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ISEQ lower as Troika offer kind words

Friday, October 26 08:52:28

The ISEQ is lower this morning at 3,221, down 18 points on yesterday's significant move forward as markets take the next Corporate results which turned disappointing overnight. Davy Stockbrokers looks at the latest Troika report on Ireland and offers some forecasts:

Unsurprisingly, Troika officials deemed Ireland to have met all bailout conditions at the conclusion of its eighth quarterly review yesterday (October 25th). With Ministers Noonan and Howlin lauding the government's efforts thus far, the attention has now shifted to the final year of the programme, in which the Troika hopes that Ireland will be the first bailout nation to regain full market access.

With this in mind, the IMF has again insisted on ESM capital injections into Irish banks, as per the June 29th agreement, as a key condition of Ireland regaining full market access. But, not for the first time, German officials have muddied the waters, with new reports from RTE this morning citing government officials that any ESM injection would constitute a second bailout. This will certainly form part of the agenda today when Tanaiste Eamon Gilmore visits Berlin for talks with his German counterpart.

Today's retail sales data for September (11.00) will provide the first indication of sales volumes in Q3 overall. With robust growth of 1pc and 0.4pc in July and August respectively, even flat volumes in September would have left volumes up 0.7pc on Q2. However, the outlook for Q4 is less certain, with a mooted E1.25bn in tax rises in Budget 2013 likely to curb individuals' spending in the remaining months of the year. In our latest Irish economic forecast, we see consumer spending falling 1.9pc in 2012 followed by a slight recovery to a 0.5pc decline in 2013 according to Davy Stockbrokers.