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Latest Dublin Prices

ISEQ higher as borrowing costs fall

Wednesday, February 13 09:16:23

The ISEQ is higher this morning at 3,643, up 16 points as European markets mark time on corporate results and concerns about growth prospects.

Davy Stockbrokers looks at the consequences of last weeks deal for Ireland's cost of borrowing:

The Euro Stoxx 50 rose 1pc yesterday, with the S and P500 up 0.2pc at the close. An aggressive cost-cutting plan by UK bank Barclays fuelled speculation that the sector may follow suit, pushing bank shares higher. Today, markets will look to US retail sales data to gauge the impact of the 2pc payroll tax rise on the US consumer.

Irish bond yields fell again yesterday after the announcement of the upgrade by S&P to close to 3.6pc. Irish trade in goods data for December are released this morning. In the year to Q3 2012, Irish export growth has slowed sharply to 2pc, split between buoyant services at 7.6pc and contracting goods exports at -3.4pc. Hopefully, today's data should follow the 8.5pc bounce-back in industrial production in December. If not, goods exports look set to decline by around 3pc in Q4 2012.

UK CPI inflation was 2.7pc in January, according to data released yesterday.

Today's Bank of England press conference should see governor, Mervyn King, indicate that the MPC is prepared to look through higher CPI inflation, above the 2pc target. Yet again, temporary energy price pressures and the impact of the recent sterling depreciation to 86p explain some of the recent rise in CPI. However, the Bank of England could forecast that CPI inflation could rise above 3pc later in 2013. If so, investors may question the likelihood of a further round of quantitative easing by the bank according to Davy Stockbrokers