Thursday, February 14 09:08:58
The ISEQ is steady this morning at 3,686, up 4 points overnight as European markets ease following poor economic data from France and Germany.
Ireland's export performance has been the outstanding success of recent years however there are concerns and Davy Stockbrokers discuss:
Stock indices were little changed yesterday. The Euro Stoxx was up 0.3pc and the S and P500 was up 0.1pc. Irish yields continued to fall, with the bid yield down to 3.64pc at the close.
Irish trade data for December showed a sharp 13.3pc decline in volumes on the month. This meant that goods exports fell from E8.1bn in November, to E6.8bn.
The entire fall was accounted for by pharmaceuticals. That said, even excluding the pharmaceutical sector, goods export growth continues to slow. Weak euro-area demand has hurt Irish goods exports, down -3.4pc in the year to Q3 2012.
Unfortunately, the strong rebound in aggregate industrial production (+8.5pc) and pharmaceutical sector output (+17pc) in December did not show up in the export data.
This suggests that Irish goods exports might bounce back in January. But the lags and leads between pharmaceutical output and exports are not clear. And the ultimate impact of the pharmaceutical patent cliff on the sector in Ireland may not have fully played out.
Overall, goods exports fell by 7.5pc in Q4 2012. Should services exports fail to offset this decline in Q4 2012, annual export growth could fall into negative territory, down sharply from the 5pc growth recorded in 2011.
Today, markets will focus on European GDP data. The German and French GDP numbers this morning were a little worse than expected at -0.6pc and -0.3pc respectively. Italian GDP is expected to contract by 0.6pc, when the data are released later this morning, and the euro-area aggregate by -0.4pc.
The pick-up in investor and business confidence through the final quarter of 2012 hopefully suggests the trough of the euro-area recession was around the beginning of Q4 2012. If so, a modest recovery in the euro area in 2013 could provide stronger demand for Irish exports according to Davy Stockbrokers.