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ISEQ lower-4th Quarter accounts today

Thursday, March 21 09:12:35

The ISEQ is lower this morning at 3,948, down 24 points overnight as markets respond to the Cyprus crisis balanced somewhat by positive news from China. National accounts for the final quarter of 2012 are released today and are previewed by Davy Stockbrokers:

Irish national accounts for Q4 are released today. Following the 0.2pc quarter-on-quarter (qoq) rise in Q3 2012, most of the indicators on activity in the Irish economy for Q4 have been negative. Goods exports fell by an enormous 7.5pc in Q4 2012 and industrial production by 5pc.

On their own, these developments could reduce GDP by around 1.5pc in Q4. But retail sales rose by 1.5pc in Q4 and we have little information to gauge the performance of the important traded services sector. Overall, we had pencilled in a small 0.3pc qoq fall to deliver our forecast for calendar year growth of 0.5pc in 2012. However, given the volatility and the potential for revisions in the GDP data, the underlying picture is more important.

Through 2012, export growth has slowed sharply given weak euro area demand. But domestic demand has been surprisingly strong, particularly the 10pc rise in investment spending in the year to Q3 2012. Today's GDP release may provide more evidence that the domestic economy is stabilising despite weak goods exports from the multinational sector and especially in pharmaceuticals. Yesterday's neutral UK budget contained few surprises. Public sector borrowing is now expected to equal 7.5pc of GDP in 2013, falling gradually to 2.3pc by the end of the 2017 budget year. Net debt is expected to peak at 86pc of GDP in 2016 and gross debt at 101pc of GDP. Chancellor George Osborne followed through on expectations that additional cuts to current expenditure would free resources for some modest tax cuts and higher capital expenditure.

Most government departments will be expected to find additional 1pc spending cuts. The corporation tax rate will fall to 20pc by 2015, and personal tax allowances increased to £10,000 by 2014. Capital expenditure plans have been raised by £3bn from 2015, following the £5bn increases announced in the December autumn statement for 2013 and 2014.

The budget contained several eye-catching measures to stimulate activity in the construction sector. The new Help-to-Buy scheme is expected to provide guarantees on up of £130bn of mortgage lending. The budget also provided £3bn of lending for a shared equity lending scheme. The Chancellor also changed the Bank of England's remit, indicating that the Bank may now mimic the Federal Reserve's open ended commitments on accommodative monetary policy according to Davy Stockbrokers.