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ISEQ loses ground to profit takers

Wednesday, April 23 17:42:17

The strong rebound in the ISEQ evident yesterday fizzled out today as investors consolidated gains and as global economic prospects dominated.

The index was down 40.95 points to 4,948.09.

European shares edged down after three days of gains as signs of a still stuttering Chinese economy and rising worries about Ukraine offset a reassuring set of European economic numbers.

The Irish recovery will continue but credit will have little part in the rebound, an analysis from Davy Research said today. Irish households have reduced debt by 17pc to E168bn since 2008. But pressure from tax rises and lower wages means that the ratio of household debt to disposable income peaked later, at 211pc in 2011, only falling to 196pc in 2013. Davy said that this is still an exceptionally high level of indebtedness by international standards.

Shares in CRH gained 11c to E21.30. Following two months of the Architectural Billings Index (a 9-12 month leading indicator for US non-residential activity) showing growth, it surprisingly returned below the critical 50 level in March. The score was 48.8, down from 50.7 in February. The design contract component (a new measure issued by the American Institute of Architects and a leading indicator for the billings index) was also weak at 48.2 versus 51 in February. However, somewhat encouraging is that the inquiries component was up a point to 57.9 and partly reverses two consecutive months of decline. "The softening in the ABI data also follows a couple of weak months for highway contact awards, both of which can be attributable to the weather. However, the next couple of months of data will tell us if we should be more concerned or not. An element of our positive view on both CRH and Wolseley is their exposures to the late cycle segments of non-residential and highway building," said Goodbody Stockbrokers.

Shares in food group, Origin Enterprises, climbed 5c to E7.85 ahead of a Q3 trading update on May 28th. "We forecast EPS growth of 2pc to 54c as the dilutive effect of the Welcon disposal is more than offset by strong profit growth (30pc) in the Agronomy business. 90pc of Origin's profits are in H2," said Goodbody's.