Irish shares tapped a surprise early new year buying wave that sent the Iseq Overall index climbing 3%, reflecting huge gains for Bank of Ireland and housebuilder Glenveagh at the end of a week marked by global stock market tremors.
Irish bank shares, which had lost up to a third of their value in 2018, were prominent in the upswing, with Bank of Ireland and AIB surging by around 5%.
Housebuilders Glenveagh and Cairn Homes – which had failed to live up to promoters’ hopes last year – soared as much as 8% and 5%. Glenveagh published a trading update that at last convinced investors it was on track to deliver on its new homes targets in the coming years.
In its latest acquisition, it bought a 43-acre site in Douglas earmarked for 500 homes for €25m, with some of the payment deferred. All its Co Cork sites could now account for 2,000 homes of the 11,850 units the builder plans for its land bank around the country. The housebuilder reports full-year earnings in March.
After Cairn Homes, Glenveagh was only the second housebuilder to list on the Irish market when it made its debut in late 2017. Investors had hailed the prospects for an Irish house builder focused on building houses in the country's worst ever housing crisis.
But it has lost about 30% of its value in the past 52 weeks. Cairn Homes has fared no better--its shares were down 40% in the year--and Friday's gains were rare good news for the two builders.
Global shares, which had been rattled earlier this week by Apple’s warning over the outlook of its iPhone sales, were up strongly in the latest session after the US Federal Reserve head Jerome Powell sounded dovish on future US interest rate increases and the latest US jobs report showed employment still growing strongly.
That helped international firms such as CRH, up 5%. Defensive market heavyweights such as Kerry whose shares had escaped much of the earlier rout rose slightly, by around 1%. Frankfurt’s Dax and the Cac-40 in Paris gained 3.3% and 2.7%. The Ftse-100, which is dominated by multinationals rose 2%. The more UK-focused Ftse-350 also gained 2%.
Irish banks have been the focus of investor concerns over the last two and a half years. As proxies for the Irish economy, the lenders are likely to be the hardest hit if the UK crashes out of the EU at the end of March. Bank of Ireland is also vulnerable from its loans tie-up with the British post office which puts its sterling operations at risk from any further Brexit-driven devaluation of the UK currency.
A solid set of job numbers and some comforting words from the chair of the Federal Reserve "have been just the ticket to get markets into bullish mode", said Chris Beauchamp at online broker IG. On Mr Jeromes's comments, he said that for "many, this will look like the tail wagging the dog and that the Fed is responding too quickly to market volatility".
"Perhaps more questions will be asked come Monday and the start of a new week, but for today the bulls are firmly in control," Mr Beauchamp said.