Irish yields, CRH jump on Trump

Irish bond markets, along with other debt markets in Europe, traded wildly yesterday, while CRH rose again on stock markets as investors tried to second-guess the effects of the unexpected election of Donald Trump will have on Europe’s politics and companies.

“It was volatile,” said Ryan McGrath, senior bond trader at Cantor Fitzgerald Ireland, of the wide fluctuations in the yields of Irish government bonds and those other eurozone countries.

On stock markets, shares in CRH, which, of all Irish shares, has the most to gain should Mr Trump follow through on his infrastructure spend pledge, jumped again, by almost 2%.

With 60% of its profits generated in the US, its shares have jumped to €32.51 from €29.79 on the eve of the US election last week.

The shares have now gained almost 22% this year, valuing the company at just over €27bn.

The Irish 10-year bond yield, which started the day at 1%, leaped at one stage to 1.1% before falling back. It ended at 1.02%, up 2 basis points on the day.

Debt investors fear the so-called populist protest votes that helped secure wins for Brexit campaigners and now Mr Trump will lead to defeat for Italian prime minister Matteo Renzi in his looming referendum and might also lead to far-right victories at national elections in the Netherlands, France, and Germany next year.

Italy’s 10-year bond ended seven basis points higher at 2.09%, while the French 10-year bond rose six basis points to 0.81%.

The implied cost of borrowing for the German government rose 2 basis points to 0.33%, having jumped to 0.4% at one stage amid the uncertainty sparked by Mr Trump’s win.

On stock markets, investors were also scrambling to guess whether Mr Trump would “keep his word”, said Joshua Mahony, market analyst at online trader IG, as stocks rallied on hopes that the US president-elect will pump in huge amounts of spending on infrastructure and boost growth in the US.

“Financial markets have started this week as they left last week, with the initial fear associated with Donald Trump’s impending presidency transformed into an overwhelming bullish risk-on sentiment,” Mr Mahony said.

“Amid expectations of huge infrastructure spending in the US, it is clear markets have shifted away from a focus on monetary stimulus and towards the fiscal implications of Trump’s presidency.

“With infrastructure projects in the pipeline construction companies are coming into vogue. No doubt this presidency will provide opportunities and investors are adjusting their portfolios to account for that.”