Shares in the big two Irish banks and a handful of property shares played catch-up with the global market slump to post falls, taking stock of the fading hopes of a deal that would avoid Britain crashing out of the EU at the end of October.
Bank of Ireland shares tumbled by 3.25% and AIB edged lower, while housebuilder Glenveagh fell 2.5%, and property firm Hibernia Reit and hotels group Dalata each slid by 2%.
The Iseq index of Irish shares edged lower and is now down by 13% in the past year.
The Ftse 100 in London and Euro Stoxx index both fell also.
Remarks by Taoiseach Leo Varadkar in Belfast, comments by British cabinet minister Michael Gove, and meetings in London between Finance Minister Paschal Donohoe and his British counterpart Sajid Javid did little to suggest the differences between the EU and the new UK administration will be closed any time soon.
“For the pound, we are now starting to see a degree of acceptance that Boris Johnson’s approach will lead to a push for a no-deal Brexit,” said Joshua Mahony, senior market analyst at online broker IG.
“Markets are currently pricing in a 52% chance of a [UK] rate cut by year-end, largely reflecting the notion that it will be a coin toss over whether Boris could even get a no-deal Brexit through parliament ahead of the October deadline.”
After the drama of last week when the UK came close to a full-blown currency crisis, sterling traded slightly higher, but, at 91.71p, continued to signal that investors still put a high probability on a crash-out Brexit at Halloween.
Business groups in the North and Republic reiterated their warnings over Brexit.
“Businesses in Northern Ireland are rightly concerned about the future of north-south relationships including all-island trade, integration of our labour markets, the all-island energy market, and the damaging impact a no-deal exit could have on export sales,” said Ann McGregor, head of the Northern Ireland Chamber of Commerce and Industry.
Head of Dublin Chamber Mary Rose Burke said that “the North-South business relationship is one that we deeply value and must work to protect”.
Meanwhile, the Government and the National Treasury Management Agency, which looks after the State’s debt, posted a surprisingly upbeat review from credit-rating firm Moody’s.
Despite the risk of Brexit, it said in a sovereign rating “update” that it anticipates the economy to perform well in the coming years.
It scored Ireland’s overall vulnerability to an “event risk” as low, with “the risks related to the banking sector are receding” and the exposure to a political risk as “higher than before and motivated by the increased risk of no-deal Brexit following the election of Boris Johnson as UK Prime Minister”.
It said: “A no-deal Brexit would result in the re-emergence of border controls between the Republic and Northern Ireland, leading to temporary economic disruptions for the Irish economy. Bordering regions and specific sectors, including agriculture, would be the most affected.”
“Although not anticipated, a material adverse impact of Brexit or global corporate tax reform on Ireland’s growth performance in coming years would also be rating negative.”