Shares, sterling rise as Johnson’s power fades

UK-exposed Irish shares rose for a second day on lingering hopes of an avoidance of a crash-out, no-deal Brexit.

Shares, sterling rise as Johnson’s power fades

UK-exposed Irish shares rose for a second day on lingering hopes of an avoidance of a crash-out, no-deal Brexit.

Sterling also rose further — to 90p — against the euro as prime minister Boris Johnson’s hopes of forcing a general election in a bid to free himself up to force through Brexit at the end of next month diminished.

“Johnson’s power seems to be fading, as his calls for an election fall on deaf ears for now.

"The pound looks likely to keep rising if the anti no-deal coalition manage to push election and Article 50 timelines further into the future,” said Josh Mahony, senior market analyst at online trading platform IG.

The banks were the strongest movers on the Irish market, with AIB up almost 5% and Bank of Ireland nearly 9% ahead.

Ryanair was up by just over 1%, but fellow travel stock Irish Continental Group, which owns Irish Ferries, was ahead by over 5%. Dalata Hotels rose by over 4% and Kingspan was up 2%.

“We are now seeing Boris Johnson steady lose influence over the Brexit process he was appointed to lead.

"With new legislation limiting his ability to force through a no-deal Brexit expected to pass, markets are happy to take a more optimistic tone for the first time in months,” said Mr Mahony.

“While Johnson could win an election and ultimately attempt to force through a no-deal Brexit, there is no guarantee that he can even get such an election in time to avoid an extension in October.

“The government has next week to obtain the votes to push through an election, or else Johnson trips up on his own move to prorogue parliament and runs out of time.

"Yes, a no-deal Brexit still remains a possibility, yet we are also seeing a strong chance that the can will be kicked further down the road, alleviating market fears for now at least.

If the government fails to secure an election next week, there is a high likelihood we will see the pound’s gains continue for some time yet.

Most European markets rose and the US opened positively; on a positive outlook for US-China trade talks.

“We have seen this all before, so there is a strong chance that market scepticism kicks in to limit these gains,” warned Mr Mahony.

Meanwhile, a survey by the Irish arm of the Institute of Directors (IoD) has found lingering Brexit uncertainty is still having a significant impact on business leaders’ sentiment, with confidence levels plummeting by more than 30% year-on-year in the second quarter of the year.

“Business confidence is plummeting...the uncertainty evident over the past 12 months has intensified in the last quarter,” said IoD Ireland chief executive Maura Quinn.

The survey shows just 15% of business leaders felt more optimistic about the Irish economy than in the first quarter of the year. That compared to 32% in the first three months of the year.

As much as 63% of the respondents said Brexit uncertainty has impacted on their company’s strategic planning. “The message is clear: Irish business leaders are worried, and they want the Irish Government to take note and deliver accordingly in next month’s Budget, which is just weeks before the current Brexit deadline,” said Ms Quinn.

“Overall, this is a challenging period for Irish business from a number of perspectives, but it is clear Brexit is the dominant concern.”

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