Irish shares fall, European gas price rises as investors weigh diplomatic efforts over Ukraine
The price of wholesale gas on the so-called Dutch TTF contract for delivery in June rose by almost 4% to €78.75 per megawatt hour, up from less than €20 last summer.
Irish and most other European shares fell sharply and the price of European gas climbed, as investors assessed the likelihood of diplomatic efforts to turn the heat down over Ukraine.
The Iseq index of Irish shares closed about 2.5% lower but some of the largest Irish-based companies such as building materials maker CRH and packaging giant Smurfit Kappa, which sell across Europe, fell further, by as much as 3.5%.
The two main banks, AIB and Bank of Ireland, which investors use as proxies for the Irish economy, were also sharply lower, by as much as 4%.
Irish-linked airlines fell, but relatively less sharply.
Ryanair and rival EasyJet fell 2%, while IAG, the owner of Aer Lingus, British Airways, and Iberia, closed 6% lower.
Budapest-based Wizz Air, which also competes with Ryanair, fell by 7%.
For Irish businesses and households, there was more bad news from wholesale energy markets.
The price of gas — which is used to help generate a significant amount of the power on the Irish electricity grid — rose again for contracts up to the early summer.
For instance, the price of wholesale gas on the so-called Dutch TTF contract for delivery in June rose by almost 4% to €78.75 per megawatt hour in early evening trade. Last summer, wholesale gas was trading at less than €20.
Meanwhile, the price of crude oil fluctuated, with the market growing increasingly volatile in the face of geopolitical tensions over Ukraine.
Russia’s foreign minister said he would propose to continue diplomatic engagements with the West over tensions in Ukraine, soothing some concerns.
“On the geopolitical front, it seems that Ukraine and Russia tensions are easing after the fast escalation last week,” said Rohan Reddy, a research analyst at Global X Management, a firm that manages $2bn (€1.75bn) in energy-related assets.
With the diplomatic efforts, the market is seeing a reduced risk that Russian oil supply will be threatened by sanctions, he added
Opec secretary general Mohammad Barkindo said he was "reasonably optimistic" that global leaders involved in the standoff between Russia and the West over Ukraine will be able to restore peace and stability.
Geopolitics and massive underinvestment were driving the oil market, Mr Barkindo said on the sidelines of an industry event in Cairo, adding that the world needs every barrel it can get at the moment.
The price of Brent crude was down $1 to $94.40 a barrel. A month ago, crude was trading at $85 a barrel.
Elsewhere, the Ukraine crisis has led to investors buying gold and government bonds of many eurozone countries, sending yields lower.
Gold rose to its highest since mid-November. The price of palladium rose. Russia is the world’s top supplier of the metal, which is used in catalytic converters.
Germany's 10-year bond traded at 0.25%, Ireland's traded at 0.83%, while the yield on Italy's 10-year bond was at 1.95%. In contrast, the yield on Russia's 10-year bond rose to 10%.
• Additional reporting Reuters and Bloomberg
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