Irish stocks fall as energy costs and interest rates hurt confidence in European markets

Shares in leading Irish companies CRH, Ryanair and Flutter Entertainment, owner of Paddy Power, fell on Monday as investors across Europe worried about impending rate hikes and the impact of the energy crisis.

Bunnies in CRH – led by Albert Manifold and one of the world’s largest building materials groups – were trading a little over 3 percent lower towards the end of the markets on Monday. Ryanair lost almost 3 per cent while Flutter lost 1.6 per cent. Insulation maker Kingspan lost 3.2 percent, while hotel group Dalata near the bell lost nearly 2.9 percent.

Shares of Smurfit Kappa — one of the world’s largest manufacturers of packaging materials — were down more than 4.2 percent as close on Monday approached. It has seen a resurgence in recent years as online commerce has boomed.

But with the European Central Bank poised to hike interest rates this week and consumers and businesses grappling with soaring electricity and gas prices, stock market indices across Europe suffered on Monday.

Ireland’s Iseq All Share Index was down 2.1 percent at the close. The euro also gave way.

The Stoxx Europe 600 Index fell after Russia’s Gazprom indefinitely halted supplies to Europe via its key gas pipeline, although the benchmark gauge recovered from its lowest levels as energy stocks rallied.

Wall Street stock futures rose after the worst week for world stocks since June.

Cash Treasuries and US stocks closed for Labor Day.

The euro fell to a two-decade low while the dollar appreciated. The pound held steady after the Conservative Party appointed Liz Truss as leader, paving the way for her to become Britain’s new prime minister. Their plan to “boost” the economy through tax cuts is already worrying investors given double-digit inflation.

Oil rallied as Opec+ agreed to make a token oil supply cut for October. Elsewhere, Bitcoin fell below the $20,000 mark. Gold has changed little.

Gazprom announced its move after leaders of the Group of Seven (G7) agreed to impose a price cap on Russian oil while the Kremlin pursues its war in Ukraine.

The wholesale price of natural gas rose more than 30 percent in Europe and countries could take special measures to contain electricity costs by the end of the week. Germany is planning a 65 billion euro package to protect consumers.

“Economies have braced themselves for some sort of energy restraint and the prospect of rationing, but compared to expectations at the start of the year, this is obviously pretty close to the worst outcome,” said Wei Li, BlackRock’s global chief investment strategist. “So as we head into the rest of the year, an underweight to equities seems appropriate at this point.”

Monetary authorities, including the ECB, will continue to raise interest rates this week to fight inflation despite the deteriorating global economic outlook.

Additional reporting from Bloomberg Irish stocks fall as energy costs and interest rates hurt confidence in European markets

Fry Electronics Team

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