Markets sustain modest post-Brexit recovery

Irish shares have clawed back some lost ground...

Markets in Europe seem set for a second day of modest recovery following gains on most Asian markets overnight and relatively flat closes on the two principal US markets yesterday evening.

The London Futures market is signalling that stocks there will open 1% higher in half an hour’s time following its 2.5% recovery yesterday.

The ISEQ index of Irish share prices recovered about 3.5% of its more than 20% losses over the previous two days.

Bank of Ireland closed 10% higher at close to 19c while Ryanair ended the day 5.5% higher at just over €11.

Currency trading has also steadied for the time being with the euro trading at just over 83p sterling and sterling at 1.33 to the US dollar.

Meanwhile, Finance Minister, Michael Noonan confirmed at the closing session of the National Economic Dialogue last night, a 0.5% reduction in his department’s growth forecasts for 2017 – down to 3.4% due to Brexit vote, though he added that the €1bn fiscal space for next Autumn’s budget would not be affected.

Outlook

Ratings agency Fitch says that Ireland is facing an increase in unemployment and lower economic growth following the UK's decision to leave the EU.

It adds that the vote is unlikely to have an immediate effect on Ireland's sovereign rating but "a medium-term rating impact would be possible if the economic dislocation of Brexit were to prove severe."

The main factors that it believes will damage Ireland's outlook are the introduction of new trade barriers between Ireland and the UK - and a possible weakening of the Northern Irish peace process.