Irish shares fall on Covid-19 fears as US continues bull run



The recovery in Irish shares over recent weeks was stopped in its tracks as investors focused on the number of Covid-19 cases across Europe, even as US stocks continued to rise. 

The Iseq index of Irish shares fell 1.5%, putting an end to a long and slow recovery since the onset of the crisis. 

The index which last week reached its highest level since March has since slipped back on concerns that the rising Covid case numbers across Europe will slow the lifting of social and economic restrictions. 

In the lastest session, Bank of Ireland and AIB fell by 5.7% and 3.7%, while the Irish-owned multinationals Smurfit-Kappa and CRH fell by 3.4% and 2%. 

Transport companies were mixed, with Ryanair shedding 3.3% but ICG, the owner of Irish Ferries, climbed 4%.    

In the US, stocks continued to rise despite new numbers showing a rise in unemployment claimants.            

The number of Americans filing a new claim for unemployment benefits rose unexpectedly back above the 1 million mark, a setback for a struggling US job market crippled by the coronavirus pandemic.

Initial claims for state unemployment benefits rose to a seasonally adjusted 1.106 million for the week ended August 15, from an upwardly revised 971,000 in the prior week. 

The previous week’s level had marked the first time since March that new claims had registered below 1 million. 

“Last week’s drop back below the one-million mark signalled a significant hurdle for the US economy, yet the rise to 1.1 million fresh claims does highlight the ongoing difficulties as we move into the second stage of the recovery,” said Joshua Mahony, senior market analyst at online broker IG. 

“Nevertheless, positives can be taken from this release, with the sub-15-million continuing claims figure serving to highlight a significant decline in existing claims to overcome the greater rise in new filings,” he said. 

There were further signs that US investors were losing their fears with stocks on a bull run in the midst of the global coronavirus pandemic.

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” is near its lowest level since late February and options markets are showing diminishing concerns of a near-term drop in equities.

The S&P 500’s .SPX run to fresh highs has come as some of Wall Street’s biggest banks, including Goldman Sachs, UBS Global Wealth Management and Morgan Stanley, turn more bullish on stocks and are urging clients to remain exposed to equities. 

Investors may well heed their advice: nearly 80% of fund managers surveyed by BofA Global Research, the highest level in more than a decade, expect the global economy to grow over the next year. 

The survey also showed falling allocations to cash, another sign of increasing bullishness.

The growing optimism is in contrast to the fear and gloom that prevailed on Wall Street only months ago, after the S&P 500 plunged 34% in just 23 trading days and the economy entered a recession that would turn out to be its worst since the Great Depression. 



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