Shares fall amid banking worries

A steep sell-off in banking stocks hit European indexes on Friday as worries about the stability of the financial sector intensified, with Deutsche Bank tumbling as the cost of insuring the German bank’s debt against the risk of default jumped to a more than four-year high.

Dublin

The Dublin market fell almost 3 per cent on Friday, with the turbulence in global stocks weighing heavily on the index.

Banking stocks were hard hit, with Bank of Ireland notching up a 5.36 per cent loss, closing the session at €8.97. AIB was almost 4.8 per cent off at €3.58 and Permanent TSB was 1.2 per cent lower over the day.

Building stocks were also off the pace, with CRH closing at €44.05, down 3.65 per cent, and Kingspan shedding 3.85 per cent to end the week at €58.88. Property fund Ires Reit was down 1.56 per cent, and Cairn Homes lost almost 2 per cent.

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Ryanair shares dipped to €14.12, losing 4.7 per cent, while Paddy Power owner Flutter closed at €158.80, more than 1 per cent lower.

London

The FTSE 100 moved 1.26 per cent, or 94.15 points, lower to finish at 7,405.45.

Banking firms Standard Chartered and Barclays were among the weakest performers, with the latter down 5.88p at 133.9p and Standard Chartered down 40.6p at 591.8p.

Investors cheered pub group Wetherspoons on Friday as it saw sales jump in advance of pre-pandemic levels and returned to a half-year profit. The hospitality giant reported a 5 per cent increase in sales over the six months to January 29th compared with the same period in 2019, and up 13 per cent compared with the previous year. Shares gained by 79p to 660p as a result on Friday.

Pharmaceutical group GSK dropped back after a California judge denied the company’s bid to keep expert testimony allegedly linking its discontinued heartburn drug Zantac to cancer out of an upcoming trial. Analysts said the ruling will weigh on GSK’s share price until the trial begins in July. Shares dipped by 36.6p to 1,401.2p.

Europe

The pan-European Stoxx 600 index fell 1.4 per cent, but still posted a weekly gain supported by a sharp recovery earlier this week.

European banks fell 3.8 per cent and were set for their third week of declines, after the failure of US midsized lenders and the turmoil at Credit Suisse highlighted growing risks to banks in the wake of tightening financial conditions.

The German Dax fell by 1.81 per cent and the French Cac 40 decreased by 1.9 per cent at the close

Deutsche Bank tumbled 8.5 per cent. The German heavyweight said it would redeem $1.5 billion of Tier 2 notes due in 2028.

Shares of UBS Group and Credit Suisse fell 3.6 per cent and 5.2 per cent, respectively, after Bloomberg News reported they were among the banks under scrutiny in a US department of justice inquiry into whether financial professionals had helped Russian oligarchs evade sanctions.

Austria’s Raiffeisen Bank International slid 7.9 per cent after Reuters reported the European Central Bank was pressing the bank to unwind its highly profitable business in Russia.

Elsewhere, the German Dax fell by 1.81 per cent and the French Cac 40 decreased by 1.9 per cent at the close.

New York

Wall Street’s main indexes fell on Friday as investors fled from risky assets on growing concerns that a contagion in the banking sector had not been fully confined despite assurances from key officials.

Shares of big US banks such as JPMorgan Chase, Wells Fargo and Bank of America dropped between 0.8 per cent and 2.4 per cent.

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Meanwhile, some regional lenders such as PacWest Bancorp, Western Alliance Bancorp and Truist Financial Corp gained between 0.2 per cent and 3.0 per cent, faring better than the larger banks.

US two-year Treasury yields fell sharply to their lowest levels since September on Friday.

Traders’ bets have now shifted toward a pause in US rate hikes in May, after the Federal Reserve signalled caution about its next move amid the global banking crisis, sparked by the failure of two regional banks.

At 12.21pm ET, the Dow Jones Industrial Average was down or 0.33 per cent, The S&P 500 was down 0.40 per cent and the Nasdaq Composite was down 0.70 per cent. – Additional reporting: Reuters, PA