Shares plunge on concern over UK inflation and US debt

Worse than expected UK inflation combined with ongoing fears about US debt to send markets sliding on Wednesday.

DUBLIN

The Iseq Index of Irish shares shed more than 1 per cent, as leading stocks took hits in the fallout from bad news on both sides of the Atlantic, dealers said.

Paddy Power and Betfair owner, Flutter Entertainment, slid 4.6 per cent to €179.95 as investors shied away from stocks exposed to leisure and discretionary spending.

AIB fell 4.33 per cent to €3.846 on Wednesday while peer Bank of Ireland followed with a 3.93 per cent drop to €8.838.

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Among the industrials, building materials giant CRH shed 1.9 per cent to €44.63 while packaging group Smurfit Kappa dropped 3.03 per cent to €34.01.

[ Central Bank reports 57% drop in profit as higher interest rates hit balance sheet ]

[ CRH now ‘de facto American’ even as base remains in Dublin, says chief ]

Ryanair proved one of the more resilient shares among the market’s heavyweights, losing just 0.6 per cent to €16.55. Dealers noted the airline had enjoyed a good run since announcing on Monday that it made €1.44 billion profit in the 12 months to March 31st.

“We were expecting that to come to an end but there was still plenty of buyer interest,” said one trader.

LONDON

A 2.2 per cent plunge in the FTSE 100 wiped £44 billion off the value of the stocks covered by the blue-chip index after Bank of England announced that consumer prices rose 8.7 per cent in annual terms in April.

British home builders were among the worst hit, with investors fearing that high prices would continue to feed into high borrowing charges, hitting demand and property values. Persimmon tumbled 5.5 per cent to 1,215 pence while rival Taylor Wimpey shed 4.55 per cent to close at 117.5p.

Irish builders’ supplier Grafton Group was caught in the storm, sliding 2.6 per cent to 830p. The company is listed on the London market and generates much of its revenues in Britain.

Ryanair rival Easyjet and Wizz Air both fell 2.3 per cent, to 488.4p and 2,850p respectively. Aer Lingus owner International Consolidated Airlines’ Group was down 1.26 per cent at 157.25p.

EUROPE

Europe’s benchmark Stoxx 600 Index lost 1.7 per cent, the biggest intraday fall in two months. The German and French markets headed towards losses of more than 1 per cent.

[ Ex-Department of Finance official leads €100 trillion EU bond market transparency bid ]

[ Irish economy to keep growing even as European Commission warns of ‘persistent’ inflation ]

Gucci and LVMH owner, luxury goods group Kering, tumbled 2.36 per cent to €513.50.

Automakers, banks and miners also suffered.

NEW YORK

The lack of progress on raising the US government’s $31.4 trillion debt limit in advance of the June 1st deadline that could trigger a default kept Wall Street on edge.

Chipmaker Nvidia fell 2 per cent in advance of its quarterly earnings after Wednesday’s close. Agilent Technologies shares plunged 7.9 per cent on reduced profit forecasts.

Citigroup fell 3.1 per cent as the lender abandoned the sale of Mexican business, Banamex, opting for a dual stock listing instead.

Urban Outfitters jumped 16.2 per cent as the fashion chain posted upbeat quarterly results, while rival Abercrombie & Fitch soared 27.1 per cent on raising its annual sales forecast. – Additional reporting: Bloomberg, Reuters