Irish and UK stocks lost some ground in late afternoon trading due to a security incident in Germany, but still finished the day deep in positive territory as the UK voted on continuing membership of the European Union.
Sterling, seen as the clearest gauge of investor sentiment on Brexit, also advanced against most currencies on Thursday, as bookmakers’ odds indicate the Remain camp is on course to win the referendum.
The currency slipped back somewhat in the middle of the afternoon due to the security incident at a cinema in Viernheim, but regained its footing to finish at its highest closing position this year.
The Iseq index was 1.5 per cent higher at 6,427 points by close, while the FTSE 100 in London had added 1.2 per cent. Elsewhere, European stock markets and US equity index futures were also in positive territory.
Investors have been glued to the UK’s debate on EU membership in recent weeks as governments and central banks around the world warned that a vote for so-called Brexit could hurt global economic growth and destabilise financial markets. A gauge of expected volatility in US stocks jumped to its highest level since February ahead of the referendum.
Base case
“Our base case is that UK voters will elect to stick with membershp of the EU,” said Philip O’Sullivan, an economist with Investec in Dublin, adding that the referendum is “this year’s single biggest event for the Irish economy.”
Financial stocks were among the top performers in Dublin, with Permanent TSB up 9.7 per cent to €2.18 amid renewed speculation that the lender could end up being merged with another company.
Bank of Ireland jumped 5.8 per cent.
CRH was also in demand, gaining 2.3 per cent, helped by news that broker Canacccord had initiated coverage of the stock with a buy recommendation.
“Even though it looks as though much of the ‘risk of Brexit’ has been priced out of markets, there remains plenty of scope for volatility on either outcome, albeit very much more on a Leave than Remain,” said Ray Attrill, global co-head of foreign-exchange strategy in Sydney at National Bank Australia.
(Additional reporting: Bloomberg)
