Bank shares enjoy ratings boost
Financial shares including those of Permanent TSB were boosted following upgrades of Irish banking by rating firms.
Shares in AIB and Bank of Ireland rose 2.5% and 1.8% and insurer FBD also performed strongly, up 3.5%.
Permanent TSB shares climbed 8% after S&P Global Ratings singled out the mortgage bank. “We raised the ratings on Permanent TSB because the group is building up its loss-absorbing cushion to fulfil its minimum requirement for own funds and eligible liabilities,” said S&P, adding that its balance sheet “has improved but it still displays a lack of business diversity and weak profitability prospects”.
Meanwhile, sterling continued to gain as investors bet that Boris Johnson’s Conservatives would secure a majority at next week’s elections. Nonetheless, the higher the pound rises, the more nervous options traders become.
Even as sterling enjoys its longest winning streak since June on optimism Tories will win a majority, a barometer of sentiment and positioning shows options traders are the most bearish on the pound in eight months.
Traders are balancing confidence about a win for Mr Johnson against doubts about opinion polls, which broadly failed to predict the 2016 Brexit vote and the 2017 general election result that stripped the Tories of their majority.
Some may also view the Conservatives’ victory on December 12 as fully priced in.
Pound bulls prefer the ruling Tories for the prospect of moving on to the next stage of Brexit talks and their market-friendly policies, in contrast to Labour’s pledges to nationalise industries and overhaul the economy.
“The central case seems to be a comfortable Tory win that could keep the GBP/USD supported, moving toward $1.34 and higher,” said Valentin Marinov at Credit Agricole.
