Where CRH goes, so too goes the Iseq.
The Irish market has gained as much as 12 per cent from its lows in March, coming this week within 40 points of its February highs – which themselves had marked the Irish stock market’s highest level in more than a decade.
The move had been fuelled in no small way by an almost 20 per cent surge by shares in CRH, which makes more than a quarter per cent of the Iseq.
The market really seems to have got on board with the building material giant’s decision last month to spend up to €1 billion of its own stock in the next year, as it takes a bit of a breather from mergers and acquisitions deals. (A rally by the dollar in recent months has also helped.)
The company’s logic is that the market hadn’t been valuing the “intrinsic” worth of CRH’s shares, which pulled back heavily last year, as investors took a more circumspect view of US president Donald Trump’s infrastructure spending plans and seemed to ignore the potential of a recovering Europe.
But while analysts at Wall Street giant JP Morgan decided on Wednesday to reinitiate coverage of CRH’s stock with an “overweight” rating – the equivalent of a “buy” – and upside share price target, the stock traded down 2.1 per cent. It contributed to a 0.74 per cent fall by the Iseq.
JP Morgan said in the note that it preferred CRH to European peers HeidelbergCement and LafargeHolcim. But is Wednesday’s price drop a pause for breath, or beginning to reflect whispers of concern about the US and European economies beginning to slow down?Tags: Business, CRH, HeidelbergCement, Lafargeholcim, Markets