Asia-Pacific -benchmarks

German business confidence fell to a 26-year low in March, adding to evidence that the recession in Europe’s biggest economy is getting worse. The Ifo institute, at the University of Munich, said today, that its business climate index, dropped to 82.1 from 82.6 in February.

European stocks have risen Wednesday, for a fifth straight day and the Dow Jones Stoxx 600 is up 0.2%.

The ISEQ Index is up 0.3%.

AIB is down 6% and BoI has dipped 7%.

Elan is up 2%.

On Tuesday, it was disclosed, that Elan partner Biogen Idec, may have found a treatment for the deadly brain infections that have been tied to use of its multiple sclerosis drug Tysabri, the biotech  companies fastest-growing product.

Analysts said the drugmaker may discuss its Tysabri safety efforts at a meeting today with investors to present its latest drug research.

A malaria pill developed during the Vietnam War is being tested by Biogen on patients with progressive, multifocal leukoencephalopathy, the brain disorder known as PML, said Al Sandrock, Biogen's head of neurology research.

Mobile phone services company Zamano today reported pre-tax losses of €3.622m for 2008.

The company had reported pre-tax profits of €3.08m the previous year.

Revenues rose by 66% to €41.4m from €24.7m mainly as a result of acquisitions completed in 2007.

Rod Matthews, Chairman of Zamano, commented: "The Board worked throughout 2008 to ensure the Group took appropriate steps to address the difficult economic conditions, currency fluctuations and changing regulatory environment. As a result of these actions, the Board remains confident that the Group's strategy and management continue to position zamano to respond positively to the unpredictable changes in the environment. The Board is pleased that profitability year to date is in line with expectations."

John O'Shea, CEO , added: "The Group has made significant progress on the key actions identified in September 2008 as being critical to positioning zamano for the current challenging environment, and we will continue to focus on executing these actions through 2009."

Results detail

European Benchmarks

Irish Share Prices

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3431 and at £0.9108.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record. 

Commodities

Gold spot price

Gold is trading at $925.00 down $1.10 from Tuesday's spot price close in New York.

Goodbody economist Dermot O'Leary comments on the Irish economy: Back to the table  - -"With the budget in Ireland looming, tough decisions will have to be taken in the coming weeks and plenty of pain will have to be endured. In truth, we have known this for some time. The difficult part though was always going to be a realisation that these decisions would have to be taken so as to ensure the continued viability of the economy into the medium-term. Evidence that acceptance of the necessary fiscal retrenchment would be a bridge too far came in the form of protests following the budget last October and the cuts to public sector pay in February.

In this light, the news that planned strikes for next Monday may now be averted is a positive development. After a number of unions rejected strike action over the past few days, the Irish Government sent out an invitation to the social partners yesterday to re-engage in talks on a shared approach to economic recovery. If the invite is accepted by the unions today – which appears likely – talks could start as soon as next weekend. Let us be clear, the talks will not be plain sailing, as both employers and unions will have to accept some proposals that their members will not like. However, the sight of strikes on the streets of Ireland’s main cities would further reinforce some international opinion that Ireland does not have the will to make the necessary decisions to address its problems.

 These latest events, especially the rejection by a number of unions of strike action, indicate that the message is getting across that it is better to attempt to come up with internal solutions to the problems. In this way, the country can regain some of the confidence in the financial markets that it has lost over the past six months. While it is unrelated to yesterday’s moves, the downward movement in the CDS spread (5-year spread down from 396bps to 220bps) and the successful €1bn bond auction are positive developments. Further proactive action in the budget in less than two week’s time should further alleviate the concerns that international investors currently have."

Goodbody analyst Eamonn Hughes comments: Airlines; Posturing by Ryanair or the real deal on upgrades? - - "On a day in which the IATA raised its loss guidance for the airline sector this year, Ryanair hinted that it could be looking to raise its guidance on passengers carried for FY10, a statement obviously at odds with trends elsewhere in the industry. The IATA announcement was flagged last week, though the move to raise prospective losses for the global industry from $2.5bn to $4.7bn appeared to have negative feed-through implications for the Ryanair share price yesterday. The IATA announcement was at 8.30am yesterday and Ryanair declined over the following 30 minutes and traded at the lower levels for the rest of the day. US airlines overnight and European travel & leisure stocks were relatively flat on the day, so Ryanair’s showing made it the worst performing stock in the DJ European Travel & Leisure index, down 6.3%. Crucially, however, it closed below its 200 day moving average of 282c, an important support level since mid-late November, with the next support level looking like the 250c range, around which the stock gravitated for a while back in October.

The IATA update highlighted that the “state of the industry is grim”. It is now forecasting that revenues fall 12% (6.5% previously in their December guidance and compares to the 7% drop in the two years after 9/11). Global demand is now anticipated to fall by 5.7% compared to a 3% decline previously and Cargo is now pencilled in to fall by 13% compared to 5% previously. Yields don’t escape and are slated in to fall by 4.3% points (3% previously). Lower fuel “is the only good news” with IATA budgeting for $50 for the year. We would have a similar figure on un-hedged amounts for both AERL and RYA, though rising to $60 in 2010 and $70 in 2011. Within Europe, demand is expected to fall by 6.5% though capacity cuts of 5.3% won’t keep pace, implying load factors continue to ease. However, the recent February traffic statistics from a range of European airlines would highlight that the bias to these figures is still lower already.

While the IATA announcement indirectly may have impacted the stock price on the day, we are more interested in the comments attributed to the RYA CEO on possibly raising passenger growth estimates while talking to Bloomberg in Madrid. RYA has guided a Pax number for FY10 of 67m, up 15/16% yoy. While the airline won’t revise its forecasts until it has its full year earnings in June, Michael O’Leary is quoted as saying “if anything, we’ll be revising our numbers up” on the passenger front. “I think our growth will be even stronger this year”. “People are increasingly making their travel decisions on price. We are seeing a dramatic switch in passengers across from high fare, fuel-surcharging airlines”.

If the comment to raise passenger guidance is actually going to materialise, then what locations offer the growth? Interestingly, Mr O’Leary was in Spain yesterday to announce 39 new routes from Spain this year, operating from 8 different airports. In the Q3 conference call, RYA indicated that Spain would account for c10% of traffic so presumably this number goes up in due course. As we noted above, RYA is currently guiding 67m passengers to be carried for fiscal 2010. Assuming, RYA tempered its disposals programme in which to drive higher capacity growth, then we note that every additional 1m passengers would have the potential to impact FY10 EPS by c1.5%.

It is not clear whether this upgrade will materialise or not, but we note additional comments that RYA appears to be attempting to re-open negotiations with Airbus for new craft and it would obviously be no harm highlighting the growth plans of the airline in the meantime with which to whet appetites. We are still not convinced about the seriousness of RYA’s approaches to Airbus given that the current one-size fits all plan for the Ryanair fleet has worked well to date, as it has for Southwest which now has 530 Boeing 737s compared with “just” 181 currently for RYA. Alternatively, there is always the possibility that any overtures to Airbus could be to focus on the wider-body craft if the transatlantic plan is ever to get off the ground."