During August, we will not be providing the 'Markets Afternoon' report due to holiday and site development work. Use the relevant links below for the latest data.

Drinks giant Diageo today reported an 8% drop in Irish sales in their annual results, but it made market gains in beers and spirits. Sales of Guinness were down 5% in the year ended June 30th, but the company says this fall is in line with the overall decline in the drinks industry. However, Guinness' market share has risen slightly to 32.6%  --  one of every three pints bought in Irish pubs. The drink has had 30 consecutive months of growth in Irish pubs.

Trading in southern European markets remained particularly difficult. The on trade continued to decline in Spain and increased excise taxes and reduced consumer spending led to a sharp slowdown in Greece in the fourth quarter. The trend towards at home consumption across many markets led to increased promotional activity in the off trade and some mix 3 dilution. The weaker trade conditions in Southern Europe and Ireland impacted overall marketing spend as campaigns were reduced in line with consumer trends.

Results detail

Olivier Desbarres, director of FX strategy at Credit Suisse, says investors should go long currencies that are leveraged to Germany, such as the Swedish krona, Polish zloty & the Swiss franc. He speaks to CNCB's Oriel Morrison:

Economic View: Ireland goes back to the bond market today; Goodbody's chief economist, Dermot O’Leary, commented - - "S&P’s downgrade and the NTMA’s subsequent criticism have put the Irish sovereign back in the limelight on international markets once again. Unfortunately, it is for the wrong reasons. Despite deterioration over previous weeks following the news that the government’s tab for Anglo Irish Bank will be higher than previously estimated, yields on Irish bonds rose further once again yesterday.

 The ten-year spread over German bunds stands at 3.24% this morning. This morning’s auction of €400m-€600m Treasury bills now takes on significantly more importance than usual and it goes without saying that investors will demand a higher yield on their investment, with the only question being how much. It must be remembered that Ireland was being asked similar questions about its creditworthiness by bond markets at the beginning of 2009 when spreads were at close to 3%.

This triggered action by the government by way of an emergency Budget in April of last year. The actions on the public finances subsequently helped in reducing that spread to below 1.4% later in 2009. The point here is that Ireland can do little about international developments. It can, however, try to influence international perceptions by its actions. In 2009, it was by way of pretty aggressive fiscal policy decisions. Now it has to be way of actions on the banking sector."

The BP oil spill is inflaming a chorus of criticism of US energy policy, with T. Boone Pickens, BP Capital Management, George Pataki, Chadbourne & Parke counsel; and Andrew Ross Sorkin, New York Times:

Rating agency analysis poor by any standard, Germany the beacon of hope: Davy economist, Aidan Corcoran, commented  -- "Standard & Poor's downgraded the rating on Irish sovereign debt from AA to AA- late on Tuesday, citing the rising costs of banking recapitalisations. The move surprised markets, pushing the spread on Irish 10-year government debt to 332bps over their German counterparts yesterday. The spread over German Bunds may be at a historically high value, but it must be remembered that the absolute level of yield on Irish debt remains well below the levels seen in the early to mid 1990s.

Standard & Poor's analysts are assuming that the assets in NAMA, as well as the Irish government's investments, through the NPRF, in Allied Irish Banks and Bank of Ireland, will achieve no return over the horizon they consider. This level of pessimism is difficult to reconcile with reality. The shock value of the downgrade was bound to impact spreads as investors struggled to understand the reasons for the cut. When the extreme nature of the rating agency's assumptions becomes clear, there may be a more considered response on the part of the bond markets. Today's treasury bill issue of between €400m and €600m will give a clearer picture on this.

A major reason for the widening spreads over Bunds since April is not the increasing yield on Irish government debt, but the plummeting yield on German government debt. Depending on one's view, this could be down to German economic strength attracting haven flows, or deflationary fears. With German inflation rising steadily (to 1.2% in the year to July) and the up-tick in consumer spending, the former appears more likely.

Yesterday's rise in the German Ifo business climate indicator for August reinforces this view. The headline business climate indicator increased from 106.2 to 106.7, beating the consensus forecast of a fall to 105.5 and leaving the index at its highest level since July 2007. This stands out as the only good news amid dire durable good and new home sales data from the US, which continued to frighten markets."

US Markets

On Wednesday in New York, the Dow Jones rose 20 points or 0.20% to 10,020.

The S&P 500 rose 0.33% and the Nasdaq advanced 0.84%.

Asia Markets

The MSCI Asia-Pacific index rose 0.4% on Thursday.

The Nikkei added 0.69%; China's Shanghai Composite rose 0.27%; Australia's S&P/ASX 200 Index climbed 0.83% and India's Sensex Index rose 0.23%.

Asia benchmarks

In Europe, the Dow Jones Stoxx 600 added 0.74% Thursday.

The ISEQ has risen 0.84% in Dublin.

CRH is down 0.29%; AIB is up 1.16% and BoI has added 3.25%.

Online travel booking engine Datalex today announced a loss of €2.2 million for the first half of the year.

Goodbody's Dan Cavanagh commented: "Datalex reported its H110 results, the key extracts from which were: (i) revenue of $13.1m (down 9% yoy and slightly ahead of our expectations of $12.9m). At the divisional level, the e-business was down 8% yoy to $11m (vs. $11m forecast) and the legacy TPF reported a revenue outturn of $2.1m (down 13% and ahead of our forecasts of $1.9m); (ii) gross profits were $1.5m (vs. $0.69m in H109 and ahead our $1.4m estimate), with a 40bps enhancement in margins from 4.8% in H109 to 11.6% in the current period (vs. forecasts of 11.2%); (iii) EBITDA was $1m (up from $0.4m in H109) inline with our forecasts of $1m; and (iv) a cash balance of $8.4m, marginally behind our expectations of $9.0m, with the main variance being a negative € FX translation hit. The moderation in the cash outflows to $2m (down from $3.7m in H109) should provide some comfort on concerns of continuing cash burn.

The revenue split revealed that 84% of group revenues came from its e-business division (vs. 83% in both FY09 and H209), with the balance being derived from the TPF division. Transaction revenue declined by $300k yoy to $6.7m where the volcanic ash disruptions impacted air travel, however there was an improvement in the run-rate from H209 (+$400K), with the pickup being driven by higher volumes of flight bookings during the first six months of the year. Shifting operating costs to a transaction based model reduces the capex commitment by the airline sector and is expected to play into Datalex’s hands over the long-term. Based on the run rates seen in H110 and subject to further discussions with management, at first glance any changes to our current forecasts (FY10f EBITDA $3m) are likely to be modest."

Irish Financials; Focus on funding & margins: Goodbody's Eamonn Hughes comments  - - "The S&P downgrade of Ireland Tuesday evening led to a tough day for a range of Irish asset classes yesterday, with yields on 2 year bonds up 42bps to 3.23% and 10 year bonds up 22bps to 5.58%. The interdependence of the economy and financial system saw bank credit and CDS spreads move out as well, with spreads on the AIB senior paper CDS spreads out 22bps to 479bps and BOI out 12bps to 360bps. Presumably, S&P moves to downgrade the individual banks any time now which will keep the focus clearly on funding.

The expiry of the original government guarantee at the end of next month, though the later ELG version remains in place, is keeping investors focused on funding in the short term. However, both of the large banks have substantial pots of eligible liquidity which hopefully should give the credit markets some comfort, with AIB indicating it had gross eligible collateral of €49bn at end June, whilst BOI had €42bn of eligible collateral. Higher sovereign costs drive higher funding costs for the banks, so the risks on margins are building. Nevertheless, we have attempted to pitch our margin estimates relatively conservatively. For instance, BOI recently reported a 1.41% H1 margin with guidance of 1.35% for the year, implying a figure around the 130bps level for H2.

However, one needs to strip out the cost of the ELG scheme which was 11bps in H1, implying the underlying guidance for H1 is closer to 120bps. We are sitting on 110bps, so are sitting below guidance, but obviously a prolonged period of bond and credit market turmoil would be unwelcome for our estimates."