Irish stocks fell sharply, mirroring the drop elsewhere in Europe and on Wall Street after inflation data showed US consumer prices for April rising at their fastest rate since just before the Gulf War. The core consumer prices index, which excludes volatile food and energy prices, was up 0.4 per cent in April, the largest increase since January 1995 and well above expectations. The numbers knocked the shine off investors' glowing image of the US economy's state of health and dented complacency about interest rates.
"People are now worrying about the possibility of a US rate hike at the next FOMC (Federal Open Market Committee) meeting on Tuesday," one dealer said.
The statistics took their toll on currency and bond markets as well as on stocks with both the dollar and Treasury bonds falling sharply. The Dow fell 1 per cent on opening, the FTSE closed 2.5 per cent lower while most other European markets took a battering.
In Dublin, the ISEQ index closed 1.7 per cent lower but dealers said there was no real selling pressure although most stocks were marked down sharply. "Things weren't looking too bad until the US CPI came out and then everything took a thumping," one dealer noted.
However, he said the Irish market tended to lag such events, not lead them, and there could be follow-through selling next week.
"The key is what happens in London and New York though I expect we're in for a bit of volatility," the dealer said.
Among the stocks to lose ground were AIB, down 30 cents to €14.00 (£11.03) and Bank of Ireland, which closed at €18.30 (£14.41), down 10 cents. CRH gave up 25 cents to €18.15 (£14.29) while Smurfit fell by eight cents to €2.45 (£1.93). But Irish Life & Permanent managed to buck the general trend, gaining five cents to €12.70 (£10).
