MORE than £280 million was wiped off the value of Irish stock yesterday in a wave of selling of the leading shares, as the market reacted negatively to the 3 per cent fall in the New York market the previous evening.
Prices fell sharply across the major world markets in response to the 161 point fall of the Dow on Monday. And, even though the New York market managed to stabilise after a roller coaster day which saw the Dow trade within a band of more than 200 points, share markets outside the US seem to be in for a period of instability.
Last night, the Dow closed up 9.25 points on 5,358.76 after a day of some of the most extraordinarily volatile trading for many years. Early strength on the New York market was soon replaced by a wave of programme selling which drove the market, and particularly high technology stocks down even further.
Texas Instruments became the latest high tech company to report dismal results and warn of pricing pressures, and further reports from the sector will be the key influence on the New York market in the short term.
The Dow plunged through a number of resistance points to fall another 163 points or 3 per cent to 5,182, with the high technology stocks on the Nasdaq market down almost 5 per cent at one stage, before a wave of buying in the early afternoon brought the market back to close above Monday's close. The 683 million shares dealt represented the heaviest ever trading on the New York Stock Exchange.
The Nasdaq industrials, which include most of the high technology stocks responsible for the recent market turmoil, finally closed just 2 per cent lower.
In Dublin, share prices fell by 2 per cent, with most of the losses concentrated on the higher capitalisation stocks were it is easier for investors to buy and sell in size. The ISEQ Overall Index fell below 2,401 at one stage before rebounding slightly to close down over 48 points on 2,404. At this level, the market is almost 8 per cent down on its all time high of a few weeks ago.
The big losers on the day were construction materials group CRH, which lost 17p and closed on 575p after its 12p fall on Monday. At its closing level, CRH is now almost 12 per cent off its all time high of a few weeks ago and is suffering from the weakness of the British market as well as the surprise "sell" recommendation issued last week by NatWest Markets.
Bank of Ireland was 13p lower on 402p, although AIB was not as badly affected by the International weakness and closed down 7p on 306p. Smurfit, supported by generally well received second quarter figures from JS Corp, was the best of the leaders and lost just 2p to 162p.
Europe's leading stock markets tumbled as investors bailed out of shares in a wave of panic selling sparked by Wall Street's spectacular fall overnight. London's FTSE 100 index closed with a heavy loss of 66 points or 1.8 per cent at 3,632.3 points.
At one stage, the index dropped up to 2.3 per cent to its lowest level of 3,614.6 points. However, relative strength in early trading in New York reassured London.
London trading was influenced by the strong fall on the bond market, which was badly affected by the announcement of a worsening of the British budget deficit.
German shares were among the hardest hit, with the DAX 30 index ending the day down 3.17 per cent at 2,469.79. Frankfurt dealers said investors were spooked not only by fall in the Dow Jones overnight but also by the slide in the US dollar in European trade.
