Over €3 billion was knocked off the value of Irish shares yesterday as stock markets around the world tumbled on the back of nervousness about inflation and interest rates, writes Emmet Oliver.
In Dublin the Iseq was down 2.9 per cent. The value of Irish shares has fallen in eight of the last 10 days of trading and much of the gains from earlier this year have been wiped out.
The Iseq's value is down by more than €5 billion in little more than a week.
Few companies managed to buck the trend in Dublin, with virtually all the leading stocks down, particularly the banks.
The pharmaceutical company Elan was one of the few stocks to avoid a fall, but the food group Kerry was down 6.1 per cent.
The markets are worried that the Federal Reserve will be forced to put interest rates up again and inflation figures in the US last week worried many market observers.
There is also concern about the European Central Bank putting up rates again. ECB president Jean Claude Trichet has warned that governments must do more to tackle inflation and solely blaming energy prices is not enough.
So far people holding equity- based Special Savings Incentive Accounts (SSIAs) have escaped the worst effects of the stock market falls, but this may not continue. Some of the SSIA managed funds are invested across property, equities and bonds, so have managed to retain their investment value.
At the weekend AIB said most equity-based accounts had remained relatively intact because they were sufficiently diversified.
The London market suffered a major downward lurch as falling mining and oil stocks dragged the FTSE 100 to its lowest level since mid-December.
At the close the FTSE 100 was down 124.7 points, or 2.2 per cent, at 5,532.7 - its fourth consecutive session of losses.
In that period the index has shed 5.4 per cent.
European equity markets slumped as increasingly risk-averse investors cut their exposure to emerging markets and fled to more defensive sectors.
Analysts said a more defensive mindset was likely to unfold over coming weeks as slower earnings growth and higher interest rates brought changes.
Asian markets have also experienced severe falls, with Hong Kong down 3 per cent and Tokyo down 2 per cent. The Indian market was also badly hit.
There was some relief from the bad news last night when US blue-chip stocks turned positive as oil futures recovered from a sell-off in commodities to settle higher, pushing up heavily weighted energy shares like Exxon Mobil.
Oil recovered, after falling to a six-week low earlier. The Dow Jones industrial average was up 17.47 points, or 0.16 percent, at 11,161.53. (additional reporting Financial Times service)