Carmakers put the brakes on markets
Published 23/09/2015 | 02:30
Volkswagen's unfolding emission-test scandal and worries about global growth weighed on investor sentiment in Europe, sending the region's stocks lower.
Volkswagen tumbled 20pc, dragging a measure of carmakers to its biggest two-day slump since 2008, after saying irregularities on diesel-output readings extend to 11 million vehicles around the world, and it has set aside €6.5bn in an initial tally of the costs.
Shares have lost 35pc since its admission of cheating on US air-pollution tests. Peugeot Citroen fell 8.8pc after France's finance minister called for a European investigation of the industry.
"The extremely negative thing about it is that you cannot quantify the overall costs and penalties for VW that will occur," said Matthias Jasper, head of equities at WGZ Bank in Dusseldorf.
"It may take years to come and people are getting really nervous about it. I'm completely unable to give a time horizon when this may end; it's a pretty scary picture. This is also the reason why even long-term oriented investors are dumping the shares."
The Stoxx Europe 600 Index dropped 3.1pc to 346.67 at the close of trading, its lowest since August 24.
By the close in Dublin, the ISEQ Overall Index was down 2.22pc, or 144.65 points, to end the trading day at 6,359.28. The leaders on the Dublin index included Applegreen, which rose 2.9pc to €4.68, while financial service group IFG increased 1.2pc to €1.88.
On the other side of the board, the laggards included speciality baker Aryzta, which slipped 3.8pc to €46.52, while insurance group FBD dropped 3.7pc to €6.45.
Equities remain volatile as investors also parse comments from Federal Reserve officials for signals on the trajectory of interest rates after the central bank last week held its fire amid concerns over global growth.