Bargain hunters for stock get a timely dividend
THE bargain hunters who had the courage to commit funds amid all the gloom of Tuesday's global stock market slump have been handsomely rewarded.
World equity markets rebounded strongly yesterday, jumping onto the coat-tails of a revitalised Wall Street. In Dublin, the ISEQ index soared by 175.2 points or 5pc to 3717.75, recouping all but 100 points of Tuesday's record 278 points nosedive.
In money terms this means that the value of shares on the market recovered £1.6bn of the £2.5bn which had been wiped off the previous day. And it was the same story right round European bourses.
Britain's FTSE 100 index rose 2.5pc, the French CAC-40 index advanced 6.3pc,and Germany's DAX index jumped 6.3pc.
European markets took their lead from Asia, where Hong Kong's Hang Seng index closed with a 19 pc recovery, albeit in response to Wall Street's record 337 burst upwards on Tuesday.
Yesterday's rebound in world stock prices gathered steam after Federal Reserve chairman Alan Greenspan said the recent turmoil in financial markets would eventually be viewed as healthy.
Greenspan regarded as the world's most powerful central banker also told Congress the currency turmoil in Asia that wreaked havoc on world stock markets would onlyhave a modest impact on the US economy.
The comments sent the Dow Jones industrial average on Wall Street up 120 points, or about 1.6 pc, in early trading New York , building on Tuesday's record-breaking rally.
The Dow gave back some of the gains during the session but still managed to stay in positive territory for the second day running, closing 8.35 points higher at about 7506.
Greenspan said the US stock market was now ``less out of line'' than previously, and that the recent turmoil in world stock markets may be viewed as a ``salutary event'' in a few years.
The market retrenchment should be temporary and the contagion in Asia can be contained, he said.
But despite the strong gains in stock markets worldwide, analysts cautioned that sharp swings may continue, casting uncertainty over equities for some time.
``One has to regard this recovery as extremely fragile,'' a Dublin trader warned yesterday. ``It is quite probable we are going to see more volatility, but at least we seem to have broken the cycle of markets just going down and down each day.''
Meanwhile, some participants were bracing for more volatility in the world's biggest equity market.
``My gut feeling is that Wall Street will run out of steam today. Our problems are not over yet,'' a London dealer commented.
But not everyone is so pessimis tic. Commenting on yesterday's strong buying in Dublin, a dealer said: ``Things would appear to be settling down, and really it's a case of cash with nowhere to go except back into equities.''
All of Tuesday's fallers recouped lost ground yesterday, with Bank of Ireland probably the pick of the lot. Its stock rebounded 65p to 848p, a gain of 8.3pc which effectively wiped out Tuesday's deficit.
Irish Permanent also recouped its heavy loss, recovering 50p to 660p. AIB rallied 6.5pc or 35p to 570p but was still someway adrift.
Ryanair, the heaviest loser in Dublin, clawed back 35p of Tues day's fall in recovering 12pc to 325p, but still has some ground to make up. Indications, reported in these pages yesterday, that BA is considering entering the budget-slights mar ket possibly held the stock's recovery in check.
Smurfit made a partial recover, rising 17p or 9pc to 205p.