Wednesday 22 November 2017

Global slowdown spooks trading

Donal O'Donovan

Donal O'Donovan

STOCK markets around the world slumped and oil dropped to an 18-month low as weak economic data and the Spanish crisis continued to spook markets yesterday.

In Dublin the ISEQ index of Irish shares closed just under 0.7pc yesterday.

Aer Lingus remains the big interest on the Dublin market following a takeover approach from Ryanair on Wednesday.

Shares in the partially state-owned airline ended the day down 3.2pc, at €1.05, giving up some of the gains that had seen the stock soar 15pc in reaction to Wednesday's approach. Shares in Ryanair were barely changed at €4.02.

Aer Lingus might be the most watched stock but Kerry Group's were the most traded shares yesterday. Shares closed up 1.2pc at €33.73 in Dublin, undoing some of the 4.07pc fall seen in the previous session, in what had been a dire day for food stocks on Wednesday following a profit warning from Danone.

Shares in CRH ended the session down 1.5pc, Elan closed down 1.3pc at €11.12.

Markets across the world were down 1pc after new data showed manufacturing activity was down not just in Europe but in China and the US.

In London the FTSE was down almost 1pc, and Germany's DAX fell 0.77pc.

Overvalued

On US markets losses mounted after Goldman Sachs said shares were overvalued and recommended "shorting" the benchmark S&P 500 index of leading shares. Adding to the weakness were new figures showing business activity across the eurozone has decreased for a fifth straight month in June.

The repercussions of the European crisis are now being felt elsewhere. Chinese manufacturing contracted, while weaker demand led to a slowdown in US factory growth.

"The genesis is Europe and it's starting to flow through everything now. Business has slowed down," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

With global growth in doubt, energy and materials shares led declines and oil slumped. In the oil market, Brent crude fell $2.85 to $89.84 a barrel, the lowest level since December 2010. The dollar strengthened against global currencies and gold was down 2pc at $1,574.40 an ounce.

Back in the eurozone Spain's besieged government managed to sell bonds yesterday but at the cost of an all-time high price for medium-term debt.

Across Europe shares regarded as cyclical -- in sectors like oil, mining and other commodities -- lost ground. The STOXX Europe 600 basic resources index fell 3pc, carmakers were down 1.9pc and tech shares fell 1pc. The FTSEurofirst 300 index of top European shares closed down 0.5 pc.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business