Markets continue downward march

GLOBAL stock markets continued their relentless drive lower yesterday after initial European rallies were wiped by the continuing weakness of the US indices as investors failed to see value in the market.

In Dublin, Bank of Ireland was the main loser, dropping 68 cent to 11.47 while AIB also shed 35c to 11.75.

Over the course of last month’s bloodbath on the ISEQ, the financials and the other heavy-hitters which make up the lion’s share of the index have sustained massive losses.

Once the kingpin of the ISEQ, Elan’s share price has been the worst hit as its own corporate governance issues compounded with the general malaise and the beleaguered pharmaceutical’s market capitalisation dropped by over 75% to just under 648 million in the last month.

Bank of Ireland has seen its market cap fall 16% to 10.59 billion while AIB has suffered a smaller decline of 11.4% to 10.54bn.

Ryanair’s value has slumped by nearly 19% in the last month to its current share price of 5.20.

The FTSE 100 index closed 1% lower yesterday, reaching a fresh six-year low on its third down day in a row. The index gained in the morning but gave up these increases in the afternoon due to pressure from US markets. It closed at 3,858, down 38 points. During trading it fell below another threshold of 3,800, sinking as far as 3,794 at one point only to recover later.

US equities had a mixed day as early losses were reversed into minor gains by lunchtime. At this stage, the Dow Jones was up 52 points to 7,837, the S&P 500 had fallen by 7.6 to 812 and the Nasdaq had lost 11.6 to 1,271.

Citigroup and JP Morgan Chase were the latest companies whose shares slumped as the whiff of corruption moved in. Concern grew that the two big banks may have provided other companies with structured deals similar to the ones they created for Enron. Shares in Citigroup plunged 13.3% to a 52-week low of $27.77 and JP Morgan gave up 11% to $21.90.

AT&T, the long-distance carrier, reported a $12.7bn second-quarter loss after taking a $13.1bn charge for the market devaluation of its cable business but its shares rose 0.1% to $9.53.

Lucent Technologies slumped 19% to $1.71 after the company posted its ninth consecutive quarterly loss, and said it would cut 7,000 more jobs, or 13% of its workforce, due to the continuing decline in the telecommunications equipment market.