Stocks plunge amid eurozone concern

A GROWING concern that the eurozone debt crisis hasn’t been sufficiently dealt with plunged international stock markets into further freefall yesterday evening — with nearly £50 billion (€58bn) being wiped off the value of London-quoted shares and Dublin’s ISEQ hitting a two-year low, as Irish shares lost €1bn in value.

London’s FTSE market fell by 3.4% yesterday, to 5,393 points.

There was a similar percentage slip in Frankfurt, on the DAX; while the CAC-40 index in Paris was down by nearly 4% at 3,320 points. In Dublin, the ISEQ shed 94 points, or 3.55%, to 2,546 points — marking the Irish Stock Exchange’s lowest daily trading level for more than two years.

In the USA, Treasury bond yields were last night plunging to levels seen in the 1950s amid heightened concerns that the two-year recovery in the world’s largest economy is stalling.

Yields on benchmark 10-year US notes were about 4.3 percentage points below the average over the past 49 years and almost where they were when President Dwight D Eisenhower began his administration in 1953. The yield, which dropped to as low as 2.46% yesterday in New York, reached a record low of 2.04% in December 2008 during the global financial crisis.

The catalyst for yesterday’s falls was European Central Bank (ECB) action. The ECB announced that it was keeping its main interest rate unchanged at 1.5% but also started buying eurozone government bonds; although not those of Italy or Spain.

Borrowing costs for those two countries rose again yesterday. Investors have continued to worry and panic sell on fears that the US could slide back into recession and Italy and Spain may require bailout/rescue packages.

The European Commission president, Jose Manuel Barroso, also warned that the eurozone’s sovereign debt crisis is continuing to spread. Yesterday also saw further weak economic data emanating from the US; this time showing a rise in the number applying for unemployment benefits, which only added to the woe on the international markets.

In non-European markets, Tokyo’s Nikkei crept up by 0.2% to 9,659 points, but the Hang Seng in Hong Kong fell by 0.5% to 21,885 in afternoon trading,

On Wall Street it was the single worst day since the 2008 financial crisis, with the Dow plunging over 500 points, or 4.3% at the close. Yesterday’s sell-off marked the ninth biggest point loss for the Dow. The Nasdaq down by over 5% at the close.

Dublin provided an apt snapshot of the turmoil spreading across international exchanges. FBD Insurance, Tullow Oil and Petroneft were the only notable climbers.

The list of heavy fallers was far bigger and included some of the ISEQ’s traditionally strongest performers. Kerry Group shed 84c in what was a poor day for the country’s food companies, with Glanbia down by 17c, C&C down 13c, Aryzta shedding €1.30 and Greencore down 3c.

Paddy Power was the biggest casualty, with its share price falling by as much as €1.50 to €32 but there were also bad falls for the likes of DCC, Icon, CRH and Kingspan.

* AIB has announced — in the aftermath of the state’s ownership of the bank increasing to 99.8% — the de-listing of its shares from the New York Stock Exchange (NYSE).