ISEQ falls 4%, in line with all major markets

THE ISEQ index of Irish shares fell over 4% yesterday, a pattern consistent across all major international stock exchanges in light of Greece’s decision to hold a referendum on its latest bailout offer.

Large scale selloffs were the order of the day among investors yesterday as the hopes of a widespread solution to the eurozone debt crisis — emerging from last week’s second EU summit in Brussels — gave way to concerns over the knock-on effects of a potential Greek default.

News that acceptance of Greece’s second $130 billion bailout/50% debt writedown offer from Europe will now depend on a public vote resulted in falls of about 5% for Europe’s major bourses.

France’s main market, the CAC-40 was down by 5.4%, dragged downwards by the country’s banks, who are some of the largest holders of Greek debt.

The DAX in Frankfurt fell by 5% and the IBEX in Madrid slipped by 4.2%.

The Borsa Italiana in Milan was down by nearly 7% while the FTSE 100 in London was a comparably minor faller, dipping 2.2%.

Meanwhile, Greece’s own benchmark index, the Athens Stock Exchange was down by just under 7%.

Given the kind of volatility seen across the markets in recent months, yesterday’s activity was significant for representing the biggest one-day combined loss for European stocks in just over a month.

“After the euphoria from last week’s eurozone summit, this is a dose of cold water and introduces further uncertainty into the market,” Barclays’ chief European strategist, Edmund Shing told the Bloomberg news service yesterday.

“It just shows you how important details have become.

“It’s not as bad as the market makes out and is more of a knee-jerk reaction. We don’t yet know when the referendum will take place.”

Dublin’s ISEQ was down by 116.5 points — nearly 4.3% — to just over the 2,608 point mark.

Aryzta — the Irish-Swiss bakery group — and building materials giant CRH were the biggest casualties, each suffering falls of over €1.

However, there were notable reversals for the likes of Kerry Group, Paddy Power, Smurfit Kappa and Tullow Oil.

Merrion Pharmaceuticals — up by 2c — was the only notable climber on the day.

After yesterday’s closing bells in Europe, the knock-on was evident on Wall Street, with the major US markets down by between 2.5% and 3.2%.