No Santa rally as Iseq posts poor year

Irish shares mostly escaped a renewed global sell-off, but the Iseq was still hurtling to be one of the worst-performing stock markets in Europe this year.

US shares were again hit by fears of a slowdown in growth next year despite the US Federal Reserve doing its best to sound dovish on the future path of interest rate hikes.

European shares ended the latest session slightly lower but they had repeatedly followed the US stock markets lower during the week. For Irish shares, 2018 was shaping up to be the year to be forgotten.

The Iseq Overall Index has lost 22% of its value this year, placing it among one of Europe’s worst performers.

Frankfurt’s Dax index and the Cac-40 in Paris have dropped by 19% and 10%, respectively, while stocks in Madrid and Lisbon have fallen 14% and 10%.

Irish Stock Exchange heavyweights CRH, Ryanair, AIB, and Bank of Ireland have all had a turbulent year.

Ryanair shares have been hit by concerns over rising fuel costs and its trade union woes. Its shares have slid 32% this year. Shares in the two main banks have also fallen by over 30%, and those at international building products giant CRH have dropped 23%.

Despite the rapid growth in the economy, domestic-focused shares have hardly fared any better. Shares in insurer FBD and housebuilder Cairn Homes have fallen 20% and 46%, respectively, this year.

In London, Chris Beauchamp, chief market analyst at online broker IG, said that investors continued “to sell into the rallies”.

“Those assuming a Santa rally is now completely off the cards should be aware that the end of December remains a strong period, but we are now grasping at straws. Any rally in the next two weeks is at risk of heavy selling come January,” Mr Beauchamp said.

Meanwhile, Wall Street fell in volatile trading, after a few failed attempts at a rally, led by a drop in technology and other high-growth sectors, while defensive stocks rose amid concerns of slowing growth and a looming US Federal government shutdown.

The three major indexes swung between losses and gains of more than 1% as fragile investor nerves were tested by news of turmoil in Washington.

The S&P 500, already on pace for its worst December since the Great Depression, hit its lowest since August 2017. The Dow fell to its lowest since October 2017, while the Nasdaq sank to a 15-month low, toying with bear market territory for the second day in a row. Consumer staples, utilities and property sectors logged small gains.

Additional reporting Reuters