A pledge by the US central bank, the Federal Reserve, for a massive spending spree of all types of US debt failed to put the brake on the global stock market sell-off, suggesting that investors are looking for huge government spending programmes and not just market-calming initiatives by central banks.
Shares in the big two Irish banks and a handful of property shares played catch-up with the global market slump to post falls, taking stock of the fading hopes of a deal that would avoid Britain crashing out of the EU at the end of October.
Sterling steadied after initially posting further large losses on UK political fears but shares in Europe and the US were hit as the fallout of the US-China trade war extended to Chinese champion Huawei and the world’s chip makers for mobile phones.
Irish shares tapped a surprise early new year buying wave that sent the Iseq Overall index climbing 3%, reflecting huge gains for Bank of Ireland and housebuilder Glenveagh at the end of a week marked by global stock market tremors.
The Trump administration needs to deliver on a number of its campaign promises if the rally in the US stockmarkets — which, in turn, can boost European markets, including the Iseq — is to last. This month marks the 10th anniversary of the beginning of the global financial crisis that set off the Great Recession.
Irish investors have been warned off from increasing their bets on overvalued Irish and global shares because the risks posed by President Donald Trump cutting US corporation taxes and by Brexit-driven choppy currency markets for Ireland’s economy are just too great.
Stock markets investors should avoid Europe-wide shares for the time being, Merion Capital has warned, though a very small handful of Irish companies, including Fyffes and Irish Residential Properties REIT, may offer some shelter from further storms ahead.
Irish taxpayers were among the biggest losers yesterday as the fallout from the UK’s decision to leave the EU upended global markets and wiped more than €260m off the value of the State’s shareholding in Irish banks.
The debate over whether the UK will exit the EU has switched dramatically to the potential gains for some Irish shareholders and most Irish exporters should the so-called ‘Bremain’ side win the looming UK vote on EU membership on June 23.
Banks will face extensive scrutiny of their mortgage loan books and have to justify more clearly the way they deal with distressed borrowers in arrears in the Programme of Government struck between Fine Gael and the Independent Alliance.