Stocks slump on recovery woes
Pessimistic Draghi sends investors fleeing
Stock retreated after European Central Bank president Mario Draghi said economic recovery in the euro area remains subject to downside risks. Photograph: Lisi Niesner/Reuters
European stocks retreated, posting the biggest two-day slump in more than four months, as European Central Bank president Mario Draghi said economic recovery in the euro area remains subject to downside risks.
Meanwhile US stocks cut their gains in a volatile session, with the Dow turning negative following an unexpected rise in weekly jobless claims.
The Bank of Japan also shocked markets with a radical overhaul of its monetary policy.
In tandem with its European peers, the Iseq Index finished the day down, sliding 46 points or 1.2 per cent to close at 3,912.
“The Irish market was down alongside everything else, with a sell-off across the board in the afternoon,” according to one stockbroker. He said the market was “weak” yesterday which was reflected in share prices.
CRH, Paddy Power , and Smurfit Kappa were the big movers of the day, though all traded down. Ryanair was also down, losing 1.6 per cent to finish the day at €6.04.
Food companies Kerry, Glanbia and C&C bucked the trend slightly, all rising, albeit less than 1 per cent. Kerry Group finished up 0.35 per cent at €45.16, Glanbia gained 0.21 per cent to close at €9.44 and C&C was up 0.43 per cent at €5.09.
UK stocks posted the biggest two- day drop since July as European Central Bank president Mario Draghi said he sees risks to the euro area’s economic recovery and US jobless-benefit claims unexpectedly increased.
Diageo dropped 1.9 per cent after a report that its acquisition of United Spirits may be delayed.
WH Smith retreated 3.6 per cent to 736.5 pence, the most since February 2nd, as Goldman Sachs downgraded the shares to sell from neutral, citing a high exposure to low-growth product categories including books, news and stationery.
European Natural Resources jumped 4.7 per cent, rebounding from a four-year low, as Halyk Bank Kazakhstan raised its recommendation on the mining company.
Vedanta Resources rallied 6.1 per cent to 1,070 pence, the biggest gain since September, as Bank of America upgraded the mining company to buy from neutral.
The FTSE 100 Index fell 76.16 points, or 1.2 per cent, to 6,344.12 at the close in London, after sliding 1.1 per cent yesterday.
European shares fell sharply as traders disappointed by a lack of fresh economic stimulus measures from the European Central Bank took profit on recent outperformers.
The ECB kept its interest rates on hold and failed to unveil new initiatives, such as special credit schemes for small enterprises, which some traders had been hoping for after recent weak economic data.
Banca Generali lost 5.1 per cent after Assicurazioni Generali sold part of its stake in the lender.
European Aeronautic, Defence and Space dropped 2.7 per cent as an investor offered to sell shares worth €384 million in the owner of Airbus.
The euro zone Euro Stoxx 50 index fell 0.7 per cent to 2,621.43 points. Germany’s DAX dropped 0.7 per cent and France’s CAC 40 lost 0.8 per cent.
US stocks were little changed, paring an earlier rally, as optimism over central banks' stimulus efforts faded.
McDonald ’s, AT&T and American Express rose at least 0.8 per cent to lead gains in the Dow Jones Industrial Average.
Retailer Best Buy jumped 13 per cent, the most since January, after Samsung Electronics said it will staff mini-stores at Best Buy’s US locations to showcase how its tablets, smartphones and televisions work together.
– Additional reporting: Bloomberg, Reuters