Sign up to The Irish Times Archive (1859 - 2008)My Account »
European stocks lost 2.5 per cent early today, breaking six straight days of gains as oil and pharmaceutical shares fell and investor focus returned to the economy after Barack Obama's election as US president.
At 9.49am the pan-European FTSEurofirst 300 index was 2.5 percent lower 949.52. European stocks ended the previous session up 4.3 per cent at 974.15 points, hitting a one-month closing high.
In Dublin at 10.20am the Iseq index was 2.2 per cent lower at 3,006, a fall of 68 points. AIB, which cut its earnings forecasts today was 7.7 per cent lower at €3.91.
Analysts said that an Obama win had been largely priced in after six days of gains for European shares.
The index has lost 37 per cent so far this year. The new Obama administration, which takes office in January, will face the world's worst financial crisis since the Great Depression, and a potentially steep downturn in the global economy.
“He (Obama) has no easy job,” said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany. “Today we are looking at what may come from the economic side...A lot of problems are ahead with the housing market in the US and with the global economy cooling too,” he added.
“Volatility may cool a little bit but for the whole market I see...more potential on the downside.”
Pharmaceuticals were the heaviest drag on the index, shedding their recent gains. GlaxoSmithKline lost 4.9 per cent, Novartis dropped 4.3 per cent and Roche went down 3.7 per cent.
Among oil shares, BP, Royal Dutch Shell and Total all dropped about 3 per cent as crude fell nearly 4 per cent to below $68 a barrel. Shell traded ex-dividend yesterday, adding to the downward pressure on that stock.
Around Europe, Britain's FTSE 100 lost 2.6 per cent, Germany's DAX shed 2 per cent and France's CAC lost 2.7 per cent.
In Asia, Japan's Nikkei rose 4.5 per cent. Major US stock indexes rose between about 3 and 4 per cent with the biggest Election Day rally ever last night as a backdrop.
