Almost £1 billion has been wiped off the value of the Irish stock market after the overnight slump on Wall Street which saw more than 3 per cent knocked off American share prices. The 2 per cent fall in Dublin was mirrored on most international stock markets and there were heavy falls also in London, Frankfurt, Paris and Milan.
But while the international markets recovered from their lowest levels, dealers said the tone in the market was nervous, with little reassurance being drawn from Wall Street's recovery.
Throughout yesterday trading in New York was volatile, with early 70-point losses by the Dow being quickly replaced by a 70-point move into positive territory before the index see-sawed throughout the trading session. At the close on Wall Street, the Dow was up just almost 57 points on the day on 8547, with most of those gains notched upo in the last half-hour of trading when the index finally moved into positive territory. The broader-based S&P 100 index was up over one per cent.
Some bullish comments from several influential Wall Street strategists encouraged bargain hunters to come out of hiding after the market's swoon on Tuesday and some market analysts welcomed the 3.4 per cent slide in the Dow industrials, saying it brought blue chips more in line with the broader market where many stocks were already down sharply from their 52-week highs. This camp felt the Dow has yet to reach a floor.
But one of Wall Street's best known bulls, Goldman Sachs strategist Abby Joseph Cohen, said she is still confident in the bull market and told clients the sell-off is overdone. Ms Cohen said she saw stocks as having reached the bottom of a trading range and reiterated her 1998 target of 9300 on the Dow. Ms Cohen has often said she expects the blue chip average to easily surpass that target this year.
The market may still need time to digest its 25 percent to 35 percent gains of the four months ahead of April, she said, and the market has overreacted to the potential threats posed by the Asian fiscal crisis, corporate earnings and inflation.
Traders said her comments, and bullish words from other top analysts at Donaldson Lufkin & Jenrette and Paine-Webber, helped soothe investors after Tuesday's stinging losses.
In London, about £30 billion was wiped off the value of leading shares at one point as the stock market wobbled after heavy falls on Wall Street and fears of another rise in interest rates.
The FTSE-100 index of top British companies plunged 164.7 points to 5571.4 in the early afternoon - its lowest level for six months - in response to Tuesday's slide on New York and worries about today's rates decision by the Bank of England.
London shares recovered from their lows to close 103.6 points down at 5632.5 - a fall of more than £18 billion - after the Dow staged its modest comeback from Tuesday's 299.43 points nosedive, its third highest daily fall.
Frankfurt share prices fell over two per cent, while in Paris the benchmark CAC-40 index closed one per cent lower.
