After pausing for breath early in Tuesday’s session following Monday’s convulsions, a wave of late selling dragged European stocks lower.
The pound bounced back from record lows against the US dollar, tempting investors back into UK asset markets following a rout that wiped more than €89 billion off the value of a UK government bond index in just two days.
Wall Street, meanwhile, slipped back after gaining early on Tuesday amid ongoing concerns about the strength of the global economy.
With few surprises in store for investors, budget day saw the ISEQ index close marginally higher, up 0.2 per cent after losing half a percentage point on Monday. The index finished the day at its session low, dragged down by a wave of selling that hit afternoon trading as concerns around a leaking Nord Stream gas pipeline took hold.
Irish property and construction stocks gave up some of the resilience they showed in previous sessions compared with their UK peers. Cairn Homes dropped 2.9 per cent lower on the session, while Kingspan’s share price fell 2.8 per cent. Glenveagh Homes shed 2.5 per cent.
At the opposite end of the table agri-services group Origin Enterprises gained close to 10.7 per cent after publishing preliminary results revealing a 41 per cent spike in revenues in its latest financial year due to soaring commodities prices. Of the larger caps Smurfit Kappa gained 2.9 per cent while Flutter added 2.5 per cent.
The FTSE 100 index fell 0.5 per cent on the day, finishing below 7,000 points for the first time since March after a late afternoon crash pushed it into the red.
Sterling was up 0.8 per cent to a little under $1.08 in London, above the all-time lows hit on Monday, but still down sharply from last week following chancellor Kwasi Kwarteng’s mini-budget last Friday.
Natural gas prices soared as evidence appeared to suggest a sabotage attack on two gas pipelines connecting Russia to Europe, boosting mining and exploration stocks. Glencore climbed 3.3 per cent while Chilean mineral explorer Antofagasta gained 2.3 per cent.
On the other end of the scale, traders in Dublin said that any stocks with exposure to the UK property market took a pasting on Tuesday as investors ramped up bets on impending large-scale rates hikes by the Bank of England.
Online property platform Rightmove tumbled 8.8 per cent, with housebuilder Persimmon’s share price declining by more than 4 per cent.
Up 0.8 per cent at midday, the Europe-wide Stoxx 600 was little changed at the close of a volatile session.
Benchmark European gas prices climbed as much as 12 per cent on Tuesday after Germany said it suspects the damage to the Nord Stream pipeline system used to transport Russian gas to Europe was the result of sabotage.
The German DAX weakened by more than 0.7 per cent, while the French CAC fell almost 0.3 per cent by closing bell.
Gains in mining companies, energy and healthcare stocks were offset by sharp falls in banks and utilities as concerns about the European Central Bank’s inflation strategy came to the fore. Goldman Sachs expects Frankfurt to hike rates by 75 basis points at its next two meetings, Bloomberg News reported.
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all slipped 0.3 per cent lower after Wall Street fell deeper into a bear market in the previous session. Benchmark 10-year Treasury yields ticked up from Monday’s 12-year high and the dollar added to 20-year highs on a basket of other currencies.
Investors digested fresh data that showed the US economy is not yet on the brink of a recession even as the US Federal Reserve steps up its inflation battle.
The S&P 500 fell 0.3 per cent after St Louis Fed president James Bullard indicated the Fed “must appropriately address” the “serious problem” of inflation. The yield on 10-year US Treasury bonds pushed past 3.9 per cent. Oil rallied, aided by a weakening dollar.
The Fed will need to raise interest rates by at least another percentage point this year, Chicago Fed president Charles Evans said on Tuesday, a more aggressive stance than he has previously embraced that underscores the central bank’s hardening resolve to quash too-high inflation.
Markets are still wary about the pace of US interest rate rises to calm inflation, a concern which has hurt risky assets and boosted the US currency.