US stocks fell for the thirdstraight session yesterday, with major market gauges ending at their lowest levels this year, as concern that the Federal Reserve will raise interest rates as early as June rattled investors.
In Dublin, more than €1.3 billion was wiped off the value of Irish stocks as the market was hit by the jitters afflicting investors worldwide.
In London, the FTSE suffered its biggest fall in eight weeks, while the European markets were also weak.
The Dow Jones industrial average dropped 127.32 points, or 1.26 per cent, to end at 9,990.02, closing below the key 10,000 mark for the first time since December 10th last. The Standard & Poor's 500 Index dropped 11.58 points, or 1.05 per cent, to end at 1,087.12, its lowest level in nearly five months.
The technology-laced Nasdaq Composite Index dropped 21.89 points, or 1.14 percent, to 1,896.07, posting its lowest close since November 2003.
"More than anything else, markets are reacting to fears of interest-rate changes and of what the bond market will do," said one US trader.
"We had a savage mark down first thing from which we have not recovered," one Dublin dealer said. "There is just no respite. It's affecting all sectors and all stocks."
The performance of the Irish market is likely to be dictated by the fate of share prices overseas in the days ahead, but worries about rising interest rates are likely to keep markets on tenterhooks.
Friends First chief economist Mr Jim Power notes that the US Federal Reserve has just two opportunities to tighten interest rates ahead of the US election, namely at its June or August meetings.
"Following last Friday's very strong employment report for April, an increase at the June meeting now looks highly probable and rates look set to rise by 0.5 percentage points in 2004," he says. Meanwhile, the dollar scored fresh gains against major currencies yesterday, pushing the yen to an eight-month low.
The euro fared better than the yen, which fell more than 1 per cent to its lowest level since a G7 call last September for more exchange rate flexibility.
But the euro was still close to a recent five and a half month trough.
