Markets react badly to poor US figures

GLOBAL STOCK markets fell sharply yesterday as markets responded to Friday’s disappointing job figures from the US and concern mounted about the euro zone debt crisis.

In Dublin, the Irish stock exchange, which has been closed since Thursday evening, took its lead from the macro context, finishing down 1.5 per cent at just under 3,142, in line with European markets.

According to one trader, brokers faced a heavy front of selling first thing in the morning as the Irish market digested Friday’s news from the US. This continued throughout the day, with a particularly sharp sell-off in European stocks towards the end of the day.

Trading was light following the bank holiday weekend, with little stock-specific news of note.

Few names made gains yesterday, with the late sell-off having an adverse effect on closing prices.

Having spent most of the session in positive territory, Ryanair receded towards the end of the day, finishing off 0.4 per cent at €4.42. Fellow airline Aer Lingus was one of the few stocks to make gains, finishing up 3 per cent at €0.98.

Independent News and Media also advanced, adding 5 per cent to €0.22. Total Produce added 1 per cent to €0.455 following positive results from Capespan, the South African fruit producer in which Total Produce has a 25 per cent shareholding.

UK

UK STOCKS fell to the lowest level this year on the back of Friday’s US jobs report. HSBC and Rio Tinto Group led declines on the benchmark FTSE 100 Index. The FTSE 100 dropped 2.2 per cent, to 5,595 at the close in London, the lowest since December 30th.

Randgold Resources rallied the most since November after Mali’s military junta agreed to hand over power in the country that accounts for about two-thirds of the miner’s gold output.

“Markets in Europe got their first chance to react to Friday’s non-farm payroll figures this morning, and the result was not pretty,” Chris Beauchamp, a market analyst at IG Index in London, said.

HSBC, Europe’s largest bank, slipped 3.2 per cent to 537 pence. Rio Tinto, the world’s third-biggest mining company, fell 4.5 per cent to 3,306p. Banks and basic-resources companies were among the largest fallers. FirstGroup slid 7.2 per cent to 198.5p as brokers from Barclays to Citigroup downgraded the British transport operator.

Cove Energy gained 4.2 per cent to 219p after Mozambique clarified a tax charge. Thomas Cook rallied 13 per cent to 23.25p, the biggest jump since February, after the travel company said it was in advanced talks with its banks on extending its financing arrangements

EUROPE

EUROPEAN stocks tumbled to a two-month low amid mounting concern about the region’s debt crisis and fears about the US recovery.

UniCredit, Intesa Sanpaolo and Banca Popolare Di Milano Scarl each dropped more than 6.5 per cent. Banco Santander declined as Spanish bond yields rose and the country’s government increased its efforts to bring the country’s deficit under control.

EFG Eurobank Ergasias, Greece’s second-biggest lender, led a rally in Greek banks, surging 29 per cent to 66.9 cents. National Bank of Greece, the Mediterranean nation’s largest lender, climbed 24 per cent to €2.05, while Piraeus Bank, Greece’s fourth-biggest lender, jumped 27 per cent to 33.1 cents.

Vedanta Resources led a retreat in mining companies as copper fell in London and the metal producer reported lower iron-ore sales. The Stoxx Europe 600 Index dropped 2.5 per cent to 252.57 at the close in London, its lowest since January 30th.

The volume of shares changing hands in the gauge’s companies was 7.6 per cent higher today than the average of the last 30 days.

France’s CAC 40 slid 3.1 per cent, while Germany’s DAX slipped 2.5 per cent. Spain’s Ibex 35 plunged 3 per cent to its lowest level since March 2009.

US

THE SELL-OFF in US stocks accelerated yesterday, as the Dow and SP 500 dropped for a fifth day, with the pullback coming on the cusp of earnings season.

The slide marked the SP 500’s worst day since December 8th. The declines were the largest losses this year in both points and percentage drops for each of the three major US stock indexes.

The declines were the largest losses this year in terms of both points and percentage drops for each of the three major US stock indexes. All SP 500 sectors ended solidly lower, with industrial and materials names suffering the biggest drops.

The Nasdaq closed below 3,000 for the first time since March 12th.

Concerns about European debt have resurfaced and could be a catalyst for further declines as the yields on riskier Italian and Spanish debt climbed. US-listed shares of Banco Santander fell 3 per cent to $6.51. Alcoa climbed 5.4 per cent to $9.82 after the aluminium maker reported its quarterly results. – (Bloomberg)