Iseq slides in late trading as rally runs out of steam
Coronavirus: Analysts caution that markets will remain volatile for the foreseeable future
Wall Street shares are also on track to stage a mini recovery. Photograph: Bryan R Smith/AFP/Getty
Irish shares slid in late trading on Tuesday as an equities rally across Europe – a day after the biggest sell-off since 2008 – petered out, with investors fretting about central banks’ limited firepower to help the world economy deal with the fallout from the coronavirus.
Nervous investors in Europe also baulked as Sweden’s public health agency warned that it sees a “very high” risk of local contagion of Covid-19 as the number of confirmed cases in that country soared past 300.
The Iseq index closed 0.7 per cent lower at 5,826.65, having surged by as much as 4.3 per cent earlier in the session. The pan-European Stoxx 600 index and London’s Ftse 100 also handed back earlier gains to close down 1.1 per cent and 0.1 per cent, respectively, and a rebound on Wall Street gave way to volatility towards the end of the European session.
“The market seems to be in sort of a holding pattern, having had the big sell-off,” said Keith Temperton, a trader at Tavira Securities. “We’re looking for government responses and central bank responses to try and ease the burden on financial markets.”
Analysts cautioned that markets will remain choppy for the foreseeable future.
Fears of a global recession pounded global equity markets on Monday, with the Dow Jones Industrials Average losing a record 2,000 points at one point. The plunge on Monday was also fuelled as oil prices slumped by more than 30 per cent in the sharpest slump since the 1991 Gulf War, as a stand-off between Saudia Arabia and Russia over production sparked a price war.
But sentiment brightened in early Asia trade on growing hopes of a second interest rate cut this month by the US Federal Reserve.
While the European Central Bank is also expected to take some action when its governing council meets later this week, investors are increasingly concerned by late European trading on Tuesday that monetary policy tools are limited and governments will need to act more decisively to stave off an international downturn.
US president Donald Trump said he would ask Congress for a payroll tax cut and other “very major” stimulus moves to ease the economic pain of coronavirus, but the details remained unclear by the time traders in Europe had left their desks.
The goal, business groups and economists say, is to get more cash into the pockets of workers and companies quickly.
The global death toll from Covid-19 has topped 4,000 and the number of confirmed cases is more than 116,000.
“Traders are a bit nervy. The only positive news we’ve been getting out is probably rate cuts or tax cuts,” said Michael Baker, an analyst at ETX Capital in London. “We need news in terms of the actual control of the virus, which we don’t seem to be having right now.”
– Additional reporting: Reuters