Stock markets stay nervous despite Friday gains for European and Irish shares

Wall Street turns negative as investors remain spooked by pandemic impact

Masked people walk in front of a TV screen showing a live broadcast of US president Donald Trump’s speech.

Masked people walk in front of a TV screen showing a live broadcast of US president Donald Trump’s speech.

 

Nervousness remains on world stock markets amid a growing sense that the global economy has slipped into recession.

Although European shares climbed on Friday, with investors tempted back into the market by a string of central bank and government interventions, it brought only partial relief after a torrid week, the fifth consecutive week of decline.

Despite the wave of fiscal and monetary stimulus measures, volatility is expected to continue.

A Reuters poll of economists suggested the global economy was already in recession, while analysts at US stock market index operator S&P Global said volatility across regions and asset classes was at record highs.

In Dublin, the Iseq index finished up 3.9 per cent, while the benchmark pan-European Stoxx 600 rose 1.8 per cent, having earlier jumped nearly 5 per cent.

Britain’s FTSE 100 nudged up just 0.8 per cent, with the blue-chip exporters on the index declining in line with a fresh plunge in oil prices and a rebound for sterling. The FTSE 250 mid-cap stocks added 5.95 per cent, while French, German, Spanish and Italian stocks all finished higher on the day.

Even travel and leisure stocks across Europe attempted a comeback in what has been their worst month so far since October 1987.

Wall Street opened higher, but the Dow Jones Industrial Average and the S&P 500 soon turned negative, and were soon joined by Nasdaq, as investors weighed the impact of a tighter lockdown in the state of New York. This took the gloss off European stocks, which had already started to give up about half their initial gains.

Fears over the severity of the outbreak have wiped off nearly 30 per cent, or more than $8 trillion, from the value of the US benchmark S&P 500 since its record closing high on February 19th.

US investors are now counting on further stimulus over the next few days, as the Senate mulls a $1 trillion package that would include direct financial help for households and businesses.

Friday was also marked by a sharp fall in oil prices that put US crude oil on track for its biggest weekly percentage decline since 1991. The spread of coronavirus has slashed demand, while Moscow has rejected US intervention in a price war with Saudi Arabaia.

Meanwhile, sterling rebounded versus the US dollar and euro. The currency climbed off more than three-decade lows against the greenback after central banks moved to ease a scramble for dollars.

Euro zone measures

Dublin’s Iseq index had earlier traded as much as 8 per cent higher earlier in the day after the European Commission said it was looking at both loosening debt rules for member states and issuing common euro zone bonds. The moves are designed to shore up businesses and households crushed by the meltdown in economic activity.

The gains were pared back by lunchtime, however, as the period of trading volatility continued.

The financial stocks, which have been heavily hit in recent sessions, began a tentative recovery, with AIB closing up 3.6 per cent at just under 80 cent, although it had earlier soared 17 per cent. Bank of Ireland, meanwhile, saw its 12 per cent gain in the morning trimmed back to 2.2 per cent, with the stock finishing the week at just under €1.78.

Building materials company CRH, rose 7.8 per cent to €18.96, clawing back some of the losses of recent times, while there were welcome one-day gains too for the much-impacted Ryanair and Dalata Hotel Group.

European stocks are still looking at its worst month in three decades as the deepening spread of the outbreak in Europe forces countries to shut down.

Several blue-chip European companies have flagged a severe hit to business as the pandemic empties hotels and crushes consumer spending, with the airline industry facing a complete collapse in the face of halt in global travel.

– Additional reporting: Reuters