The New York stock market has staged a spectacular recovery after its record fall of last Monday, but the recovery came too late to prevent the Irish stock market falling by more than 7 per cent, with almost £2.5 billion wiped off the value of Irish shares. At the close in New York market last night, the Dow Jones index had risen 4.7 per cent in record trading volumes of over one billion shares and with a rise of 335 points had clawed back a substantial portion of the 554-point fall on Monday. The gain was the biggest points rise in Wall Street's history, just as Monday's collapse was the biggest one-day points fall.
But despite the improvement on Wall Street and the subsequent recovery in share prices in most international markets, fund managers and dealers have warned that stock markets are facing a period of instability, and prices are likely to be volatile for some time.
As stock markets opened for business yesterday, there were fears that the overnight 14 per cent fall in Hong Kong would set off a collapse in share prices that would feed through from European markets to New York. In early trading in Europe, that collapse seemed inevitable as the London market lost more than 9 per cent of its value, Paris 10 per cent and Frankfurt an amazing 13 per cent.
And as the New York market fell almost 200 points in its first hour's trading after the 554-point fall on Monday, those fears of a worldwide collapse seemed certain to be fulfilled. But by midmorning in New York, the market had staged a phenomenal recovery and in 10 minutes of frantic trading the Dow Jones index moved from a fall of 189 points to a gain of 70 points.
Buyers rushed into the market once the Dow Jones fell below 7,000, with technology stocks the target for much of the buying.
The recovery on Wall Street had a galvanising effect on European stock markets, with the London market surging in afternoon trade and converting the early 9.5 per cent fall in prices to a closing fall of less than 2 per cent.
The other major European markets also made up much of their earlier losses, and investors rushed back into the market looking to buy shares at their lower levels. The one exception was Dublin, where the market only regained a fraction of its early losses, although the Dublin market always tends to trail movements overseas. A further recovery in Irish share prices is likely this morning.
Hong Kong shares surged on opening early today, with the Hang Seng Index leaping 1,593.41 points - 17.59 per cent - in early trading. Prices also rallied in Tokyo, with the Nikkel rallied in Tokyo, with the Nikkei rising 564.93 points, or 3.5 per cent to end the morning session.