European stock markets staged a strong rally yesterday, boosted by the $75 billion (€82 billion) stimulus announced by President Bush and the unexpectedly positive trading comments from bell-wether technology stocks, Cisco and Dell.
Stocks, however, came off their best levels on news of the mysterious aircraft crash in the Black Sea, losing some of their gains on fears that the crash was due to terrorist action.
In line with other European markets, the Irish market recovered almost 3 per cent and the ISEQ has now risen almost 11 per cent since its post-bombings low on September 21st.
All of the major Irish financial and industrial stocks made solid gains, while Irish technology shares - which had been hammered even during the months prior to the September 11th attacks - made big gains, as the good news from Cisco and Dell continued to drive the Nasdaq ahead.
The positive trading comments from Cisco and Dell boosted the European technology sector, with Nokia shares up 10 per cent and Vodafone up 4.5 per cent while Philips was up 8 per cent. The broad-based FTSE Eurotop index of 300 leading European stocks gained more than 3 per cent, while individual stock markets were ahead between 2 and 4 per cent.
In London, the FTSE-100 index closed at about the 5,000 level for the first time since September 11th, boosted by the quarter-point cut in interest rates by the Bank of England's monetary policy committee. The FTSE has now risen almost 19 per cent from the 41/2-year low it reached the week after the New York and Washington attacks.
Meanwhile, one of the State's biggest fund managers has urged investors to put money back into equities at the current levels. Hibernian Investment Managers believes that the decline in share prices over the past 18 months has driven markets to levels that now reflect most of the bad news likely to emerge in coming months.
HIM managing director Mr Pramit Ghose said: "My own valuation model shows that, over the last 40 years, the only occasion when markets offered cheaper valuations than the end-September levels was at the bottom of the 1973-74 bear market, in October 1974.
History shows that markets do recover from periods of weak sentiment such as this. The recovery is generally strong during the initial six months following the trough in markets."
Choosing extent of downgrades required is analysts' only choice: page 5
