It was "Green Friday" on the Irish stock market yesterday, with dealers breathing a sigh of relief at the sea of green tickers on their monitors, indicating that almost all Irish stocks were making gains. Laura Slatteryreports.
After a grim week that saw some €8.4 billion wiped from the value of Irish shares by Thursday evening, the Iseq index bounced back more than 4 per cent, reducing the week's losses to €4.8 billion.
The Iseq, which has been hit harder than other markets by the worldwide slump in investor sentiment, enjoyed a better than average rebound in Friday's trading session.
The FTSE 100 also made a recovery, but its climb was more modest at 1.7 per cent. Irish financial stocks achieved double the gains made by banks trading on the FTSE. Bank of Ireland led the way up, surging almost 10 per cent.
However, Irish shares are still down 5 per cent compared with last week and have fallen 16 per cent since the start of November. Dealers on the Dublin market are waiting anxiously to see if the gains were the start of a sustained positive mood, merely a temporary recovery or "dead cat bounce", as one dealer put it.
Dealers reported signs that the kind of investors who tend to buy and hold stocks for long periods were getting back into the market on the basis that current share prices appear cheap.
But global economic conditions remain far from ideal, with the dollar yesterday tumbling to a new low of $1.4966 against the euro.
It also sank against the Japanese yen and the Chinese yuan, as investors bet that the Federal Reserve will cut interest rates in order to kick-start the US economy's spluttering economic growth.
While the dollar had been weakening against the euro all week, the trend took a more serious turn yesterday as liquidity dried up due to the holidays in the US and Japan.
But after the initial slump, the dollar did manage to recoup some of its losses as comments from the European Central Bank (ECB) hit dealing screens.
Miguel Angel Fernandez Ordonez, governor of the Bank of Spain and an ECB council member, said world financial turmoil threatened a stronger than expected slowdown in the euro zone, while Jean Claude Trichet, ECB president, said "brutal" movements in the foreign exchange market were unwelcome.
The current volatile phase in international stock markets was sparked in August by fears that banks and investment houses were nursing hidden losses relating to a heavy rate of defaults on the US subprime mortgage market.
Concern that the US economy is about to slide into a recession has piled on the pressure, while the slowdown in the Irish housing sector has also left investors wary of the banking and housing-related stocks that make up a large component of the Iseq index.
(Additional reporting: Financial Times service)
