Concern about the global economy overshadowed the World Economic Forum in Davos yesterday as global stock markets hit fresh lows amid renewed alarm about falling oil prices.
With world leaders including Taoiseach Enda Kenny, French prime minister Manuel Valls and Britain's David Cameron due to attend the annual summit today, focus yesterday was on the rout in equity markets as European stock markets hit a 13-month low and oil plunged past $27 a barrel.
Stock markets closed lower almost across the board, despite a late rally in the US, prompting some to ask if equities were entering bear market territory.
In London, the FTSE 100 finished more than 3 per cent lower, reaching its lowest point since mid-2013, while the Iseq in Dublin was 3.24 per cent weaker.
The only glimmer of hope on a grim trading day came late, as both the Standard and Poor’s Index and the Dow Jones Industrial Average in the US reduced the worst of their losses by regaining some ground in late trading.
The sudden rally offered another sign of the volatility that has been enveloping markets since the start of the year.
While senior bankers meeting in Davos played down the prospect of a global slowdown, concern over the Chinese economy and falling oil prices also continued to rattle investors.
Addressing delegates in the Swiss mountain resort, Iran's top diplomat Mohammad Agha Nahavandian signalled that the country was ready to resume its position in the world of oil production after the lifting of western sanctions last weekend.
Oil prices
The prospect of
Iran
unleashing millions of barrels of oil on to world markets has prompted fears that oil prices could slip further.
The price of crude oil has fallen by more than 70 per cent since its peak of about $115 a barrel in the summer of 2014.
Concerns about a Chinese slowdown have seen world equity markets fall sharply since the beginning of the year, intensifying this week.
On Tuesday, the IMF cut its growth forecast for the world economy to 3.4 per cent, down from the 3.6 per cent predicted in October.
As the World Economic Forum continues today, focus will also turn to Frankfurt where the ECB governing council is due to meet.
Despite the torrid start to the year, most analysts do not expect significant ECB policy action today given the central bank’s decision in December to cut the deposit rate by 10 basis points and to extend its quantitative easing programme by six months.
Mr Kenny arrived in Davos last night. He is due to meet executives from PayPal, Microsoft and Google today as well as Facebook's Sheryl Sandberg.
The Taoiseach will also host an IDA business dinner for more than 50 senior executives tonight.
