AIB, Cairn Homes and Kingspan among worst performing Irish stocks
A trader works on the floor of the New York Stock Exchange in New York. Photo: Michael Nagle/Bloomberg
Shares in Dublin were among those seeing a second day of sharp falls after markets opened on Monday, with the Euronext Dublin market trading despite the Irish bank holiday.
Globally, Monday is seeing a second day of sharp falls across a swath of sectors including tech stocks and banks, amid twin fears that a recent boom in shares linked to the potential of artificial intelligence (AI) had over shot as well as general fears for the US economy where weaker than expected data last week on jobs and manufacturing have raised the prospect of potential recession in the world’s biggest economy.
The risk of recession reflects a view the US central bank, the Federal Reserve Bank, has waited too long to cut interest rates hiked in the past two years in an effort to calm inflation.
US stock index futures tumbled on Monday, with those tied to the tech heavy Nasdaq falling nearly 4pc. Stock markets from Asia to Europe took a beating and bond yields slid as investors rushed to safe-haven assets and investors bet the US Federal Reserve would need to cut interest rates quickly to spur growth. All megacap and growth stocks, the main drivers for the indexes hitting record highs earlier this year, fell sharply in premarket trading. Apple Inc slumped 7.3pc after Berkshire Hathaway slashed its stake in the iPhone maker by almost 50%, suggesting that the billionaire investor is growing wary about the broader US economy or stock market valuations that have gotten too high. Chip maker Nvidia fell 6.8pc after reports of a delay in the launch of its upcoming artificial-intelligence chips due to design flaws. It has been a darling of the stock market for most of this year, with its shares hitting a record in June.
In Ireland AIB and Bank of Ireland saw some of the biggest price falls early on Monday, as happened on Friday before the scale of drops eased back later in the morning. Housebuilder Cairn Homes, construction materials maker Kingspan and hotel group Dalata were also among names seeing the biggest falls but almost every company in the Iseq 20 index of leading Irish shares was down, with Kerry Group a rare exception as it had been on Friday.
Banks globally are under pressure after weak US jobs data sparked speculation the US Fed may reduce rates faster potentially even making a chunky half-of-on-percent cut to its benchmark interest rates at its September meeting, which would hit the profitability of US banks and drag down global banking valuations.
Big Wall Street brokerages also revised their Fed rate projections for 2024 to show greater policy easing by the central bank. “I am reluctant to believe the Fed would start the easing process with a 50 bps cut, but if the next seven weeks of data are consistent with this week’s, the Fed should be aggressive,” said Ronald Temple, chief market strategist at Lazard.
