European markets ended lower again yesterday with banks stock again in focus. US stock indexes also traded lower, as cautious investors doubled down on safer assets amid increasing concerns of a sustained slowdown in global economic growth.
The Irish market was down almost 2 per cent at lunchtime, but recovered some ground later to close down 0.5 per cent. In London, the FTSE 100 Index dropped 1 per cent while most other European markets lost 1.5 per cent, with losses concentrated in the banking sector. Bank of Ireland shares lost another 3.9 per cent to 24.5 cent.
Senior management in Deutsche Bank were forced to confirm that its finances were “ rock solid” after it was subject to market speculation which have sent its shares to new lows.
Gold prices steadied near seven-month highs, while yields on Japan’s 10-year government bond slipped into negative territory for the first time ever. Chinese markets are closed through the week for the Lunar New Year. Oil prices gave up early gains to trade down 1 per cent as the US market neared the open.
"There is a high probability of a further correction in equity prices, led by banking and energy stocks," said Lorne Baring, managing director of B Capital Wealth Management, adding that looming defaults in the energy sector would hurt banks.
Wall Street fell on Monday, after a late rally in energy stocks failed to stem the sell-off in the financial sector and US shares remained weak yesterday. “Investors should be concerned that the behaviour was similar to January’s when macro trends dominated and late day short squeezes prevented the type of liquidation selling necessary for a sustainable low,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
US stock indexes have failed to sustain several attempts at rallies this year, with falling oil prices being a major influence.
Reuters
