Irish and other European financial markets will hold their breath in advance of the reopening of Wall Street at midday today Irish time. Shares have already been marked down significantly in Dublin and other international markets that stayed open following last Tuesday's catastrophe in New York. But it will only be with the reopening of the world's largest financial market place that the extent of the damage to the global economy will become apparent.
Wall Street, which has been closed for four days - the longest period since the first World War - will fall initially by between 5 and 10 per cent to reflect the falls seen on other markets, said Mr Jim Power, head of investment strategy with Friends First in Dublin. European markets were expected to trade nervously ahead of the start of trading in the US at 2.30 p.m. Irish time, he said.
Trading will initially be light, he said, and very volatile. "It could move up and down by 10 per cent or more."
Analysts predict there may be some initial buying of shares - for patriotic and other reasons - by US investment houses, but "people will soon focus on the real economic story, which is unambiguously negative", said Mr Power .
Federal Reserve Bank Chairman Mr Alan Greenspan, who goes to Capitol Hill on Thursday to discuss the health of the US financial system, will be intently watched. The prospect of an emergency rate cut in US interest rates will be one of the factors underpinning Wall Street when it opens.
The Fed has been pumping massive amounts of temporary money into the US banking system - $81.25 billion on Friday alone - to make sure the complex web of financial transactions does not seize up and Wall Street can conduct business. Further intervention by the Fed is expected, as is co-ordinated action from the other world central banks including the European Central Bank which is also expected to cut rates.
US analysts were more upbeat about the prospects for US stocks. "It seems likely the market will fall on Monday, then be flat or slightly up, but not enough to make it a positive week," said Mr Matthew Norris, a portfolio manager with Advantus Capital Management in Minneapolis. "People are going to wonder how this attack is going to affect all (their) companies".
Most analysts concur that the world's largest economy is close to recession. "Whatever your view on the US economy was last week, it would have to be more negative this week," said Mr Power.
