World equity markets have plunged to levels not seen since the September terror attacks after weak US economic data undermined hopes of a recovery in the world’s largest economy.
In New York the Dow Jones Industrial Average, which hit seven-month lows yesterday fell 150 points at the open. What little buying sentiment remained was shaken further by a fatal blast outside the US consulate in Karachi, Pakistan.
Industrial production figures for May - a 0.2 per cent rise, the fifth consecutive monthly increase - lent some support, but analysts said the number would have had to be sharply higher to boost the market. The University of Michigan issued a surprisingly weak survey of consumer sentiment shortly after the market opened, which could damage market sentiment still further.
Merrill Lynch's simultaneous downgrade of several of US wireless companies - including Sprint PCS, AT&T Wireless and Triton PCS Holdings - weighed on the sector from the opening bell. Morgan Stanley and JP Morgan subsequently added their own downgrades of Sprint PCS. The group was off 31 per cent at $4.15 at the open, and AT&T Wireless lost 20 per cent to $5.11.
In London weak banking and telecom shares pulled the FTSE 100 share index down 3 per cent today, knocking £35 billion off the value of blue-chip stocks as outlook concerns undermined investor confidence.
In Dublin bank shares bore the brunt of the sell-off in international markets. The ISEQ is down 131 points this afternoon with AIB down euro 1.27 or 9 per cent at 13.84, Bank of Ireland is off 83 cents at 12.67 and Irish Life and Permanent down 4.8 per cent.
Meanwhile, the bomb outside the US consulate could add to the momentum to safe-haven assets, away from equities. The bomb, which exploded a day after Mr Donald Rumsfeld, US defence secretary, visited Pakistan, killed at least eight Pakistanis.