Standard & Poor’s decision to downgrade its credit outlook for the US, coupled with speculation that Greece may have to restructure its debts, weighed on the Iseq today which sold off with global markets.
The Iseq closed about 48 points lower, or 1.6 per cent, at 2,902.09. "It was really all driven by macro events," one Dublin broker said, explaining that European markets were hit by a "broad-based sell off".
"We had some pretty nasty losses across the board," he said. Index heavyweight CRH underperformed its sector, sinking 4 per cent to €15.49 on a day that saw its peer group fall an average of 2 per cent. In the airline space, low-fares carrier Ryanair was also hit by the negative sentiment, and was down almost 2.5 per cent at €3.34.
The news that ratings agency Moody's had downgraded Irish banks to junk status "obviously wasn't a positive", the trader said, but it was "just negative news rather than anything new or insightful". It was simply a follow-on from the sovereign downgrade announced by the ratings agency last Friday, he said, and so didn't surprise the market. However the "Greece factor" weighed on the sovereign bonds of peripheral nations such as Ireland, and as a result the banks sold off too.
Irish Life & Permanent and Bank of Ireland finished fractionally down at 16.4 cent and 26.4 cent respectively, while AIB was 1.5 cent down at 22 cent.
Elsewhere, mining company Kenmare Resources issued an interim management statement that was weaker than expected, and the stock closed down slightly at about 53 cent after paring its losses into the close.
Drug manufacturer Elan was one of the strongest performers on the day, gaining about 20 cent to finish at €5.52.
Across Europe, the UK's FTSE 100 index and Germany's DAX index slid 2.1 per cent, while France's CAC 40 index sank 2.4 per cent.
Additional reporting: Bloomberg