On Tuesday, global stock markets generally took a tumble, with increased oil prices following a presumed missile attack by Iran on Israel.
In Dublin, Irish banking institutions were hard hit, as Euronext Dublin fell 2.6%, underperforming compared to its peers. Significant losses were suffered by Bank of Ireland and AIB, which fell by 6.7% and 5.6% respectively. A trader suggested that the tumble could be attributed to “rate sensitivity”, as reduced inflation might compel the European Central Bank to lessen interest rates.
“There was no indication in the budget that was a cause, but there was a sector note from Morgan Stanley on European banks that highlighted the Irish banks as susceptible to rates”, she mentioned.
The trader also pointed out that Spanish banks were fairly weak. She noted that it was largely a day of selling for the market, attributed to geopolitical factors.
The spike in oil prices might have taken a toll on budget airline Ryanair, as it ended the day down 1.8%. Irish global nutrition group, Glanbia also fell, closing down 3.3%, whilst hotel juggernaut Dalata ended down 1.6%.
Over in London, the core FTSE 100 index inched up 0.5%, primarily driven by the energy sector, fueled by the apprehension of heightened conflict in the Middle East. However, the more home-rooted FTSE 250 fell 0.7%.
Aerospace and defence stocks experienced a 1% increase, whereas the personal goods index fell 3.6%, mainly due to a 4.1% loss in Burberry, spurred on by brokerages lowering their price forecasts.
Among single movers, Mulberry’s share dipped by 3.2% in response to the luxury brand turning down Frasers’ approach for acquisition. Despite retaining its full-year outlook, Greggs slipped 5.8% due to slower sales growth in the latest quarter.
On the mainland, similar trends prevailed as pan-European exchanges fell 0.5% amid investors’ cautious approach due to the geopolitical landscape. Similarly, the German DAX dropped 0.3% on weaker automaker shares, while the French CAC 40 fell 0.5% led by declines in luxury good stocks.
In Europe, the Frankfurt Dax index slipped 0.7%, whilst the Paris Cac 40 saw a drop of 0.8%. MSCI’s global stocks measure experienced a decline of 0.9%, in the meantime, the Stoxx 600 index saw a 0.4% reduction. Inflation data from the Euro zone, falling below the ECB’s target of 2%, prompted a bond rally and made a stronger argument for faster rate cuts than traders previously anticipated.
Across the pond, Wall Street’s leading indexes suffered due to reported mounting tensions in the Middle East, prompting investors to offload riskier assets. The S&P 500 benchmark, for example, reached its lowest point in more than a week. Following the European markets’ close, the S&P 500 had decreased by 0.86%. Meanwhile, the Dow Jones had also fallen by 0.27%.
Defence stocks like Northrop Grumman and Lockheed Martin saw respective increases of 4.3% and 3.8%, contributing to a 1.3% climb in the wider defence index. In contrast, the Dow Jones Transport Average, which tracks airline stocks, fell by 1.3%.
The CBOE’s market volatility index, often referred to as Wall Street’s ‘fear gauge’, saw a 3.46-point jump, achieving a three-week high of 20.19. Concurrently, the yield on standard Treasury bonds reached session lows.
Regarding shipping, market watchers noted a port strike on the East and Gulf coasts interrupting about half the country’s oceanic shipping. Retailers make up about 50% of all container shipping volumes. The shares of Costco and Walmart were respectively down by 1.3% and remained unchanged. The information was supplemented by various agencies’ reports.