Japanese stocks fell to their lowest level in five months in Asian trade this morning. In the US yesterday, the S&P 500 fell nearly 3%, at one point its worst day in nearly three years. The Dow Jones fell 2.8% at last night's close. Those moves were mirrored by markets across the world. In London, the FTSE 100 fell by 2.8%, its worst one-day slide for 16 months, taking the index to its lowest since June last year and wiping £46 billion off its value. Dublin's ISEQ index was 2.6% lower, which wiped about €4 billion off the value of quoted Irish companies. In general European equities closed the day 3.2%lower - their biggest one-day fall in almost four years. Stock markets have been jittery the past few weeks because Europe, especially Germany, is not doing well. But now there is also real concern about the US and retail sales unexpectedly shrank there last month for the first time since January.
Paul Sommerville, of Sommerville Advisory Markets, says the last few weeks have been "stunning" on world stock markets. The first half of the year was very quiet, as central banks pumped liquidity into the market place. But the economic numbers that have been coming out in the last couple of weeks from Germany and the US are weaker than expected and traders are now beginning to fret that the global economic recovery that everyone has priced into the market will not happen, the analyst says.
Mr Sommerville says the "big picture data" is affecting markets, pointing out that the German DAX index is now down about 10% for the year - 15% off its high - and the US markets, which had been doing very well are now "up by the stairs and down by the elevator". The S&P 500 has given back all of its gains for the year in the fast five sessions alone and that means the markets are now pricing in much slower growth across the world, he says.
The analyst said that traders are very worried that the ECB has not done enough so far to get Europe out of the mire and they are also concerned that Germany is going to enter a recession while the US economy is not progressing as fast as had been expected. This is also reflected in some of the companies' earnings figures.
Mr Sommerville says the bonds markets are pricing in low inflation and deflation and stagnation - which is having a serious impact on the markets. The ECB is coming under huge pressure to introduce Quantitative Easing in an effort to end the downturn in Europe and it introduced "QE Light" in the last couple of weeks despite German opposition. He predicts that the ECB will try introducing QE again in 2015, adding that he while he does not think it will solve Europe's problems it should go some way to boost stock markets.
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MORNING BRIEFS - Limerick-based medical technology company Gen Cell Biosystems has been sold for about $150m to the New York Stock Exchange-listed Becton Dickinson. The three-year-old privately-owned Irish company had raised €6m to date from backers including Enterprise Ireland and investors based in Ireland, Switzerland, Monaco, Singapore and the United States to develop its DNA sequencing technology.
*** Ireland is ranked 20th amongst 55 countries in terms of its attractiveness as a work location according to new research. According to an index from jobs website Indeed, the biggest numbers searching for jobs in Ireland from abroad come from the UK, the US, Spain, France and Italy. The report also shows that almost one in three Irish users of Indeed.com is looking for a job in another country. Indeed has its European headquarters in Dublin, employing over 150 staff.
