Irish stocks shared in a general market rout on Monday, wiping as much as €6bn off the combined valuations of the biggest listed Irish companies as the prospect of war in Ukraine and rising interest rates sent investors diving for safety.
In Dublin the Iseq 20 index of leading shares fell more than 4pc – roughly €6bn in cash terms and worse than most European peers, with big internationally trading names like CRH (-4.68pc), Ryanair (-3.27pc) and Kingspan (-11.58pc) leading the index lower, but domestically focused banks and builders were also hit.
Globally, demand for the US dollar, oil and safe haven government bonds soared while investors ditched riskier assets from crypto to corporate shares.
The pan continental Euro STOXX 600 fell 2.1pc.
Among the casualties were tech stocks, which fell 4pc to their lowest since July. The sector had already been on the back foot after Wall Street was pummelled last week by prospects of rising interest rates.
Despite easing restrictions, travel and leisure shares were down 4.5pc, set for their worst day since late November on the prospect of a European war.
“Ukraine at the moment is really front of mind,” said Michael Hewson, chief market analyst at CMC Markets.
“The escalating drumbeat of conflict risk in Ukraine has seen European equity markets fall back sharply today, as the UK followed the US in announcing that it was removing nonessential embassy staff from Kiev as concerns increased that a conflict was getting closer,” he said.
“Over the last 12 years, buy-the-dip is the mentality for investors generally. This the first time in the last 12 years, I’ve felt, that’s not the default position to be in,” Mr Hewson said.
Compounding the share drops is the fact that for the first time since the global financial crisis investors don’t believe central banks will row in with support in the form of additional stimulus.
Instead, markets are preparing for the prospect of rising interest rates in the US.
The US central bank is expected to confirm on Wednesday it will soon start tapering what has been unprecedented levels of monetary stimulus, cutting the supply of funds that has supercharged growth stocks in recent years, notably including in the tech sector.
Anxious markets are now even pricing in a small chance the Fed may hike interest rates as early as this week, though March is still seen as most likely.
Higher interest rates mean the prospect of higher borrowing costs for companies and more attractive bond yields for lenders, driving money from stock markets into bond markets.
