Bond prices pushed ahead strongly as US treasury bonds moved towards 6 per cent yields and overseas buyers came into the market. Dealers estimated that about £500 million of stock traded yesterday with a discernible shift in emphasis towards fixed-interest stock.
This follows volume of £480 million on Wednesday and around £650 million the day before.
Yesterday also saw the Central Bank hold its its first official repo tender, setting a variable rate of 6 3/8 per cent. This move by the Central Bank is seen as shifting towards a Bundesbank-type approach to money market management in the run-up to EMU. Traders said it had little impact on the market but did provide some diversion.
The equity market failed to match the gains in major international markets, but still closed up comfortably on the day, with financial shares, in particular, doing well. AIB was 9p higher on 587p, Bank of Ireland added 6p to the sterling equivalent of 893p while Anglo Irish was 2p higher on 114p ahead of full-year results next Tuesday. Irish Permanent - which settled its action against its former chief executive, Dr Edmund Farrell, - was 4 1/2p higher on 664 1/2p while Irish Life gained 2p to 345p.
Among the industrials, Smurfit was unchanged on 190p while CRH gained 5p to 770p. Ryanair continued its steady climb and dealt up another 7p to 345p. Riada has put Ryanair on its "buy" list, with the broker believing that British Airways' move into the low-cost airline business will have no significant impact on the Irish airline. The most that BA might do in the short-term is try and cherry-pick three or four of the most attractive routes from one of the low-cost competitors.
Ivernia did not change from its overnight 100p, but BCP analysts believe that the share - on a hefty discount to its 135p net asset value - should hit 150p by mid-1998 and 200p by mid-1999. Ivernia is currently rated as an exploration stock and a move to a mining-type rating is warranted, says BCP.
Elsewhere, Greencore managed to regain some ground and closed up 6p on 308p. Whether Greencore will hold those gains remains to be seen as the pattern of trading in recent weeks has been sharp reverses by the share as soon as it makes any significant jump above 300p.
Avonmore/Waterford was 2p lower on 260p as an outcome to the ballot on the redundancy offer is awaited. IWP - despite reporting half-year figures in line with forecasts - lost 10p to 290p, while Independent lost 10p to 365p. Kerry added 10p to 770p while Tullow, with a gain of 6p, hit a new high of 160p as news from Bangladesh is awaited by investors.
The Dublin bond market improved, following the higher close in German and the US markets. Traders said market-makers have been reluctant to hold large quantities of stock in the current environment and thus the markets can be squeezed even on relatively modest volumes.
However, he said the market welcomed the return of foreign investors. "The equity markets have taken most investors' attention in recent weeks and the bond markets have been sidelined."
