Irish equities fell slightly yesterday following profit-taking and on fears of US interest rate rises. Irish equities have done very well following Bank of Ireland's takeover of New Ireland Assurance, according to Dr Dan McLaughlin, chief economist at Riada Stockbrokers. He added that the entire sector has been re-rated after Bank of Ireland paid four times value for the life assurer.
Irish Life, which had been trading just under this level, gained as a result.
Fears over US interest rate rises were triggered by data showing that US retail sales rose 0.3 per cent in September, compared to an expected fall of almost 0.1 per cent.
In addition, German wholesale prices were stronger than expected, pointing to further German rate rises. They increased 0.1 per cent on the month and 3.5 per cent year on year - the forecast had been for a fall of 0.5 per cent.
Traders said the market was still thinking about Bank of Ireland's takeover of New Ireland. On Tuesday, the bank confirmed it had made an offer for the share capital of New Ireland for £23.82 per New Ireland share. The takeover makes Bank of Ireland number two in the life and pensions market.
Bank of Ireland's share price fell 10p yesterday to close at 880p. Insurer Irish Life fell 13p to close at 387p, after soaring 35p the day before.
Dealers said Irish Life rose on speculation that it would either be a takeover target or new managing director Mr David Went would prove to be a very good appointment.
They added that some profit-taking set in at the main industrials, CRH and Smurfit. CRH closed flat at 835p, having fallen as low as 827 1/2p earlier in the session. Smurfit fell to 203p sterling from 230p the day before.
Crean fell to a recent low of 130p from 140p, having traded as high as 200p in August. At the same time Fyffes bounced 4p to close at 104p.
Dr McLaughlin added that the European bond markets suffered a setback following speculation that the Russian government was in trouble. President Yeltsin later moved to defuse the situation and a no-confidence vote has been postponed until next Wednesday.
The German data also set the market back, while the fall-back in the British jobless total also revived fears that UK interest rates could be on the way up. UK unemployment fell to 5.2 per cent from 5.3 per cent in August.
The markets are now preparing for the release of the latest US consumer price index, which could point to a rate rise in November, according to Mr Colin Hunt, chief economist at Bank of Ireland. "This is a complete turnaround from the market's point of view, given the relaxed sentiment of the last number of weeks," he said.
