The old maxim "buy on the rumour and sell on the fact" was the main reason for the dramatic fall in London share prices after the Bank of England's monetary policy committee cut British interest rates by a half a percentage point. The drop in London was the main reason for the 1.6 per cent fall in the Irish market.
Though lower British rates were seen as supporting shares in the longer term, in the short term investors took the view that the excitement was over for the time being. In effect, the market reverted to its habit of buying on the rumour, selling on the fact, dealers said.
In recent weeks, hopes for lower rates in Britain, the US and Europe have driven the FTSE 100 up almost 1,000 points, or around 20 per cent since its fall to a 17-month closing low a month ago.
There is a view in the Dublin market that a cut in interest rates by the Central Bank today will trigger a revival in the financial stocks, especially if a cut in interest rates is followed by good results from Bank of Ireland next week. Yesterday, the bank - which has led the surge in financial shares in the past few days - dropped 50p to £12.50, while AIB was 32 1/2p lower on 935p. Other financials were little changed, but Anglo Irish continued its good run and gained 2p to 174p. Merger candidates Irish Life and Irish Permanent were weaker on 568p and 935p, down 7p and 5p respectively, while First Active seems to have peaked for the moment and was down 5p on 350p.
Among the industrials, Smurfit's recent good run came to an end and the share lost 5p to 118p after truly horrendous third-quarter results from JS Corp's marriage partner, Stone Container. Stone's difficulties seem bottomless and it will be a major task to turn around the company when it is absorbed into JS Corp. JS Corp itself was marginally easier on Nasdaq.
Profit-taking continued to hit CRH after its recent surge and the share dropped 20p to 960p although it was well-bid at that level at the close. Arcon jumped 4p to 25p after the good drilling results from Galmoy and some analysts believe Galmoy's life can be extended further - possibly to as much as 20 years on the basis of the recent results.
The Galen results were in line with forecasts, but the shares still fell 29p to 392 1/2p sterling in London. Galen has repeated its desire to link up with an international partner after the collapse of the Ferring merger. But in the shorter term, some analysts believe the group will have to do something to change its corporate structure and produce a bigger free float ahead of any future merger. In Dublin, it fell 10p sterling to 405p.
Fyffes was 1p easier on 120p; the Central American hurricane does not seem to have affected investor sentiment towards the share. On the contrary, Fyffes may benefit at the expense of groups like Dole and Del Monte, which source a far higher proportion of their banana supplies from the affected area than does Fyffes.
Elsewhere, Ryanair was 20p firmer on 420p, Ryan gained 3p to 68p, Green Property was 3p easier on 372p, and DCC was up 5p on 420p.
