The Irish share rally, which has seen the stock market rise by 6 per cent since Monday, petered out yesterday as weakness on international markets began to take its toll. After surging by 1.5 per cent in morning trade, the market ran out of steam, unable to buck the trend on overseas markets where Asian jitters again made themselves felt.
A sharp fall in the value of several Asian currencies against the dollar caused stock markets there to plummet, led by Hong Kong's Hang Seng index which fell by 5.9 per cent.
The uncertainty took its toll on Wall Street which slid for the second day in a row with the technology sector suffering most amid earnings warnings and broker downgrades. The Dow Jones Industrial Average closed down 3.98 on 7902.27, recouping some earlier losses which had dragged European markets down.
This time, the Irish market was unable to ignore the trend elsewhere and profit-takers emerged to pull most of the leading stocks off their morning highs. The ISEQ index of Irish shares still closed 44.4 points or 1.04 per cent higher at 4,303.85 but off the all-time high of 4,328.12 hit earlier in the day.
Irish Permanent, which missed Tuesday's rally, made up lost ground and gained 25p to 785p but Bank of Ireland closed unchanged at 1160p, down from an earlier high of 1175p, while AIB closed 5p higher at 745p, off a peak of 758p.
Industrials, which have lagged financial stocks in recent days, fared somewhat better and although CRH drifted down from a high of 893p, it managed to close with a gain of 25p at 880p while Smurfit added 10p to 217p. Traders say that the positive domestic background should underpin the market and make a sharp reverse unlikely.
The recent falls in the currency should also lend support to the market by making it cheap for overseas investors as well as boosting exports and helping the profit translations of Irish companies with overseas subsidiaries.
But despite solid domestic fundamentals, the Irish market is unlikely to make further headway in isolation and much will depend on the direction of international markets in the days ahead.
