INTEREST rates dominated the financial markets this week, with a surprise interest rate cut in Britain and renewed speculation about the trend in Irish borrowing costs featuring.
By yesterday the focus had moved across the Atlantic to renewed fears of higher US interest rates following the latest employment figures, which sent international markets into a sharp reverse heading" into the weekend.
The week had also started with US interest rate worries and Dublin reopened after the bank holiday weekend in the wake of sharp falls in Wall Street in the two previous trading sessions.
However, after a quiet start, Dublin got into its stride in midweek.
In a week when the industrial stocks made the main gains, one of the features was the continued rise of CRH. Having reached the 600p barrier for the first time at the end of the previous week, the share continued to make gains, ending yesterday at another high of 613p.
Good demand from British investors is one reason for the recent CRH gains. Overall the British building sector has been strong recently and CRH has benefited. A strong trading statement from builders Pilkington helped the mood of the market this week, and the reduction in British interest rates can only push construction shares further forwards.
In Ireland, analyst Mr John Clarke of Riada said that the latest figures from the National House Builders Guarantee Scheme also helped the share. The monthly figures showed bond registrations - seen as a proxy for new house starts - at 2679 in May, up from 1803 in the same month last year.
Waterford Wedgwood was another stock to benefit from positive British industry sentiment, rising during the week from 77.5p to 81p, before closing yesterday at 80p.
Elsewhere, Smurfit also gained earlier in the week from the rising trend, before dropping yesterday as the jitters hit the international markets. It ended at 164p, slightly down on the week. Kerry is another at an all time high, touching 650p as it heads towards meetings to seek approval for a reduction in the co op's shareholdings in the plc.
Clondalkin has also made strong gains as the market welcomed last week's announcement that it was paying £58 million for a Netherlands plastic packaging company, Van der Windt.
While the industrial stocks moved ahead, fortunes were more mixed among the financials, with the main two banks ending on a weak note as inflation jitters hit the markets.
Investors will now be closely monitoring interest rate sentiment in Ireland, as any concerns which hit the gilt market would have a knock on impact on financial stocks. Already yesterday there was a late fall off in Irish bond market prices in line with international markets.
The market was already soft before the news from the US on speculation that the National Treasury Management Agency may announce a gilt auction next week. An auction of 2015 stock has to be held before the end of June, and market speculation is that the NTMA may auction £50 million to £100 million of stock next week.
However, the NTMA is likely to be closely watching the trend in international and Irish markets before deciding whether to go ahead.
