By any standards it was an extraordinary week on the Irish bond and equity markets, with unprecedented levels of trading in some of the financial shares and benchmark Government bonds reaching new highs.
The fact that the stock market was brought back from its record high by profit-taking on Thursday and yesterday came as no great surprise. With the Irish market still not looking overvalued and with Woodchester and New Ireland money boosting liquidity, technical factors are also underpinning the market.
Mr Alan Greenspan's weekend comments on potential deflation were interpreted as a signal that US interest rates are not going to rise in the short-term, and this - together with a mass exodus of investment funds from the Far East to the safe havens in the West - sent treasury bond yields spiralling downwards.
Once treasury bonds took over, bond prices in Europe also went to orbit, with the result that financial stocks, which tend to trade in line with bond yields, were in huge demand from both domestic and overseas investors.
Some of the gloss came off the US markets later in the week, with Asian worries once again weighing on sentiment but the moderate response to what seemed to be negative non-farm payroll figures underlines the current strength of western stock markets.
The volume of trading in the financial shares was extraordinary - and particularly in Irish Life where a staggering £273 million worth of shares has traded since the beginning of the year. Irish Life has been boosted particularly by its heavy exposure to buoyant investment markets.
CRH also hit a new high before being hit by profit-taking, boosted in part by being included in investment bank Robert Fleming's list of 50 best stocks for 1998.
Fyffes - a poor performer for a number of years - has had a good start for 1998, partly due to speculation that next Monday's fullyear results may be accompanied by a share buy-back. Most analysts believe that their existing forecasts for Fyffes will be exceeded on Monday and 1998 upgrades are likely for the fruit company. Chiquita's problems are seen as unique to the American group and Fyffes may finally break out of the narrow trading range that has afflicted the share ever since Dole pulled out of its takeover a few years ago.
After making excellent progress in the first half of the week when the share hit 217p, Smurfit once again found it difficult to sustain a recovery and the shares were left offered at 200p as the market closed yesterday.
The half-year results this week from Abbey and Heiton show the strength of the construction and house-building sectors, and the Abbey results, in particular, have led to very substantial upgrades to 1998 profits and earnings forecasts. Goodbody has increased its 1998 profits forecast from £12.9 million to £15.9 million and earnings per share from 22p to 27.7p. Abbey shares did not trade in Dublin after the figures, but given the 25p rise in London, it will be no surprise if the they trade up to more than 300p from the last dealt 265p. Heiton results were also excellent, and upgrades are also likely for the shares.
