Davy Stockbrokers is sticking to its forecasts that the ISEQ Index will reach 6,200 by yearend, but said it would not be surprised to see the index dip to between 5,500 and 5,600 over the summer months. The brokers remain generally cautious about the prospects for equity markets, with concerns focused on valuation issues and earnings prospects.

Davy does not believe that earnings multiples will expand over the next 12 months or so, with more downside than upside a likely outcome in the near term. Corporate earning estimates on both sides of the Atlantic are being scaled back. The broker expects most of the major markets to continue to slide over the summer and autumn months and will not be surprised to see the lows of early spring being breached again.

Davy suggests that the defensive structure of the Irish market will continue to provide reasonable protection. It says the "easy money" has already been made in playing valuation gaps between Irish and European stocks, but it suggests there are still sufficient anomalies for that situation to continue to provide some support for the Irish market.