Jobless figures in US boost share values

Share prices surged to new highs on international markets yesterday following the release of figures which showed that employment in the US was growing at a much slower rate that analysts had expected. The rise of 215,000 in the in the September US non-farm payroll figures was far lower than the 337,000 increase expected in the markets. The combination of strong economic growth and very low inflation sent US treasury bonds soaring, gains that soon filtered through to European stock and bond markets.

The jobs report bolstered other signs that the pace of economic expansion was easing as the third quarter came to a close and calmed fears that the Federal Reserve would have to raise interest rates to tame an overheating economy. Most analysts now believe that a rise in US interest rates is unlikely over the medium-term.

The positive tone on international markets allowed Irish gilt and share prices to push ahead.

The ISEQ Overall Index broke through the 3900 barrier with a rise of 1.6 per cent, and the value of the Irish market rose by over £500 million. In London, the FTSE-100 index closed at a record high, up 34.7 points to 5330.8.

In New York, the Dow Jones initially rose by over 100 points after the release of the non-farm payroll figures, before easing back in later trading. At the close in Wall Street, the Dow was at 8038.58, a rise of 11.05 points on the day. The strength of the Irish gilt market has enhanced financial shares, and prices moved to maintain the differential against gilts.

The financial market is also being boosted by expectations that around £300 million will be released into the market from the sales of Woodchester and New Ireland, cash that investors would ideally being looking to invest in the financial sector. Not all of that cash will flow into financial shares but the weight of money in the market is such that there is no reason - bar an unforeseen slump in new York or London - for the current bull market to come to an end.