Market fails to rebound from British interest rate bombshell

The quarter-point rise in British interest rates may have been an early bombshell for international markets, but the Irish market suffered most from the weakness and failed to recover after the London market recovered about half of its losses to close down just 37 points lower on the day.

In contrast, the Irish market failed to rebound and fell almost 59 points through the psychological barrier of 5000 on the ISEQ and there are some fears that yesterday's poor performance could herald a bout of selling. Those who did not sell in May and go away, could be about to do so in June, said a number of dealers. Any selling, however, is likely to be of the private investor variety as few institutions are likely to sell stock in any size for fear of not being able to get back into the market when the rebound comes.

Yesterday's selling was of the steady drip-drip variety rather than a deluge but it was enough to leave most of the leaders well off their Wednesday closing levels and offered at those levels. The end of the reporting season - with the exception of a few corporates like Ryanair (reporting next week) - has left the market short of actual domestic news to move prices.

Among the leaders, Smurfit fell 5p further to 227p and is now well off the level before the announcement of the JS Corp/Stone merger. The two merger partners are both well off their highs after the announcement with JS Corp trading at $173/4 last night from its $21 high and Stone on $17 from its $203/4 high. That $25 price that Smurfit is offering Morgan Stanley for half its JS Corp stake looks better by the day.

Elsewhere among the leaders, it was red ink all the way with AIB down 10p on 910p and Bank of Ireland down 15p to £13.10. CRH continued to weaken and was 6p lower on 991p while Elan was 113p lower on £42.02 as the stock dealt $3/4 lower on Nasdaq to $59 3/4. Secondline financial shares were also weaker with Irish Permanent hitting a low of 840p before closing down 20p on the day on 845p although Irish Life was just 2p lower on 583p. Second-line industrials were mixed, with Marlborough going against the downward trend to close up 15p on 350p. There are mixed views in the market about Marlborough, with some believing the stock to be in the "gogo" category while others (a minority it must be said) believing that it is totally overvalued. At the moment, the Marlborough bulls are winning the argument.

Galen continued its recent heavy losses and was almost 95 1/4p lower on 416p sterling. Other Northern Ireland shares remained friendless, with Powerscreen also falling even further - by 10 1/2p to 55p sterling. How far can Powerscreen fall? That's anybody's guess. Mackie results were as bad as anybody feared and the shares were marooned on 13p sterling. Those same shares hit a high of 380p only a few years ago.

Intel's overnight weakness didn't affect the Irish Nasdaq techies, with Iona up $5/8 to $29 3/8 while CBT was $1/4 higher on $47 7/8.