More market turbulence ahead

Investors should be prepared for a few more months of volatility with most analysts predicting the stock markets will settle back to more normal trading and improve by year end. Hibernian Investment Managers says some technology sectors have hit more realistic levels and should start to stabilise in the near future helping the markets to make further progress.

The technology, media and telecoms (TMT) sectors have borne the brunt of the slide in the Nasdaq index in recent months. European markets managed to show some resilience, however, with the region as a whole being one of the few areas to generate positive returns. In the Irish market, financial stocks outperformed all other stocks, largely due to an 8 per cent rise in AIB's value.

Technology stocks reflected the sector's volatility with most showing losses. Hibernian notes that as TMT stocks began to stabilise across the world, Irish stocks began to underperform. It suggests that if the new economy sectors begin to outperform again, the Irish market may struggle to build on gains in the year to date, at the pace seen in recent months. This is because of the relatively high weighting of old economy stocks in the ISEQ.