Fears that the profit warning by Hewlett Packard and higher-than-expected Irish and US inflation figures would send markets into a tailspin proved to be wide of the mark yesterday, although the Irish market did close sharply lower mainly due to profit-taking after the Bank of Ireland full-year results.
There may have been few surprises in the figures, but analysts said that the presentation was a bit more downbeat than they had expected. Bank of Ireland shares had also been bid up strongly ahead of the results and the absence of surprises triggered the profit-taking. The shares dealt as low as £14.45 before closing down 40p on the day on £14.50.
Other financials were also hit by the weakness, with AIB 24p lower on the sterling equivalent of 966p, Anglo-Irish off 3 1/2p on 200p, Irish Life down 10p to 625p and Irish Permanent was 5p lower on 930p.
Among the industrials, Smurfit continued to drift as the initial reaction to the JS Corp/Stone merger dissipated further. Smurfit shares were 7p lower on 261p, while, on Wall Street, the two merger candidates were marginally higher although the massive trading volumes in JS Corp and Stone shares continued to diminish. The latest inventory and shipments figures for the sector suggest that the prospects of a June linerboard price increase are receding into the horizon and September now seems to be the best opportunity for the industry to force through the long-awaited increase.
CRH was 7p higher in thin trading, while Greencore continued to weaken before bouncing back a little towards the end of the day to end down 10p on 390p. Greencore has been the focus of some private client selling that some in the market have linked to the dispute with farmers over malting barley prices. If that is the case, then Greencore should get a modest boost from the decision of the IFA to recommend the latest offer and end the effective boycott of Greencore's Interchem and Minch Norton businesses by malting barley farmers.
Independent hit a low of 400p a level where it seen as offering value but then rebounded to close up 1 1/2p at the sterling equivalent of 406.4p, while Fyffes closed down 1p on 199.7p in a sterling
deal despite some recent "sell" suggestions from British media commentators. Kerry was 9p higher on 925p sterling, while United Drug jumped 30p to 540p.
On Wall Street, Hewlett Packard might have suffered a bloodbath, put positive trading comments by IBM's Mr Lou Gerstner meant the rest of the market was relatively unaffected. Irish stocks on Nasdaq were unchanged, or marginally firmer, with Iona the pick of the bunch with a $1/2 rise to $31 1/4 as the Irish market closed.
Gilts eased slightly in afternoon trading after domestic inflation figures came in very much on the high side, with a 2.5 per cent rate for the year to the end of April. The main impact of the inflation figures will probably be to make the Central Bank more determined to hold off on interest rate cuts for as long as possible and possibly until September. Next week sees the next NTMA auction £100 million of the 10-year stock is expected.
