The Dublin market's strong performance this week seems set to continue, with the wide availability of institutional funds and the shortage of stock likely to make the bull run sustainable, at least in the short-term.
The shortage of results from large plcs next week is likely to take some of the demand out of the market, however, and the crisis in Iraq and continuing Asian woes do pose a threat.
This week saw several factors come together, which elevated the market to record highs.
The remarkable results from AIB, the willingness of American institutional investors to come into the market and comments from the governor of Central Bank, Mr Maurice O'Connell all put dealers in a buying mood.
"The shortage of stock is probably the major factor at the moment, but when AIB, the biggest company on the Dublin market, posts those kind of results the whole market gets a lift," said one dealer.
Dealers scoured the dictionary to find superlatives to describe the figures, which prompted an immediate 17p increase in the share price to 884p.
Strong growth in core lending and deposit taking - and in fee generating banking operations - pushed up profits. By yesterday the share price was at a record high of 917p in a busy trade.
Group chief executive, Mr Tom Mulcahy's comment - that high profits are the best way to ward off a takeover - cheered the markets.
His view that AIB still needs to be bigger was interpreted favourably by the markets.
One problem faced by the bank - in common with most major financial institutions - is a shrinking net interest margin on its core lending. These margins have been falling for some time because of competition in lending markets and may come under further pressure in monetary union.
Irish Permanent also announced "solid" results, during the week, showing a 13.2 per cent rise in pre-tax profits. While dealers gave them the thumbs up, the figures did not considerably boost the share price. "Coming out on the same week as AIB, a lot of the shine was taken off them," said one dealer.
Despite this downbeat tone, virtually all the financial stocks had a good run during the week, with Anglo Irish Bank and Irish Life also riding the wave.
Outside of the financials, Kerry showed some vigour, jumping up to 900p towards the end of the week.
The main reason seems to be increasing satisfaction in the market with the Dalgety deal and the subsequent sale of Spillers to Tomkins. This week also saw Smurfit on a downward trend, as overseas investors decided to indulge in some heavy selling. The 200p mark looks unsustainable for Smurfit at the moment with sellers always emerging in size once the shares approach that level. The reports of an imminent takeover of Swedish packaging company, Munskjo, did not excite the markets.
The battle by Dunloe to take over Ewart did not prompt any great increase in the share price of either, although the latest speculation of new investors wanting to enter the fray may yet effect Dunloe's performance.
