The effects of the summer season became evident in the Irish stock market during the week as the flow of corporate news slowed to a trickle, volumes tailed off and the yen became the only story in town.
Along with international markets, Irish shares rose and fell as sentiment toward Japan waxed and waned.
The euphoria which greeted last week's joint intervention to support the yen by the US Federal Reserve and the Bank of Japan fizzled out quickly following Japan's perceived failure to come up with a concrete economic rescue plan at a weekend meeting between G7 and Asian countries in Tokyo.
Despite urging Japan to fix and open up its ailing economy, the meeting failed to set out a definite plan of action, sending the yen and most international stock market indices lurching lower.
The Irish market, taking its cue from the international trend, got off to a weak start on Monday but began to perk up as the week wore on, encouraged by positive signs from Wall Street. A mid-week rally in US shares, as AT&T's takeover of cable giant TCI ignited a new wave of merger speculation briefly pushed worries about the Far East into the background and gave markets some respite.
Irish banking and financial stocks proved the main beneficiaries of the improved international mood as overseas investor interest, from the US in particular, drove them ahead. The financial index gained 2.4 per cent on Thursday alone but industrial and second-line stocks failed to keep pace and lagged far behind.
However, Wall Street's upbeat mood failed to last as nervousness about Asia continued to hang over the market and worries grew about Japan and its ailing banking system in particular.
Yesterday's news that Japan's second-largest trust bank, Sumitomo Trust & Banking Co Ltd and troubled Long-Term Credit Bank of Japan (LTCB) are considering a merger will be closely watched amid hopes that the banking marriage, if it materialises, will be a step towards cleaning up Japan's financial system.
But the process is likely to a long and slow one and many analysts and fund managers expect it to act as a brake on equity performance in the months ahead.
"The current correction could continue over coming months as investors re-assess the impact of lower growth in the Far East on corporate earnings forecasts," one fund manager noted.
Meanwhile, the direction of interest rates is likely to become a renewed focus of attention for European markets in the week ahead. In its June monthly report, the Bundesbank appeared to lay the ground for a tightening of monetary policy in Germany during the second half of the year.
Some analysts are now wondering if it might not be contemplating a modest rise ahead of its summer break and before the German election campaign gets under way. Speculation about another British interest rate rise was also fuelled by a newspaper report yesterday that the Bank of England's monetary policy committee voted with a large seven-two majority for June's rate rise.
