International markets were buffeted by severe turbulence this week, although there was some relief on the horizon yesterday.
Most observers agree that the dramatic losses in recent days are part of a correction, but it is difficult to pinpoint when it will end. The markets are now dealing with two unknown factors which could cause prices to slide downwards again.
The first is the continuing nervousness about events in Asia, where the governor of the Bank of Japan has been warning about a failure of the country's banking system.
This week saw a second factor coming into play the near collapse of the Russian stock market on Thursday and the possible devaluation of the rouble.
While there was a recovery yesterday, some traders are worried the situation in Russia will have a knock-on effect on Germany, which has many ties to Russia, mainly through banking. All of this seems to point to another bumpy ride next week on all markets. Despite the international woes, some players have been getting on and making deals. Markets in London and New York were taken by surprise during the week when BP and Amoco announced a giant merger, with Irishman Mr Peter Sutherland becoming co-chairman of the new company.
The £60 billion sterling deal helped push up oil prices on some markets.
In Dublin the market has been losing value all week. The overall ISEQ index has fallen from 5100 to 4845 with losses sustained across the board.
Even market leaders like AIB have been cut down to size. The stock started the week at 1150p, buoyed up by its bumper results announced the week before, but was cut back to 1100p when the market closed on Thursday evening.
Bank of Ireland also found itself caught in a tailspin, as it fell back from 1403p to 1304p by Thursday evening. With two of the largest stocks on the market taking hits of that size, there was little chance of any second liners advancing. The lack of buyers in the market also handicapped most stocks.
Ryanair was one of the few to buck the market trend starting the week at 545p and rising to 560p. This was done on the back of a 19.4 per cent rise in pre-tax profits from £7.7 million to £9.2 million for the first quarter.
The poor climate for second line stocks showed in the lack of movement in the share price of Silvermines. Although it reported a 54 per cent increase in pre-tax profits, the price did not budge all week.
The possibility that Aer Rianta might ultimately join the market also raised its head this week. The Minister for Public Enterprise, Ms O'Rourke, has asked that all options for the future development of the company be examined and flotation could be on the agenda.
However several issues would have to be resolved before that happens, including how the company will replace the sizeable profits it will lose when duty-free is abolished.
