The last few years have not been kind to the global equity market bears. As the few remaining pessimists sat on the sidelines, they were forced to watch share prices chart new territory, led by a surging Dow, while more bullish investors cashed in on ever larger returns.

But the 9 per cent drop in the Dow over the last month has given the bears fresh hope that they may at last be vindicated and their numbers are swelling. The recent defection of well-known US bull, Mr Ralph Acampora, head of technical analysis at Prudential Securities, one of the largest retail brokerages in the US, has unnerved many investors and led some to ask whether the investment cycle has finally turned.

Known as "Mr 10,000", for his forecast last June that the Dow would hit that level within 12 months, he is now calling for the index to fall by 15 to 20 per cent from its high. And if many of the market optimists are not quite for turning, they are not the raging bulls they once were.

However, famous bulls like Ms Abby Cohen, co-chair of the investment committee of Goldman Sachs, one of the most powerful investment banks in New York are sticking to their belief that the US market will continue to rise. Goldman, the US merchant bank in which prominent Irish businessman Mr Peter Sutherland is involved as chairman and managing director of Goldman Sachs International, is putting its money where Ms Cohen's mouth is. The firm confirmed this week that it plans to go ahead with an autumn float, from which Mr Sutherland stands to gain as much as $100 million (£71.4 million).

Another of Mr Sutherland's business interests also hit the headlines this week when British Petroleum announced it was merging with Amoco in a $110 billion deal. Although oil industry analysts believe it will act as a catalyst for further consolidation in the exploration sector, it is perhaps indicative of the gloom that has descended on markets that news of the largest industrial merger ever failed to lift share prices.

But if views in the US are divided over how serious the current downturn is, few in the Irish market are prepared to call the end of the recent rally just yet. Stock market analysts and fund managers in Dublin say that while global equity markets may be in for a tougher time in the months ahead, and while some correction may be inevitable for highly rated markets such as the US, it is just too early to say that we are now in a bear phase.

"You'd have to be a brave man to call it over," says one Irish fund manager. "There have been those who have been saying that for the last three years but in the meantime investors have been sitting on returns of 60 to 70 per cent."

However, most concede that the backdrop for global equity markets is not looking good. Few expect the stellar gains of recent years to be repeated as the Asian crisis rumbles on, taking its toll on corporate earnings and putting further pressure on an already competitive global price environment.

"Asia is not a short-term problem. It's going to go on this year and next year and put more and more pressure on the pricing environment," says Mr Pat Woods, investment manager Ireland at Standard Life. "If costs keep climbing, that will put pressure on margins and corporate earnings will suffer."

Already forecasts for US corporate earnings have been heavily scaled back and many analysts are now expecting growth not much above zero this year.

Meanwhile, the Asian crisis has been exacerbated by the outbreak of trouble in Russia. Russian markets have been plummeting for months on fears that the government, teetering on the brink of bankruptcy, will default on debt repayments and so will be forced to devalue the rouble. The crisis took a turn for the worse this week. Traders said weak international markets and fears of a rouble devaluation, proposed by international financier Mr George Soros but rejected by the Russian central bank, had further damaged sentiment.

But although the international backdrop may not be auspicious, the key factor that usually sees a bull market turn into a bear one is rising interest rates, analysts say. From this viewpoint, the news for equity markets to date is good.

With the exception of Britain, interest rates across Europe, in the US and in Japan look set to remain low and, ironically, the Asian crisis is having a positive impact in this regard. Many economists believe the US Federal Reserve has been able to stay its hand in tightening monetary policy because of the Asian slump and its effect on the world economy.

"Asia is having a deflationary impact, so interest rates are not going up. It's the one silver lining from the Asian weakness," says one analyst.

However, market-watchers here will be keeping a very close eye on the behaviour of US mutual funds the equivalent of unit-linked funds here in coming months to see whether money continues to flow into equities or a switch into bond or money market products begins.

Whatever the fate of Wall Street, it is likely to determine the course of European markets, including Ireland, which have once again shown that when the Dow stumbles, they fall.

But if Irish stocks are likely to suffer as part of any global correction, many analysts believe they will be supported over the long term by the strong earnings growth currently being delivered by Irish corporates.

"Like any small market, what's happening internationally is going to affect the Irish market," says Mr Dara Fitzgerald, portfolio manager with Hibernian Investment Managers. "But when the dust settles, the Irish market will come out of it with its attractions intact."