Volatility on the Far Eastern stock markets continued to provide an inauspicious background to Western markets, but even the by-now regular "dead cat bounce" in Hong Kong share prices failed to prevent the Irish market powering ahead to a new high on Thursday before profit-taking yesterday brought the market back from its high.
Despite the extraordinary scale of the new year bull market - the ISEQ was up over 6 per cent on the start of the year when it reached its 4,312.2 high - dealers believe it is well underpinned, with the strength of corporate earnings the current driving force.
Fyffes provided a perfect fillip on Monday with results that were way ahead of analysts' forecasts. It might be easy to blame the analysts for getting their forecasts so wrong - the average profits forecast was £47 million against an out-turn of £54 million - but given Mr Neil McCann's downbeat comments at last April's annual general meeting, virtually nobody in the market expected anything like the results that Fyffes eventually produced.
Give the market a pleasant surprise and you will be rewarded, and that was true for Fyffes with its share breaking out of a longterm narrow trading range between 100p and 120p to soar as high as 138p. There is no question that the share has been re-rated, and, with the group stating that the likely changes to the EU banana regime will have minimal impact, Fyffes is in a strong position to try and widen its shareholder base to reflect the international nature of its business.
The previous results from Heiton, Jurys and Abbey and this week's excellent figures from Irish Continental emphasise the strength of Irish corporate earnings - especially for those companies with a strong exposure to the domestic economy.
The reporting season goes into something of a lull over the next few weeks, but, with the calendar financial year companies beginning to report results from next month onwards, there will be plenty of corporate news to keep the market well bid.
One stock that has yet to report results, but which has already gone through a fundamental rerating is Golden Vale, where the share has gone from 81p at the end of 1997 to 105p at yesterday's close. For a few years, Golden Vale - for a variety of reasons, some self-inflicted - has been the poor relation of the agri-business sector. But the attitude towards the company has changed dramatically, with a new and more focused management and better product prices contributing to a re-rating of the stock.
And while second-line industrials made strong gains this week, the strength of the current bull market is firmly based on the major financial shares. Judging by a recent Merrill Lynch report on Allied Irish Banks, that pattern is likely to continue with Merrill forecasting a further 16 per cent in the AIB share price to 850p.
The economy, lower bad debts in the US as a result of the exit from the credit card market and the growing internationalisation of the AIB share register are some of the factors cited by Merrill for its bullishness towards AIB.
