Flat week predicted for global markets

By Brian O’Mahony, Business Correspondent

Movement across the markets yesterday did little to change their viewpoint, although the FTSE rallied by 2.2% adding over £20 billion to the value of the market in the process.

In Dublin the ISEQ Index fell marginally by 13 points while in the US the Nasdaq was up fractionally in late trading.

The Dow Jones industrial average was tentative and was down marginally after a flat week last week when it made modest losses.

Economists and analysts said the outlook was for pretty slack trading especially in the US which has driven market sentiment globally ever since the markets went into sharp decline as concerns grew about the Internet stocks and the future direction of the US economy.

Both Davy Stockbrokers and Ulster Bank Markets yesterday suggested markets would mark time for the reasons already given.

They pointed out that little by way of fresh economic data of any critical nature due out from the US might drive the market one direction or another.

For that reason alone Florence O’Donoghoe of Davy Stockbrokers said the current week at best will be pretty flat, a sentiment echoed by chief economist with Ulster Bank Markets, Niall Dunne.

To a significant degree, performance indicators and consumer confidence surveys have been critical to the performance of the Dow and other key markets in the US for several months.

Also the fact that traders are on annual leave will take demand out of the markets also while the news that most of the US top 900 companies have been given a clean bill of health by the SEC, although there are some exceptions, has helped to calm market anxieties also.

Media group Vivendi Universal led European shares modestly higher on Monday afternoon, but Anglo-Swedish drug maker AstraZeneca tumbled on concerns over a cancer treatment.

By 13.36pm the pan-European FTSE Euro top 300 index was up 0.7% at 969 points representing a 13% rally in the past month after hitting a five-year low on July 24.

On Wall Street, the blue-chip Dow Jones industrial average was virtually at 8,773 points, while the tech-laden Nasdaq Composite rose modestly.

By late afternoon there was little change in the US and dealers warned that trading volumes were expected to remain light with many brokers and investors away on summer holidays.

With the earnings season also winding down market analysts remained on alert.

The problem is that if you get two or three strong days, then people are quick to take profits, said one analyst.

Vivendi, the world's second biggest media group, was the day's top blue-chip gainer, its shares up 12.8% on hopes of asset sales to cut its 19 billion debt pile.

The stock hit multi-year lows last week. In that sense a lot of analysts are still wary of what direction the markets are really headed over the next few months.