False dawn warning over markets

THE bull-run on world stock markets this week may be more of a trot than a stampede, according to economists who believe the good figures driving the market are not all that they seem.

The ISEQ index breached the 4,000 mark for the first time since September 23 bringing a welcome relief to investors, who have watched the value of Irish shares fall week-in, week-out.

The value of Irish shares recorded a net increase of 2.89bn since trading started on Monday morning. Ulster Bank financial market's economist, Niall Dunne says technical analysis had warned us to expect a slump after initial advances in the US stock market.

All US stocks are doing right now is beating revised earnings forecasts. Six months ago analysts might have set an earnings target of $2 for a US stock. Three months ago amid worsening market conditions, that forecast may have been halved to $1," he said.

Mr Dunne points out the Philadelphia Federal Reserve's October survey of manufacturing activity in its district collapsed to 13.1, from +2.3 last month. Davy Stockbroker's Robbie Kelleher says he does not believe a sustained market rally will continue and believes the bear market is not over as economic data on both sides of the Atlantic is still very soft.

Swedish telecom Ericsson is to seek 45 redundancies from its operation in Clonskeagh, Dublin. It has cut 350 staff from Athlone and Dublin over the past two years. The company employs close to 1,500 people in Ireland.

In the US share prices were lower in morning trade as investors locked in gains after a rally in which equities ended the day higher in five out of the last six sessions.