Good Afternoon
Interesting day for the markets , on the back of another strong day yesterday , European and the UK markets have given up ground today though Ireland continues to make ground driven by CRH with a 40% weightin gin the index , it is hardly representative anymore.
Not the greatest amount of corporate newsflow in Ireland after the St. Patricks day celebrations. AIB has found resistance levels but Bank of Ireland continues to go better and was today up 12% at 36c. These big percentage moves are still tiny penny or two moves in reality...
Kingspan had been one of the stell ar performers over the last week but today it paused and gave back -8% of its gains. Grafton also gave up about -2.4% . SIG , the UK distributor of Kingspan Insulation products announced an 11 for 7 issue itself at a 28% discount. A defensive issue though it has been speculated about for some time. SIG closed down -4% today.
C&C steadly gt dragged up as the market digested the UK Nielsen news of yesterday which shows the rate of decline of the product slowed. TOtal Produce regained 8% today to trade again at 27c with 1.25m shares trading.
On the negative side in Ireland Smurfit was once again friendless as US corrugated box shipments in February dropped by 12.7% on an actual basis and 8.3% on a same day basis (adjusted for one less shipping days in the latest month) or an effective decline of 10.5%. Smurfit Kappa stock fell -2.86%
Ryanair yesterday confirmed that it has agreed with all of its pilot groups a 12 month pay freeze. The pilots have also agreed to work productivity improvements as an alternative to management’s original proposal of a pay cut (of up to 10%). The pay freeze is consistent with earlier management plans and reinforces its aim to reduce non-fuel unit costs by 5% in the year to March 2010. Ryanair has also announced that it is to take a fifth aircraft out of its Dublin base this summer. Ryanair had previously announced that it would reduce the number of its Dublin based aircraft from 22 to 18, and this will now reduce to 17. As a result, the yoy decrease in its average weekly number of flights in Dublin this summer will be 20%, up from a previous target of 16%. Aer Lingus is also reducing its capacity in Dublin by 4% this year, so the capacity action of the airlines in response to the fall-off in demand in Dublin will help mitigate the impact on yield of that demand reduction. Ryanair has seen consistent flows of stock and today the stock which was under pressure most of the day actually rebounbded to close up 1% , having been down -5% at one stage.
Aer Lingus which continues its roadshow today found some support and the price rallied by +4% to 59.4c.
INM also fell today by -5% and everyone awaits the next move from Denis O'Brien to get a feel for what happens in terms of how the debt package gets re-structured and at what cost if any to existing shareholders in terms of dilution.
Lots of stocks are now back at the levels they were at at the before the last pullback. The question is whither from here. The market has absorbed a lot of bad news and rallies. I am sceptical here of yet another false dawn , I would like to see confirmatory chart breakout signals before turning bullish just because the market has moved up. It is so easy to get it wrong here and to anticipate that something will go right just because you want it to. These markets are still very dangerous. I am looking to be more positive about the market though and I am hearing noises which would encourage especially in relation to the UK and some anecdotal stories about things bottoming in the USA also. Wishful thinking maybe , lets hope the market builds a base here and that it is not just another sucker rally.
Have a good evening
Liam
___________________________________________
Liam Boggan
Merrion Stockbrokers
www.merrion-capital.com
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