US stock markets staged a pullback on Friday and overnight the US futures markets posted further losses. Last week's pullback was among the steepest on Wall Street since the financial crisis and comes after a record breaking year for the Dow Jones.

Aidan Donnelly, senior equity analyst with Davy, said the gains last year came on the back of strong returns in the US. "There were 15 consecutive months of gains on the S&P500 with January the strongest month of the 15. Given the length of that period, it wasn't a big surprise to see a pullback of some sort," he said.


Mr Donnelly said the tax changes introduced late last year by the Trump administration had been the primary driver of markets into the new year coupled with strong corporate earnings. "The numbers are slightly better than expected. The main focus now is to get to grips with what the tax changes will mean for 2018. We've seen substantial improvements in guidance for some companies as a result of the changes."

Aidan Donnelly attributed some of the pullback witnessed on Friday to a change in sentiment on the bond market. "Economic numbers released on Friday pointed to average wage inflation starting to pick up. Some were surprised at how strong it was. We've seen US inflation creep up slowly. That has seen bond yields drift higher. The bond market is now moving to a level where it's a credible alternative to equities. It's a credible alternative that hasn't been there for a long time," he said. 

Ultimately the pullback on Friday wasn't a big surprise and had to be put in context, the analyst said. "After such a long period of little pullback, a 2% change seems like a massive move. It used to be the case that a pullback like that wouldn't ruffle any feathers," he concluded.

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MORNING BRIEFS - Ryanair is cautious in its outlook for the rest of the year despite a 12% increase in profits for its third trading quarter. The airline has maintained its guidance for full year profits in the range of €1.4-1.45 billion, but says that is heavily dependent on a number of factors. Michael O'Leary is not optimistic about fare increases despite the collapse of a number of competitors. Ryanair said its passenger numbers were up 6% to 30.4 million in the quarter despite the cancellation of thousands of flights as a result of a pilot rostering issue. The airline also announced a €750m share buyback.

*** Payment services company Stripe is to expand its European Headquarters in Dublin adding dozens of engineering positions over the next few years. The San Francisco based company was founded by the Collison brothers from Limerick and is now worth more than $9 billion. Elsewhere, the management and technology consultancy, BearingPoint, is to increase its Dublin headcount by 40 from 300 currently.

*** Jerome Powell will be sworn in as the new governor of the US Federal Reserve later today. The former investment banker succeeds Janet Yellen at the head of the Fed and he the first non-economist to take up the position since the 1970s.