Stockbroker Brewin Dolphin Securities is expecting the UK stockmarket to peak in the summer and then drop off as momentum falters. Mike Lenhoff, head of strategy at Brewin Dolphin, says there are three key drivers for the market: valuations, interest rates and earnings momentum. In the UK only interest rates are negative for the markets, as they are rising, whereas valuations are seen as fair and there is still earnings momentum, although this is slowing with the impact of the falling dollar to the pound, he says. But in the US, valuations are too high, although this is offset by low interest rates and earnings momentum, Lenhoff says. “Valuations will not enter the picture until the Federal Reserve changes its policy on interest rates, which will not happen before late summer at the earliest, and at that point the market will say valuations do not chime with interest rates.” He adds that Europe’s position is best placed on interest rates and valuations, although earnings momentum is slow. He says, therefore, that the FTSE 100 will follow Wall Street’s rally and reach 5000 in the summer before dropping back to 4750 by the year’s end, although this is still higher than at the start of 2004. Lenhoff last year correctly predicted the end-2003 level of the FTSE 100 at 4500.