London's equity market shrugged off the initial debilitating effects of resurgent interest rate worries and returned to the bull tack yesterday.
The FTSE 100 index posted its fourth straight gain, moving to within 40 points of its all-time closing high and 50 points off its intraday record, mostly on the back of strength in the Footsie future, but also as Wall Street extended its recent strong run.
The US market raced higher from the outset yesterday, with the Dow Jones Industrial Average building on initial gains of 50 points. Subsequently, after London closed, the Dow re-crossed the 8,000-mark to post a 130-point gain at one stage, with sentiment driven by a subdued Philadelphia Federal Reserve survey.
A single big buyer of the future, late yesterday, was said to have influenced other buyers, helping fuel yesterday's good performance. And the derivatives markets will be very much in the firing line today with expiries of the future and index options, or "double-witching", generally expected to create extremely busy trading in mid-morning.
Footsie finished a session of increasing activity up 33.1 points at 5,046.2, while the FTSE 250 penetrated the 4,700 mark to close 15.0 ahead at 4,701.8. The SmallCap rose 5.6 to 2,291.2.
The day's economic news caused the market no problems. M4 money supply rose 0.7 per cent in August, well within the range of market forecasts, while the Confederation of British Industry's survey for September highlighted the restraining effect on UK exports of the strength of sterling over recent months.
One unwelcome feature of the day was sterling's appreciation against the dollar and the deutschmark after news that the Bundesbank had left German interest rates on hold. The Bank of England's sterling exchange rate index finished at 100.6, up 1.1 per cent on the day.
Traders said there was talk in the stock market that some of the big broking houses were preparing to lift their end-year FTSE 100 forecasts beyond the 5,200 level, compared with current levels of around 5,000.
