A reshuffled FTSE-100 index yesterday broke through the top of the 6,000-6,600 range in which it has traded for much of the period since the start of 1999.
However, the index's new constituents were not much help. Freeserve, the Internet services provider, made an inauspicious start to its blue-chip career, off 10.8 per cent and there were hits for Thus, Baltimore and EMAP. It was a day that did not fit neatly into the old economy/new economy dichotomy that has characterised the market in recent months.
Two big media stocks, Reuters and Pearson (which owns the Financial Times) were the best performers in Footsie but there were also good performances from old economy stalwarts such as Billiton and Sainsbury.
The FTSE-100 index closed with a 66.5 point gain at 6,624.5, having been 95.4 points ahead at best. Although that still leaves the Footsie below its end-1999 level, many analysts think that the sharp run-up in share prices towards the end of last year was a bit of an aberration.
Takeover activity and hopes of corporate earnings growth have tended to stop Footsie from falling much below 6,000 but fears of rising interest rates have tended to cap the index.
The market was helped yesterday by follow-on strength from Wall Street. The Dow Jones Industrial average had gained more than 100 points by the London close.
All the main FTSE indices rallied although the performance of the large caps was the best. The FTSE 250 gained 32.6 to 6,598.4, the SmallCap 18.2 to 3,428.5 and the Techmark 100 hit heavily last week rose 33.68 to 4,877.59.
Turnover was fairly subdued by recent standards with just 1.65 billion shares traded by the 6 p.m. count.
Traders were not taking big positions ahead of the week's two big events the British Budget and the US Federal Reserve's latest decision on interest rates. The Budget is not expected to be a big market mover. Most are expecting a modest loosening of fiscal policy, with a combination of tax cuts and spending increases worth £3-4 billion.
But the Fed statement is a potential cause of trouble. According to the global economics team at ING Barings: "The overwhelming expectation is that the Fed will raise rates by a further 25 basis points, and issue a statement with the standard hawkish phrase that the balance of risks remain `towards conditions that may generate heightened inflationary pressures'. Growth still looks very strong, long-term rates have fallen and stocks, despite their volatility, remain robust: factors which point to another rate rise on May 16th and more beyond that."
