A LATE sell off in gilts, along with other European bonds, plus a diffident opening by Wall Street, took some of the shine off a generally confident British equity market yesterday.
Nevertheless, the enthusiastic response of US bond markets over recent days to the Federal Reserve's decision to leave interest rates unchanged, provided powerful support for equities.
The FT-SE 100 index ended the day 13.2 ahead at 3,946.4. There was no real enthusiasm for the second line stocks, however, with the FT-SE Mid-250 index closing a mere 1.3 firmer at 4.406.2.
Over the week, which has witnessed two big monetary policy meetings in the US and Britain, both of which saw interest rates left unaltered, the FT-SE 100 has fallen by 17.7 points and the Mid 250 by 22. But markets have been wary of talk of over valuation in the US and elsewhere.
The next test for global markets comes next week with some especially important economic news, notably the US non farm payroll report for September.
"If the employment numbers are seen as good, we could see the yield on the long bond down to 6.75 per cent, and Wall Street in good heart. On the other hand, a poor number could well be seen as an indication that the Fed's decision may have had political overtones; if that is the case then we can say goodbye to the bull market," said one strategist.
