Expectations that London and other European markets would tumble after the steep decline in the Dow Jones Industrial Average on Tuesday were confounded yesterday.
The FTSE 100 index edged lower during the first few minutes of the trading session, only to stabilise and then bound higher, stimulated by a burst of strength in the market's super-stocks, most notably the telecoms, the oil majors and the pharmaceuticals.
While there were sound fundamental reasons for the good performances from those sectors, there were some well-founded suspicions that the early bounce back by the FTSE 100, plus many of the leading 250 and SmallCap stocks, owed much to programme trade activity, obviously weighted to the buy side.
At the end of a reasonably active session, the FTSE 100 showed a 56.1 gain at 6,269.3. At its best, the index moved back through the 6,300 level to hit 6,312.5, posting a three-figure gain in the process. Its retreat from the day's highs came as Wall Street made a cautious start to the US trading session, amid continuing nervousness about third-quarter profit warnings.
Despite moving into positive territory for much of the session, the FTSE 250 eventually succumbed to small pockets of downside pressure and finished a net 2.6 off at 6,699.6. The FTSE SmallCap, meanwhile, never managed to claw its way into the black and settled 6.2 lower at 3,419.2. The Techmark 100 posted a modest 22.53 gain at 3,749.44.
Sentiment in London and elsewhere has been dealt a series of blows in recent sessions as markets have reeled from the impact of damaging profit warnings from a number of leading US companies, such as Eastman Kodak, Intel and Sprint.
But there is a feeling around trading desks that much of the bad news is now priced into markets and that the institutions are increasingly prepared to buy the market whenever the 100 index dips below the 6,200 level. The approaching end of the third quarter and the prospect of an end-year rally are also seen as bullish factors for the market.
The 100 index's performance was all the more impressive in view of the shock news from Granada Media that first-half broadcasting revenues will not match those of last year, which it said were inflated by the Rugby World Cup and Euro 2000 football championship. Granada Media shares plummeted 12 per cent and took other media shares down with them.
Turnover in equities reached 1.78 billion shares by the 6 p.m. cut-off point, once again boosted by the 191 million shares traded in Vodafone, which accounted for over 10 per cent of the total.
