A stock market battle was fought once again yesterday between a positive international background and some discouraging news from the corporate sector. Victory went to the former.
The weekend climbdown by Iraq over weapons inspections, combined with optimism about the outcome of today's meeting of the US Federal Reserve open market committee, meant that equity markets round the globe had an upbeat air yesterday. Most analysts believe the Fed will cut rates by a quarter of a percentage point for the third time this autumn.
Asian markets set the tone for the day, with Hong Kong gaining 3 per cent and Japan unveiling more details of a 24 trillion yen (£126 billion) restructuring plan. London could hardly resist the bullish mood. The FTSE 100 index reached its high for the day, up 77.5 at 5,540.7, in the first seven minutes of trading.
Support also came from Wall Street, where electronic trading indicated the Dow Jones Industrial Average would open well and, sure enough, the Dow quickly leapt past 9,000 when New York opened. And the pound, which has recently shown worrying signs, from UK manufacturers' point of view, of regaining some of its former strength, fell 2 pfennigs against the deutschmark.
All this enabled the FTSE 100 index to close 47.3 points higher at 5,510.5. Like the blue-chip index, the benchmarks for medium and smaller companies were positive throughout the session, although the trading range was fairly limited. The FTSE 250 index ended 9.2 ahead at 4,835.6 and the SmallCap index 0.1 up at 2,067.2.
Trading volume was subdued yesterday, with only 672 million shares dealt by the 6 p.m. count, of which just over half were in non-Footsie stocks.
