London's equity market took another step forward yesterday, encouraged by the prospect of yet another reduction in US interest rates following last night's meeting of the US Federal Reserve's open market committee.
At the finish of the trading session the FTSE 100 had recrossed the 5,400 level and was up 72.9 at 5,430.3, with the market accelerating sharply towards the close. It was a similar story in the midcaps, where the FTSE 250 ended a net 26.4 higher at 6,163.0 its best of the day and the FTSE SmallCap which gained 11.1 to a session high of 2,729.9.
The Techmark 100 index was in negative territory and below the 1,500 level throughout the morning, before moving ahead later in the day and closing 8.14 firmer at 1,504.49.
Gains in the market stretched across most sectors, although a mixed performance by many of the TMT (techs, media and telecommunications) stocks, many of which are strong candidates to drop out of the FTSE 100 index after the September quarterly review, had a restraining effect on the Techmark index.
Ironically, it was TMT stocks that occupied six out of the top seven positions in the FTSE 100 winners list.
On the downside, the three worst individual performers in the top 100, Colt Telecom, Marconi and Spirent, which are threatened with relegation from the premier index, came from the same grouping. Other sectors attracting keen interest included the housebuilders and construction stocks, which figured prominently in the FTSE 250 table, proving eight out of the top 20 performers. The sector has been boosted by a buoyant housing market, strong results and recent takeover activity.
But while dealers welcomed the market's return to the upward path, it was clear from the low turnover levels that the institutions had mostly continued to stay on the sidelines.
"We've seen some closing of short positions and programme trading activity but not very much more," said one market-maker.
Global markets are reckoned to have already factored in a 25-basis-points-cut in US interest rates, which would be the seventh reduction this year.
Economists were also waiting to see if the Fed will maintain its current bias towards further easing of monetary policy or shift to a neutral policy.
