The stock market should have been off to the races yesterday - both literally and metaphorically. The combination of sunshine and the first day of Royal Ascot provided solid grounds for some serious corporate entertainment.

And the lowest inflation figures for nearly six years should have given a cast-iron excuse to move into certain areas of the market. But trading volumes were not significantly upset by the sport.

The prospect of US inflation was watched far more keenly than the news of weakening UK prices. The Footsie rise of 21.1 to 6,451.2 was seen as technical rather than fundamental. When the latest UK retail price figures were released, they showed that the index dropped by 0.3 per cent between April and May, from 1.6 per cent annual growth to 1.3 per cent.

On the other hand, the latest Merrill Lynch survey of UK fund managers shows 93 per cent of those polled expect a stronger economy on a year's view; bulls of corporate profits outnumber bears by a record 73 per cent; and fund managers continue to upgrade earnings forecasts.