Another interest rate cut from the Bank of England and a global rally in technology stocks helped push the FTSE 100 index back above 5,000 yesterday for the first time since the terrorist attacks in the US on September 11th.
The Bank's monetary policy committee cut rates by a quarter of a percentage point for the second time since the attacks on New York and Washington. The interest rate move was widely expected; Footsie was up more than 100 points even before the decision was announced at noon. But there can be little doubt that the market would have given back much of its gains had the Bank left rates unchanged.
The market's buoyant mood during the morning session owed much to Wednesday's statement from Cisco, the US network equipment giant, that it was on target to meet earnings targets for the current quarter. The bullish mood was confirmed when Dell, the personal computer manufacturer, said it was also on target to meet earnings forecasts.
Technology stocks surged, with ARM leading the way in the FTSE 100, gaining 18 per cent. Seventeen FTSE 250 stocks, many of them new economy groups, notched up double-digit gains. The Techmark 100 jumped 61.96 or 5.3 per cent to 1,220.15.
But the rally was pretty broadly based, with stocks as diverse as Granada, Royal & Sun Alliance, Rolls-Royce and Marks and Spencer all featuring among the top 20 FTSE 100 performers.
The blue-chip benchmark closed up 134.4 at 5,016.2, having touched 5,034.3 at best. The FTSE 250 was also strong, gaining 135.6 at 5,193.1 while the SmallCap advanced 36.5 to 2,187.6.
There were some moments during the day when confidence looked rather more fragile than the closing figures would suggest. News of the downing of a Russian airliner over the Black Sea was a reminder of the potential for further terrorist attacks.
And US economic figures, which showed a sharp jump in weekly jobless claims to 528,000, were a reminder of the possibility of a US recession.
But the market has regained much of the ground lost since the attacks and analysts are starting to sound more confident about the outlook.
