A rather edgy afternoon performance by the market followed a less-than-impressive showing by US markets at the opening yesterday. Up 37.8 at 5,465.0 at the best of the day, the FTSE 100 subsequently drifted back and threatened to slide into negative territory minutes before the close and eventually settled only 3.9 ahead at 5,431.1.
The FTSE 250 closed 9.1 up at 6,101.05, having been up 12.3 at one point, while the Techmark 100 was finally six firmer at 1,529.98 after moving in a 20-point range. The FTSE SmallCap eased 1.8 to 2,718.0. Turnover was dire even for a quiet Monday in mid-August, eventually reaching 1.34 billion shares by the 6 p.m. cut-off point. Activity in Vodafone accounted for about 18 per cent of that total.
It wasn't only Wall Street's three-figure rise on Friday, which reversed an earlier three-figure decline, that helped to underpin London yesterday.
The oil majors, BP and Shell, lent sterling support to the FTSE 100, responding to the latest uptick in crude oil prices.
And many of the front line old-economy stocks, such as BOC, Hanson, Rio Tinto, and the general and food retailers continued to make good progress.
Wolverhampton & Dudley Breweries shares slid after the company fought off the hostile bid from Pubmaster. And Marconi shares encountered renewed selling pressure as talk of another profits warning circulated in the market.
This morning brings official inflation numbers for July, expected to encourage the market, followed up tomorrow by the minutes of the August meeting of the Bank of England's monetary policy committee, and average earnings and unemployment data, and on Thursday by official numbers on retail sales.
Ian Scott, UK strategist at Lehman Brothers, detailed the market's attractions at these levels. "One has to be very bearish about the future course of UK corporate profitability in order to be bearish about the outlook for UK equities from here. The UK market is 'priced' for a 26 per cent erosion to current forward earnings estimates. Even when the 'old' economy is considered in isolation, such a fall would make the current cycle one of the largest in recent times."
