Guarded calm lay behind yesterday's performance of British equities as a raft of disappointing corporate results jostled for influence with another record breaking performance on Wednesday for Wall Street.
The FTSE 100 index slipped in the first hour of dealing as the market took note of uninspiring first-quarter numbers from British Telecom.
Those concerns, mainly directed at the proposed merger with MCI of the US, were compounded by reduced interim profits from Glaxo Wellcome and lower firsthalf figures from TI Group.
Glaxo and TI were both affected by the translation of overseas earnings into a strengthening sterling. And, while the currency effect had been factored into forecasts, there was no positive counterbalance in the statements.
As the day wore on, however, confidence increased that the Dow Jones Industrial Average would maintain its current upward momentum.
The signals were encouraging. Before equity trading began in New York, the US long bond was continuing to rise, pushing the yield down to 6.25 per cent at one stage.
Data for gross domestic product growth in the second quarter showed an above-forecast 2.2 per cent annualised gain. But the price deflator posted its smallest rise since 1964. That combination provided further evidence that the "goldilocks" economy of robust growth with low inflation is well in place.
On the other hand, this was offset by statistics showing weekly jobless claims at their lowest level for 23 years. The data did not augur well for the more significant non-farm payroll numbers expected today. These are forecast to show an increase in employment of about 200,000 and any higher figure will fuel inflationary fears.
Also, there were inflationary elements in the latest Chicago purchasing managers index.
US investors appeared unable to make up their minds. As the Dow swung from an early rise to a subsequent fall, Footsie lost its earlier gains.
The blue-chip index ended the day 19.8 lower at 4,907.5. The FTSE Mid-250 and SmallCap indices, less affected by international factors, climbed 10.0 to 4,492.0 and 2.4 to 2,188.4 respectively. - (Financial Times Service)
