El Nino, the Pacific weather system threatening to depress global commodities, might have been moving through the London stock market yesterday. Summer torpor settled over dealers and investors as the week began with no significant economic data or blue-chip company results.
Moreover, Wall Street's performance on Friday gave little incentive for volatility. Following a week in which the Dow Jones Industrial Average rose almost 3 per cent, the rally was beginning to slow and the Dow closed the final session of the week 3.49 points adrift.
The FTSE 100 index traded flat for most of the morning with only one company - SmithKline Beecham - going ex-dividend and accounting for just 0.693 points off the main index.
But Footsie perked up in the afternoon to close 11.1 higher at 4,862.6. The FTSE 250 fell 13.5 to 4,461.2 and the SmallCap dipped 3.3 to 2,182.4. Overall turnover by 6 p.m. was 732.3 million shares.
In terms of corporate reporting, the focus was on the second-liners. Allied Carpets produced a healthy boost in profits and an optimistic statement about future sales, which have been improved by the building society windfalls. As one waggish dealer put it: "The carpetbaggers are giving a lift to the carpet makers."
Investors in the flooring company would have warmed to the latest lending figures which showed that gross mortgage loans were up 13 per cent in June.
Broadly, though, the market shrugged off the inflationary pressure of the June data, having already factored it into forecasts. One senior sales trader commented: "It has been as quiet as I can remember. The only driving factor behind this market is the weekend press coverage."
Perhaps there was an element of dealers holding their fire ahead of a week in which the UK's biggest companies are reporting.
Eight Footsie heavyweights - Abbey National, BAT Industries, Guardian Royal Exchange, BT, Glaxo Wellcome, Lasmo, Lloyds TSB and Unilever - are to announce figures over the next four days.
The statements are likely to provide more detail about the difficult times faced by overseas earners as a result of the big rises in sterling over the past few months.
However, the currency provided some relief yesterday as late profit-taking knocked 3.5 pfennigs and three cents off the pound's value against the D-Mark and US dollar.
That, and a firmer performance by the Dow, which was up 20 points during the first hour of US trading, gave a chance for Footsie to rally in the afternoon.
The late strength was helped by currency-led shifts, as well as buying in the US, in the principal UK pharmaceuticals stocks, which bounced back after recent top-slicing.
It is to the US that the market will be looking for the week's main direction when the non-farm employment figures for July are released on Friday. -
