The London stock market's recent rally continued apace yesterday, as the FTSE 100 index raced to the top of its recent 6,000-6,600 trading range in heavy volume.
For the second day running, the catalyst was economic data from the US which appeared to throw doubt on the need for further interest rate rises from the Federal Reserve.
The non-farm payroll numbers, released at 1.30 p.m. London time, revealed a much smaller rise in employment than expected and a jump of only 0.1 per cent in average earnings. The Dow Jones Industrial Average and the Nasdaq Composite continued their recent rally on the news, with both more than 150 points ahead by the London close.
That ensured a bumper day for shares in London and for technology shares in particular.
The FTSE 100 rose 155.9 points to 6,626.4 by the close, taking its gain over the last two weeks to nearly 600 points or 9.8 per cent.
The Techmark 100 index turned in an even better performance, leaping 272.9, or 8.1 per cent to 3,634.95. That represented the sixth consecutive gain for the index of leading technology-related stocks.
Eight Footsie constituents gained more than 10 per cent on the day with the usual suspects from the technology sector CMG, Baltimore, Psion, Sage and ARM leading the way, while 17 FTSE 250 constituents managed double-digit gains, including such dotcom standard-bearers as Durlacher and QXL.com.
The gain in the market was broadly based, with the FTSE 250 index closing 115.4 up at 6,423.1 and the SmallCap 36.6 higher at 3,238.4.
There were only a few pockets of weakness in the market. P&O took a battering after comments about a drop in cruise revenues this year thanks to over-capacity and a competitive US market. The pharmaceuticals stocks were also weaker on concerns about US controls on drug prices.
Although the US economic data were very warmly received, some analysts warned against too bullish an interpretation of the figures.
"The past week has seen the markets rally after a string of data releases showing signs that growth is slowing," said the economics team at ING Barings. "But sadly this looks a little too neat."
"Weakness in stocks and bonds is a crucial component of the tightening in financial conditions that will deliver the slowdown that the Fed is aiming for. If this is reversed, then the Fed's task will be harder. The irony is that, having jumped to the conclusion that a soft landing is in the bag, the markets have made it less likely to happen."
However, the markets seemed fairly confident that next week's Bank of England monetary policy committee meeting will not result in an increase in UK rates.
Volume was back at the bumper levels seen earlier in the year with 2.08 billion shares traded by the 6 p.m. count. Vodafone AirTouch was the busiest stock, trading 344 million shares.
