London struggled yesterday following a sparkling rally throughout the week. Investors had taken the Footsie well above 6,000 but they balked at the latest set of US economic data. The hurdle too far was the set of non-farm payroll figures which, at first, looked encouraging for economists worried about inflation pressures.
The September numbers had been forecast to rise to about 250,000 from 124,000 in August and actually came in 8,000 below the August figure.
But the result was seen to be influenced by Hurricane Floyd and, when they dug below the headline number, economists started to worry about the rise in hourly earnings, which reflected the biggest one-month gain for 16 years.
In fact, the market was already running out of puff. Dramatic gains in the telecoms and banking stocks were beginning to look over-stretched.
BP Amoco and Shell Transport, two of Britain's biggest companies, fell 3 per cent and 4.5 per cent as, at one stage, oil prices sank 7 per cent to below $21 a barrel.
On the other hand, the bears might have been gloating too soon. Once the figures were digested, the Dow Jones Industrial Average did not seem to mind too much. The US index was up 60 points just after London closed to record a gain of more than 300 points on the week.
Footsie rebounded to end the day flat with a net fall of only 1.0 to 6,199.4. The other indices were also treading water. The FTSE 250 fell only 8.5 to 5,762.6 and the SmallCap was flat with a fall of only 0.8 to 2,687.9.
