The week-long struggle between interest rate optimism and corporate earnings worries ended with a victory for the bulls, and a solid rise for the FTSE 100 index. A stream of profit warnings from the US had put pressure on the London market all week, culminating in bad news about the fourth quarter from Intel, the chipmaker, late on Thursday.
But it was clear early on that Wall Street was going to shrug off Intel's downbeat statement and that gave London the incentive to power ahead. Instead of being unnerved by the Intel news, investors on Wall Street decided to concentrate on the potential for lower interest rates in 2001 after the encouraging remarks made by Mr Alan Greenspan, the Federal Reserve chairman, on Tuesday.
The non-farm payroll numbers for November did little to damage the prospect of lower US rates. Payrolls rose by just 94,000, well below the consensus forecast, and unemployment edged up to 4 per cent. However, average earnings rose by 0.4 per cent on the month and 4 per cent on the year, slightly ahead of economists' expectations. Both the Nasdaq Composite and the Dow Jones Industrial Average chalked up triple-digit gains in early morning trading.
The FTSE 100 looked for a while as if it was going to follow suit, gaining 111 points to 6,343 by mid-morning. It slipped back in the afternoon to close 56.9 points higher at 6,288.3. That left the benchmark 1.9 per cent ahead on the week.
Technology, media and telecom stocks enjoyed a good day, making up six of Footsie's 10 best performers. Bookham, which tends to move more in a day than some shares manage in a year, gained 14.4 per cent. The Techmark 100 index gained 56.32 to 2,794.23 on the day, for a 7.7 per cent gain on the week. On the week the FTSE 250 closed up 0.8 per cent and the SmallCap 1.2 per cent up.
There was a bit of bid excitement to keep the market bubbling, with Scottish Media Group picking up a 14.9 per cent stake in Scottish Radio and property group Burford agreeing to a management buyout. But there was also another profit warning, this time from e-commerce software group Actinic. Like BATM the day before, Actinic shares fell more than 50 per cent.
Nervousness about TMT stocks remains. "The Nasdaq's 10.5 per cent jump on Tuesday is exactly the kind of behaviour we should expect in a true bear market. Volatility and nervousness in the tech stocks look set to continue into 2001," said Mr Tony Jackson of Charterhouse Securities.
