There was a disappointing end to a disappointing week for London's equity market yesterday, with the FTSE 100 posting its fourth decline in five trading sessions as caution set in about the outlook for interest rates.
With the end of the second quarter looming next week and the summer sporting season getting into full swing, the institutions were again happy merely to watch whatever action was developing in the market, rather than get involved. There was also precious little economic news to crank the market into life.
The trade figures released early yesterday proved slightly better than expected, but had no real impact on sentiment, with gilts tending to drift back a shade and the Bank of England's sterling index modestly lower too.
So with no hard takeover news to encourage sentiment, it was the tendency to fret about the forthcoming interest rate announcements that kept the market under minor downside pressure.
The US Federal Reserve's Open Market Committee meets next week, with its decision on interest rates expected at 7.15 p.m. London time on Wednesday. While many in the market expect the Fed to leave rates on hold, an increase cannot be ruled out.
Wall Street was mixed at the outset yesterday, the Dow Jones following up Thursday's 121-point decline with a robust rally which drove the index up 68 points. The Nasdaq Composite, which fell in line with the Dow on Thursday, dipped 58 points.
At the close, the FTSE 100 was down 22.3 at 6,391.5, a decline of 134.5, or 2.1 per cent, over the week. The FTSE 250 was also easier at the close, but not by much, ending 6.3 weaker at 6,563.2, a gain of 29.7 over the week. The FTSE SmallCap delivered another impressive showing, up another 17.4 at 3,379.9. Over the week, the SmallCap was up just short of 50 points, or 1.5 per cent.
The Techmark 100 dipped 18.27, but remained in positive territory over the week, during which it moved up nearly 89 points, or 2.6 per cent.
Few dealers expect a big upturn in activity over the dog days of the summer period, unless there is an outbreak of takeover business or a shift in interest rate policy.
