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City: Hyper market

Jeremy Warner
Saturday 06 February 1993 19:02 EST
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THE general stock-market view these days seems to be that whatever is bad for sterling is good for equities. With the Government now saying, in effect, sod the exchange rate, let's get interest rates as low as possible in the hope that it might just prompt a revival in the economy, it seems a not unreasonable analysis.

The downside to a low exchange rate - higher inflation - has never been much of a problem for the stock market. If anything, equities thrive on inflation. Yet you had to wonder, as share prices romped ahead again last week, whether the market has not run just a little ahead of itself.

Since the scales fell from the Government's eyes and it decided to withdraw from the ERM in mid-September, the FT-SE 100 index has risen nearly 500 points - almost 20 per cent. The outlook for corporate Britain has certainly improved but surely not by that much.

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