Footsie soars through 3,900 barrier
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Your support makes all the difference.Shares rose to record highs again yesterday as the FT-SE 100 index closed above 3,900 for the first time. Dealers said Thursday's unexpectedly large cut in German interest rates, and the falls across Europe that it triggered, might pave the way for further reductions in the cost of money in the UK.
In relatively thin, pre-holiday trading, the London market shrugged off strong economic growth figures from the US which suggested the next movement in interest rates there might be upwards.
The FT-SE 100 index of leading shares ended the final session before the bank holiday 16.4 points higher at 3907.5, having been more than 20 points higher at one stage in the early afternoon.
Demand for durable goods in the US remained surprisingly strong in July, adding weight to the view that the Federal Reserve might be forced to raise interest rates before the end of the year to rein back inflation.
Durable goods orders in the US during the month increased by 1.6 per cent, four times higher than expectations. Excluding the volatile transportation equipment and military hardware sectors, orders were 3.5 per cent higher.
The strong durables order book contradicted recent housing, industrial output and retail sales figures that all suggested a continuing slowdown in the US, helping to convince Fed chairman Alan Greenspan not to raise interest rates at the most recent policy meeting.
Even as storm clouds loomed in the US, dealers in London turned their attention to the next FT-SE 100 target of 4,000, although analysts immediately started questioning whether recent gains were sustainable.
"It's not that far away but I would be moderately surprised to see 4,000 in the ultra short term," said UBS strategist Tim Brown.
The gains of the past month have been dramatic - a near 300 point rise since July 16 and a rebound from the year's low to its high within the space of five weeks.
Market report, page 18
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