There was a feeling of anti-climax in London equities yesterday after the US Federal Reserve's open market committee did exactly as the markets have been expecting for some time - cutting its Fed funds rate by another 50 basis points for the second time in a month.
And the Fed went a step further, announcing that the risks in the US economy "are weighted to conditions that may generate economic weakness in the foreseeable future", or "in other words, there are more rate cuts to come", as one dealer put it.
Wall Street's response to the news proved a disappointment, with the Dow Jones Industrial Average finishing a mere six points higher, while the Nasdaq Composite endured a much worse session, finishing 65 points lower.
So it was always going to be extremely difficult for London to make progress against that background.
The upshot of the trading session was another poor performance by the FTSE 100, which closed 45.7 off at 6,251.8, having fallen 64.1 at worst.
The FTSE SmallCap eased 7.0 to 3.319.8 and the Techmark 100 fell 36.97 to 2,771.043.
The FTSE 250 provided some respite, edging up 6.4 to 6,742.3.
And tending to make the possibility of any progress by London stocks even more awkward was the latest raft of domestic economic data, all of which tended to surprise a market expecting evidence of a slowing of the UK economy. In the event, the news turned those expectations upside down.
The latest monthly survey of UK house prices by the Nationwide revealed prices rose by 2.5 per cent in January, the biggest monthly gain since October 1994, while the UK purchasing managers' index of manufacturing came in at 52.0, compared with last month's 51.3.
And the Confederation of British Industry's January Survey of Distributive Trades said that retail sales were rising at their fastest rate since May last year. "The market is telling us that 25 basis points will come off UK interest rates after next week's monetary policy committee meeting," said one trader.
But Richard Jeffrey, economist at ING Barings Charterhouse Securities, said: "When looking at the strength of recent UK data, particularly the CBI retail survey, you could be forgiven for asking the question whether rates should be going up rather than down."
Turnover in equities was 2.2 billion shares.
