LONDON's equity market displayed a marked reluctance to emulate Wall Street's startling overnight gains and finished only marginally ahead on the day.
The big investing institutions, which have stood away from the stock market for some weeks, awaiting a clearer picture from the outcome of the May 1st general election, refused to be drawn into the market yesterday, despite Wall Street's rise.
And no real confidence was imparted to the stock market by the latest outpouring of economic news, which included the March public sector borrowing requirement, unemployment detail, average earnings and unit wage costs.
On the contrary, news of a 5 per cent increase in average earnings for the year to March, plus the continuing strong decline in unemployment, was seen by some as a classic recipe for a build up of inflationary pressures.
It was also pointed out that Tuesday's US inflation figures, while weaker than Wall Street analysts had expected, referred to the state of the US economy six months ago, and the Federal Reserve was more interested in how the US economy will be operating in a year's time.
Alan Greenspan has warned many times that the Fed prefers pre emptive action," said one marketmaker, who insisted a US interest rate rise remained very much on the agenda after the May 20th FOMC meeting.
Wall Street followed up Tuesday evenings's 135 point leap by the Dow Jones Industrial Average - its second biggest numerical gain for 10 years - with a quiet, firm start yesterday. But even that relatively good performance failed to kickstart a London market which remained stubbornly unresponsive all day.
The FTSE 100 index finished the session with a 7.8 gain at 4,294.6, well below the day's best, which had seen the index back above 4,300 and up 20.6. The FTSE 250 also closed well down on the session high, closing a net 2.9 ahead at 4,524.6, after 4,536.5. The SmallCap gave a more impressive showing, moving up 3.6 to 2.296.7.
The head of trading at one of the big London based securities houses said it was becoming increasingly difficult to call trends in markets, especially London. But he insisted that, notwithstanding a hung parliament, the UK market would be supported.
Others remained concerned about trends in US bonds with talk persisting that a move by the yield on the US long bond above the 7.3 per cent level could signal a big shift into bonds.
This morning brings more crucial economic news with inflation details for March
Turnover fell away after Tuesday's rise in retail business. At the 6 p.m. count, turnover was 672.4 million shares, with non FTSE 100 shares accounting for 56 per cent of the overall figure.
Dealers are gearing up for a big session on Monday when trading in Alliance & Leicester, the first of the big building society transitions to banking status, commences.
