The London market made up for a poor start and surged ahead today, as traders reacted to US Secretary of State Colin Powell’s key address.
By the close of trading the FTSE 100 Index was up 88.6 points at 3,678.7, reversing a subdued opening which saw it tumble an initial 21 points.
But equities in both London and New York rallied on hopes the uncertainty over war would soon be ended.
By the time the London markets closed, the Dow Jones Industrial Average was strongly ahead, which gave a late lift to UK stocks.
In a speech to the United Nations, Powell produced evidence that he said proved Saddam Hussein was hiding weapons of mass destruction.
Dealers interpreted the speech as a sign war would be sooner rather than later, and traders said the feeling was that as soon as war starts the market could bounce.
Martin Dobson, head dealer at NatWest Stockbrokers, said: “It has been hanging over the market so long, and the market is hoping the uncertainty is over.
“It looks as if there doesn’t seem to be any way out for Saddam Hussein and the likelihood is the UN is likely to sanction intervention.”
As well as the lift from Wall Street, London stocks continued to benefit from the Financial Services Authority’s decision last week to ease regulatory requirements for insurance firms to soothe the battered sector.
Insurance stocks on the way up today included Prudential, 14.5p ahead at 400p, Norwich Union owner Aviva, up 18.25p at 431.25p, and Legal & General ahead 3.25p at 77p.
Royal & Sun Alliance also gained, up 1.75p at 97.75p, despite being the latest firm to announce bonus cuts.
Mobile phone giant Vodafone also helped prop up the London market after confirming talks to sell fixed line business Japan Telecom.
The announcement lifted shares almost 5% – up 5p at 113.75p – while rival mmO2 continued to benefit from a trading update yesterday, gaining 2.5p to 49p.
Elsewhere in the FTSE, energy giant Scottish Power led the way with a 7% gain, up 21.75p at 353.75p, after reassuring in its third quarter trading statement that it would meet full-year hopes.
However, fund manager Amvescap continued to fall after disappointing the City yesterday with its annual results. Shares were off another 1.75p at 321.75p.
Media stocks were also out of favour, with BSkyB down 12p at 580p, Daily Mail & General Trust off 7.5p at 535p, and Reuters 2p lower at 170p.
Outside the FTSE, housebuilders were benefiting from Bellway’s forecast of better than expected interim results.
Bellway surged 25p to 490.5p, while Westbury added 16.5p to 266.5p and Wilson Connolly lifted 4p to 138p.
Pubs and bars group Regent Inns also rose sharply, up 13% or 7.5p to 64p, after revealing strong half-year results from its Walkabout and Jongleurs sites.
The biggest FTSE risers were Scottish Power, up 21.75p at 353.75p, Friends Provident up 5.25p at 96.5p, Tomkins up 10.75p at 203.75p and Alliance Unichem up 21.75p at 422.75p.
Fallers were Invensys down 1.25p at 45.75p, Shire Pharmaceuticals down 6.75p at 321.75p, BSkyB down 12p at 580p and WPP down 7p at 423p.
EGi News 05/02/03
