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Reuters
London, Feb 24: London's FTSE 100 hit an unexpected all-time high Wednesday morning, defying predictions of European caution following US Fed chairman Alan Greenspan's congressional testimony Tuesday. While other European stock markets were more hesitant and foreign exchange markets virtually static, the FTSE roared up to 6,230, 80 points above its Tuesday close and easily topping its previous best of 6195.6. The gains were mainly on strength in bank and pharmaceutical shares, but some dealers cautioned that the rapid rise seemed narrowly based and possibly unsustainable. The dollar was below its overnight high against the euro, trading around 1.0980/85, nearly half a cent off its best ever level but making little progress in any direction. The dollar seemed to have established itself firmly above 121 yen and was trading in a narrow range around 121.50/60.
Sterling was also not far from its best ever level against the euro but touched a six-month low against the dollar at $1.6058 before recovering veryslightly. Japanese government bond cash and futures were higher in Tokyo, partly on short covering after finance minister Kiichi Miyazawa said his ministry might have to consider measures to check rises in long-term interest rates. Greenspan, speaking at his twice-yearly Humphrey-Hawkins testimony to congress on the economy and interest rates, told a questioner he had ``concerns'' about the current high values of stocks. He agreed that some gains were due to improvements in business productivity that had enabled the economy to operate at a higher rate without spurring inflation.But revisiting his famous phrase of December 1996, Greenspan added:
``Whether or not it (the market) is gripped by irrational exuberance is an issue that you won't really know for sure, except after the fact.'' But Wall Street, as one US analyst put it, heard his warning and shrugged. The Dow Jones industrials average closed a negligible 8.26 points down, while the Nasdaq index, heavily weighted toward volatile technology stocks,ended 1.39 percent up.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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