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UK EQUITY MARKET INSIGHTS

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The FTSE 100 index got to within 6 points of the 4,000 level at its peak on Friday, but slipped back to close at 3,...
The FTSE 100 index got to within 6 points of the 4,000 level at its peak on Friday, but slipped back to close at 3,964.1. Over the week the index lost 3.8 points, or 0.1%.

There is plenty to keep the market on tender-hooks in the coming week, in particular meetings about interest rate policy in both the UK and the US.

Eddie George and Ken Clarke met yesterday, and on balance investors are forecasting no change to base rates, (currently at 5.75%). Although Ken would like to cut rates one more time to boost the 'feel good' factor, recent buoyancy in the consumer sector plus strongly voiced concerns from the Bank of England, will probably stop him from doing so. The UK equity market would be unphased by a decision to leave rates on hold, but would be concerned about a rate cut, given its political motivation.

However, the decision in the US is much more finely balanced and investors remain divided. A 0.25% rate rise would not shock global equity markets, but a 0.5% increase could prompt a market sell off, to which the FTSE 100 would not be immune.
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