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UK EQUITY MARKET INSIGHTS

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Although the Dow Jones US equity market index rose nearly 170 points last week, London put on a dismal performance,...
Although the Dow Jones US equity market index rose nearly 170 points last week, London put on a dismal performance, with the FT-SE 100 index falling nearly 2%. (A strong US equity market performance has been fuelled by private investors. With interest rates currently quite low the equity market is one of the only places to put cash at the moment).

One negative for the domestic market was the news from the latest CBI Distributive Trades Survey that the retail sector was much stronger than expected in January. Evidence of continued buoyant high street sales was seen to undermine the chances of another interest rate cut rather than as an encouraging economic signal. (Although the market has recently been welcoming weak data as increasing the probability of a monetary easing, it may soon get to the stage where investors become worried about the effect of subdued activity on corporate sector health).

UK equity market weakness last week was compounded by a rumours on Friday that the Scott enquiry into arms sales to Iraq might force at least one political resignation, prompting a snap election.

The first notable announcements of the results season are likely to grab investors' attention this week, especially as a number of profit warnings have caused concern about the rate of earnings growth. Leading companies reporting this week include BP, Shell, Reuters and Hanson.
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