In the tug of war that has been played out between the doomsayers and the optimists about the direction of the Footsie, the bulls have gained a heavyweight backer. Goldman Sachs predicted that the FTSE 100 will hit all-time highs within 12 months. The vampire-squid bank reckons the benchmark index will punch through the 6,999 level last seen more than a decade ago on the eve of the millennium, and roar all the way to 7,200.
The weakening pound and further monetary easing will push the index on, according to Goldmanite strategists. The Footsie is up 7 per cent this year, but Goldman's call leaves another 12 per cent upside from here.
The brains at the bank point out that the index is only at five-year highs at the moment in sterling terms. Taking the slump in the pound into account, the bank says the Footsie is ranked a lowly 15th in terms of dollar returns. The Footsie's international base, meanwhile, means that only 19 per cent of sales are to the UK and, more to the point, 45 per cent of dividends are paid directly in dollars.
Shame for Goldman, then, on the day that it stuck its neck out with its optimistic prediction, the bulls took a breather and the FTSE 100 slipped 29.12 points to 6,481.50 points.
Vodafone was one of those given a pummelling, as the telecoms giant whose ads bellow "Power to you" saw one of its investors suggest that the power at the telecoms giant's management team seems to have gone out.
The investment chief of the hedge fund Bronte Capital, John Hempton, caught wind of talk that Vodafone is considering selling its stake in Verizon Wireless, with which it has a United States wireless joint venture. And he doesn't like it.
"This is absurd and if it happens it will mark an important part of the British business establishment (and the entire Vodafone board) as both venal and incompetent," Mr Hempton ranted. He has reason to care: Vodafone is the hedge fund's third-biggest position, although it's not entirely clear why when reading Mr Hempton's view of the stock.
"Vodafone has, for the last decade or so, been a collection of modest success and abject failures, made good by one spectacular success. The spectacular success is that they own 45 per cent of Verizon Wireless, the best-performed wireless carrier in the US," he wrote.
Mr Hempton went on to rebrand the telecoms giant as "Vodafail" and added: "Any deal where Vodafone sells its Verizon Wireless stake rather than selling itself starts with a tens-of-billions of dollars disadvantage in post-tax shareholder value. It would be insane. The only justification for such a deal is that shareholders trust Vodafone management to be tens of billions of dollars better with the shareholder money than the shareholders would be themselves. And sorry – Vodafone management has not earned and does not deserve that sort of trust.
"If Vodafone management pursue any deal to resolve the Verizon Wireless issue, then the entire Vodafone board should be sacked for venal and costly incompetence." Ouch. That was some kicking, and it saw Vodafone shares drop 2.75p to 182.25p.
The miners provided major drag, with Rio Tinto 70p lighter at 3,377p, Vedanta Resources off 27p at 1,169p, and Antofagasta 34p cheaper at 1,095p.
The outsourcing group Capita was another of the day's big fallers, retreating 8.5p to 885p on the back of a downgrade from the Swiss bank UBS, which cut its rating to neutral from buy.
Rival Serco also dipped 5.5p to 620p, but part of the drop came from it trading ex-dividend.
In fact, ex-dividend stocks accounted for around a third of the FTSE 100's fall, with British American Tobacco, Hargreaves Lansdown, Land Securities and Meggitt, as well as emerging markets-focused bank Standard Chartered knocking more than 10 points off the index.
Prudential was a big gainer, up 96p to 1,125p, following impressive full-year results, while the FTSE 250 energy group Exillon slipped 3.25p to 150.75p despite Worldview Capital Management, the Swiss-based investment manager, withdrawing its requisition for an extraordinary general meeting.
Meanwhile the Ukraine-focused iron ore miner Ferrexpo surprised investors with a special dividend of 6.6 cents a share and said it was on track with plans to boost production.
It is looking to appease shareholders in the face of a 62 per cent drop in 2012 profits after iron ore prices sank to three-year lows in September.
So far, it hasn't worked: the shares dipped 16.5p to 203.5p.Reuse content