A near two percent decline on Friday, to 5138.3, may herald the start of a sea change. But the message from the market since the first falls last year was that the problem, certainly for Europe, was nowhere near as serious as some doomsters may have been suggesting.
At first glance it is difficult to see why the recent problems for the Indonesian rupiah should change matters much.
Nevertheless, the market has been looking overvalued for some time; simply for that reason, some declines now may be welcome. It would be a brave forecaster, however, who will forecast the market making much headway this year.
One sector in Europe last year to outperform remarkably, even by the standards of a bull market, was the cellular telephone operators. Overall, the sector doubled in value. The UK components - Vodafone and Orange - did their bit to boost values, with rises of, respectively, 81 per cent and 43 per cent - less than the average of 98 per cent, calculated by Salomon Brothers. One reason the UK had such a poor showing was that it was Europe's slowest-growing market for the second year on the trot. However, based on penetration rates, the UK still has plenty to go for. About 14.6 per cent of the population has a mobile phone, compared to 36 per cent, say in Norway, 40 per cent or so in Finland, and 19 per cent in Italy.
Enterprise Oil is beginning to look undervalued, especially compared to its old rival Lasmo. One reason, after strong gains for both shares last year, is that the former has failed to come up with much on the exploration front. Enterprise has failed to make a single significant exploration announcement for all of last year. It has also had to put its hand up, and confess that it won't make its production targets for this year and 1999. One area of potential upside is the Clair field West of Shetland. Enterprise has a 15 per cent stake, and Enterprise's reserves could well be proved higher this year. While there is understandable disappointment at Enterprise's announcement, holders of the shares should hang on in there - there is little to fear in the long term.
BA still trades on a significant discount to the market. But after a difficult 1997, that discount could disappear as the group starts to fire on all cylinders. A resolution of the American Airlines situation must be in store, while further efficiency gains, and possibly another joint venture in Europe, could pave the way for a resumption of interest in the shares.