A weak performance on the futures market pulled the index down by 10.4 points during the half day's trading, leaving it 44 points shy of Wednesday's record close at 3,418.4. But most dealers expect 1994 to bring further substantial gains, lifting the index by at least 300 points.
Shares in property, electricity, construction and building materials have all done well over the past 12 months, while food retailers, brewers and distillers and health and household sector companies brought up the rear. The FT-SE 250 index of 250 middle-ranking company shares rose slightly yesterday, mirroring its outperformance of the blue chips through the year.
Private investors expect 1994 to be another good year, according to a survey by ShareLink, the financial services retailer. Nearly 80 per cent of the 500 investors polled expect the FT-SE 100 to rise next year.
ShareLink reported 'moderate to strong' buying during the first half of the year, but sellers were just in the ascendancy in June and then were level-pegging with buyers for much of the rest of the year. Supermarkets were the most popular.
The rise in share prices during 1993 has gone hand-in-hand with rising gilt prices, as growing optimism about low inflation and diminishing fears about the Government's ability to fund its borrowing pushed yields on government debt to their lowest levels in a generation. The yield on 10-year bonds has fallen from almost 9 per cent at the beginning of the year to less than 6.5 per cent.
Short-dated gilts and equities have also been boosted in the closing weeks of the year by the belief that Kenneth Clarke will cut interest rates again. Economists believe the half-point cut in rates in the week before the Budget will not be enough to offset tax increases.
Hopes of rate cuts have done the pound little harm. Sterling closed at 81.8 per cent of its 1985 value, only a little below its high point for the year of 82.2 per cent reached, in mid-January (and equalled for a few minutes earlier this week). After this high the pound fell dramatically in the following month, after John Major was panicked into an interest rate cut by a bad set of unemployment figures. But sterling then recovered rapidly through the spring, after which it fluctuated between 79 and 82 per cent for the rest of the year.
Bloomberg's IHT World Stock Index of 231 stocks from 20 countries rose about 21 per cent during the year. Shares from Hong Kong, Finland and Singapore did best, with the US, Canada and Japan lagging behind.
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