Like in a good Western movie, the two enemies have been staring at one another for ages, hands hovering over their guns, ready to shoot at the first sign of weakness.
The run-up to the final showdown has been a tense time for the London market. The domestic bourse has not been able to sustain the Fed's gaze and has followed the Dow downwards in three of the past five sessions.
This tendency to blink first has been triggered by the markets' belief that US rates will go up on Wednesday evening.
After a big hint by the Fed chairman Alan Greenspan, the majority of experts expect a 25 basis point rise - and a few bears are even talking of a half-point increase.
The key question is: what will the UK and US stockmarkets do after the predicted hike?
Forecasting the markets' future is a shortcut to looking silly, but recent history can provide some useful guidance.
A study by Bob Semple and David McBain of BT Alex.Brown, recently bought by Deutsche Bank, shows that equity markets react badly to prolonged periods of US rate increases, while they tend to shrug off isolated rises.
In 1997, for example, the Fed only moved rates once and the US and UK bourses hardly budged. In 1988-1989, however, the tightening round comprised 14 hikes and the equity market was depressed for months.
In the run-up to the 1987 crash, the Fed raised rates seven times but it took ten months after the first increase for the bottom to fall out of the market.
In short, if you want to know what happens after Wednesday, think long- term: is this the start of a hike cycle or a mere blip on the Fed bullish charts?
Those seeking solace from the overseas tribulations can turn to a few UK-centric midcappers due to report results.
The supermarket chain Somerfield, finals on Thursday, will have to allay concerns over a sales slowdown. Turnover for the year should be flat overall but all the eyes will be on the current trading statement. Since merging with pile-'em-high-sell-'em-cheap rival Kwik Save last year, the group has been dogged by rumours of poor trading.
The market's bearish view of the new Somerfield has been compounded by the feeling that the rebranding of the Kwik Save stores has been slower than expected.
These troubles have sent the shares into freefall. In 1999, the stock has underperformed the market by some 37 per cent and is now hovering around a 12-month low.
At these levels, Somerfield could be vulnerable to a bid, especially if some of its larger UK and European rivals decide to fatten up to fend off the new Asda/Wal-Mart powerhouse. Pretax profits should come in at between pounds 220m and pounds 225m but comparisons with last year are meaningless because of the Kwik Save deal.
Berkeley, the upmarket housebuilder, is another domestically oriented company on the block. Tomorrow's results should show a slight advance in pretax profits, say pounds 102m compared to last year's pounds 100m. Berkeley, founded and run by larger-than-life managing director Tony Pidgley, has had a year of two halves.
The first part was disappointing, as demand for homes in the company's southern strongholds weakened. Since then, the housing market in London and the South-east has come back with a vengeance and Berkeley should have capitalised on its strong brand name and good landbank. A statement on its mooted interest for rival Fairview will also be sought.
The computer services group FI will reveal a gigantic 70 per cent rise in pretax profits to pounds 17m on Wednesday. For once, analysts will not have to wait for the announcement to see whether their predictions are right. The company did the spade work for them last month after the pounds 120m acquisition of the computer outsourcing company OSI.
At time of the purchase, FI also said that its order book stood at a healthy pounds 266m. The company has been one of the winners in the race to offer information technology advice to finance, retail and service giants.
The bulk of FI's business comes from the financial sector, where its blue-chip clients include Legal & General, Lloyds TSB and Bank of Scotland. FI's main weakness is its thinnish margins and analysts will want to see an improvement on that front.
British Biotech will be hoping to start a new era with its finals on Wednesday. After settling its case with the sacked whistleblower Andrew Millar, the fallen star of the biotech sector has survived almost unscathed two probes by the US and UK regulators into allegedly misleading stockmarket statements.
The focus should now be on British Biotech's leading product Marismastat, where trials results are due over the next few months. The much-rumoured takeover by a rival will be another talking point.
The company's final numbers are less interesting, with experts going for a loss of over pounds 36.4m compared with pounds 42m last year.
Another mooted bid target, the packaging group David S Smith, is due to report tomorrow. Profits will go down from over pounds 50.6m to around pounds 34 as tough markets and the strong pound have taken their toll.Reuse content