The party's nearly over

The party's nearly over

IT WOULD be a brave man who predicted the outcome of John Major's "put up or shut up" challenge, and an even braver one to forecast what it will mean for the markets. The cliche that markets hate uncertainty looks as tired as ever. But it remains true. As my colleague Hamish McRae points out on page 4, the world doesn't care terribly much who is prime minister. But they want the dust to settle, regardless of whether Major, Portillo, Heseltine or even Blair ends up with the keys to Number 10.

In the meantime, the bond and share markets will remain jumpy. Anything more than 100 abstentions or votes against Major in the first ballot and he is probably finished. Less than 25 and he is home and hosed. The worst outcome would be 60 or 70 abstentions or votes against. This might allow Major to claim victory, but nothing would be resolved.

My only tip is to keep a careful eye on Wall Street as well as Westminster. The Dow Jones share index keeps on hitting new highs. Traders seem to greet any bit of economic news positively. The fact that growth was negative in the second quarter and is expected to be negative in the third - the technical definition of a recession - is being taken as another good reason to mark shares higher still. Demand for technology stocks can only be described as frenzied.

The Dow could easily rise another 200 or 300 points. But correction has to come at some stage. American traders will eventually have to recognise and adjust to the low-inflation, slow-growth pattern likely to dominate the next decade. The party could end abruptly. Where Wall Street