The Sterling Crisis: Exhausting week of confusion ends on high note: Record trading
Saturday 19 September 1992
It ended on a high note, with the market rising nearly 200 points in two days on record trading levels.
Dealers went home tired and happy, wondering what lay in store for them next week after the French referendum on the Maastricht treaty.
A few will return to their desks on Sunday evening in time for the referendum results but more will turn up early - which in the modern City of London means 6.15am - on Monday.
Fund managers - the men and women who invest billions on behalf of pension funds, insurance companies and charities - were as confused by last week's gyrations as anyone.
One seasoned professional said: 'After that experience, when we did not know what was happening from hour-to-hour, how can you expect me to predict what will happen two days from now?'
The gains were solid enough. Shares in ICI, which opened the week at pounds 10.68 and sank to pounds 10.54 on Wednesday, were changing hands by the end of the week at pounds 11.37, a gain of 6.5 per cent since the previous Friday.
Hanson, which at one point last year looked as if it might bid for the chemicals giant, saw its shares gain 14.4 per cent to 226.5p over the week.
Both companies earn a large slice of their profits overseas and stand to benefit as sterling declines. Other international earners to benefit from the euphoria at sterling's decline include Glaxo, the drugs company, Tomkins, which owns the Smith & Wesson handgun firm, and exporters such as British Aerospace.
Lord Forte became pounds 4.55m richer as the value of his hotels company jumped. But David Sainsbury saw the value of his 20 per cent stake in the supermarket company fall by pounds 5.2m as investors switched their allegiance to companies which export and those with overseas businesses.
Stock market investors exhibited an uncanny gift of foresight dueing the week.
On Tuesday, as the pound slumped they correctly guessed that the government would increase interest rates. Dealers reduced their prices accordingly.
They were proved right the next morning but to no avail. The pound continued weak despite a threatened hike to 15 per cent.
The dealers then guessed that the government would give up the fight and devalue the pound. That duly came true after the stock market had closed on Wednesday, prompting huge buying on Thursday, the busiest day since the current trading system was introduced in 1986. Investors were further encouraged by the cut in interest rates to 10 per cent.
They are now predicting a further cut to 8 per cent. Whether their record remains in tact remains to be seen next week.
The threat of higher inflation holds few fears for stock market investors as share prices traditionally offer an excllent hedge against rising retail prices.
Pension funds have 80 per cent of their assets in shares so are keen to see further rises. In many ways they were guilty of talking their own book when they went home predicting further gains next week.
Emergency call 'started off dumb, but got pretty serious'
Thought you'd seen it all after the Jeremy Paxman interview?
Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent
"History is violent," says the US Army tank commander Don "Wardaddy" Collier
Argentinian scored 'rabona' wonder goal for Tottenham in Europa League – see it here
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
- 4 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
- 5 Of course, teenage girls need role models – but not like beauty vlogger Zoella
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
This 'woman calls police to order pizza' story isn't going where you're expecting
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Diwali: What is the festival of lights – and how is it celebrated around the world?
Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
£350 Per Day: Clearwater People Solutions Ltd: Our client based in Reading are...
Highly Attractive Package: Austen Lloyd: A VERY HIGH QUALITY FIRM - A high q...
competitive + bonus + benefits: Sauce Recruitment: Are you the king or Queen o...
£10 per hour: Randstad Education Chelmsford: Are you an experienced note taker...