A decline in the FTSE 100 over the week of 75 points, or just 1.7%, hardly ranks in itself as much to worry about: the index is still bang in the middle of the range in which it has traded for the last nine months. Beneath the calm surface, though, it was possible to detect a few hints this week that when the market finally finds a direction it will be down.

The first was the way in which investors are reacting to corporate news. It would normally take a substantial profits warning to send a large FTSE 100 company's shares down 20%, but BSkyB achieved it by saying simply that it will invest more of its cash to take advantage of an expanding market place for its goods. The investor reaction suggests a strong preference for hoarding cash rather than spending it - a bear market mentality.

Some 10% was also removed in a day from Smith & Nephew, one of those stocks that ought to be a classic refuge for investors seeking safety - artificial hips, after all, are not fashion items. One quarter of mildly disappointing numbers from S&N was to blame and the market reaction looked like a straightforward case of the jitters.

If you are of the jittery kind, there is plenty of ammunition around: the soaring price of oil and the threat of bankruptcy at Yukos, Russia's largest oil producer; the risk that China's economy is about to re-acquaint itself with gravity; and a dollar undergoing a fresh bout of weakness.

Then there was yesterday's little troubler, the dreadfully weak job-creation figures in the US. They were taken badly on Wall Street, with the Dow Jones down 90 points by mid-afternoon, meaning it has shed more than 2.5% on the week.

Meanwhile, the technology-heavy Nasdaq - the first port of call for American optimists - is at its lowest level since last October.

The point to remember is that, if bad news lurks around the corner, the US markets still have plenty of room to fall. The Dow is valued at 19 times historic earnings and yields only 1.7%. By most historical measures, it is still extremely overvalued.

Searching question

The innovative stock market flotation of Google, the internet search engine business, seems to be running into serious trouble.

From logistical problems, causing a delay in getting information to potential bidders in this auction of about £2bn of stock, to the fact that the company's general counsel has been told he is being investigated over his work at another firm, each new issue encouraged speculation that Google's young founders might suddenly pull the whole exercise and find a different way to raise the capital they need.

None of which would bother the world of investment banking.

The Google auction process threatens to destabilise the cosy system for floating companies on Wall Street and in the City, which typically sees the banks, brokers and associated advisers walking away with at least 5% of the proceeds.

The development of open auctions for new companies joining the markets also promises to disrupt the relationship between investment banks and their more profitable clients, such as hedge funds, which tend to get preferential treatment in the most promising floats.

That said, we've been here before. The dotcom boom was littered with plans to use the net to eliminate financial intermediaries from the investment banking industry and revolutionise the relationship between investors and companies looking to raise capital. None came to fruition.

Google is the nearest we've come. It would be a shame, at this advanced stage, to see it all unravel now.

Better late ...

The wacky world of railway finance has thrown up another oddity. The inter-city rail firm GNER yesterday revealed a fall in profits - and pinned the blame on Network Rail for maintaining its track too efficiently.

GNER's Bermuda-based parent company, Sea Containers, said revenue at GNER soared by a third to $208m (£112m) in the three months to June.

It benefited from an increase in passengers, higher fares and from selling more sandwiches on board. But its profits fell by 10% to $12.4m because of "a reduction in compensation payments for delays from Network Rail".

Such is the parallel universe of the railways.

Passengers can fume to their hearts' content when engineering work shreds the timetable - but they still buy tickets, because they need to get from A to B.

Meanwhile, Network Rail obligingly hands over millions in compensation for the train operator's inconvenience.

GNER gets no direct subsidy from the government. It is viewed as one of the better operators on the network, with a reliability rate of 73.6% last year.

The company may well be one of the few train operators to win a renewed franchise when its present deal expires in April.

But with Network Rail's performance steadily improving, perhaps Sea Containers should reconsider whether Britain's railways are a decent money-making prospect.



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