There was more than just a whiff of post-US presidential election anticlimax in London's equity market yesterday as another dose of Nasdaq-inspired weakness hit the TMT stocks and dragged down all the main indices.
The recent confidence sapping profit warnings from the US, and not just from the tech-related areas, hit Wall Street very hard. The Nasdaq Composite dipped 109 points overnight, and followed that up with another downside performance yesterday. It was down 60 points at worst, before stabilising as London closed.
It was the Dow's turn to take the real market pain yesterday, following up its 26 point overnight rise with a 178 point retreat which was reduced to 121 points as UK dealers finished for the day.
And for good measure the day's domestic economic news, November retail sales, took the market by surprise, coming in much stronger than expected and up 0.7 per cent, compared with a consensus forecast of plus 0.2 per cent. That news put a small dent in the confidence of those expecting a cut in UK interest rates in the not too distant future.
The latest Nasdaq weakness triggered another dismal session for the TMTs, the technology, media and telecom stocks. Telecoms issues, and especially Vodafone, were given a rough ride after the Bank of England warned of an increased risk to financial stability arising from the surge in lending to the sector.
Mixed in with the weakness in those sectors was a poor showing by the oil majors and an abrupt decline in HSBC, the biggest of the UK banks.
At the close of a busy session, the FTSE 100 index was left with a 139.2, or 2.2 per cent, decline at 6,263.8, its biggest one-day fall in percentage terms since November 22nd.
But there was a much more severe decline in the TechMARK 100 index, which gave up 121.6, or 4.3 per cent. TMTs provided 15 out of the 20 worst individual performers in the FTSE 100, as dealers reported a fresh burst of selling by fund managers alarmed at the ever-growing list of profit warnings.
It was not all gloom, however. Two of the UK's leading housebuilders, Bryant Group and Beazer, announced a merger. Turnover in equities reached 1.94 billion shares.
