There was no room for faint hearts in London's equity dealing rooms yesterday, as a full-blooded slump on Wall Street, shortly after US markets opened, threatened to overwhelm European markets.
London's response to an early 433-point slide in the Dow Jones Industrial Average, which plummeted through the 10,000 level, was immediate and substantial, with market-makers quickly on the defensive.
Quotations were chopped right across the board and the FTSE 100 looked for a short while as if it would drop through the 6,000 level that has provided stout resistance in the recent past.
At its worst of the day the FTSE 100 fell 186.0 to 6,017.2. It then stabilised and embarked on a rapid recovery which brought the index back to a closing level of 6,148.2, down 55.0.
The pain experienced by the leading stocks quickly spread to the rest of the market. The FTSE 250 index settled 62.8 off at 6,372.3, having dipped to 6,340.0, while the FTSE SmallCap was finally 48.9 off at 3,201.9, after slipping below the 3,200 level and hitting a session low of 3,196.7.
But once again it was the Techmark 100 index that took the heaviest pummelling, finishing a net 146.6 down at 3,215.54, after 3,152.66.
Mr Martin Brooker, equity market strategist at Credit Lyonnais Securities, added to the gloom. "With the trend of US corporate profits, the oil supply/demand balance and the so-called peace process in the Middle East on a hair trigger, participation in a purely liquidity-driven rebound looks as if it may be half-hearted at best."
Behind the startling weakness in the Dow, which also rallied strongly after its initial slide, was another disappointment from one of the leading US stocks, this time IBM, the computer colossus, which announced disappointing sales growth after Wall Street closed for business on Tuesday.
And if the corporate news wasn't bad enough, Wall Street also had to contend with worse than expected news on US inflation in September, at the headline and core level.
The news added to Wall Street's concerns that US interest rates may rise after the Presidential election on November 7th.
The Federal Reserve's rate-setting Open Market Committee is scheduled to meet on November 15th.
Turnover in equities was 1.8 billion shares.
