Another disappointment from the US technology sector ensured a difficult start to the week for the London market. Hewlett-Packard's fourth-quarter figures fell well short of expectations, citing margin pressures and adverse currency effects. That prompted a sharp fall in its shares and also in technology sector shares worldwide. The Hewlett disappointment followed a revenue downgrade from Dell Computer late last week.
The Hewlett news sent the Nasdaq Composite down below 3,000 for the first time since November 1999 and hit tech stocks in London.
Technology stocks comprised six of the 10 worst performers in the FTSE 100 index yesterday. Bookham shares continued to suffer, with the fibreoptics group looking set to drop out of the FTSE 100 index if there is no recovery. Shares in Freeserve, the Internet service provider, dropped below the flotation price to an all-time low. Another dot.com standard-bearer, Lastminute.com, also fell to an all-time low.
The Techmark 100 index of leading technology stocks fell 145.2 or 4.5 per cent to 3,077.24, leaving it 46.5 per cent below its March peak.
New-economy stocks were not the only ones to suffer. The UK bank sector was hit by downgrades from HSBC and Goldman Sachs.
The day lived up to its ominous start when technical problems delayed the feed of futures prices from Liffe. The FTSE 100 index spent the day in negative territory with losses accelerating in the afternoon as Nasdaq slumped and the Dow Jones Industrial Average dropped around 200 points.
There were big losses for Future Networks and Telspec, the latest UK groups to issue profit warnings.
US political uncertainty continued to depress sentiment with the result of the presidential vote seemingly bogged down in the courts. And the oil price stayed above $32 a barrel as OPEC froze production levels for the rest of the year.
The latest UK economic data had little impact on the markets. Producer price figures for October showed a 0.1 per cent month-on-month rise in output (factory gate) prices and 0.9 per cent month-on-month fall in input (raw material) prices. Retail price data for October are released today.
The Bank of England's quarterly inflation report is out later this week and Credit Suisse First Boston is saying that the next move in interest rates will be down. "We have cut our forecast for the end of next year to 5.5 per cent with the expectation that we may reach that level by yearend," said economist Robert Barrie.
Turnover was subdued by recent standards with just 1.28 billion shares traded by the 6 p.m. count.
