There were no shocks to London's equity market from the decision of the Bank of England's monetary policy committee to lift British interest rates by 25 basis points, the fourth increase in six months.
But London could not ignore the impact of Wall Street's overnight slide that saw the Dow Jones Industrial Average retreat 258 points and the recently buoyant Nasdaq Composite running back 64 points from its record high. Wall Street never looked comfortable from the outset of trading yesterday when the Dow eased and then rallied as the Nasdaq gyrated. Not long after London closed the Dow was slightly down. Obviously much of the pain the leaders felt was directed towards the hi-tech, telecom and Internet-related stocks which have outperformed massively recently.
But there were plenty of positive areas of the market yesterday, principally the oil sector which has been under pressure recently. It helped drag the FTSE 100 well above its lowest point as Shell delighted the stock market with better-than-expected fourth-quarter results, including a proposal to buy large amounts of its own shares in the next few years.
The good news from Shell, top of the FTSE 100 table, spilled over to BP Amoco. Without the impressive performances from those two stocks, the index would have been facing a much more severe decline. London did stage a spirited rally after an uncomfortable morning session, which saw the FTSE 100 down 115.6 at worst, sliding below 6,200 before picking up and finishing a net 35.6 off at 6,279.8. The index briefly broke into positive ground, but quickly ran into pockets of selling. But the downside pressure among the stock market's second and third-ranking stocks was relentless, with the FTSE 250 sliding a net 73.1 to finish at 6,043.8, only 0.8 above the day's lowest point, while the FTSE SmallCap settled 20.5 down at 3,137.0, the lowest of the session.
Turnover in equities came out at a hefty 3.1 billion shares, not far short of the record daily turnover of 3.4 billion, with Vodafone AirTouch accounting for a massive 1.1 billion shares, or 33 per cent of the total, after the group's successful bid for Germany's Mannesmann was declared unconditional. Vodafone dropped to 319p in early trading, with some traders initially perplexed that the tracker funds had not moved in to increase their weightings in the stock. Later it rallied strongly to finish in the top 20 FTSE 100 performers. Some of the banks attracted keen support as the expected capitulation of NatWest was followed by substantial switching into Barclays and Lloyds TSB, both of which have suffered badly in recent months.
