Renewed concerns about the ever-growing list of profit warnings from the US and the UK were mostly responsible for the latest setback in the London stock market yesterday.
The FTSE 100 index registered its tenth loss out of the last 11 trading days as the market reeled from Monday's steep losses on Wall Street. While Footise's closing losses were subdued, helped by a revival on US markets as London closed, dealers remained unhappy about the short-term outlook.
"This market is running scared of more profit warnings, which are increasingly being blamed on the rise in oil prices," said one trader. He added that the concerns were becoming more worrying because the current batch of warnings was a reflection of oil prices in the recent past. "It now looks as if crude is about to dash towards $40 a barrel. If that is the case, then there is more downside to come," he warned.
Once again the FTSE 100 dropped below the 6,400 level, sliding back to 6,360.6 at worst, in mid-morning, before clawing its way back to close a net 6.7 off at 6,403.5.
The performance of the more junior indices, however, was being seen as a warning that the big institutions had taken a more defensive view. Market-makers said the big funds tended to exit the big, more liquid stocks first, then the mid and smaller caps.
The FTSE 250 plummeted 95.8 to 6,806.0, having fallen below 6,800 at one point. And the SmallCap was equally pressured on the downside, finishing the day a net 29.7 off at 3,509.8, a session low.
The Techmark 100 was even more roughly handled, closing 68.3 off at 3,759.58, having dipped to 3,748.46.
Over the past 11 sessions, the 100 index has fallen almost 400 points, or 5.8 per cent. During the same period the 250 index has lost 343 points, or 4.8 per cent.
The list of warnings gnawing at Wall Street's confidence grew even longer overnight, including Gillette, Alcoa and Ingersoll Rand.
Richard Kersley, European equity strategist at Credit Suisse First Boston, said: "While interest rate fears may have eased valuation worries, forecast concerns seem to have simply replaced them as the primary hurdle to the markets' progress."
Footsie stocks seen as vulnerable included ICI and Invensys, while, in the 250 index, old economy stocks such as Tomkins, Tate & Lyle and Corus were given a hard time.
