AN overwhelming sense of postbudget anti climax permeated the London stock market yesterday, with stock prices briefly flaring up and then subsiding as dealers struggled for good reasons to chase the market any further.
And a deteriorating trend on Wall Street yesterday did nothing to bolster sentiment in London. The Dow Jones Industrial Average was down well over 30 points as trading in London ceased.
The FT-SE 100 index settled 19.2 off at 4,049.2, while the FTSE Mid-250 gave up 11.4 to 4,412. The SmallCap fell 5 to 2,162.7. The consensus view around the City's trading desks was that the market had done much of its upside work in the two pre budget sessions when the FTSE 100 rose more than 100 points.
That rise, it was suggested, left very little potential in the market, especially with Wall Street unlikely to give European markets much of a tow for the rest of the week, which is disrupted by today's Thanksgiving Day break. The US bond market closed at lunchtime yesterday and will do so again on Friday along with Wall Street.
It was the latter's erratic performance on Tuesday that dictated the course of the FTSE 100 during the budget speech. The Dow Jones Industrial Average gave a turbulent performance overnight, with an early 30 point rise replaced by a 50 point fall and an eventual closing loss of 19 points.
There was a flurry of buying interest in the market at the outset, but it quickly petered out to be followed by profit taking.
Much of the rest of the session was taken up with sorting out the winners and losers arising from a closer scrutiny of the Chancellor's budget proposals.
Equities were also unsettled by a lacklustre showing by the gilts market, where some observers continued to take the view that further domestic interest rate rises are on the cards in the short term.
Mr Andrew Cates, an economist at UBS, said: "We are pencilling in another quarter point rise in base rates early in the new year, though there is some chance it could come straight after the Chancellor/governor meeting on December 11th."
On the positive side, a late burst of takeover speculation drove SmithKline sharply higher, while T & N's move to cap its asbestos liability by taking out an insurance policy was greeted enthusiastically by the market, which quickly moved to upgrade the shares.
But there was bleak news for the building materials arena, as Redland warned shareholders at its e.g.m., of flagging sales in continental Europe and the impact of the strength of sterling.
The news took almost 8 per cent off Redland shares and damaged BMC and Pilkington as well.
Turnover in the equity market at the 6 p.m. count was a disappointing 720.6 million shares, shared equally between the FT-SE 100 and other stocks.
Customer business on budget day was £1.28 billion sterling.
