Some healthy US economic data steadied nerves in global equity markets yesterday and ensured the FTSE 100 index closed with only a modest loss.
Figures showed that US industrial production rose by 0.4 per cent in March, compared with forecasts of a 0.1 per cent fall. That eased fears that the US might be sliding into recession.
Until the US data were released, it looked like being another dismal day for the UK stock market.
A profit warning from Cisco Systems, the Internet equipment company, late on Monday was followed by poor first-quarter figures and a forecast of a second-quarter loss from Philips, the Dutch electronics group.
Technology shares were marked down heavily and the FTSE 100 index tumbled from a small opening gain to be down 111.7 points at 5,654.9, just after 9 a.m.
At that stage, it looked as if Wall Street would open sharply lower. But the economic data, and results from some old economy companies that were in line with forecasts, ensured that both the Nasdaq and the Dow Jones Industrial Average quickly reversed its opening losses and that enabled Footsie to recover. At the close, the UK's blue-chip benchmark was down just 5.5 at 5,761.1.
The FTSE 250 and SmallCap indices also suffered just minor declines: the former down 7.4 at 6,141.0 and the latter was off 5.6 at 2,877.7. Technology shares, however, continued to bear the scars of the Cisco and Philips news. The financial problems of Winstar and PSINet in the US also weighed on sentiment. The worst 10 performers in the FTSE 100 were all from the technology and telecom sectors and the Techmark 100 index closed down 40.76 at 1,837.09.
There was not much in the way of domestic news to affect the market. Kalamazoo Computer warned that yearly losses would be greater than expected while Ffastfill, a software designer, said revenues would fall short of expectations.
The strategy team at Schroder Salomon Smith Barney has cut its end-year FTSE 100 forecast and its expectation of earnings growth to 5 per cent.