With Wall Street breaking more records during the May Day holiday and another burst of corporate activity adding spice to the occasion, it looked certain that the UK equity market would drive to new peaks yesterday.
That was the case during an early burst of strong buying which drove the market's two main indices, the FTSE 100 and All-Share, to intra-day highs. But by the end of the session, the picture in the leading stocks had changed dramatically, with weakness in US bonds and UK gilts undermining sentiment. Dealers said a mixture of bond market weakness and unease over the Dow's astonishing progress in recent months prompted the late sell-off. They also noted the relatively heavy turnover in the market, of 1.2 billion shares. Weakened by the abrupt turnaround in the leaders, the All-Share Index subsided to close down 3.47 at 3,024.93.
The big reversal did not extend to the rest of the market, where mid-ranking and smallcap stocks finished with good gains, although well off the day's best levels.
The day's economic news included M4 money supply and lending data for March and the UK purchasing managers report for April.
The latter showed manufacturing had contracted again during the month, albeit at a slower pace than the previous month. The data encouraged some to hope that another cut in UK interest rates could be on the cards tomorrow.
