There was increasing anxiety in London's equity market yesterday with share prices extending Monday's weakness for much of the session. Dealers argued that that the market had overreached itself and that, at best, a period of consolidation was now in prospect.
That view was reinforced by the emergence of further confidence-sapping profit warnings and down-gradings as well as from a general round of weakness across international stock markets.
Additional pressure came with some increasingly disturbing news from the high street. The latest British Retailing Consortium survey, for October, revealed that sales last month had fallen 0.6 per cent, only the second monthly decline in retail sales for over three years. There was no respite from the bad news from the latest quarterly survey by the Confederation of British Industry of regional trends in manufacturing.
And sterling gave precious little help to the market, edging ahead again and finishing slightly higher on the Bank of England's exchange rate index, after a steep rise on Monday. That gave cause for concern among the big exporters and engineering stocks.
Finally, there were few indications from Wall Street's initial weak opening that a rally was in sight for a rather worn-out looking London market.
Nevertheless, minutes after its opening a strong rally took place on Wall Street.
Such was the impetus behind the rally that the FTSE 100 briefly nudged into positive ground, only to drift back to show a marginal 1.6 decline on balance at 5,432.3.
Dealers refused to get excited about the rally in the front line stocks, pointing out that the pick up in the leaders had not run through at all to the rest of the stock market.
