THE runaway performance of the London market since the eve of the British budget looked like extending into a fourth straight session early yesterday. The FTSE 100 index hit an intra-day record before coming off to finish the session well down on balance.
At the end of another day of wild swings in the FTSE future and the cash market, the FTSE 100 showed a 18.9 fall at 4,812.8. The other FTSE indices were never anything like as volatile as the 100 but also came under various bouts of pressure.
The FTSE Mid-250, left behind by the 100 index all week, had a bumpy ride, burdened again by sterling's strength, and settled 22.2 lower at 4,453. The FTSE SmallCap ended 0.6 down at 2,226.6.
Over the week, the FTSE 100 has risen 172.5, or 3.7 per cent with 123.7 of that occurring on Tuesday, the session before the Budget. The FTSE Mid- 250, on the other hand, ended the week barely changed, while the SmallCap showed a 6.5 fall.
"The big technical squeeze that has gripped the equity market since Tuesday carried over to this morning but eventually unwound," said one market-maker.
He added that moves to close the dividend tax exemption loop-hole for market-makers had prompted extra volatility in derivatives.
London's market-making teams are said to have suffered heavy losses during the extremely volatile conditions that have been a feature of trading since the first authoritative budget leaks hit the market in mid- June.
There remained a big two-way pull in the market, with some fund managers, still armed with plenty of cash, reluctant to shift more cash into stocks, because of worries that the Chancellor of the Exchequer, Mr Gordon Brown's abolition of the 20 per cent tax credit on dividends may provoke a large switching out of equities and into gilts to fill the income gap.
Others, however, pointed out the tax credit news had already been discounted
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