The UK stock market's recent rally ran out of steam yesterday in the face of a weak opening on Wall Street.
US consumer confidence figures were disappointing with the index falling to 82.2 in November, rather than rising as investors had hoped. That triggered an early triple-digit drop in the Dow Jones Industrial Average which duly weighed on sentiment in London. The FTSE 100 index reached its low point of the day, down 69.7 at 5,232.8, when the Dow was trading 150 points lower.
The Chancellor's pre-budget statement appeared to have little impact on the equity market but gilts weakened over the course of the speech, with the benchmark 10-year issue falling a point, in response to the government's plans for higher spending on health.
The Chancellor's forecast for UK economic growth in 2002 was surprisingly upbeat and there were fears that, if the economy became more sluggish than he expected, the public finances would deteriorate.
Earlier, the market had looked to continue the recent rally, with the FTSE 100 up 30 at 5,332.5 by mid-morning. At the close, however, the blue chip benchmark was down 36.5 at 5,266.0. The other indices were also lower with the FTSE 250 down 26.1 at 5,931.8, the SmallCap off 11.5 at 2,619.4 and the Techmark 100 falling 21.13 to 1,542.69.
Telecom stocks were generally weaker after Nokia downgraded its forecast for mobile phone sales; MMO was the worst performer in the FTSE 100 while Vodafone dropped 1.3 per cent.
The other two components of the TMT trio technology and media - also lost ground, with ARM and Logica two of the Footsie's worst four performers.
Yesterday's modest sell-off still leaves the UK market substantially ahead of its level on September 10th, before the terrorist attacks on New York and Washington. Stuart Fowler, head of UK equities at AXA Investment Managers, takes a bullish line, saying: "It feels as if we've moved through a turning point, leaving the bear market of the last two years behind us."
Turnover was healthy yesterday with 2.42 billion shares traded.
Vodafone and MMO each traded more than 200 million shares while Telewest was also active.
