A dose of profit-taking in many of the recently buoyant TMT stocks, which have mainly been the driving forces behind the FTSE 100's breakout from its tight trading range, brought a halt to the latter's recent strong showing yesterday. The early morning sell-off was also attributed to a sudden drop in the Dax future, apparently in the wake of a mistakenly inputted trade.
At the end of the trading session, the FTSE 100 had fallen back below the hard-won 5,300 level, finishing a net 39.3 off at 5,298.7, having been down 54.5 at 5,283.5 when the Dax future plummeted.
It was the same for the other indices. The FTSE 250 lost 52.2 to 5,958.8, its lowest of the day, while the FTSE SmallCap fell 14.5 to 2,620.6. Easily the worst performance, in percentage terms, came from the recently rampant Techmark 100, which lost 71.26, or 4.3 per cent.
The selling in London took the market very much by surprise in the wake of the strong showing by Wall Street on Monday evening where the Dow Jones Industrial Average closed in on the 10,000 level it lost on September 5th, finishing the overnight session a net 109 high and only 34 points away from 10,000.
The techheavy Nasdaq Composite was similarly buoyant, climbing 35 points, which added to the surprise in London as the TMTs fell away.
Once again turnover in equities remained robust, which, as one dealer put it, "tells us that the institutions are still in the mood to play". Turnover in equities reached three billion at the 6 p.m. cut-off point. But activity is expected to wind down considerably from today as US markets look ahead to tomorrow's Thanksgiving Day holiday which sees Wall Street closed. Many investors and traders extend the Thanksgiving break into Friday and markets are expected to be extremely thin.
Oil shares, which have blown hot and cold in recent sessions, were stalwart supports of the 100 index yesterday as the market adopted the view that OPEC and non-OPEC producers would eventually reach an accord over output cuts to help stabilise oil prices.
Other winners in the top 100 index included BAE Systems, pushed hard by ABN Amro, and some resurgent defensive sectors, including the tobaccos and retailers.
