In a typically subdued start to the trading week, London's equity market fell back yesterday, burdened by another rise in sterling and the impact of last Friday's hefty decline on Wall Street.
But dealers insisted there was no big sell-off and that a general lack of interest in chasing the market was mainly behind the decline.
"It really did feel as if no one wanted to deal although later it transpired that there was plenty of sector rotation, out of the recent high-tech type winners and into the so-called old economy stocks," said one marketmaker. He said the utilities had been attracting cash as had many of the banks which have been given a rough ride by the market for some time.
But he still insisted that the underlying trend in the stock market was on the sell side. "History suggests that January tends to set the trend for the year; it really does feel like that could be the case this year," he said.
London's poor showing was set against a mixed performance on Wall Street. The Dow Jones Industrial Average, which dropped 230 points on Friday, initially fell back about 19 points before rising strongly to post a three-figure rise shortly after London finished. But the tech-laden Nasdaq Composite was hit very hard on the downside as the Dow rallied.
At the close of trading, the FTSE 100 was down 98.4 at 6,099.6, having been 143.9 lower at 6,054.1 at its worst of the day.
The market's weakness was mostly confined to the leaders, however; the FTSE 250 closed 2.6 higher at 6,445.3, after extremes of 6,452.5 and 6,429.0, while the FTSE SmallCap was finally 4.0 lower at 3,320.9, having touched 3,330.1 and 3,319.9.
Some broking houses maintained their bullish stances, however. The strategy team at Salomon Smith Barney said that stirring up any interest in British equities, especially in old world sectors, is a thankless task.
The day's economic news played no really big part in determining the market's trend yesterday. Fourth-quarter British gross domestic product was unrevised at plus 0.8 per cent, a year-on-year gain of 2.9 per cent, in line with expectations.
The breakdown of individual FTSE 100 constituent performances provided the answers to questions about yesterday's market setback. The banking sector, so badly mauled over the past 18 months and more, delivered five out of the six best performers in the top 100 stocks. Turnover fell just short of 2 billion shares, eventually reaching 1.94 billion, with Vodafone accounting for 316 million.
