More bad news from some of the biggest names in the technology sector meant that stock markets around the world continued their downward spiral yesterday.
While there were some tentative signs that the sell-off in technology shares might have peaked, dealers said that markets would remain nervous and stocks would remain under pressure until the outcome of the Federal Reserve's meeting to set US interest rates next week.
There had been some speculation that, given the weakness of equity markets, the Fed might be particularly aggressive and reduce interest rates by 0.75 of a percentage point. But a report which showed that US consumer confidence had edged up unexpectedly in March after three months of sharp falls has dampened hopes of a 0.75 of a percentage point cut in rates. A half-point cut in US rates is now expected.
But some economists played down the significance of that report, noting that most of the poll participants were surveyed before this week's big slide in the US stock market.
Thursday's heavy fall in both the Dow and Nasdaq Composite Index set the tone for trading on European markets yesterday. The profits warnings from Compaq and Oracle were followed by a similar warning from the Dutch chip designer ASML. These bad news announcements followed a series of sentiment sapping announcements from various technology giants including Motorola, Cisco, Intel, Cable & Wireless, Ericsson and Siemens.
On New York, markets opened weaker but then recovered in midday trading as bargain-hunters went in search of what they believed were some undervalued stocks. At the close, the Dow was down 203.64 points on 9,827.64, while the technology-Nasdaq composite index was 49.65 down on 1,891.06. Earlier the London market took another hammering with the FTSE-100 index down almost three cents to its lowest closing level for 27 months. The FTSE techMARK index, which is an index of London-listed technology stocks, fell almost 5 per cent as software companies were heavily sold.
The stream of bad corporate news, which has yet to show any signs of letting up, and the dramatic slide of the FTSE-100 index to well below long-term support around 6,000 points have made it tough to call when the bottom will be reached.
One of the worst technology performers in London was the Irish software group Baltimore Technologies, which fell 15 per cent in early trading before eventually closing down 12 per cent as the shares fell to 24 1/2p to 180p sterling.
"There is no momentum in this market. It's like trying to push water uphill," said Mr Justin Urquhart-Stewart of Barclays Stockbrokers in London. "Interest rates next week may give us a rally but I think it will be a bear rally," he said.
Fund managers earlier this year talked about shares being attractively valued around the 6,000 level for the FTSE. Yet, there are still no signs of buyers filling their boots even at current levels.
"Simply because it is in attractive valuation territory on its own account, won't provide enough support to shrug off the difficulties being experienced at a global level," said one fund manager.
