Market Report: Low volumes suggest the old adage has taken effect

The "sell in May and go away" crowd have increasing reason to feel smug. Anyone who shorted the FTSE 100 at the start of the month, following the old City cliche, is quids in. The market is going nowhere good any time soon, by most accounts. Big buy orders are even less fashionable than French Connection (off 9.5p to 30p yesterday after another profits warning).

The index of 100 leading shares fell 66.87 to 5338.38, not a terrible fall, but bad in the context of repeated slips. An up day would be welcome.

David Jones at IG Index said: "It was a funny old day. The morning was just worries about Greece and the afternoon saw really weak figures from the US Fed."

In some ways that was sort of taken as a positive. "They were so bad the Fed will have to do something," Mr Jones said. Expect more quantitative easing, in other words.

The market is now back down to lows last touched in December. Unless there's an outbreak of optimism soon, and the market keeps going past 5,300, the next point of support might be 5,000, the worrywarts say.

One gloomy analysis yesterday said it wouldn't be time to buy the FTSE 100 until it hits 4,700. So tin hat time for a little while, then.

"Equities never had a monkey's against a background of the Greek tragedy and serious concern over Spain's finances," said the ever-lugubrious David Buik at BGC Partners.

Of the FTSE 100's 66-point loss, banks were responsible for 15 points, mining seven points, oil & gas eight and Vodafone four points, he informs us.

The thing is, yesterday was supposed to be a turnaround day. Everyone said so.

Overnight the wires chirped: UK shares would open higher thanks to "strong economic data from Asia" and the chance of more liquidity stimulus from the US.

The FTSE 100 futures market was up. Investors are supposed to take that as a signal of direction. They pile in and the prediction becomes self-fulfilling.

Even the glass-half-empty crowd were talking of a bear squeeze, as those short of the market went to cover positions. This never materialised, and the new assumption is that while the UK market is better positioned than others in Europe, it is still inevitably linked to the euro crisis, so for now investors will prefer Asian and US assets.

Aviva, the accident-prone insurer, had another bad day at the office, leading the market down. It was off 13.2p at 269.7p after it said first quarter sales were so-so and that it would be without a chief executive for at least the rest of the year.

The mean crowd said this could only benefit the business; others wondered how it could possibly take that long to fill a job paying upwards of £3m a year.

Market-makers declined to chase business by narrowing spreads on the miners – a common tactic on a bad day – so they slumped too. Kazakhmys fell 21.48p to 690.5p and Glencore 8.85p to 354.3p. Glencore floated at 530p, you will recall, a price that in no way indicated the top of the commodities market. Its own bankers said so.

Volumes were low – there was a lot of hand-sitting. By mid morning a mere 208 million shares had changed hands. On a good day there would be more like 400 million being bought and sold. "It's quieter than a witches left nipple," said one commentator, mixing metaphors with little concern for either language or decorum.

Banks weren't getting any love either. In theory, traders tend to think that Royal Bank of Scotland and Lloyds Banking Group will come good one day. Just not soon. RBS lost 0.69p to 21.06p and Lloyds fell 1.02p to 27.65p. Barclays couldn't avoid the fray, giving up 7.1p to 181.9p.

Chris Beauchamp, the market analyst at IG Index, said: "The eurozone crisis continues to gnaw away at sentiment. Last night's Fed minutes changed nothing, containing the usual caveats that the world's biggest central bank might intervene if things take a turn for the worse, but overall markets are being left to fend for themselves."

Mike McCudden, head of derivatives at Interactive Investor, said: "With the ECB now offering no liquidity to some Greek banks and Greeks themselves stockpiling cash under the mattress, the mess created in the wake of their exit is becoming increasingly difficult to fathom.

"In the face of uncertainty over Greece and the lack of clarity over the impact of Greece staying or going, markets look set to remain volatile for quite some time."

Those looking for light relief turned to the spread betters. ETX Capital is offering clients the chance to punt on Facebook shares ahead of the flotation tomorrow. It opened its spread for the stock at $37.39 to $40.39, representing a market valuation of up to $110bn. That spread quickly moved to $43.50 to $46.50, which suggests a lot of early interest.

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