US rates could now decide the future of the bull run

MARKET REPORT

Blue chips got themselves into a rare old tizzy with Footsie crashing 125.5 points, the biggest points fall since the black days of the crash nearly a decade ago.

But shares have, of course, risen dramatically since the trauma of 1987. And in percentage terms the slide was less than occurred during the crash and pales against plunges since the horrific meltdown. In October five years ago Footsie slumped just over 4 per cent against 2.51 per cent yesterday.

Futures action on both sides of the Atlantic did some damage. Worries about interest rates were another influence. Vague indications highly geared maverick hedge funds may be cutting their London positions were also unsettling.

But the dramatic slide seemed to be more the snowballing result of a series of unrelated and undramatic happenings and views than any single, identifiable factor. Trading was not heavy and there was no panicky selling.

Blue chips went into retreat from the first bell although manoeuvring ahead of the Footsie futures expiry allowed shares to more or less hold the line in early trading. Once the futures action was completed worries about New York sent Footsie steadily lower.

When New York opened sharply down a relatively gentle slide steepened. And it seemed to gather its own momentum. Even a modest transatlantic rally was brushed aside.

So the index closed at 4,865.8 which, illustrating just how strong blue chips have been, is the lowest for only three weeks.

There is, of course, a pressing desire in some quarters to get Footsie lower. Many believe there is a need for a correction and blue chips are hopelessly overvalued.

A Friday afternoon in the holiday season with many market men, including experienced players, away from their offices presented an ideal environment for what amounted to a rout in a vacuum.

The stories going the rounds ranged from big sell programmes with institutions allegedly switching into second liners and talk a big investment house was dumping stock ahead of a downbeat review of blue chips.

There was, of course, some profit taking.

Many market men confessed they were puzzled by a crash without reason or substance. Said one: "It's something of a mystery. Nothing has happened to spook the market. Many feel a correction is necessary but the nature and speed of the fall is astonishing."

It will be interesting to see whether the market adopts a more resilient attitude on Monday. If further weakness occurs - and US interest rates could go up next week - then the great bull run could be over.

Amid the mayhem second and third liners kept their cool. The FTSE 250 index edged ahead; so did the FTSE SmallCaps index. They were. however, not immune from the demoralising behaviour of their peers and finished below their best. Among supporting shares ending higher were Greenalls, the hotels and pubs chain, 10.5p to 487.5p, and Psion, the computer group, 15p to 376.5p.

Financials, which led the blue-chip charge, took a battering. HSBC, ruffled by higher Hong Kong interest rates and the biggest share fall since the Chinese took over, fell 166.5p to 2,167.5p. It alone accounted for 16 points of Footsie's fall.

Associated British Foods, on talk it could lead a break-up bid for struggling Dalgety, lost 38.5p to 498.5p and BSkyB, as Sam Chisholm's swan song failed to please, lost 33p to 437p.

On such a day blue chip flyers were few and far between. National Grid, with a 2.4 per cent advance to 256p, topped the pile. Significantly, BTR made further headway, up 1p to 215p.

Alliance & Leicester reflected solid interim figures and talk it is near to making an acquisition with an 8p lift to 620.5p.

Eidos, the computer games group, crashed 102.5p to 447.5p following a widening first-quarter loss and allegations regulators were investigating share dealings.

Proving a day is a long time in the market Graystone, an engineer, said bid talks were off. On Thursday it issued a statement that the negotiations, started a month ago, were continuing. With the company adding that figures would not meet market hopes the shares more than halved to 39p.

A warning from ABI Leisure, the caravan group, that a forecast two weeks ago of profits of pounds 4.5m was wrong and the group would suffer a loss, knocked the shares 27p to 38p; Portmeirion Potteries was smashed 65p to 430p on a cautious trading statement.

Arts & Entertainment
Ricky Gervais at a screening of 'Muppets Most Wanted' in London last month
tvAs the second series of his divisive sitcom 'Derek' hits screens, the comedian on why he'll never bow to critics who habitually circle his work
News
news
Life & Style
Going down: Google's ambition to build an elevator into space isn't likely to be fulfilled any time soon
techTechnology giant’s scientists say there is no material strong enough for a cable from Earth into orbit
News
David Cameron sings a hymn during the enthronement service of The Most Rev Justin Welby as Archbishop of Canterbury, at Canterbury Cathedral last year
news
VIDEO
Life & Style
From long to Jong: Guy Pewsey outside Mo Nabbach’s M&M Hair Academy in west London before the haircut
fashionThe Independent heads to an Ealing hairdressers to try out the North Korean dictator's trademark do
Sport
Vito Mannone fails to keep out Samir Nasri's late strike
sportMan City 2 Sunderland 2: Keeper flaps at Nasri's late leveller, but Black Cat striker's two goals in 10 minutes had already done damage
Extras
indybest10 best smartphones
News
peopleRyan Gosling says yes, science says no. Take the A-list facial hair challenge
Arts & Entertainment
tvCreator Vince Gilligan sheds light on alternate endings
News
Paul Weller, aka the Modfather, performing at last year’s Isle of Wight Festival in Newport
people
Arts & Entertainment
Play It Forward: the DC Record Fair in Washington, US
musicIndependent music shops can offer a tempting alternative to downloads on Record Store Day
Sport
video
News
Supermarkets are running out of Easter Eggs
Deals make eggs cheaper than normal chocolate
Life & Style
Wasp factory: 1.3 million examples of the Vespa scooter have been sold in the last decade
motoringIconic Italian scooter still revving up millions of sales
Voices
voicesThe Ukip leader on why he's done nothing illegal
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Analyst - Financial services, Client data, LEI

£40000 - £50000 per annum + BONUS + BENEFITS: Harrington Starr: A leading, Cit...

Management Consultancy - Operational Research Analysts

£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

Corporate Actions Consultant - Market data, ISO15022, presales

£45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: Corporate Acti...

Prudential Risk/Operational Risk Associate - London

£350 - £400 per day: Harrington Starr: An opportunity has arisen at a FCA regu...

Day In a Page

Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit
Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics

Is sexual harassment a fact of gay life?

Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics
Kim Jong-un's haircut: The Independent heads to Ealing to try out the dictator's do

Our journalist tries out Kim Jong-un's haircut

The North Korean embassy in London complained when M&M Hair Academy used Kim Jong-un's image in the window. Curious, Guy Pewsey heads to the hair salon and surrenders to the clippers
A History of the First World War in 100 moments: A forgotten naval victory in which even Nature played a part

A History of the First World War in 100 moments

A forgotten naval victory in which even Nature played a part
Vespa rides on with launch of Primavera: Iconic Italian scooter still revving up millions of sales

Vespa rides on with launch of the Primavera

The Vespa has been a style icon since the 1950s and the release this month of its latest model confirms it has lost little of its lustre
Record Store Day: Independent music shops can offer a tempting alternative to downloads

Record Store Day celebrates independent music shops

This Saturday sees a host of events around the country to champion the sellers of well-grooved wax
10 best smartphones

10 best smartphones

With a number of new smartphones on the market, we round up the best around, including some more established models
Homelessness: Why is the supported lodgings lifeline under threat?

Why is the supported lodgings lifeline under threat?

Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

A History of the First World War in 100 Moments

When the world’s biggest shed took over Regent’s Park
The pain of IVF

The pain of IVF

As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal
Supersize art

Is big better? Britain's latest super-sized art

The Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
James Dean: Back on the big screen

James Dean: Back on the big screen

As 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star perfected his moody act
Catch-22: How the cult classic was adapted for the stage

How a cult classic was adapted for the stage

More than half a century after it was published 'Catch-22' will make its British stage debut next week
10 best activity books for children

10 best activity books for children

Keep little ones busy this bank holiday with one of these creative, educational and fun books