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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones