US rates could now decide the future of the bull run


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 and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
The Etihad Stadium, home of Manchester City
premier leaguePlus all the build-up to Man City vs Chelsea and Everton vs Palace
Polly Borgen at the Tribeca Film Festival in 2012
peopleThe Emmy award-winner starred in Cape Fear, the Sopranos and Desperate House Wives
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam