Yesterday's trading: Global fall sends London tumbling
It was an accident just waiting to happen. Market-makers have for weeks been desperate to get share prices lower so that they could hopefully replenish short book positions.
Overnight events in China, which saw the Shanghai Composite index plummet more than 9% for its biggest fall in 10 years, and growing fears about possible sanctions against Iran, gave them the perfect excuse to give the market a whack. And did they?
They slashed opening prices in the hope that nervous investors would panic and trouser some of the profits accrued during the raging bull market of recent months.
The ploy worked. Although it also took a warning about a possible recession in the US this year from former Federal Reserve chairman Alan Greenspan - very timely, may I say, ahead of the publication of his memoirs - and fears of a South African 'windfall tax' on the mining sector to tip many investors over the edge.
The Dow Jones slumped 416 points at the outset, while Nasdaq traded 96.65 lower. Apple delaying the release of its Apple TV product until mid-March rubbed salt in the technology market's wounds.
It was no real surprise to see that the FTSE 250, which has been breaking records for weeks, sustained the biggest fall. It collapsed 431.5 points to 11,180.9. Early selling was light and dealers noted that when it was 270 points down at 8.30am, only 213m shares had been traded. Say no more. The FTSE 350 shed 85.6 points to 3,301.9.
The Big Daddy Footsie was dragged sharply lower by a sell-off in heavyweight mining stocks and closed 148.6 points down at 6,286.1. Wall Street succumbed to the bear attack with sentiment not helped by news of a sharper-than-expected 6% drop in durable goods orders in January, which fuelled growth concerns.
Having risen a healthy 15% already this year, miners were well and truly put through the mincer. Concerns over potential measures to cool the Chinese economy and fears that a possible further rise in interest rates could depress commodity prices sparked bouts of profit-taking. As did reports that a task force is being set up in South Africa to consider a potential windfall profits tax.
Broker Numis warned that should a tax be implemented it would largely impact Anglo American (123p down at 2507p), Lonmin (209p off at 3165p) and Aquarius Platinum (103p easier at 1460p).
Xstrata lost 177p to 2479p. A late jackanory suggested that shop broker Cazenove is about to step down as broker to rival Anglo American. It prompted talk that perhaps Xstrata and Anglo could soon be getting a lot closer. BHP Billiton lost 69p at 1051p, Antofagasta 28p at 473½p, Kazakhmys 59p at 1136p, Vedanta Resources 66p at 1275p and Rio Tinto 141p to 2799p.
Fund managers took the market's setback on the chin with Amvescap closing 37½p down at 612½p, Schroders 45½p at 1020p, Standard Life 18½p at 301p and Man Group 31p at 557p. Royal & Sun Alliance declined 6¾p to 157p. Financial information group Reuters was an isolated firm spot at 432p, up 6p, thanks to a Credit Suisse upgrade to outperform ahead of tomorrow's annual results.
Argos-to-Homebase group Home Retail traded 11½p higher on early vague talk of a 530p a share cash offer from Apax before retreating to finish 8½p lower at 420p.
Cairn Energy slipped 43p to 1587p despite announcing a 300p special dividend to shareholders from the proceeds of the recent flotation of its Indian business.
Major institutions who loaded up with shares of newly floated Sports Direct were last night already nursing hefty losses. Priced at 300p, conditional dealings kicked off yesterday and the surrounding gloom dragged the stock sharply lower to a close of 281p. Founder Mike Ashley's not worried, he's now £929m better off.
Online casino group PartyGaming lost 3¾p to 36p on profit-taking ahead of tomorrow's results. Music giant EMI eased 6p to 240¾p although rumours persist that a private equity consortium will soon launch a cash bid in the region of 275p a share. Dealers agree that would get underperforming boss Eric Nicoli out of jail.
Aim-listed Traction Technology accelerated 3½p to 32½p on revealing its low emission series diesel electric hybrid engine system will be trialled by bus company Arriva Southern Counties in April. Mayor of London Ken Livingstone also announced that all new buses will be diesel-electric hybrids as soon as there is volume production available, which appears likely in the next few years.
• Soon after reporting impressive results and waxing lyrical about prospects for the Israeli-based world leader in antennae for fixed broadband wireless, directors of MTI Wireless Edge sold large lumps of stock. Non executive chairman Zvi Borovitz unloaded 873,000 shares, chief executive Dov Feiner 400,000 and finance director Moni Borovitz 127,000, all at 53p. The close was 4¾p down at 51½p.
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