Shares tumbled from the outset with all leading stocks affected by Friday’s hefty tumble on Wall Street. At the start of trading, the FTSE was down 86 points but with very little dealing going on, leading shares made a steady comeback to leave the index down 58.1 at 4807.7.
Traders said there was no sign of panic selling and the current correction was seen as a healthy development. The fall had been expected by City watchers, who said European markets would post losses to catch up with the heavy fall in New York, most of which took place after the London and continental bourses had shut.
However, while analysts agreed further volatility was likely in the London market over the coming days, a crash on the scale of 1987 was not about to happen.
One senior equity strategist said the market had run away with itself inrecent weeks and was looking over-valued. The recent fall was needed to calm things down.
City experts pointed out that part of Friday’s fall was due to investors switching out of big financial, pharmaceutical and oil stocks into more medium-sized companies which have lagged behind the FTSE-100 index’s surge.
Central to the way the market behaves will be UK economic figures and any decision by the US authorities tomorrow to raise interest rates.
Half-year figures from Argos failed to catch the City’s imagination. The group warned that current sales growth was unsustainable and its shares slipped 4p to 618p.
As in late trading on Friday, financial stocks took a pounding. Midland Bank parent HSBC dropped 53p to £21.14, Barclays down 16p at £13.81, Lloyds TSB 7p weaker at 718p.
PA News 18/08/97
