Technology stocks continued their recovery from recent losses but the FTSE 100 index lost ground in the face of higher bond yields yesterday. There were a few tentative signs that investors were reassessing the rate optimism that carried both the US and British stock markets sharply higher last week.
The minutes of the US Federal Reserve's February meeting, published last Thursday, clearly point to the potential for further rate increases.
That made international bond markets nervous, including London, where the benchmark 10-year issue fell by about a point. British investors were also having second thoughts about the potential for British rate rises after the jump in public spending unveiled in last week's budget.
The FTSE 100 index ended 51.3 lower at 6,687.2, having been 84.1 off at 6,654.4 at its worst level of the day.
But there was a rather better performance from the other indices. The FTSE 250 advanced 37.9 to 6,602.1 and the SmallCap 9.8 to 3,409.0.
The Techmark 100 index of leading technology stocks continued its rebound, climbing 52.55 to 4,723.39. Technology funds are very popular with retail investors, many of whom are currently pouring money into the market ahead of the April 5th deadline for individual savings account contributions.
Baltimore Technologies was the best performing stock in the FTSE 100 index, although it remains well below its recent peak of £140. Freeserve, the Internet service provider, maintained its rally.
The market's oil heavyweights, BP Amoco and Shell, took a hit as traders waited for the latest package from OPEC, which is expected to get oil production up and the crude price down.
The main British economic news was not expected to make much of a difference to the interest rate outlook. Figures showed that British current account deficit in 1999 was £12.8 billion (€20.99 billion), the highest annual shortfall since 1990.
However, the fourth-quarter deficit narrowed to £2.8 billion from the third-quarter's £3.1 billion.
Meanwhile, the latest estimate of fourth-quarter gross domestic product growth was unchanged at 0.8 per cent, although the year-onyear rate edged up slightly to 3 per cent from 2.9 per cent.
With the overall market still lacking a clear direction, the debate continued on whether investors would switch from new economy to old economy stocks.
Turnover was 1.6 billion shares by the 6 p.m. count, amid signs that activity was subsiding in the aftermath of the Vodafone AirTouch/Mannesmann takeover.
