The last thing London's equity market needed after the TMT-led pounding it has taken recently was a full-blown profits warning from a FTSE 100 constituent. But that was exactly what it ran into yesterday morning when Sema, the Anglo-French software group, said it would not be able to match its own and market targets for the full year. That news hit Sema shares and the rest of the software sector like a bombshell, driving the FTSE 100 index down sharply at the outset and prompting a seventh straight fall in the now bedraggled Techmark 100 index.
The latter plunged 160 points at its worst of the session before stabilising and eventually finished the day a net 99.17 lower at 2,745.34. That decline extended Techmark's fall on the week to a massive 401.28, or 12.7 per cent, matching that of the Nasdaq Composite. Nasdaq's dismal performance in recent weeks and months has been triggered by a sequence of disappointing results and profit warnings from many leading US tech and telecoms issues. The Techmark 100 has now plunged around 52 per cent from its March 6th record.
But while the software stocks proved to be the main drag on the FTSE 100 index, other technology and telecom groups such as Vodafone and British Telecom provided the index with some of the ammunition it needed to launch a strong mid-morning rally and see the day out in reasonable fashion. In addition, there were good performances from some of the more defensive sectors, including retailers, building materials and utilities.
The FTSE 100 gathered itself and pushed ahead to end a traumatic session a comfortable 40.3 higher at 6,327.6, having touched extremes of 6,359.3 and 6,237.2. Similarly the FTSE 250 picked up well after an initial slide, the index retreating to show a 35.2 loss early in the day before closing a net 16.0 higher at 6,561.0. The FTSE SmallCap finished well off its low, but was still 2.0 easier at 3,265.6 as the market shut.
Over the week, the FTSE 100 was down 112.5 points, or 1.7 per cent, the 250 was off 2.3 per cent and the SmallCap lost 2 per cent.
Before the Sema shock there had been expectations, subsequently proved correct, of a further telecoms-led rally by the market, with the futures markets pointing to a Dow/Nasdaq rally when the US market reopened for a half day following the Thanksgiving break.
There were hopes in New York that the presidential election saga was finally coming to an end, removing a big level of uncertainty from the market. In the event Wall Street delivered the expected and much-needed rally. New York markets were said to be poorly-attended throughout the morning and in London, equity turnover was a rather unimpressive 1.5 billion shares by the 6 p.m. count.
