The prospects of a hard landing for the US economy, with all its implications for corporate earnings in the US and elsewhere, continued to alarm investors in London's equity market yesterday.
All the main indices came under intense downside pressure, particularly the Techmark 100 index. It fell more than 8 per cent in response to the latest weakness in TMT stocks on Wall Street overnight and again at the outset of US trading yesterday.
Surprisingly, both the US measures rallied quickly before coming under renewed pressure as London trading drew to a close.
At the close of business, the FTSE 100 was down 134.8, or 2.18 per cent, at 6,039.9, having fallen to a session low 6,029.3, down 145.4. It was the same story for the other indices, with the 250 down 66.3 at 6,464.8 and the SmallCap 40.3 lower at 3,139.7. The Techmark 100 dropped 143.0 to 2,344.61.
While many market observers had expected London to trade relatively quietly in the week following the new year holiday, it was clear from the sharp increase in turnover yesterday that some institutions were selling lines of stock in a number of the TMTs.
The seeds of the market's latest discontent were sown overnight in the US where tech and telecom stocks took a pasting. That weakness was transferred to London at the outset.
No fewer than 17 of the 20 worst performers in the FTSE 100 came from the TMT sector.
Vodafone, the UK's biggest stock by market capitalisation, was hammered all day, falling 9 per cent at worst and eventually settling a net 7 per cent lower, and accounting for more than 40 FTSE 100 points.
Volume in Vodafone was a colossal 490 million shares, one of the highest daily totals for many months, with dealers hinting that a big share placing, possibly by Hutchison Whampoa or KPN/Telia could be under way.
Dealers are now focusing intently on tomorrow's US non-farm payroll report.
there were rumours in the market that the Fed's open market committee might well decide to cut US rates instantly if the jobs report confirms recent evidence of a sharp slowdown in the economy.
Turnover in equities reached a hefty 1.78 billion shares.
