There may not have been much of a move in the main FTSE indices yesterday but there was a lot going on in the market, thanks to a £3 billion sterling (€4.9 billion) placing of Vodafone stock and a continued sell-off in the technology sector.
The placing of 925 million shares in Vodafone by Deutsche Bank and Goldman Sachs was described as the biggest ever and appeared to be extremely successful. Vodafone shares wobbled for a while but finished the day just 2.7 per cent lower.
Wall Street's positive reaction to the latest rise in US interest rates got the London market off to a buoyant start. Within 10 minutes the FTSE 100 index was 74.4 points ahead at 6,692.3. But that proved to be the best level of the day. Within a couple of hours, the prospect of higher British interest rates returned to induce a bit of caution.
The minutes of the March monetary policy committee meeting showed that all nine members voted in favour of unchanged rates. But one group said that a quarter point increase might be justified, and the committee did worry about wages growth and the strength of the housing market.
Although some economists think base rates are close to their peak, the minutes suggested further rate rises might be on the way.
Footsie dropped a low of 6,551.7, down 66.2, shortly after the minutes were released but then settled into a narrow trading range. It ended off 8.3 at 6,609.6.
The FTSE 250 index also suffered a slight drop of 7.7 to 6,515.3 while the SmallCap edged up 3.2 points to 3,402.
The main move of the day was in the Techmark 100 index which followed up Tuesday's 6 per cent drop with a decline of another 1.5 per cent to 4,520.06.
There were more big falls in the recent entrants to the FTSE 100 index with software encryption company Baltimore dropping 8.3 per cent, telecoms group Kingston off 9.4 and biotechnology company Celltech down 10.4 per cent. Freeserve also lost ground and is now less than half its peak price.
Old economy stocks fared far better with BG and Kingfisher leading the way among the Footsie stocks.
HSBC, in its analysis of the old economy/new economy split, argues that the valuation differential has gone too far. Several old economy sectors imply growth rates consistent with a recession.
HSBC cites several British companies among its favoured European value stocks including Arjo Wiggins, BPB, Hanson, Billiton, Legal & General, Reckitt Benckiser, Royal & Sun Alliance and Unilever.
Volume, boosted by the Vodafone deal, was 2.23 billion shares at the 6 p.m. count.
