A fall of more than 70 points on the FTSE 100 index took the blue-chip benchmark worryingly close to the bottom of an established trading range.
While not extensive in itself, it represented the latest stage in a slide that has left some bulls feeling as if they had booked a summer holiday at a toreador training school.
From its peak just over two weeks ago to its close yesterday, Footsie has tumbled more than 7 per cent. It ended below one support level and within striking distance of the more significant barrier of 5,700. The index last closed below that level on March 5th.
Footsie fell 73.6 to 5,736.1, while the FTSE 250, supported by takeovers, lost only 3.0 at 5,444.9. The SmallCap fell 3.0 to 2,457.3.
Pessimists, on the other hand, surfaced with barely concealed delight. For example, Mr Gareth Williams, of ABN Amro, said: "UK institutions are increasingly bearish about the market and that view is starting to feed into what the market is doing."
He does not see heavy selling by the big investment funds, but he maintains that the buying has definitely dried up.
Mr Williams also believes that, after returning £4.5 billion to shareholders, and thus ensuring that 1998 is already the biggest year for share buy-backs in a decade, companies might be drawing in their horns.
ABN has an end-of-year Footsie target of 5,500 and sees no reason why the index should not slip another 4 per cent.
But dealers reported surprisingly solid activity, which suggested the market was not going down without a fight.
"We have seen a lot of two-way business and there is a lot of corporate activity going on. Until just before the close, the market put on a remarkably resilient performance and it has surprised a lot of people," said the head of sales trading at one broker.
Because of Monday's sizeable slide by the Dow Jones Industrial Average, London dealers had expected Footsie to start trading some 50 points lower. It was up 11 when the pre-market index closed and initial interest had been calculated.
Footsie remained steady as an enthusiastic response to interim figures from NatWest contributed 10 points to the index.
It shrugged off a placing-related downturn in Pearson shares and traded within a single-digit range until Wall Street opened.
It was only during the last hour of trading that the market really began to turn. Wall Street dropped for the second day and showed a 150-point deficit shortly after London closed. And, after the close, with the Dow down more than 200 points, the Footsie future contract was signalling an initial quote for Footsie 30 points below 5,700.
