It may not have been the end; it may not have been the beginning of the end; but for much of the session it looked as if it might have been the end of the beginning of the market's love affair with the so-called "TMT" shares, the technology, media and telecoms stocks.
Tuesday's events in the US, when the Dow Jones Industrial Average fell 135 points and the tech-heavy Nasdaq Composite posted its biggest-ever points decline, falling more than 200 points, pulled the rug from underneath British TMT stocks.
The result was sizeable profit-taking in the London market's recent high-flyers, with the TMTs and biotech stocks, also one of the most recently favoured sectors, enduring protracted spasms of selling pressure.
Such was the pain in those areas that the Techmark 100 index, which has more than doubled since its introduction in November, suffered its biggest ever percentage and points loss. The tech stocks index plunged 428.6, or almost 8 per cent, to 5,071.84. Losses in the main FTSE indices, although severe, especially in the 250 index, were insignificant compared with the retreat in the Techmark.
The edge was taken off the worst of the FTSE falls, however, by a strong rally in the Dow yesterday which, after a minor fall at the start of the session, rose sharply to post a near 200-point rise shortly after London closed.
There was no such rally for the Nasdaq, however, which registered another three-figure loss despite the strength of the Dow.
At the close, the FTSE 100 was 40.1 lower at 6,447.0, having fallen 91.0 and dropped back through the 6,400 level at its worst of the day in mid-morning. The FTSE 250, heavily loaded with high-tech and Internet stocks, was given a thorough buffeting, eventually closing 133.4, or just short of 2 per cent, off at 6,579.7.
Just as bad was the performance of the FTSE SmallCap which, already heavily represented with high-tech/Internet stocks, was additionally burdened by its content of biotech shares, which were savaged in the US overnight and again in London yesterday after what was seen as bearish news on both sides of the Atlantic. The SmallCap closed 65.0, or 1.9 per cent, down at 3441.2.
But just as the new economy stocks dragged the market down, the old economy stocks came galloping to the rescue of the various indices. "Today was all about value stocks and the old economy. There has been a huge sea-change going on; there is a feeling that the new economy stocks simply can't meet expectations," said a senior market-maker at one of the big US investment banks in London.
Turnover in equities was 2.2 billion shares.
