Britain’s stock market suffers worst day in months with more than £51bn wiped off FTSE 100
Britain’s stock market has suffered the worst day in three months with £15bn being wiped of the FTSE 100.
The crash came in the wake of fears that a second coronavirus wave will force the Government to launch harsh new lockdown measures.
Markets also tumbled across the world amid the continuing coronavirus pandemic and its effect on the global economy.
All but four FTSE 100 firms closed in the red on Monday as traders witnessed the index hit a four month intra-day low before recovering marginally later in the session.
Shares in hospitality and leisure firms were particularly dented by the rapid sell-off.
London’s top flight closed 202.76 points lower at 5,804.29 at the end of trading on Monday.
Sentiment also dived across Europe’s other major markets, with the German Dax declining at an even faster rate than the FTSE due to its own increase in cases.
The German Dax decreased by 4.37 per cent, while the French Cac moved 3.74 per cent lower.
Connor Campbell, financial analyst at Spreadex, said: “Months of warning signs and buried fears struck at once on Monday, the market buckling under the threat of another round of national lockdowns.
“Though most of the headlines have been focused on Europe, the United States is having its own nightmare.
“There’s no bipartisan fiscal stimulus in sight, an already heated election just got all the more intense following the death of Ruth Bader Ginsburg, and Covid-19-related deaths are fast approaching 200,000.”
The Dow Jones went into a screeching reversal as a result, sinking to its worst price since the start of August and 2,400 points adrift from its early-September highs.
Meanwhile, sterling dropped on the back of a rebound in the dollar, having already a suffered poor recent trading amid uncertainty over Brexit talks.
The pound fell by 0.94 per cent versus the US dollar at 1.279 and was down 0.06 per cent against the euro at 1.09.
Airline and pub stocks were particularly hard hit by lockdown fears, with British Airways owner IAG hitting the foot of the FTSE, while Mitchell & Butlers and JD Wetherspoon both plunged in value.
The only risers on Monday were three of the UK’s largest supermarket chains and takeaway delivery firm Just Eat Takeaway, which all continued to trade strongly during the first UK lockdown.
In company news, shares in HSBC hit a 24-year low after journalists published revelations from a cache of leaked documents which fuelled money laundering concerns.
It closed 16p lower at 288p after reports that HSBC allowed fraudsters to transfer millions of dollars around the globe.
Elsewhere, Rolls-Royce shares plummeted after the engineering giant confirmed it is considering tapping investors for £2.5 billion to shore up its finances.
It confirmed reports that the fundraiser was a funding option being reviewed by the business, sending shares 19.45p lower to 160.7p.
Security giant G4S fell by 7.6p to 186p after revealed its revenues have been “resilient” in the first eight months of the year, as it remains locked in a potential hostile takeover battle with a Canadian rival.
The price of oil tumbled into the red amid concerns that lockdown restrictions could hit the travel sector and weigh on demand.
The price of a barrel of Brent crude oil decreased by 4.73 per cent to 41.11 US dollars.
The biggest risers on the FTSE 100 were Tesco, up 5.9p at 225.5p, Morrisons, up 3.95p at 178.2p, Just Eat Takeaway, up 116p at 8,544p, and Sainsbury’s, up 1.75p at 196.75p.
The biggest fallers of the day were IAG, down 13.35p at 97.2p, Rolls-Royce, down 19.45p at 160.7p, Melrose, down 10.6p at 109.4p, and ITV, down 4.76p at 59.84p.
Meanwhile, across the Atlantic, Wall Street slumped too, though the S&P 500 had pared its losses by the end of the day.
The drops began in Asia as soon as trading opened for the week, and they accelerated in Europe on worries about the possibility of tougher restrictions there to stem rising coronavirus counts.
In the US, stocks and Treasury yields weakened, while prices sank for oil and other commodities that a healthy economy would demand.
The S&P 500 fell 38.41 points, or 1.2 per cent, to 3,281.06. It extends the index’s losing streak to four days, its longest since stocks were selling off in February on recession worries.
But a last-hour recovery helped the blue chip index more than halve its loss of 2.7 per cent from earlier in the day.
The Dow Jones Industrial Average fell 509.72, or 1.8 per cent, to 27,147.70 after coming back from an earlier 942 point slide. The Nasdaq composite slipped 14.48, or 0.1 per cent, to 10,778.80 after recovering from a 2.5 per cent drop.
Wall Street has been shaky this month, and the S&P 500 has dropped 8.4 per cent since hitting a record on September 2 amid a long list of worries for investors.
In Asia, Hong Kong’s Hang Seng dropped 2.1 per cent, South Korea’s Kospi fell 1 per cent and stocks in Shanghai lost 0.6 per cent.
The yield on the 10-year Treasury fell to 0.66 per cent from 0.69 per cent late on Friday.