The FTSE 100 and global stock markets more generally, dropped yesterday as the threat of a second lockdown in the UK and elsewhere reared into view as feared second waves of Covid-19 pandemic gather pace. London’s benchmark FTSE 100 index suffered its worst single-day return in over three months as it fell by 3.4%, wiping out gains eked out since September 11th.
The FTSE 100 is now 22% off its level of February 20th, which marked the start of the coronavirus sell-off. Early morning trading on Tuesday does, however, show some positivity with the index bouncing back by 0.66%, though it remains to be seen if that more positive mood holds throughout the day.
With cases of Covid-19 currently rising quickly in the UK, 4368 new positives recorded yesterday compared to 3899 on Sunday, the government’s chief scientific and medical advisers have warned new cases could reach 50,000 a day by mid-October. New restrictions are seen as the only realistic means of heading that surge off. But even if the infection rate can be brought back under something resembling control, “a very challenging winter”, seems inevitable.
On the London Stock Exchange, stocks in the sectors that have generally been worst hit by the pandemic again bore the brunt yesterday. Travel, tourism and hospitality saw the steepest falls with airline, hotel and pub and restaurant companies suffering. Wagamama-owner The Restaurant Group slumped by 17.7% and pubs group Marston’s by 16%. In travel and tourism, BA-owner IAG suffered a 12.1% slide and EasyJet 8%. Bus and rail companies FirstGroup and Stagecoach were down 14% and 15% respectively.
British banking stocks also took a hit yesterday on new allegations they are a ‘weak link’ in international efforts to combat money laundering. The HSBC share price is now at a 22-year low after falling 5.3% and NatWest (formerly RBS) is at an all-time low after a 3.7% loss.
The stocks to benefit were also, perhaps predictably, those that investors rushed into several months ago during the main coronavirus sell-off. Supermarkets were up with Tesco gaining 2.7%. Just Eat Takeaway, the takeaway ordering app and delivery business gained 1.4%.
The more UK-centric FTSE 250 mid-cap index was also down 4% yesterday and major indices around Europe followed the same pattern as companies listed on the London Stock Exchange. The pan-European Stoxx 600 index slid 3.2%, also its worst day since June 11th, and Germany’s DAX 4.4%. France’s CAC was down 3.7%.
Over on Wall Street later in the day the sell-off was milder but still clearly present. The S&P 500 lost 1.2% and the Dow Jones industrial average 1.8%. The tech-heavy Nasdaq almost escaped, dropping by a marginal 0.13%.
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