The FTSE 100 has suffered its worst day in three months after share prices slumped due to fears that a second coronavirus lockdown is on the way.
Companies in the travel, retail and hospitality sectors all saw stock prices tumble as the UK’s top scientific advisors warned the country could be heading for 50,000 cases a day by mid-October.
The market closed at a loss of 202 points, or 3.38% – the worst day since June 11. Markets in New York, Frankfurt, Madrid and Paris were all similarly hit.
Analysts said up to £50 billion was wiped off the value of companies on the FTSE over the course of the day.
Among the worst hit was British Airways owner IAG, which was down more than 12% to its lowest level since 2012. The airline has already had to make 10,000 staff redundant since the start of the pandemic.
Richard Hunter, head of markets at interactive investor, said: ‘With no confirmed vaccine for the coronavirus as autumn approaches, there is likely to be additional strain on government resources as they attempt to stave off a second wave, as the colder weather inevitably brings further cases to contend with.
‘Prospects for a sharp economic recovery have all but disappeared, as global growth receives the new threat of a resurgent pandemic.’
Tesco, Morrisons and Sainsbury were among the few to see stock prices rise after they benefitted from higher levels of spending during the first lockdown. Similarly companies focused on home delivery like JustEat also did well.
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.’
Adding to concerns about the impact of a second lockdown was news that the banking industry has been hit by money laundering allegations.
HSBC, one of the banks accused in a number of leaked documents, saw its share price fall to its lowest level since 1995.
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