The FTSE 100 suffered its second biggest one day fall in the history of the index, and the worst day since 1987, as it closed down 10.87 per cent.
London’s blue-chip index plunged 639 points to close at 5,237 points, as global stocks suffered yet another meltdown after Donald Trump imposed a travel ban on Europeans visiting the US.
The crash has wiped £191bn off the index today, bringing the total amount lost since last Friday to £367bn.
Earlier this week the FTSE 100 fell 7.7 per cent, its worst day since 2008.
|1||20 October 1987||-12.2 per cent|
|2||12 March 2020||-10.9 per cent|
|3||19 October 1987||-10.8 per cent|
|4||10 October 2008||-8.8 per cent|
|5||6 October 2008||-7.9 per cent|
|6||9 March 2020||-7.7 per cent|
|7||15 October 2008||-7.2 per cent|
|8||26 October 1987||-6.2 per cent|
|9||11 September 2001||-5.7 per cent|
|10||6 November 2008||-5.7 per cent|
When US trading paused shortly after the open as panicked traders pulled their investments out of the S&P 500, the FTSE 100 plunged 9.4 per cent.
The coronavirus crisis has wiped billions off FTSE 100 companies since February as infections spread aggressively across Europe.
A European Central Bank decision to hold interest rates – which are already in negative territory – and announce new stimulus did nothing to stem investor fear. Measures the ECB outlined included allowing Eurozone banks to breach requirements and delaying stress tests to 2021.
It also expanded an asset purchase programme, but disappointed traders by shying away from an expected 10 basis point cut.
European stocks went into freefall after President Trump’s announcement. France’s Cac collapsed 12.28 per cent while Germany’s Dax closed down a staggering 12.24 per cent.
Mat Weller, global head of market research at Gain Capital, said: “It appears that the ECB believes negative interest rates will not have a meaningful impact in combatting coronavirus, and while some of its unconventional policies may have a role to play, fiscal policy is the best tool to address the crisis.”
Meanwhile, US stocks hit the circuit breakers shortly after trading began this afternoon. A seven per cent plunge on the S&P 500 triggered an automated 15-minute pause in trading for the second time this week.
It failed to have much of an impact when trading restarted.
The Dow Jones sank nine per cent before recovering somewhat to stand at -4.56 per cent. The S&P 500 continued its fall to stand 8.5 per cent down before recovering to similar levels to the Dow. The tech-heavy Nasdaq is down 4.39 per cent after plunging eight per cent earlier in the day.
FTSE 100 and global stocks sink on travel ban
FTSE’s tumble came despite the government and Bank of England launching a combined stimulus package yesterday to support the economy throughout coronavirus.
Trump announced the ban – which will not apply to the UK or Ireland – in the early hours of this morning. He said: “This is the most aggressive and comprehensive effort to confront a foreign virus in modern history.”
The move came after the World Health Organisation labelled Covid-19 a pandemic yesterday.
The travel ban on 26 EU countries will last 30 days and come into effect on Friday. Speaking from the Oval Office, he said: “To keep new cases from entering our shores, we will be suspending all travel from Europe.”
Travel stocks plunge
Jasper Lawler, head of research at London Capital Research group, said: “Trump managed to spook an already spooked market.”
WH Smith warned of a huge £40m hit to its stores across airports and train stations. Shares in the retailer plunged 13.6 per cent to 1,371p.
FTSE 100 airline stocks also tumbled on the US travel ban. British Airways owner International Airlines Group (IAG) suffered an 8.5 per cent fall in its share price to 363p. Easyjet shares dropped 6.5 per cent to 865p.
Norwegian Air’s shares crashed 25.6 per cent on Norway’s stock market. The firm has already cancelled 3,000 flights over coronavirus and the airline is tipped to follow Flybe into collapse.
Ryanair fell 4.7 per cent to 10.6p and fellow budget flyer Wizz Air sank 8.1 per cent to 2,802p.
Ayush Ansal, chief investment officer at hedge fund Crimson Black Capital, said: “The travel ban is a major over-reaction from President Trump and economies and markets globally will pay the price.”
“Coupled with the World Health Organisation’s declaration that the Covid-19 outbreak is a pandemic, the European travel ban has created a perfect storm for markets.”
FTSE 100 ‘a crime scene’
Spreadex financial analyst Connor Campbell said the FTSE 100 “resembles a crime scene” after the Trump travel ban represented the latest blow to equities.
The blue-chip index is now deep into bear territory – a fall of 20 per cent or more.
Trump appeared to blame Europe for creating hotspots of coronavirus cases in the US. Traders feared the fallout on trade in goods, despite Trump saying trade would not be affected.
Lawler said: “The travel ban is a decisive step to prevent the spread in the US but will cripple trade between the two continents. Goods will still flow but presumably at reduced pace and trade in services will almost grind to a halt.”
In the US, stock futures pointed for another negative open for Wall Street. Robert Kavcic, senior economist at BMO Capital Markets, said: “This morning’s decline would leave all of the major North American indices in bear market territory.”
US bond yields continued to fall as investors fled to the relative safety of government IOUs. The yield on the US 10-year Treasury was down 12 basis points to 0.698 per cent. Yields moves inversely to price.
PM moves to delay spread of UK coronavirus
The travel ban followed reports Prime Minister Boris Johnson is set to escalate the UK’s coronavirus response to its next phase.
Tactics to delay the UK coronavirus outbreak could force schools to close, cancel major sports events and compel people to work from home.
The PM is set to chair an emergency Cobra meeting today to announce the change from containment to delay.
Chancellor Rishi Sunak yesterday unveiled £12bn worth of spending to help the country cope with the fallout of the coronavirus in the Budget. The economy is set to slow considerably as people self-quarantine, offices and factories close, and confidence plummets.
The Budget measures were coordinated with the Bank of England, which slashed UK interest rates by 50 basis points (0.5 percentage points) to 0.25 per cent before markets opened yesterday.
The moves failed to persuade investors, however, with the FTSE 100 finishing the day 1.4 per cent lower.