FTSE suffers second worst day in history
As Trump travel ban triggers worst stock market rout since 1987 crash . . .
BRITAIN’S stock market suffered its worst day since the crash of 1987 – and its second worst in history – yesterday as panic gripped the world’s financial system.
on another extraordinary day, the FTSE 100 plunged 10.9 per cent or 639 points to 5237.48 – its lowest level since 2012. It wiped £160billion off the value of Britain’s biggest companies.
The sell-off eclipsed the 8.8 per cent meltdown in the depths of the financial crisis in october 2008. It also pipped the notorious Black Monday crash on october 19, 1987, and is second only to the 12.2 per cent fall which occurred the following day.
It also eclipsed the 7.7 per cent drop on Monday this week – which in itself was dubbed another ‘Black Monday’ in a nod to the original crash of 1987.
The plunge came on another day of worldwide turmoil, with Donald Trump imposing a US travel ban on passengers from Europe and Boris Johnson describing Covid19 as the ‘worst public health crisis in a generation’.
The rout knocked £160.4billion off the value of Britain’s leading blue chip companies in just one day of trading, the biggest fall in monetary terms on record.
Shares have now lost almost a fifth of their value so far this week, blowing a massive hole in savers’ investments and pension funds.
The latest sell off also means the total value of listed companies on the larger FTSE All Share index has fallen £676billion – or 29 per cent – since the virus sparked a wave of panic selling. Emergency efforts announced by the Bank of England, including a £290billion stimulus package to support struggling businesses and households proved to be of no consolation to investors.
Major firms gave stark warnings about their futures yesterday. Low cost airline Norwegian said it would lay off up to half its staff due to the outbreak.
WH Smith halved its expectations for the year and predicted sales would take a £130million hit. And cinema chain Cineworld warned it could be forced out of business if families weren’t able to visit.
one commentator last night said markets were ‘at breaking point’ and were ‘aggressively pricing for a major global recession’.
Experts said President Trump’s 30- day ban on foreign nationals entering the US, combined with increasingly drastic measures being introduced across the world to contain the virus, had created a ‘perfect storm’ for markets.
The pain was shared by investors around the world as markets in France and Germany both plunged more than 12 per cent.
Italy – which is in complete lockdown over the virus – collapsed a record 17 per cent.
Trading on Wall Street had to be suspended shortly after opening as the S&P 500 plunged more than 7 per cent in a matter of minutes. Emergency circuit breakers kicked in for 15 minutes to prevent further panic selling.
As soon as they reopened, markets started falling again.
Russ Mould, of investment service AJ Bell, said: ‘A negative response to the Trump administration’s handling of the crisis, including the ban on travellers from the EU, and increasingly stringent containment measures in Western countries created a perfect storm for the markets.’
Some of Britain’s biggest firms were pushed to the brink yesterday after President Trump’s shock travel ban sparked the biggest stock market rout in more than three decades.
The FTSe 100 plunged almost 11pc to 5237.48 on its second worst day of trading ever as a number of countries stepped up their response to the rapid spread of the virus.
more than £160bn was wiped off the Footsie – a record amount – as every single blue-chip company fell in value.
The percentage drop pipped the 10.8pc sell off during the Black monday crash on october 19, 1987, and is second only to the 12.2pc fall the following day.
As markets across the world were gripped by fear, there are growing concerns that the pandemic will push a slew of vulnerable companies to breaking point.
Yesterday cinema chain Cineworld warned it could go bust if it is forced to close cinemas for up to three months. And shopping centreowner Intu said it could collapse if it cannot find fresh funds to prop up its finances – which will be difficult to raise in the current market – after the value of its properties fell by £2bn last year.
Helal miah, investment research analyst at The Share Centre, said: ‘It feels like a bit of a panic on the markets at the moment – but as the days go on and you see how things are being shut down, the sell- off seems justified. This could push fragile companies – such as those with weak balance sheets and large debts – over the edge.’
The warnings from Intu and Cineworld came as big firms from all sectors, from retailers to travel companies, sounded the alarm:
WH Smith said profits were likely to halve to £40m because travel restrictions have led to a drop in shoppers visiting its airport stores;
Airline Norwegian announced plans to lay off half of its staff and cut 4,000 flights;
Cruise operator Carnival’s Princess Cruises division will shut down for two months due to the virus after two of its ships became floating Covid-19 hotbeds;
Bus and rail group Go-Ahead warned it expects fewer passengers to use its services;
Transport booking app
Trainline has seen a hit to recent trading;
Travelex-owner Finablr said it would be difficult for the company to access cash it needs to keep the business running smoothly.
The dramatic fall in UK shares was mirrored on bourses in europe, the US and Asia.
Trading on Wall Street had to be suspended shortly after opening when the S&P 500 plunged more than 7pc in a matter of minutes.
emergency circuit breakers introduced after the Black monday crash in 1987, kicked in for 15 minutes to prevent further panic selling. As soon as they reopened markets started falling again.
By yesterday evening the Dow
Jones was down 10pc, while the S&P 500 was down 9.5pc.
Russ mould, investment director at AJ Bell, said the negative reaction to the Trump administration’s handling of the crisis, which includes a ban on travellers from the eU, and stringent containment measures created ‘a perfect storm’ for markets.