FTSE suffers second worst day in history
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.’
TULLOW Oil’s future was in doubt last night it revealed that the recent oil price rout could sink it.
The energy group announced plans to slash its workforce by a third and attempt to raise £780m by selling parts of the business as it warned there was ‘material uncertainty’ about its ability to keep trading.
Tullow’s shares sank 31.3pc, or 5.67p, to 12.46p, and have fallen by more than 90pc in the past year. The business – which was already struggling – has been pushed to the brink by a plunge in crude prices that began three weeks ago on worries about coronavirus’s effect on oil demand.
On Monday prices racked up one of the biggest one-day falls in history as Saudi Arabia ignited a price war with Russia, which could flood the global market with cheap supplies. Yesterday, crude fell by another 6pc to $33 a barrel in response to President Trump’s shock travel ban that put a moratorium on all flights from Europe. In the last three weeks Brent crude almost halved from $59 a barrel. FTSE 250-listed Tullow swung to a loss of £1.3bn in 2019 – from a profit of £204m a year before – as it took £1.6bn of write-offs and one-off charges, in part caused by a much-lauded oil discovery in Guyana which turned out to be a dud.
The crash in oil prices also reignited a battle between Premier Oil and its largest shareholder, Asia Research and Capital Management (ARCM).
ARCM wants Premier to abandon plans to spend £660m buying energy projects in the North Sea amid the crash in oil prices.
Premier fell 45pc, or 10.35p, to 12.62p.