It’s a black Friday as new Covid strain hits Footsie
THE FTSE 100 suffered its worst one-day fall yesterday since the early days of the Covid pandemic, as investors ran for the hills with the new Covid strain at their heels.
The index ended the day down 266 points, the biggest loss since late March 2020. It was a 3.6 per cent fall.
It was a tough showing for investors around the world and came after the UK imposed new travel restrictions on those coming from half a dozen countries in southern Africa, where a new strain of the Covid virus has been identified. The European Union also recommended its members should consider new curbs.
“European equity markets have undergone a collective bout of end-of-week hypoxia, on the back of concerns that this new more transmissible Covid -19 variant could well derail the progress being made on tackling the pandemic when it comes to effective vaccines and treatments of the virus,” said CMC Markets analyst Michael Hewson.
“The intensity of today’s reaction is probably being exacerbated by the fact a lot of investors had mentally checked out for this week, with the US being off for Thanksgiving yesterday, against the backdrop of a quiet market session yesterday, with US markets only back for half a day.”
He added: “The FTSE 100 is down heavily, but so are the Dax and Cac 40, with the two main European benchmarks posting their biggest weekly declines this year, as investors not unreasonably choose to shoot first and ask questions later, especially so close to year-end, and given the size of the gains seen so far this year.”
Unsurprisingly, airlines and other travel companies were among the worst-hit on the day, with online supermarket Ocado being one of the only FTSE 100 companies to gain.
Like other online retailers, Ocado stands to gain heavily if there is another lockdown. Its shares were one of the biggest winners during the coronavirus lockdowns.
In the US the S&P 500 had dropped 2.2% when European traders were closing. The Dow Jones had dipped 2.8%.
In Europe the Dax closed down 4.2%, while the Cac 40 in Paris was the worst performer among the major markets, plummeting by 4.8%.
The cost of Brent crude oil plummeted by 11% to $73.18 per barrel on fears of a global economic slowdown.
The only market participants who seemed relatively calm were the currency traders. Sterling barely moved against the euro, trading at an exchange rate of 1.1787 by the end of the day It dropped 0.1% against the dollar, to buy 1.3321 shortly after markets closed in Europe.
In company news, sofa specialist SCS said the demand that had been pent up during lockdowns is starting to ease, and that orders have dropped by nearly 11% compared with a year ago. It is also being hurt by widely publicised supply chain problems. Shares closed down 8.6% at 227.5p.
The biggest risers on the FTSE 100 were Ocado, up 80p at 1,829p; B&M European Retail, up 8.8p at 628p; Croda, up 102p at 9.902p; United Utilities, up 8.5p at 1,095.5p; and Bunzl, up 21p at 2,835p. The biggest fallers were IAG, down 22.92p at 131.4p; Rolls-royce, down 15.98p at 121.56p; Melrose, down 16.5p at 144.3p; and Intercontinental Hotel Group, down 462p at 4,580p.