The FTSE 100 has fallen to its lowest level in six months as financial markets react to surging coronavirus infections around the world.
There was a sea of red for stocks across Europe and the US in Wednesday trading over fears COVID-19 will deliver a deeper-than-expected hit to the global economy in the months ahead.
The FTSE 100 was more than 3% down in afternoon trading at one stage with all of its constituent companies, bar Rolls-Royce, losing ground. The index closed 2.6% lower at 5,582.
That left it 26% down in the year to date. The domestically focused FTSE 250 lost almost 2% in the session.
The situation was worse across the Channel as the CAC in Paris and Germany’s DAX also fell sharply – the latter almost 5% lower at one stage – in reaction to looming lockdown restrictions in their respective countries.
In New York, the Dow Jones Industrial Average and wider S&P 500 lost more than 3% with technology companies – darlings of the market in recent months and seemingly immune to virus jitters – feeling some of the pain.
US investors also fretted over the political stalemate in Washington on additional financial aid for consumers and businesses.
The slump marked a resumption of recent stock market falls.
Chris Beauchamp, chief market analyst at IG, said of the carnage: “After Tuesday’s relative calm we have seen a return to the unrelenting selling of Monday’s session, only this time it is arguably even more dramatic.
“Global indices are deep in the red, as Germany prepares to head back into a national lockdown, with Switzerland following suit.
“In these circumstances, a UK lockdown seems not far behind, given the current direction of travel across the continent.”
Parts of the UK have already brought in tighter restrictions in an effort to halt the virus, as the number of new cases hovers around 20,000 a day.
There are fears that these restrictions – especially if they spread to cover more of the country – will reverse the tentative economic recovery seen during the summer.
The UK’s Vaccine Taskforce boss has warned that the first generation of vaccines “is likely to be imperfect” and “might not prevent infection”.
A study also found that the number of people with antibodies fell 26% since lockdown was eased over summer.
A safe and effective vaccine is seen as one of the few ways for the world to move past the pandemic – the other being a widely effective cure.
The global market reaction reflects jitters over the weeks and months ahead – particularly in Europe.
John Woolfitt, director of trading at Atlantic Capital Markets, said: “Global markets look incredibly nervous – the mix of rising COVID-19 cases and deaths and the potential full lockdown in France, add this to the uncertainty ahead of the US elections and you have a very poor backdrop.
“I don’t expect this to be long-term, but nervousness will continue until elections are done and some form of steadying in the COVID-19 numbers.”