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The downward trend affected all but a few stocks in the UK 100-share index. Only the Just Eat online delivery service and the Tesco and Morrisons supermarkets achieved positive territory.
The FTSE 250 index, seen as a better reflection of the health of the UK economy, was down almost 4% in mid-afternoon.
One of its biggest failures was pub and restaurant owner Mitchells & Butlers, which fell more than 12% as concerns grew that the hotel industry would have more to lose from a new closure.
The pound also lost ground against the dollar, falling 0.76% to $ 1.2825 by mid-afternoon. It fell slightly against the euro to 1.0905 euros.
Why does all this matter to me?
Many people are more affected by stock market crashes than they think.
There are millions of people with a pension, whether private or for work, who will see their savings (in what is known as a defined contribution pension) invested in pension plans. The value of your savings bank is influenced by the performance of these investments.
Pension savers for the most part let the experts choose where to invest this money to help it grow, and a proportion will be in stocks.
Widespread falls in equity prices are likely bad news for these investments, although pension investors stress that these are long-term investments and are designed to overcome bouts of weakness.
- Why should I care if stock prices fall?
There has certainly been an element of European unity in the markets today, with the FTSE 100 in London, the Cac 40 in Paris, the Dax in Frankfurt and the Ibex in Madrid all suffering similar declines.
The reason behind the sadness seems pretty clear. With the number of Covid-19 cases multiplying rapidly here and in many European countries, there is a real prospect of new restrictions in daily life. In some regions, like Madrid, for example, they already exist.
The fear is that while these measures are unlikely to be as severe as the spring lockdowns, they will still weigh on economic activity and could stifle the post-lockdown recovery.
Stocks are down across the board, but inevitably, companies that depend on getting people out there and mingling are among the hardest hit.
Airlines, tourism companies, and hotel companies have already had a terrible year, and investors know they can’t afford any more setbacks.
‘Bitter pill’
Coronavirus cases have risen in many European countries as governments struggle to avoid another round of national lockdowns.
In the UK, leading scientists warn that the country is at a “tipping point” in the pandemic and “is heading in the wrong direction.”
Prime Minister Boris Johnson is understood to be considering a two-week mini-lockdown in England, referred to as an “automatic switch,” in an effort to halt the widespread growth of the virus.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The FTSE 100 is the worst hit among its European peers with a storm of pessimistic news affecting all sectors.”
He added that concerns about the travel industry had had a “ripple effect”, with the blow from aircraft engine maker Rolls Royce, as investors saw no end to the drop in demand for new planes.
At the same time, the prospect of coronavirus evening curfews after a summer of recovery in sales was “a bitter pill to swallow” for the hotel industry.
If you add the prospect of a no-deal Brexit to the murky mix, it’s no wonder that many investors seem to have picked up on a serious case of nervousness today. ”
