Lockdown alarm clears £50b stock
UK, Tuesday
Fears that a renewed rise in coronavirus cases will blight economic prospects wiped more than £50billion (6.4 trillion) off UK shares Tuesday, and caused similar falls across European and US stock markets.
London’s FTSE 100 share index closed down 3.4 per cent, with airlines, travel firms, hotel groups and pubs leading the rout. Worst hit was British Airways owner IAG, down 12 per cent.
It comes amid fears that major economies could see second lockdowns as they struggle to regain control of the virus.
Banking shares were affected by an extra set of concerns as allegations of money-laundering surfaced in leaked secret files.
HSBC, the bank at the centre of the scandal, saw its share price fall 5.3 per cent in London, but the revelations dragged down the entire sector, with other big banks dropping by a similar amount.
On Wall Street, JP Morgan Chase and Bank of New York Mellon saw their share prices fall 3 per cent and 4 per cent respectively in response to the reports.
The downward trend affected all but a handful of stocks on the UK’s 100-share index.
Only online delivery service Just Eat and supermarkets Tesco, Morrisons and Sainsbury’s made it into positive territory.
The FTSE 250 index, seen as a better reflection of the health of the UK economy, closed nearly 4 per cent lower.
The pound also lost ground against the dollar, falling 1 per cent to $1.2790 (Sh139). It fell 0.4 per cent against the euro to €1.0897 (Sh139).
Why does all this matter?
Many people are more affected by stock market falls than they might think. There are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes.
The value of their savings pot is influenced by the performance of these investments.
Pension savers mostly let experts choose where to invest this money to help it grow and a proportion will be in shares.
Widespread falls in share prices are likely to be bad news for these investments, although pension investors stress these are long-term investments and are designed to ride out bouts of weakness. - BBC
