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The downtrend affected all but a few of the 100 stocks in the UK Index. Only its Just Eat online delivery service and the Tesco and Morrisons supermarkets made it a positive territory.
The FTSE 250 Index, seen as a better reflection of the health of the UK economy, was down nearly 4% by mid-afternoon.
One of the biggest downturns was Mitchells & Butlers, owner of bars and restaurant, down more than 12% as concerns mount that the hospitality industry will lose much of the new shutdown.
The pound also lost ground against the dollar, falling 0.76% to $ 1.2825 by mid-afternoon. It fell marginally against the euro, to € 1.0905.
Why does all this matter to me?
Many people are affected by the fall of the stock market more than they think.
There are millions of people with a pension – whether private or through work – who would see their savings (in what is known as a defined contribution pension) invested through pension systems. The value of their savings pool is affected by the performance of these investments.
Pension savers often allow experts to choose where to invest this money to help it grow and a proportion of them will be in stocks.
Widespread falls in equity prices are likely to be bad news for these investments, although pension investors argue that they are long-term investments designed to overcome bouts of weakness.
- Why should i care if stock prices are down?
There was definitely an element of European unity in the markets today, as the FTSE 100 in London, the Cac 40 in Paris, the Dax in Frankfurt and the Ibex in Madrid all suffered similar declines.
The cause of depression is very clear. With the number of Covid-19 cases increasing rapidly here and in many European countries, there is a real possibility of new restrictions on daily life. In some areas – like Madrid, for example – they are already present.
The fear is that although these measures are unlikely to be as severe as the lockdowns in the spring, they will affect economic activity and could stifle the post-lockdown recovery.
Shares are down across the board, but inevitably, companies that depend on people who are able to get out and social are among the hardest hit.
Airlines, tourism and hospitality companies have already had a terrible year – and investors know they cannot handle any more setbacks.
Coronavirus cases have soared in several European countries, as governments strive to avoid another round of national lockdowns.
In the United Kingdom, leading scholars are warning that the country is at a “tipping point” in the epidemic and “heading in the wrong direction”.
Prime Minister Boris Johnson is understood to be considering a two-week mini-lockdown in England – referred to as a “circuit breaker” – in an effort to stop the virus from spreading widely.
“The FTSE 100 is the hardest hit among its European peers with a storm of downbeat news affecting sectors across the board,” said Susanna Streeter, senior investment and market analyst at Hargreaves Lansdown.
She added that concerns about the travel industry had a “domino effect”, as aircraft engine maker Rolls-Royce took a hit, as investors saw no end to the decline in demand for new aircraft.
At the same time, the possibility of imposing a curfew for the Evening Coronavirus, after a summer of sales recovering, was a “bitter pill to swallow” for the hospitality industry,
If you add the prospect of a no-deal Brexit to this mysterious mix, there is no big surprise as many investors appear to be in jitters today.
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