Stock markets in London bounced back today after enduring their sharpest one-day fall since the height of the 2008 crash amid panic over coronavirus.
The FTSE 100 index of Britain’s biggest companies opened up 84 points or 1.42 per cent to 6,050 this morning following a bounce in the price of oil.
The rise comes after more than £150billion was wiped off the value of leading UK firms yesterday on what was termed a new Black Monday.
PAST TWO DAYS: The FTSE 100 index of the UK’s biggest companies opened up 1.42 per cent this morning, having fallen sharply yesterday on what has been termed a new Black Monday
THIS WEEK: Markets have been hammered over the past fortnight over coronavirus fears
Markets in Asia also jumped today, as Tokyo ended up 0.9 per cent and Shanghai finished 1.8 per cent higher and Hong Kong added 2 per cent in the afternoon.
Sydney surged more than 3 per cent, while Singapore, Jakarta and Bangkok all rose by more than 2 per cent. Manila, Taipei and Seoul also clocked up gains.
Yesterday, mounting fears over coronavirus and a collapse in oil prices sent the world’s financial markets into meltdown – sparking warnings of a global recession.
Some 319 people have tested positive for Covid-19 in the UK so far, up from 273 the previous day, and five people have died in British hospitals.
Bankok-based AxiCorp trader Stephen Innes warned the panic had not yet stopped, with ‘growing evidence that an oil shock of historic proportions is now underway’.
A mask-clad pedestrian passes a quotation board displaying Tokyo Stock Exchange data today
And Toshikazu Horiuchi, a broker at IwaiCosmo Securities in Japan, added: ‘Nervous trading is likely to continue for now.’
Esty Dwek, at Natixis Investment Managers, said: ‘Given market moves and other developments, we expect to see further stimulus announcements, both monetary and fiscal.
‘As these come, they should help to stabilise sentiment, though we believe fear and volatility will remain high for some time.’
The FTSE 100 plunged when it opened yesterday morning. By the time markets closed for the day, the index had dropped by 7.7 per cent to 5,965.77 points.
This marked the biggest one-day fall since the credit crisis in 2008 and the fifth biggest one-day sell-off in history – above that caused by the attacks in the US on September 11, 2001.
Pedestrians walk before an indicator board showing the US Dow Jones (right) and the 225-issue Nikkei Stock Average (left) stock figures in Tokyo today
The FTSE All-Share index, which tracks the UK’s leading listed companies, also plunged by 7.4 per cent, shedding tens of billions of pounds.
Yesterday’s sell-off meant £450billion – almost a fifth –had been knocked off the value of Britain’s leading firms in 11 days of trading since the virus began to grip Europe.
It meant the FTSE had slumped into a ‘bear market’, falling by more than 20 per cent from its previous peak.
Financial experts described it as ‘utter carnage’ and said global stock markets had been gripped by pure hysteria.
Traders quickly dubbed it the new Black Monday in a nod to the market crash in October 1987.
A man wears a protective face mask as he stands outside a brokerage in Tokyo today
The United Nations warned the Covid-19 ‘shock’ could trigger a global recession costing £760billion in lost income.
‘If you thought it couldn’t get any worse than the last fortnight, think again,’ said Neil Wilson, chief markets analyst at Markets.com, yesterday.
‘The blood really is running in the streets, it’s utter carnage out there. We don’t even know what kind of impact the coronavirus will have on the economy – yet bond and equity markets are screaming recession.’
With the global death toll approaching 4,000, the wave of panic selling has left millions of households with pensions or investment portfolios reeling as most are heavily tied up in FTSE 100 companies.
Hardest hit are older savers hoping to retire who now have less time for their investments to recover in value.
People look at data in the window of a currency exchange office in Vladivostok, Russia, today
As panic selling spread through global markets, trading was suspended on Wall Street for 15 minutes yesterday after the American S&P 500 index plummeted within minutes of opening.
The US introduced a ‘circuit breaker’ to prevent panic selling after the 1987 crash, which means trading is paused if the market falls by more than 7 per cent.
Yesterday marked the first time the system has kicked in since the 2008 financial crisis.
America’s Dow Jones industrial index tumbled by nearly 8 per cent. It lost 2,000 points – the biggest one-day point drop ever for an index which includes McDonald’s, Apple, Disney and ExxonMobil.
Donald Trump tried in vain to calm down markets.
Stock trader Peter Tuchman works on the floor of the New York Stock Exchange yesterday
The US President tweeted: ‘Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!’
In another tweet, he wrote: ‘Good for the consumer, gasoline prices coming down!’
But Chris Rupkey, MUFG Union Bank’s chief financial economist, said yesterday: ‘This doesn’t seem to cushion the blow for stock market investors. They want out. Big time. The sky is falling. Get out, get out while you can.’
Stock markets around the world were hammered, with Paris down 8.4 per cent, and Frankfurt and Madrid both down almost 8 per cent.
Italy, whose northern industrial heartlands are in lockdown, fell more than 11 per cent. Markets fell heavily across Asia overnight on Sunday.
A statue of the investment icon of the bull stands outside an office building in Beijing today
In a sign of just how anxious investors have become, yields on key UK gilts briefly turned negative for the first time ever – meaning holders of the debt bonds were being charged to lend the Government money. Experts pleaded with investors to ride out the storm.
Russ Mould, of the investment platform AJ Bell, said: ‘Bear markets are undeniably brutish and nasty. The good news is they tend to be relatively short, so investors should not panic.’
Oil prices notched up their biggest fall yesterday since the 1991 Gulf War, crashing by almost a third by the time many traders filed into work.
The commodity has been hit by a row between Russia and Saudi Arabia over measures to protect prices. Oil prices have now dropped around 40 per cent from almost $60 a barrel in the last few weeks.
The International Monetary Fund told governments and central banks around the world yesterday to take ‘targeted’ action to help households and businesses, including cutting interest rates.