Misery for investors as share rally fizzles out after biggest stock market fall since 2008 crash
A brief stock market rally fizzled out almost as soon as it had begun on another glum day for investors.
The FTSE 100 index made early gains following a brutal session in which fears over the coronavirus triggered the sharpest sell-off since the financial crisis.
But the rally was short-lived and by the close of play the blue-chip benchmark was back in the red, slipping 0.1 per cent, or 5.54 points, to 5960.23.
The Footsie made early gains following a brutal session in which fears over the coronavirus triggered the sharpest sell-off since the financial crisis. But the rally was short-lived
The slide marked the fourth consecutive day of falls on the FTSE 100, and added to the massive losses suffered on what traders have termed the new Black Monday.
But Wall Street fared better, with the benchmark Dow Jones index closing 4.9 per cent up, or 1167 points, after shedding 7.8 per cent, or 2014 points, on Monday.
It came after more than £150billion was wiped off the value of London-listed companies as the week began, in the biggest one-day slide since 2008.
Brokers cash in
City brokers celebrated this week’s chaos as savers saw their investments plunge.
As more than £150billion was wiped off companies on Monday, trading soared.
The chief executive of broker TP Icap, Nicolas Breteau, said the activity was ‘spectacular’.
He added: ‘The volumes were enormous. The roaring of the brokers on the floor, you could hear it across Victoria.’
The Covid-19 hysteria was good news for brokers, who receive commissions on every trade.
TP Icap said its traders took home an average £328,000 last year. Its profits rose from £62million to £93million.
Fears that mass work absences caused by coronavirus infections, coupled with supply chain issues as goods prove hard to import from Italy and China, could plunge the UK into a recession, have proved hard to shift.
It initially seemed as though traders were overcoming their panic as the London Stock Exchange opened yesterday.
The FTSE 100 climbed as much as 4.4 per cent, and the FTSE 250 by a 3.6 per cent, while some of the stocks most affected by the coronavirus sell-off perked up.
Travel firm Tui recovered lost ground as it soared by 15 per cent in the first three hours of trading, but it ended almost flat, up just 0.8 per cent.
Cruise specialist Carnival suffered a similar fate, as its 10 per cent rise turned into a 1.1 per cent fall.
The euphoria was tempered when Wall Street opened in the early afternoon.
There was little sign of any optimism in the US, despite mooted payroll tax cuts. All of continental Europe’s major stock indices were in the doldrums, with Germany’s Dax down 1.4 per cent and France’s CAC sliding 1.5 per cent.
Italy, the country in Europe worst-hit by the deadly Covid-19, saw its FTSE MIB index shed another 3.3 per cent.
Neil Wilson, an analyst at Markets, said: ‘The news on coronavirus is not improving and the trajectory across European nations is all too similar to Italy.
‘It has placed everyone on lockdown, extending the quarantine to every citizen – though, being Italy, it’s still voluntary.’
But other experts warned investors avoid the panic. Stefan Kreuzkamp, the chief investment officer of German asset manager DWS, said: ‘It has rarely been advisable to join in indiscriminate panic-selling of the sort arguably observed on what has been dubbed Black Monday.’
UBS is using the fall in the value of stocks to buy on the cheap, although it added it was ‘mindful of the risk of further disruption’.
Oil prices, which fell up to 35 per cent on Monday as Saudi Arabia and Russia threatened to flood the market with crude, perked up.
Brent crude was trading at $37 barrel, up 8.2 per cent on the previous day, giving some relief to the FTSE’s oil industry stocks.