Shares nervously rise after bigger FTSE 100 rout than Black Monday

Britain’s blue-chip FTSE 100 index slipped back from a surge earlier today to close up 2.5 per cent.

At one point the leading London stock market index was trading up more than 7 per cent, but investors lost confidence after US markets failed to follow European ones with big gains.

David Madden, of CMC Markets, said: ‘ Losing ground towards the end of the trading day has been common recently, and it speaks to a nervousness in the markets.’

Investors are still waiting in hope that governments will take the lead with co-ordinated action to combat the effects of coronavirus, rather than relying on central banks.  

The FTSE 100 closed 128.63 points at 5,366.11, but the FTSE 250 was down 0.99 per cent, or 155.42 points at 15,562. 

Yesterday, investors saw 10.87 per cent wiped off the FTSE 100 – its second worst day on record and bigger than the fall on Black Monday in 1987 – leading many to question how far shares could fall. 

The FTSE 100 ended the week down 17 per cent and is 30.5 per cent below the 7,674.6 recent high achieved on 17 January.

Darius McDermott, of Chelsea Financial Services, said: ‘During the global financial crisis, stock markets almost halved. It is entirely possible that happens again. 

‘We are in uncharted territory and no one knows how long the coronavirus will go on for, or the extent of the economic impact. 

‘Volatility will be here for a while.’ 

However, he added that many investors with diversified portfolios would not have seen such big falls, as they would have been protected by bond holdings.

He added: ‘For long-term investors, hard as it may be, I think now is the time to stop looking at your investments. 

‘It won’t be pretty. But eventually they will recover.’ 

Some of Britain’s biggest firms were pushed to the brink yesterday after President Trump’s shock travel ban sparked the biggest stock market rout in more than three decades.

The FTSE 100 plunged 10.9 per cent to 5,237.48 on its second worst day of trading ever as a number of countries stepped up their response to the rapid spread of the virus.

That surpassed the 10.8 per cent fall seen on Black Monday 1987, but was not as great as the drop seen the following day of 12.22 per cent. 

More than £160billion was wiped off the Footsie on Thursday – a record amount – as every single blue-chip company fell in value. 

As markets across the world were gripped by fear, there are growing concerns that the pandemic will push a slew of vulnerable companies to breaking point.

Today, Saga announced it has suspended cruise operations until 1 May and warned that the move will knock its profits.     

The travel and insurance specialist said the move follows updated advice from the Government advising people aged 70 and over and those with pre-existing health conditions against going on cruises.

It said that while cancellations had increased in recent weeks, demand for cruises was ‘very positive’, with bookings of around 80 per cent of its sales target for the year. 

Yesterday cinema chain Cineworld warned it could go bust if it is forced to close cinemas for up to three months. 

And shopping centre-owner Intu said it could collapse if it cannot find fresh funds to prop up its finances – which will be difficult to raise in the current market – after the value of its properties fell by £2billion last year.

Helal Miah, investment research analyst at The Share Centre, said: ‘It feels like a bit of a panic on the markets at the moment – but as the days go on and you see how things are being shut down, the sell-off seems justified. 

This could push fragile companies – such as those with weak balance sheets and large debts – over the edge. 

Warnings from Intu and Cineworld came as big firms from all sectors, from retailers to travel companies, sounded the alarm:

● WH Smith said profits were likely to halve to £40million because travel restrictions have led to a drop in shoppers visiting its airport stores;

● Airline Norwegian announced plans to lay off half of its staff and cut 4,000 flights;

● Cruise operator Carnival’s Princess Cruises division will shut down for two months due to the virus after two of its ships became floating Covid-19 hotbeds;

● Bus and rail group Go-Ahead warned it expects fewer passengers to use its services;

● Transport booking app Trainline has seen a hit to recent trading;

● Travelex-owner Finablr said it would be difficult for the company to access cash it needs to keep the business running smoothly. After slumping yesterday, Finablr’s share price rocketed over 100 per cent today.