FTSE 100 plunges 3.5% over fears of stricter lockdown rules due to second wave
THE FTSE 100 has plunged by 3.45% this morning over fears the UK could go into a second lockdown.
It's the worst day the London stock market has seen in three months, and is the hardest hit stock market in Europe.
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On Friday, it closed at 6007.05 but plummeted to 5796.75 by around 11:15am today.
Today it gained slightly at closing when it hit 5804.29, but it is still far off the peak of last week.
It comes as Britain's top scientists issued a Doomsday Covid warning to the nation as the UK heads into colder months.
The Prime Minister is expected to address the UK in a televised speech later this week, possibly tomorrow.
How the FTSE 100 falling affects your personal finances
FALLS in the stock market can affect your finances in a number of ways, here we explain how.
Pensions - If you save cash into a pension scheme where the provider invests your money, you'll likely see the value of your pension drop when the FTSE 100 falls.
But keep in mind that with retirement savings, you’re investing for the long-term so the drop in value isn’t likely to be permanent.
Instead, you’ll see your retirement savings grow again once the stock market recovers.
Savings and mortgages - There is no direct link between the stock market and your mortgage or savings accounts.
But if panic on the stock market spreads to the wider economy, the Bank of England may cut interest rates - and it's done so twice in recent weeks.
This means your mortgage is likely to get cheaper, while savers will suffer from lower interest rates.
We’ve explained how the interest rate cut will affect your finances here.
Sterling - The value of the pound often rises if the FTSE 100 falls, as many of the firms on the index earns a significant amount of cash in the US.
But this hasn't been the case recently as markets around the world are in "panic mode", Jeremy Thomson Cook, chief economist of Equals, said a couple of weeks ago.
He added: "Sterling is caught in the middle; a currency that has lost its haven status courtesy of Brexit while investors hold dollars as the global reserve currency."
Some of the options reported being considered include a ban on meeting other households and curfews for pubs and restaurants.
Chris Whitty and Sir Patrick Vallance warned that the UK is now seeing a second wave of coronavirus infections, and Brits could face 50,000 cases a day in just three weeks time.
The pandemic has had a big impact on businesses, with stores closing and firms reducing the number of workers in offices in a bid to slow the spread of Covid-19.
But speculation that restrictions are about to get tougher are already being felt on the FTSE 100.
Firms in the travel industry have fallen today, with British Airways owner IAG taking one of the biggest tumbles.
This has had a domino affect on aircraft engine manufacturer Rolls Royce, as investors expect demands for planes to fall, explained Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
She added: "The prospect of evening coronavirus curfews, after a summer of recovering sales, is a bitter pill to swallow for the hospitality industry.
"It's pushed Wagamama owner, The Restaurant Group, down by more than 18% and pub chain J D Wetherspoon by almost 10%."
The FTSE 100 index has also had a seriously turbulent time since the Covid-19 outbreak, plunging 11 per cent back in March in the worst day since Black Monday 1987.
The crash, which was the second worst ever - surpassing the drawn out drop of the financial crash in 2008, wiped £160billion off shares of Britain's biggest companies.
Since then, the economy has shown positive signs of recovery since lockdown restrictions were eased.
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Inflation fell to 0.2% in August, down from 1% in July, largely due to the government's Eat Out to Help Out scheme.
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But there are fears that tougher lockdown measures could cause the economy to crash again, particularly when the furlough scheme ends in October.
Thousands of jobs are believed to be at risk once the government support is pulled.
