FTSE 100 and Wall Street drop as coronavirus fears return
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The FTSE 100 fell today after two consecutive days of climbs as investors’ nerves over the impact of coronavirus on the economy returned.
London’s blue-chip stock index fell 1.1 per cent to 5,835 points by the mid-afternoon, while the mid cap FTSE 250 index fell by the same margin.
Meanwhile, after a sharp sell-off on Wall Street yesterday, US stocks opened lower this afternoon after a surprise rise in the number of people claiming unemployment benefits.
Thus far, UK markets have been slow to react to chancellor Rishi Sunak’s new package of economic measures to keep the economy afloat through the winter.
The centrepiece is a new scheme which will see the government pay part of the wages of employees not working full-time.
This replaces the furlough scheme, which saw the government pay 80 per cent of staff wages.
The Europe-wide Stoxx 600 was down 0.7 per cent. In Asia overnight, China’s CSI 300 dropped 1.9 per cent. Hong Kong’s Hang Seng fell 1.8 per cent.
Stock markets slumped on Monday as investors panicked over rising coronavirus cases and hit the sell button in anticipation of harsh new restrictions that could tank the economy.
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However, indices such as the FTSE 100 recovered over Tuesday and Wednesday as more details became clear. In the UK, the new rules were seen as less strict as many had anticipated. Some other countries are yet to impose new restrictions.
Prime Minister Boris Johnson has told pubs and restaurants they must start shutting at 10pm. Indoor sports have been banned and the PM told employees to work from home where they can.
Wall Street opens lower after unemployment claims rise
US stocks opened lower this afternoon as new jobless claims showed that an additional 870,000 people had applied for unemployment benefits last week.
The data sprung a surprise on economists, who had expected the figure to fall to 840,000, down from 860,000 the week ending 12 September.
The Dow Jones fell 0.2 per cent, at the open to 26,716, while the S&P 500 opened 0.33 per cent lower at 3,226.
The tech heavy Nasdaq Composite fell to 10,551 points, down 0.77 per cent.
Although the number of new claims is far lower than in March, when 6.9m people applied for benefits in one week, it remains at levels far higher than have ever been experienced before.
It also increases the pressure on Congress to agree a new package of support to bolster the economic recovery, which has shown signs of stalling in recent weeks.
The falls come after a major sell-off on Wall Street yesterday saw the tech-heavy Nasdaq tumbled three per cent. The S&P 500 slipped 2.4 per cent. US stocks were set to open lower again.
Fiona Cincotta, market analyst at trading platform City Index, said the falls came “after a series of warnings from the US Federal Reserve”.
She said: “Federal Chair Jerome Powell reiterated that the US economy still had a long way to go before recovery weighed on sentiment.” Other analysts said it was another leg of the recent withdrawal from US tech.
The dollar was trading slightly higher against a basket of other currencies. That signalled that investors are seeking out the safe-haven asset.