FTSE opens down again as it falls 2.3 per cent despite global central banks stepping in after one of the worst weeks in its history amid virus crisis
The FTSE 100 opened down again today as it fell 2.3 per cent despite global central banks slashing interest rates after one of the worst weeks in its history.
The index of Britain’s leading companies fell 121 points to 5,245 shortly after opening this morning.
The blue-chip index enjoyed a brief rally on Friday but managed to cling onto gains of just 2.5 per cent as fears over Covid-19 continued to chill the economy.
Over the last week, £286billion has been wiped off the value of FTSE 100 firms as investors have dropped their shares, fearing coronavirus will cause a major economic slowdown and even a recession.
An electronic signboard at KB Kookmin Bank shows the KOSPI index down in Seoul today
Since the sell-off began in earnest, on February 24, the index has lost a quarter of its value, or £460billion.
The Bank of England announced an emergency injection of money into the economy this week, including an interest rate cut from 0.75 per cent to 0.25 per cent.
Though this will make it cheaper for companies to borrow, it has hit savers who were already suffering with near record-low rates.
Russ Mould, investment director at AJ Bell, said: ‘That truly was a nightmare of a week for savers and investors.
‘Individuals with cash in the bank were struck by news of interest rate cuts, meaning returns on variable rate accounts are now next to nothing.
‘As for investors, they just experienced the worst period for stock markets since the 1987 crash and the 2008 global financial crisis.’
The muted bounce across Europe yesterday was helped along by new stimulus measures from the European Union and Germany.
The European Commission has agreed on a £33billion investment initiative to help prop up EU economies, while Germany’s finance minister said the country would do whatever it takes to support its businesses and workers.
But the pound slid as traders rushed to the perceived safety of the dollar. Sterling was down more than 1.7 per cent against the dollar on Friday, at $1.235, and slipped 1 per cent against the euro to €1.113.
In a desperate attempt to stabilise their stock markets, Spain and Italy banned traders from short-selling 154 stocks including household names such as Ferrari and Juventus Football Club.
Short-selling is a process which allows traders to profit from a fall in a company’s value, but authorities in Spain and Italy are worried that this has exacerbated the wider sell-off.
European rules mean that Britain’s regulator, the Financial Conduct Authority, was forced to ban the short-selling of these stocks on secondary markets in the UK.