Wave of selling overwhelms stocks
|Losses dominate across equities, with the FTSE 100 down 200 points as the close looms.
- Indices deep in the red as risk aversion takes hold
- UK progress towards new lockdown emblematic of European second wave
- Stronger dollar hits FTSE constituents
The term ‘sea of red’ was invented for such days. European markets had suffered heavy losses this morning, but the situation has worsened following the US open. The FTSE 100 has wiped out all its gains from early September in the space of three days, while US markets have seen losses accelerate, taking them to six-week lows. If this is the start of something bigger then we could have a long way to go before a bottom is in place – usually election years see US equities weaken from today into the end of October. With lockdowns returning and cases rising the overall outlook seems gloomy, and signs of growing political tension in the US in an already-fraught election campaign mean that investors will continue to find safety in havens.
For the FTSE 100, the situation looks dire. A flight to the dollar will hit commodity prices, dragging oil and mining stocks lower, while banks look set to come under some serious pressure following the weekend news. The FTSE 100’s gap with other indices seems set to remain, and even get wider, only this time it will be because it is falling faster than others rather than because it has been left behind. A weaker pound has provided a cushion, but in the event of a sustained multi-week correction the UK index will suffer heavily.
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