Fears of a second coronavirus lockdown have shaken market confidence and set alarm bells ringing for businesses still in ‘survival mode’ from the first wave.
The FTSE 100 suffered its worst plunge since June this morning and slumped 3.56 per cent to 5,812 as the public were warned about the accelerating spread of Covid-19.
The government’s top two scientists, Professor Chris Whitty and Sir Patrick Vallance, today said the UK faces 50,000 new daily cases by the middle of October if the disease is not brought under control.
Their gloomy intervention sets the stage for another round of restrictions when Boris Johnson is expected to address the nation as early as tomorrow.
But ministers have been warned that the re-imposition of draconian curbs will be a hammer blow for businesses already grappling with steep losses.
Retail, travel and hospitality firms, which bore the brunt of the the initial lockdown, are facing administration, experts have warned.
Richard Lim, chief executive of Retail Economics, told MailOnline: ‘A second wave is going to be disastrous for the retail sector.
‘One of the most important points is that retailers are trying to recover from the first lockdown. Many are still in survival mode and are trying to cut costs, and are getting help from the government. If we have another wave it’s inevitable some retailers will fall into administration.’
London ‘s blue-chip stock exchange slumped 3.56 per cent to a two-week low of 5,812 this morning
Sir Patrick Vallance today warned the UK could face 50,000 new coronavirus cases by mid-October if the spread of the disease is not curtailed. He is pictured alongside Professor Chris Whitty in Downing Street this morning
He added: ‘Timing is also a factor. We are approaching Christmas which is the most important time for retailers. If there are restrictions on how many people can meet, or households mixing over Christmas, it will put even more pressure on retailers.’
Richard Hunter, head of markets at Interactive Investor, told MailOnline: ‘The threat of another lockdown is what’s really weighing on the markets today.’
The FTSE rally which followed the easing of the first lockdown fizzled out this month as the spread of the virus began to accelerate.
Mr Hunter said that the end of the year was always going to be tough with the furlough scheme ending an the potential for unemployment. But the ‘question mark’ hanging over the fortunes of the fourth quarter are ‘now getting bigger’.
He added: ‘If the PM were to stand up in the next half an hour and say there’s not going to be another lockdown, the FTSE would recover.
‘But international investors have decided the British market is just too difficult at the moment.’
Travel companies, which were among the hardest bit by the lockdown, also suffered on the stock markets.
British Airways-owner IAG plunged 12.6 per cent today, a blow to the national flag carrier which is already burning through £20million each day and is facing the worst crisis in its 100-year history.
Restrictions on travel between the UK and US will cost the British economy £11billion this year, an alarming report by the aviation sector warned today.
British Airways-owner IAG plunged 12.6 per cent today, a blow to the national flag carrier which is already burning through £20million each day and is facing the worst crisis in its 100-year history
An index of travel and leisure stocks, already among the biggest decliners this year, tumbled 5.6 per cent. The mid-cap FTSE 250 fell 3.1 per cent to its lowest in nearly two months.
Michael Hewson, an analyst at CMC Markets UK, said: ‘The possibility of new lockdowns is leading the market to be absolutely risk-averse toward consumer-facing sectors like travel, restaurants and retailers.’
Fashion retailer Superdry sank 12.8 per cent after posting an annual loss due to lockdown-led store closures, while the world’s largest exhibitions group, Informa Plc, fell 2.8 per cent as it reported a half-year operating loss.
Aero-engine maker Rolls-Royce plunged 9.6 per cent to its lowest since 2004 after it confirmed it was considering a rights issue of up to £2.5billion.
Concerns of another lockdown were today compounded by an investigation into money laundering which implicated two big banks.
A slide in HSBC, Standard Chartered and Barclays drove today’s FTSE plunge amid allegations they moved illicit funds over the past two decades.
HSBC, already trading at decade lows, slid 4.2 per cent, while Standard Chartered dropped 4.1 per cent to its lowest since 1998. Barclays tumbled 5.9 per cent.