The FTSE 100 has crashed to a five month low on Tuesday, as it dropped below 7,100 for the first time since October following concerns over the coronavirus.
The fall for the FTSE 100 started yesterday, as further fears over the coronavirus continued to take their toll on global stocks and indices.
Currently, the FTSE 100 Index is at 7,118 (-0.54%). 25/2/20 11:35BST. However, global markets saw the index drop to 7,098 at around 10:35BST – a worrying drop for traders and businesses globally.
Markets plunged yesterday, as the coronavirus had reportedly hit Italy. On Sunday, football matches in Italy were postponed over the spread of the lethal virus and this has taken its toll on global markets.
Updates on the coronavirus today have reported that there are cases in a hotel in Tenerife of the disease – and now global governments are being increasingly alarmed over the potency of the coronavirus.
UK airlines were the victim of the drop in share price today and yesterday, as International Consolidated Airlines Group (LON:IAG) dropped 2% as it extended its travel restrictions to and from China.
Notably, budget airline RyanAir (LON:RYA) also lost 1.4% on its value, whilst rival TUI AG (LON:TUI) saw an ever bigger slump of 2.6%.
Yesterday, the FTSE 100 dropped 3.7% before making a slight recovery closing at 3.3% down – in what has been a gloomy few days for global businesses and stocks, it seems that the coronavirus s continuing to affect global markets.
Economic activity has been slumping in China, and demand for oil has also remained volatile. However, the weighing down on global markets is something that will concern governments, businesses and investors.
The coronavirus epidemic could still affect the FTSE 100, and has already hit the Dow Jones and German DAX – the worrying thing might be that, cases are still increasing at a time where global governments thought the virus was easing up.
John Woolfitt from Atlantic Capital Markets gave some further insight noting:
“The sell-off does look to be extremely overdone, especially when you compare
it to the markets reactions to previous outbreaks and the following impact
on the markets. Once the dust has settled it is going to be a fantastic
buying opportunity especially as the FTSE has seen 12months worth of gains
wiped out in less than a week.
The big word here is WHEN the dust has settled. There’s no point trying to
call the bottom, I am going to wait for it to present itself. Patience in
the short term will pay off nicely in the longer term. When SARS and MERS
hit the market the sell off was short lived and the bounce back highly
profitable. We expect similar again
I can’t help feeling that the US markets where looking for a reason to have
a sell off and Coronavirus has given it exactly that. It has been looking
overbought for a while.”