The FTSE 100 is on track for its worst day of the year as it slides 1% at opening.
The blue-chip index dropped 101 points to 6454 points and most stocks are in the red as they enter the New Year.
The top faller today is British Airways owner, IAG, which was down 3%. Also down was Diageo and Johnson Matthey, which were down 2.76% and 2.75% respectively.
The FTSE 250 was down by 1% to 20,508.
The FTSE 100 has lost over 14% of its value in 2020 amid the pandemic. This is, however, much worse than stocks in other countries. Germany’s DAX has gained 3.5% this year whilst Japan’s Nikkei rose 16%, and China’s CSI 300 is up 27% since the start of 2020.
Russ Mould of AJ Bell wrote earlier this month: “The UK was a turgid performer, weighed down by its sector mix and heavy exposure to banks and oils and limited exposure to technology, as well as Brexit and perceptions (fair or unfair) that the pandemic has not been handled that well.
“In fact the UK was the worst performer in the second half of the year when Latin America, the Middle East/Africa and Asia were the best.
“This switch toward emerging markets again hints at investors looking for cyclical growth – value for want of a better turn of phrase – rather than secular growth – or more reliable, almost defensive progress – as well as global export and inflation plays,” he added.
Despite the falling FTSE 100, the pound has risen and is up a third of a cent at $1.366 as the US dollar continues to fall.
Jeffrey Halley, senior market analyst at OANDA, comments: “Even the A-Team’s “Hannibal” Smith would be impressed at how well the financial markets buy everything, sell the US Dollar plan is coming together as the year ends.
“US 10-year yields eased slightly overnight, equities are moving higher, along with precious metals, commodities and energy, and currency markets spent the overnight session clubbing the greenback harder than a harp seal harvest.
“Although the US Dollar has been grinding lower throughout the week, it is interesting that currency markets have waited until the year’s penultimate trading session to press the accelerator.
“Part of that is probably down to the UK approval of the Astra Zeneca/Oxford University Covid-19 for immediate use. The Astra Zeneca vaccine is a potential game-changing accelerator in the Covid-19 battle, being producible rapidly in massive amounts, and storable at room temperatures, instead of environments that mimic the South Pole in the middle of winter.”