London markets plunge lower despite weakness in sterling
The UK markets dived further into the red as even the plummeting pound failed to come to the rescue of the country’s biggest firms.
The strengthening dollar drove the pound to its lowest point against the US currency in 35 years, as global markets continued to reel from the coronavirus pandemic.
However, the continuing spread of the virus in the UK meant multinational stocks were unable to benefit from the weakness in the pound, while the stimulus deal announced by the Chancellor on Tuesday failed to spark a rebound.
The FTSE 100 closed 214.32 points lower at 5,080.58 at the end of trading on Wednesday.
David Madden, market analyst at CMC Markets UK, said: “The stimulus packages from yesterday have done little to reassure the markets as panic selling was witnessed today.
“Governments announced packages to help combat the crisis, but they won’t kick in for a while, and there is the possibility they won’t be enough to stop a major slowdown in economic activity.”
Sterling also dipped significantly lower against the euro as the number of UK coronavirus deaths increased to 104.
The value of the pound fell 4.4% versus the US dollar at 1.153 and was down 2.7% against the euro at 1.066.
The major European markets all closed firmly in the red as traders across the world continued their sell-off.
The German Dax decreased by 5.56%, while the French Cac moved 5.94% lower.
Across the Atlantic, the Dow Jones opened significantly down, dropping to its lowest in three years.
Leisure stocks continued to tumble lower, with the Chancellor’s announcement of financial support for companies in the sector doing little to impress traders.
In company news, Morrisons saw shares surge higher after the grocery business revealed a jump in sales in recent weeks due to nationwide stockpiling.
The group, which on Tuesday announced plans to hire 3,500 staff and ramp up its online operations to help meet surging delivery demand, said like-for-like retail sales rose 5% in the six weeks since its year-end. Shares rose 18.95p to 199.3p.
Increased demand helped to drive shares higher across the other listed supermarket firms, with Tesco, Ocado and Sainsbury’s all shooting higher.
Elsewhere, Superdry shares plunged after it said it is facing a “fluid and uncertain” situation due to coronavirus, with 78 of its stores closing across Europe. It fell 29.65p to 70p at the close of play.
British American Tobacco closed marginally lower after it told investors and analysts that its sales have remained robust in recent weeks.
It said it was yet to see a “material impact” on sales from the virus, but said it postponed some product launches as a result. Shares moved 19.5p lower to 2,700p.
The price of oil has tumbled to levels last seen in 2003, as major reductions in travel continue to hammer the market.
The price of a barrel of Brent crude oil decreased 10.8% to 25.54 US dollars.
The biggest risers on the FTSE 100 were Sainsbury’s, up 24.3p at 216.3p, Morrisons, up 18.95p at 199.3p, Schroders, up 213p at 2,555p, and Ocado, up 118.5p at 1,479.5p.
The biggest fallers of the day were Carnival, down 322.6p at 620p, Meggitt, down 77.4p at 238.4p, Ashtead Group, down 395p at 1,300p, and easyJet, down 101p at 494.8p.