FTSE tumbles over fears of long-term economic turmoil and trade tensions
London markets tumbled heavily as warnings from economists over the long-term impact of the coronavirus crisis weighed on trading.
European stocks were also shaken by increased worries over the state of US-China trade tensions.
President Donald Trump continued to stoke the fires of a feud with Beijing, as he stated he was “very disappointed in China”.
The FTSE 100 closed 162.51 points lower at 5,741.54p at the end of trading on Thursday.
Europe’s other major markets also slumped dramatically as caution from central banks helped to keep sentiment low.
David Madden, market analyst at CMC Markets UK, said: “Equity markets in Europe are deep in the red as dealers are worried about the economic impact of the health crisis.
“On Wednesday, the Fed chief, Jerome Powell, cautioned that downside risks are significant, and the economic pain might remain for a prolonged period.
“The warning from the central banker came at a time when there are growing concerns about the jump in new infection rates as a result of countries reopening parts of their economies.”
The German Dax decreased by 1.95%, while the French Cac moved 1.62% lower.
Across the Atlantic, the Dow Jones shed points after the bell as investors were shaken by President Trump’s suggestion that he could “cut off the whole relationship with China”.
Sentiment was also lowered after the US revealed that another 2.98 million Americans filed for unemployment in the week ending May 9.
Meanwhile, sterling continued its weak run from the past week, and slipped back after Andrew Bailey – the Bank of England governor – also made it clear the UK central bank is not considering negative rates.
The value of the pound fell 0.34% versus the US dollar at 1.219, and was down 0.07% against the euro at 1.130.
Transport operators Stagecoach, Go-Ahead Group, National Express and FirstGroup all dived lower after politicians warned people to avoid using public transport for the near future.
In company news, WH Smith slipped after it warned over a “significant hit” since March as the coronavirus lockdown forced it to close travel outlets and many high street stores.
Shares in the group closed 42p lower at 874.5p after it said total revenues plunged 85% in April, with sales crashing 91% across its travel arm
Elsewhere, housebuilder Persimmon closed lower despite saying it will ramp up its operations after the Government eased restrictions on moving home earlier this week.
Shares in the company fell by 102p to 2,049p despite announcing its sales offices will open their doors to potential customers on Friday.
Pub group and brewer Marston’s moved higher after it secured a £70 million funding boost which it said would protect the business, even if its pubs remain closed through 2020. Its shares closed up 2p to 32p.
The price of oil lifted higher on the back of Wednesday’s Energy Information Administration report, which showed that US oil stockpiles fell – the first weekly decline since January.
The price of a barrel of Brent crude oil increased 3.61% to 30.4 US dollars.
The biggest risers on the FTSE 100 were 3I Group, up 47.2p at 797p, Informa, up 10.6p at 420p, Meggitt, up 6p at 237.9p, and ITV, up 1.38p at 69.9p.
The biggest fallers of the day were Sage Group, down 48.2p at 7.23p, Aveva, down 283p at 3,661p, Ocado, down 144p at 1,956p, and Spirax-Sarco, down 630p at 8,836p.