THE FTSE 100 opened almost 5 per cent down today as 1.5million Brits were yesterday ordered to self-isolate for 12 weeks due to coronavirus.
Boris Johnson also said it was “crucial” that Brits listened to Government advice and stayed away from parks, cafes and restaurants.
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The coronavirus has quickly spread across the globe, infecting more than 341,000 people worldwide of which 5,683 are in the UK.
Around 9am today, the shares of Britain’s biggest companies were down 4.65 per cent to 4,949.
They then slightly recovered to sit at 5,175 after 12pm, but are at the time of writing at 1.45pm down again to 5,012 – 3.44 per cent down.
The plunge comes after the Organisation for Economic Co-operation and Development (OECD) warned that the world will take years to recover from the coronavirus pandemic.
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Angel Gurría, OECD secretary general, told the BBC the economic shock was already bigger than the financial crisis.
He said it was “wishful thinking” to believe that countries would bounce back quickly.
The coronavirus is having a big impact on businesses, with McDonald’s and Nando’s both closing all UK restaurants to prevent the pandemic from spreading.
Meanwhile, easyJet and British Airways staff have been forced to take three months’ unpaid leave as airlines struggle to survive in the current climate.
The FTSE 100 index has also had a turbulent time, plunging 11 per cent in the worst day since Black Monday 1987 a couple of weeks ago.
The crash, which was the second worst ever – surpassing the drawn out drop of the financial crash in 2008, wiped £160billion off shares of Britain’s biggest companies.
The index then went up 7 per cent the following day as Boris Johnson stepped up his battle plan to delay the spread of the disease.
How the FTSE 100 falling affects your personal finances
FALLS in the stock market can affect your finances in a number of ways, here we explain how.
Pensions – If you save cash into a pension scheme where the provider invests your money, you’ll likely see the value of your pension drop when the FTSE 100 falls.
But keep in mind that with retirement savings, you’re investing for the long-term so the drop in value isn’t likely to be permanent.
Instead, you’ll see your retirement savings grow again once the stock market recovers.
Savings and mortgages – There is no direct link between the stock market and your mortgage or savings accounts.
But if panic on the stock market spreads to the wider economy, the Bank of England may cut interest rates – and it’s done so twice in recent weeks.
This means your mortgage is likely to get cheaper, while savers will suffer from lower interest rates.
We’ve explained how the interest rate cut will affect your finances here.
Sterling – The value of the pound often rises if the FTSE 100 falls, as many of the firms on the index earns a significant amount of cash in the US.
But this hasn’t been the case recently as markets around the world are in “panic mode”, Jeremy Thomson Cook, chief economist of Equals, said a couple of weeks ago.
He added: “Sterling is caught in the middle; a currency that has lost its haven status courtesy of Brexit while investors hold dollars as the global reserve currency.”
Last week, the Bank of England was forced to slash interest rates for the second time in a week in a desperate bid to support Britain’s struggling economy.
Interest rates are now the lowest they have been in 400 years.
We take a look at how the coronavirus compares to previous market crashes of 1987 and 2008 when the financial crash began.
