Worst week for UK stocks since global financial crisis and even gold is out of favour

Writer,

It is official: last week was the worst week for the UK stock market since the global financial crisis. The FTSE 100 has dropped 11.1% (or 823 points) on the week to 6,580, the third worst weekly showing for the index since records began in 1984.

The worst was 19 to 23 October 1987 which saw Black Monday contribute to a one-week decline of 22%. Then you had a 21% drop for 6 to 10 October 2008 as the global financial system started to crumble.

Fears over the coronavirus spreading around the world caused mayhem on the markets, leaving investors holding their head in their hands as large chunks are wiped off people’s savings pots.

In times of crisis people tend to veer towards supposed safe-haven assets such as gold, so it might come as a surprise to see gold miners among the worst performing FTSE 350 stocks on Friday.

Market chatter would suggest investors are selling what they can, either to shift their assets into cash or to cover margin calls. Gold fell 3.3% to $1,590 per ounce; this had been one the few bright spots in the market sell-off up until now.

Fresnillo, Hochschild Mining, Polymetal and Centamin all saw sharp share price declines which will have spooked investors who loaded up on gold mining stocks in the hope that something in their portfolio would be protected.

Travel group TUI extended its bad run with further share price declines as the markets speculated that consumers would think twice about going abroad on holiday.

So why did the markets fall so much? It’s down to fears that the coronavirus could lead to a global recession.

Companies are already experiencing supply chain problems and the idea that many people might be forced to work from home could impact productivity. Shutting schools would also compound the problem as parents would have to look after their children and may not be able to work, and consumer spending would likely fall.

FTSE 350 biggest losers on the week

TUI: -30%
Playtech: - 28%
Easyjet: -27%
SIG: -27%
Premier Oil: -24%
International Consolidated Airlines: -24%
SSP: -24%
Jupiter Fund Management: -23%

These articles are for information purposes only and are not a personal recommendation or advice.


russmould's picture
Written by:
Russ Mould

Russ Mould has 28 years' experience of the capital markets. He started at Scottish Equitable in 1991 as a fund manager and in 1993 he joined SG Warburg, now part of UBS investment bank, where he worked as equity analyst covering the technology sector for 12 years. Russ joined Shares in November 2005 as technology correspondent and became Editor of the magazine in July 2008. Following the acquisition of Shares' parent company, MSM Media by AJ Bell Group, he was appointed AJ Bell’s Investment Director in summer 2013.