Update: The FTSE 100 has fallen back under the 6,000 mark after a 7% plunge at the US open triggered a suspension to dealing on US stock markets.
The UK blue-chip index was down 478 points, or 7.4%, at 5,983, as dealing on US stock markets was halted for 15 minutes under ‘circuit breaker’ rules implemented following the financial crisis, after the S&P 500 fell 7% at the open.
The main US stock market index lifted from those levels after dealing resumed, and is now trading 5.9% lower.
Investors have fled stocks after a 21% crash in the oil price sent shock waves through markets, while the coronavirus has continued to spread, with vast areas of northern Italy placed under lockdown.
(10:10) FTSE plunges as oil crashes
The FTSE 100 has plunged 6.7% and global stock markets have plummeted as the oil price crashed 19% and fears of a worldwide recession mounted amid the worsening spread of the coronavirus.
The UK blue-chip index fell 430 points to 6,032, regaining its footing above the 6,000 mark after a plunge to 5,899 at the open, as investors grappled with the lockdown of vast areas of northern Italy to contain the spread of the disease, which has now infected 110,000 people globally.
Saudi Arabia, the world’s top oil producer, stunned markets by launching reported plans to raise oil production and discount prices, sending the price of Brent crude tumbling 19.2% to $36.60 a barrel and on course for its biggest one-day fall since the 1991 Gulf war.
On the FTSE 100, shares in Shell (RDSb) dived 14.1% to £13.69 and BP (BP) was down 17.9% at 324.5p.
The FTSE 250 index of ‘mid-cap’ stocks fell 5.2% and other European markets opened sharply lower. Italy’s FTSE MIB tumbled 9.4%, the German DAX 30 was down 5.4% and the French CAC 40 slumped 6.1%.
Stock markets in Asia were down heavily overnight. Japan’s Nikkei 225 tumbled 5.1%, Hong Kong’s Hang Seng was down 4.3% and Australia’s ASX 200 fell 7.3%. Futures pointed to a 4.9% fall for the S&P 500 when US stock markets open.
Investors fled to perceived safe havens. The yield on US 10-year Treasury bonds, which moves in the opposite direction to prices, fell further into uncharted territory to 0.4854%, having dropped as low as 0.34% overnight. For the first time in history the yield on 30-year Treasuries fell below 1%, to 0.88%, having fallen as low as 0.718% overnight.
On the FTSE 100, Lloyds (LLOY) joined BP and Shell among the heaviest fallers, down 6.2% at 42.9p as The Telegraph reported the Serious Fraud Office was examining allegations the bank and KPMG conspired to force the collapse of property company Angel Group.
Mining companies were heavily in the red as metal prices tumbled, with fallers including:
- Evraz (EVR) -11.6% at 238p;
- BHP Group (BHP) -14.5% at £11.39;
- Glencore (GLEN) -9.1% at 158.3p;
- Anglo American (AAL) -9.7% at £15.18;
- Antofagasta (ANTO) -7% at 690p.
Saudi Arabia’s move followed the collapse of talks to curb production between the Opec cartel of oil producing nations and Russia, which sent the price of Brent crude 9.4% lower on Friday.
Opec responded by removing limits on its own production. Saudi state oil giant Saudi Aramco on Saturday discounted its oil prices and Reuters reported the country would produce more than 10m barrels of oil per day in April, up from 9.7m in the last two months.
Oil stocks were the hardest hit on the London market. On the FTSE 250, Premier Oil (PMO) plunged 55% to 27.8p, Hunting (HTG) was down 22% at 210.4p and Tullow Oil (TLW) dropped 31.8% at 16p.
Among ‘small-cap’ stocks, EnQuest (ENQ) fell 19.6% to 14.4p and Pharos Energy (PHAR) was down 19.1% at 22.7p.
On the Alternative Investment Market, Hurricane Energy (HUR) was down 19.7% at 11.6p and Jadestone Energy (JSE) dropped 22% to 46p.
