You are here: Home - Investing - Experienced Investor - News -

Investors told not to panic as stock market falls

Written by: Emma Lunn
Stocks have slumped across the world over fears that a new Covid-19 variant could wreak havoc on business and travel.

In early trading, the FTSE 100 was down 3%, with travel companies, oil majors and banks hit hardest. The falls put the FTSE 100 on course for its steepest one-day drop in a year. The FTSE 350 Travel and Leisure Index was down almost 5%.

Shares in IAG, the owner of British Airways, fell more than 21% in early trading, while EasyJet fell 16%. Wizz Air fell by about 18%, and Jet2 9%.

The falls came after the UK government added six Africa countries to the travel red list after a new strain of coronavirus was designated a ‘variant under investigation’.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Fears over the new Covid variant have gripped the markets and spread around the world, causing stocks to tumble, but there’s no need to panic. The market crash at the start of the pandemic revealed how important it is not to let short-term shocks put us off our long-term investment plans. They also showed the enormous value of regular investments at times like this.

“Market falls are never comfortable to live through, and there’s always the temptation to sell up and head for the hills. But periods of volatility are part and parcel of investing, and even when we get particularly sharp short-term falls, we shouldn’t let this put us off our long term aims.”

Russ Mould, investment director at AJ Bell, said: “Forget Black Friday; today has been renamed Red Friday after the colour of share price screens as stocks slump globally on fears over a new Covid strain

“The drop in the oil price the market’s way of saying it is worried about a reduction in economic activity, something which also explains the slump in metal prices. Markets are clearly speculating that a rapid spread of a more brutal Covid strain could once again derail the global economy. Banking stocks were also weak as they are closely tied to economic activity.

“The flipside of falling commodity prices is that a weaker oil price should provide some relief in terms of inflationary pressures. That may cause central banks to be more cautious towards raising rates in the near-term, however it does depend on whether the new Covid strain causes significant disruption or can be contained as best as possible in a rapid manner.

“Headlines calling it the ‘worst ever variant’ have caused investors to panic and dump shares in travel-related stocks for fear that we’re going to see tough travel restrictions once again.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week