The FTSE 100 tumbled 3 per cent this morning as concerns around a new coronavirus variant rattled markets.
The index fell in reaction to the discovery of a new variant in southern Africa, news of which emerged yesterday (November 25).
The UK blue chip index fell from above 7,300 points yesterday to 7,060 points this morning. At the time of writing it had recovered slightly but was still below 7,100 points.
The German Dax index and French Cac fell by about 3 per cent and 3.5 per cent respectively.
The B.1.1.529 variant was first identified in Botswana and potentially spreads more quickly than the Delta variant, which is currently the most prominent in the UK. There are also concerns that vaccines are less effective against the new variant.
From midday today, travellers to the UK from South Africa, Botswana, Namibia, Zimbabwe, Lesotho and Eswatini will have to self-isolate in a government-sanctioned hotel.
Shares in travel firms have been the worst affected, with IAG, owner of British Airways, seeing its share price crash 10 per cent.
Dan Boardman-Weston, chief investment officer at BRI Wealth Management, said it was important to emphasise that nobody is completely sure about the characteristics of the new variant, and it’s too soon to quantify the likely impact of this.
“The markets are being led lower by covid sensitive stocks in the travel, leisure and oil sector with the only positive performers being technology companies that benefit from covid lockdowns.
“It’s important to note that if this is going to take the world backwards from a covid perspective then it’s likely that inflation will abate and monetary policy will stay looser for a long time which is likely to be a positive for markets in the medium term.”