The eyes of global investors were trained on London this week, but not for good reasons. Speculation about a new lockdown in Britain saw the FTSE 100 slide 3.4% on Monday, its worst one-day loss since June. The drop wiped £52bn off the value of British companies. Concern about a second wave of the pandemic in Spain and France also hit European bourses, with Germany’s Dax falling 4.6% on Monday. The FTSE remained volatile the following day but finished higher as Boris Johnson announced milder measures than many had feared.
Markets were already feeling woozy before this week’s new pandemic restrictions, says Rupert Thompson of wealth manager Kingswood. Global equities ended last week down 4.5% from their early September highs. “Central banks have now spent most of their ammunition,” but politicians are reluctant to provide further fiscal stimulus – in the UK, debate continues about extending furlough schemes beyond October. This week’s turmoil was a reminder that Covid-19 can still rattle investors.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It’s Britain’s fault!
For Wall Street traders, Monday brought back nasty memories of the crashes in March, say Ben Eisen and Anna Isaac in The Wall Street Journal. A 500-point fall in the Dow Jones index was accompanied by declines in oil and gold prices, a cross-asset washout that sparked “anxiety” about “further turbulence” to come.
Larry Kudlow, Donald Trump’s economic adviser, pointed the finger at Britain, telling a reporter that the market turmoil was “coming out of London” because of “worries that Britain might shut down”. But the US has its own headaches (including the upcoming election) and September is often the start of a “treacherous season”for markets, says Randall Forsyth in Barron’s. From Black Wednesday to Lehman Brothers going bankrupt, the month has a nasty habit of serving up the end-of-summer blues.
Long-suffering British investors have become accustomed to market whiplash. The FTSE All-Share has been “an absolute hound” in recent years, as Russ Mould of AJ Bell notes. Since the Brexit vote in 2016 it has underperformed all other major investment regions on a total returns basis. Even Latin America – where Brazilian turmoil has mingled with an Argentine debt default – has done better. The crucial problem is the FTSE’s heavy exposure to out-of-favour energy and finance stocks. That makes the market a value play by default. British shares are unlikely to shine until the world economy manages to stage a “strong, inflationary recovery”.
-
How inheritance tax trick is helping families save ‘six-figure sums’Happy to skip a generation to save thousands on inheritance tax? A deed of variation could be the estate planning tool you need.
-
Nationwide: House prices unexpectedly dropped in AugustHouse prices fell by 0.1% in August in a surprise drop, according to Nationwide, as “affordability remains stretched”
-
Are wealthy whisky enthusiasts leaving Britain?Collectables Wealthy whisky enthusiasts are heading to tax-friendly countries such as Dubai, where there is more disposable income to spend on collectable luxuries like rare whisky.
-
'The rise and fall of Kodak is a lesson for the tech giants'Opinion The long decline of Kodak – a once-dominant company – shows why no business is safe from disruption, says Matthew Lynn
-
8 of the best properties for sale with kitchen gardensThe best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growthGrowth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
