Pound falls and £33billion wiped off FTSE 100 as markets react to Europe’s UK travel bans
MORE than £33billion has been wiped off the FTSE 100 within minutes of opening this morning after many European countries ban UK travellers over fears of a mutant coronavirus strain.
Tougher lockdown restrictions for London and much of the south east of England plus a Brexit talk deadlock has knocked 1.8% off Britain's leading companies.
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The pound has also plummeted by 1.9% against the dollar this morning, falling to $1.3278.
Meanwhile, sterling fell 1.4% against the euro to €1.0859.
Prime Minister Boris Johnson will chair a crisis Cobra meeting today after France slapped a travel ban on freight and travel from the UK.
On the FTSE 100, British Airways owner International Airlines Group has been hit the hardest, falling 9%, while engine maker Rolls-Royce Holdings PLC dropped 7.8%.
The footsie index tracks the performance of the UK's 100 biggest companies.
Ahead of opening today, the index was down 13% compared to this time a year ago, making it currently the worst-performing major index.
In comparison, Wall Street's S&P 500 index gained 17%, Japan's Nikkei rose by 13% and Germany's Dax went up by 1.8%.
Investors are now preparing for a tumultuous end of year for the FTSE 100 as the UK looks likely to leave the European Union without a deal on December 31.
There are also fears France's 48-hour travel ban will cause a major food and Christmas goods shortage for supermarkets.
How the FTSE 100 falling affects your personal finances
FALLS in the stock market can affect your finances in a number of ways, here we explain how.
Pensions - If you save cash into a pension scheme where the provider invests your money, you'll likely see the value of your pension drop when the FTSE 100 falls.
But keep in mind that with retirement savings, you’re investing for the long-term so the drop in value isn’t likely to be permanent.
Instead, you’ll see your retirement savings grow again once the stock market recovers.
Savings and mortgages - There is no direct link between the stock market and your mortgage or savings accounts.
But if panic on the stock market spreads to the wider economy, the Bank of England may cut interest rates. Interest rates are currently held at 0.1%.
This means your mortgage is likely to get cheaper, while savers will suffer from lower interest rates.
We’ve explained how the interest rate cut will affect your finances here.
Sterling - The value of the pound often rises if the FTSE 100 falls.
This is because many of the firms on the index earns a significant amount of cash in the US.
But again, exchange rates are also volatile and there are many factors that make them rise and fall.
This morning, Sainsbury's warned it may run out of some fruit and vegetables if nothing is resolved soon.
But there are hopes the disruption will be short-lived after France today promised to lift the lorry ban "within hours".
Despite the worries, the Transport Secretary said the public shouldn't notice any disruption.
Mr Grant Shapps said: "The supply chain is pretty robust in as much as you get variations in supply all the time. For the most part, people won't notice it."
He added that supplies of the Covid vaccine will not be affected.
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Another Brexit deadline was missed yesterday, sending the markets into a downward spin.
Scotland's First Minister, Nicola Sturgeon, has demanded the transition period is extended to focus on the Covid crisis.
A string of Tory MPs have also demanded Boris Johnson cave to calls to prevent the possibility of a No Deal Brexit on New Year's Eve.