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How the UK’s coronavirus stock market fall compares to the world

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Investors will be glad to see the back of the first three months of 2020, after the coronavirus outbreak meant that the first quarter of the year proved brutal.In the UK, the month of March saw some of the biggest daily drops in the FTSE 100’s history, but the second biggest one-day fall on record…

Investors will be glad to see the back of the first three months of 2020, after the coronavirus outbreak meant that the first quarter of the year proved brutal.

In the UK, the month of March saw some of the biggest daily drops in the FTSE 100’s history, but the second biggest one-day fall on record was also accompanied by the second greatest one-day rise.

But how have the world’s leading stock markets fared against the UK and each other since the coronavirus started making headlines at the start of the year? 

The FTSE All Share has been one of the worst-hit stock markets across the globe since the start of the year, while the MSCI China has been among the least impacted

Market performance from 1 January to 1 April by total return
RegionIndexTotal Return (%)
UKFTSE All-Share-25.13
EuropeMSCI Europe ex UK-20.22
USS&P 500-14.53
Emerging MarketsMSCI Emerging Markets-20.57
JapanTopix-14.80
Asia ex JapanMSCI AC Asia ex Japan-15.01
ChinaMSCI China-6.20
Source: FE Analytics  

The bad news for many British investors who will have a fair dollop of home bias in their portfolios is that the UK has been among the hardest hit of major global stock markets since the start of 2020

The FTSE All-Share index, which is broader than the headline-grabbing FTSE 100, racked up a total return including dividend payouts of minus 25.1 per cent between the start of the year and end of March.

That’s considerably worse than the US S&P 500, which had a minus 14.5 per cent total return and even the MSCI Europe excluding UK measure of the continent’s major listed firms, which was down 20.2 per cent.

Over the same period, the MSCI Emerging Markets index was down 20.6 per cent, while Japan and Asia excluding Japan were down about 15 per cent, but China, where Covid 19 first emerged was down just 6.2 per cent.

The FTSE 100 suffered its second worst day in its history on Thursday 12 March, followed by its second-highest rise just five days later

The UK stock market’s rollercoaster ride 

This year has been tough for investors and March was a particularly tumultuous month. 

The week of 16 March began with some of the worst market drops in years, with the FTSE 100 down 8.5 per cent on the Monday.

Worse came on Thursday that week however after the World Health Organisation officially declared the outbreak of Covid-19 a pandemic the night before. 

The UK’s blue-chip index fell an eye-watering 10.9 per cent – its second greatest one-day drop in its history – and it was a similar story across the world, with US stocks down 9.5 per cent, and Europe down 12.4 per cent.    

Different steps to manage the pandemic by governments had a knock-on effect on sectors through the month, such as individual national lockdowns and the ban on travel from Europe by the US, which had major consequences for airlines, tourism and business.

The UK Government also held its Budget in March announcing the first of critical contingency plans to manage the economic hit of the virus, with further measures to support employees – paying 80 per cent wages inf companies put them on furlough – and the self-employed emerging over the month.

As with any unknown situation, the slightest bit of clarity can make the biggest difference, which was proven on 24 March – the morning after Prime Minister Boris Johnson announced the strict new measures for people in the UK to stay at home.

This coincided with the closing of Donald Trump’s deal with Congress to shore up the US economy in the face of the outbreak. 

The FTSE 100 jumped 9 per cent, or 452.12 points, to 5446.01, its second-biggest daily rise since its inception, despite warnings that Britain was heading for ‘a recession of the scale we have not seen in modern history’. 

At the end of trading on 6 April, the FTSE All Share was down 27.5 per cent on its mid-January peak. 

Over the past decade, investors in the UK’s stock market indices are still up, but the past three months have wiped out a sizeable chunk of their gains

Don’t panic sell in the storm 

This is the first global stock market decline of its kind in that it has been prompted by a health pandemic, but experts urge investors to remain calm and not make any knee-jerk reactions.

‘Longstanding investors who recall the Russian debt crisis, the Dot Com bubble and the Global Financial Crisis, will know that market will eventually recover, that it doesn’t make sense to panic sell in the eye of the storm and that times of turmoil do in fact present buying opportunities,’ warned Jason Hollands, of Tilney.

‘While markets are likely to remain volatile in the near term, I’m in no doubt that the impact of the coronavirus on financial markets will be transitory. We’ve seen such big day to day swings, up as well as down, trying to trade around short term moves is a mugs game. 

‘However, for investors focused on the longer-term – whether markets rise or fall next week – at these levels there are clearly opportunities for those able to feed cash in.’  

China fares best in Asia 

Despite being the original epicentre of the outbreak of the virus, China was one of the best performers between January and April, with the MSCI China down by 6.2 per cent since 1 January in total return terms.

The biggest drop the index saw was 8.1 per cent on 16 March – when almost all markets across the globe were hit.  

Jason Hollands of Tilney said: ‘This might surprise those unfamiliar with the shape of markets and who have read about the massive economic disruption in China.

‘It was the first country to be hit by the virus but current indications are that the outbreak may have peaked, with no new growth in infections in recent days. South Korea, which was also impacted early on, has seen infection rates decline.

‘Market sentiment is clearly highly sensitive to data developments and news flow at the moment and it is the escalation of cases in the developed nations and response of authorities that is driving bearish sentiment. 

‘But don’t forget, this can work both ways round and any perceived turning point over the coming weeks in stemming the spread of the virus or it peaking, will likely help reset market sentiment.’  

Japan, which has so far recorded only 85 deaths, has been hit worse in stock market terms with the TOPIX down by almost 15 per cent. 

Europe suffers

With the world’s highest death tolls from the coronavirus recorded in Italy and Spain, Europe is now considered the new epicentre of the pandemic.  

The MSCI Europe excluding UK index fell 20.2 per cent between the start of the year and end of April. 

Drilling down further, both Germany and France were down 22 per cent, while Spain and Italy were down 25 per cent, according to FE Analytics. 

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