Just before 11am today (19 August), the FTSE 100 Index plunged below the 7000 point threshold to 6995.76 as falling Anglo American share prices led the Index into the red.
This comes a month after the FTSE dipped to a two month low of 6844.11 as UK Prime Minister Boris Johnson lifted all legal coronavirus restrictions in England for the country’s ‘Freedom Day’.
The Index has reflected caution amongst traders and investors about the rise of the Delta variant in the UK following the latest wave of lifted restrictions.
But the fall in global oil prices has also hit blue chip oil and mining companies on the FTSE 100 hard, with BP and Anglo American both seeing a fall after stock markets opened this morning.
Here’s what you need to know.
What is the FTSE Index?
The Financial Times Stock Exchange, also known as the FTSE 100, FTSE Index or ‘Footsie’, is the UK’s leading share index, representing the top 100 blue chip companies listed on the London Stock Exchange according to their market capitalisation.
Maintained by the London Stock Exchange Group, the FTSE is typically viewed as an indicator of overall economic and market performance in the UK – with its rise or fall in shares generally representing UK market trends on the whole.
Why is FTSE down today?
The FTSE tumble comes as oil prices fall as a result of fears over the rise of Delta variant cases worldwide.
Today’s prices placed oil on average at $66 per barrel and down by roughly 3%.
Anglo American share prices were down 11.10% at the time of writing, with the FTSE 100 overall down 140.20 points in an almost 2% fall.
Drops in commodity values also come as the Chinese economy showed slowed growth, with the Shanghai SE Composite Index down 19.73 points on 19 August as the country deals with fresh Covid outbreaks and Beijing released slowed industrial production statistics disappointing bullish traders.
Looming large over stock markets and indexes worldwide is the continuing impact of events in Afghanistan, as the country is plunged into turmoil with the Taliban’s rapid surge to power.
The FTSE stock index has fallen alongside many other markets worldwide, with the Dow Jones Industrial Average (DJIA), also down 382.59 (1.08%) on Wall Street today as the United States sees a similar spike in coronavirus cases.
In Europe, the German blue chip companies making up the DAX Performance Index were also trading down by almost 2% on Thursday, down 286.41 points at 12.14pm today, moving in tandem with the FTSE 100, CAC 40 and Euro Stoxx.
Is the stock market going to crash?
While peaks and troughs are to be expected in a market still recovering from the economic devastation caused by the pandemic, this latest fall in the FTSE 100 Index has revived concerns of a looming market crash approaching in future.
This positive trend has generally buoyed market insiders’ hopes of greater economic stability in the UK, but the relaxation of restrictions and expectation of even higher levels of daily cases for the country has strengthened doubts about avoiding further lockdowns in the near future.
Any sudden U-turn on government coronavirus policy, such as reimposing lockdowns or harsher restrictions, would potentially serve a blow to the UK economy that would make a stock market crash more likely.