The FTSE 100 was down as much as 4.5 percent, before settling closer to 4 percent at 5445.95 points at early trading today. It broke a two-day winning streak for the index, which has managed to regain some ground since dropping below 5,000 points last month.
The large drop came after lenders said they would suspend dividend payments in light of the COVID-19 crisis.
Banks led the FTSE’s drop after announcing they would not return money to shareholders this year and cancelling outstanding dividends from 2019.
Shares of Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered all saw large drops between 5.3 percent and 9.7 percent.
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HSBC was down by 9.3 percent, Standard Chartered by 7.1 percent, Lloyds by 5.2 percent, the Royal Bank of Scotland by 5 percent, and Barclays by 4.8 percent.
The fall this morning came after the stock index finished its worst quarter since 1987 yesterday with a 24 percent drop in value in the first three months of 2020.
While most FTSE companies have seen their value drop today, there are six companies which have grown in spite of the coronavirus crisis.
At time of writing, British American Tobacco, Fresnillo, Hikma Pharmaceuticals, Morrison Supermarkets, Ocado Group, Royal Dutch Shell ‘A’ and Royal Dutch Shell ‘B’ have all seen growth.
However, in all bar one of the companies, growth remains slow with only a small increase in percentage increase in value.
The only stock to have seen a significant rise in price is Fresnillo.
The company, which specialises in the mining of gold, has seen a 4.29 percent increase in price today.
Shares in London’s biggest companies were dragged lower today after banks slashed their dividends and the US warned hundreds of thousands of Americans might die in the pandemic.
Neil Wilson, chief market analyst at Markets.com, said: “A bit of a gloomy start to April, like a sharp frost killing off the buds that appeared too soon.”
His remarks came as the number of Americans with coronavirus who have died reached more than 4,000, with more than 40,000 thought to have died globally.
US President Donald Trump warned that between 100,000 and 240,000 Americans could die from the pandemic, which is gripping communities across the globe.
American markets closed down as a result, ending a dreadful quarter when the Dow Jones lost around a quarter of its value.
It had a knock-on effect on European markets on Wednesday.
Mr Wilson added: “Global stocks got off to a soggy start in April as economic damage wrought by the coronavirus was laid bare and investors felt there was not yet enough to show the virus was at or near its peak in Europe or the US.
“Donald Trump reflected the mood as he warned of weeks of pain still ahead, a stark change from his rather casual approach thus far.
“He also called for another two trillion dollars for infrastructure spending.”
Art Hogan, chief market strategist at National Securities in New York, added: “There is no easy way to quantify either the economic shutdown or what the eventual recovery is going to look like as the monetary and fiscal policy initiatives are as historic as the economic decline.”
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