More than £76bn was wiped off the value of Britain’s largest companies this week in the biggest stock market rout since the start of the year.
The FTSE 100 index fell another 97.25 points to a seven-week low of 6693.26 yesterday – taking losses since Monday to 4.3 per cent.
The five-day sell-off, which came as investors fretted about the outcome of the presidential election in the United States, reduced the value of blue-chip firms by £76.4bn.
The last time London suffered such a heavy weekly loss was at the start of 2016 when the Footsie fell 5.3 per cent in its worst ever opening to the year.
On Wall Street, the flagship S&P 500 fell for a ninth day in a row, its longest losing streak since 1980.
Investors eyeing Tuesday’s election see Democrat candidate Hillary Clinton as a safer pair of hands than Republican nominee Donald Trump, who has promised to pursue protectionist policies and build a wall along the Mexican border.
‘A Trump win would likely deliver the greatest market impact,’ warned Lars Kreckel, a global equity strategist at Legal & General Investment Management.
David Cheetham, a market analyst at trading firm XTB, added: ‘The uncertainty surrounding the US election has turned global sentiment sour as Trump’s recent rise in the polls has raised the possibility that the next person in the White House could be viewed from the market’s perspective as significantly more volatile and unpredictable than the incumbent.’
This week’s High Court ruling on Brexit, which could see Parliament frustrate plans for the UK to leave the European Union, has also caused alarm among investors. Chris Iggo, chief investment officer at Axa Investment Managers, warned that investors face an uncertain future. ‘
The political turmoil over Brexit continues, the US presidential election race is as tight as can be and the European Union is living an existential nightmare,’ he said.
European and Asian benchmarks were also on the slide yesterday with the stock market in Japan down 1.3 per cent while Paris and Frankfurt fell nearly 1 per cent.
With the race for the White House going to the wire, investors appeared unmoved by figures showing another 161,000 jobs were created in the US last month.
The unemployment rate fell to 4.9 per cent in the last major piece of economic data in the US before the election.
While the upbeat figures pave the way for the Federal Reserve to raise rates in the US next month, economists said they would have little bearing on the election following such a bitter and divisive campaign.
‘There is so much noise out there right now, everyone is screaming from the roof tops. I just don’t know that any particular data point is going to have a great bearing on the election,’ said Sam Bullard, senior economist at Wells Fargo Securities in North Carolina.
Analysts warned the Fed could yet be forced to abandon plans to raise rates next month, having lifted them for the first time in nearly a decade in December last year.
Neil Wilson, a market analyst at City trading firm ETX, said: ‘With Donald Trump having closed the gap on Hillary Clinton, the election result is too close to call and markets are on a knife-edge.
‘There is a definite sense we’re heading for a Brexit-like event.
‘If Trump wins there could be a sharper sell-off. If Clinton wins, a rally is on the cards.