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Oct. 28, 2020, 11:16 a.m. EDT

FTSE 100 hits levels not seen since April as COVID worries slam markets

By Barbara Kollmeyer

London’s main stock index was hovering at levels not seen since April, as concerns over the spread of COVID-19 slammed global markets on Wednesday.

The FTSE 100 (FTSE:UK:UKX) dropped 3.1% to 5,552.76, while the pound (XTUP:GBPUSD) dropped 0.6% to $1.2963 as investors sought shelter in the U.S. dollar. A strong dollar works against multinational companies that earn revenue outside of the U.K., as it makes their goods less competitive overseas.

But almost everything was working against U.K. stocks as U.S. and Brent oil prices plunged over 5%. The commodity was weighed down by a storm in the Gulf of Mexico and sharply higher inventory data from an industry trade group.

Heavily-weighted oil companies such as Royal Dutch Shell and BP (NYS:BP) (LON:UK:BP) fell more than 3% each.

Rising COVID-19 cases across Europe, where France and Germany were poised to impose fresh restrictions , and climbing cases in the U.S. were rattling global investors. In the U.K., a member of the government’s Scientific Advisory Group for Emergencies, Mark Walport, warned the number of patients in hospital could surpass the spring peak by November if the government doesn’t restrict movement further.

Pharmaceutical stocks were hit hard, with shares of AstraZeneca and GlaxoSmithKline off by 3% and 5%. Only the aerospace and defense sector was in the green, with Rolls-Royce (LON:UK:RR) a standout gainer rising 14%.

“Biggest fallers today have been in commercial real estate, with British Land and Land Securities seeing big losses over concerns that more lockdowns will hollow out their real-estate portfolios even further,” added Michael Hewson, chief market analyst with CMC Markets.

That also hit travel and leisure shares, with shares of International Consolidated Airlines (LON:UK:IAG) down 5% and easyJet (LON:UK:EZJ) off 4%, while InterContinental Hotels Group was down nearly 4%.

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