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FTSE 100 posts biggest annual fall since 2008

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·Contributor
·3 min read
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2020 was officially the worst year for FTSE 100 share index since financial crisis. Photo: Lionel Healing/Getty Images
2020 was officially the worst year for FTSE 100 share index since financial crisis. Photo: Lionel Healing/Getty Images

London’s FTSE 100 (^FTSE) closed in early trading on Thursday down 1.5%, marking the end of the index’s worst year since 2008 as it was rocked by the COVID-19 pandemic.

The blue-chip index was lower 95.3 points on Thursday to 6460 points, taking its total losses for 2020 to 14.34%.

Germany’s DAX (^GDAXI) was closed in Frankfurt, while the CAC 40 (^FCHI) slid lower down 0.9% in Paris on Thursday.

US markets were rather muted with thin trading. The S&P (^GSPC) open lowered 0.1% and Dow Jones (^DJI) also fell 0.1% and the Nasdaq (^IXIC) dropped 0.2%.

“2020 has been an incredibly intriguing year for the stock market as we have seen one of the sharpest declines in the US stock market as the major indices plunged over 30% in mid-March earlier this year,” said Naeem Aslam, chief market analyst at AvaTrade.

“And following that, we experienced one of the fastest recoveries for the US equity markets. We saw the US and European stock indices scoring several record highs.”

WATCH: Will Interest rates stay low forever?

READ MORE: Major UK firms 'named and shamed' for failing to pay minimum wage

The dollar was also trading at its lowest point in 2.5 years overnight in London, giving a basket of currencies a step up, though a reversion may be likely.

The pound continued its ascent in mid-day trading in London on Thursday, up 0.3% against the dollar, sitting at $1.3659.

The pound continued rising against the dollar on Thursday. Chart: Yahoo Finance
The pound continued rising against the dollar on Thursday. Chart: Yahoo Finance

“The US economic data isn’t giving any indications that the Fed is going to move the needle on its monetary policy stance and this is pushing the dollar index lower,” said Aslam. “The index has touched the 2.5 year low and it is important to keep in mind that the index is due for a mean reversion trade which means a move back to the upside.”

Wednesday’s announcement that Oxford-AstraZeneca’s (AZN.L) COVID-19 vaccine had been approved by the UK government also boosted the value of the pound as it is considered an effective delivery method to execute mass immunisation programmes given the drug’s cheap cost and higher storage threshold than its peers — created by Pfizer (PFE)-BioNTech (BNTX) and Moderna’s (MRNA). If this holds true, exponential growth in COVID-19 case counts should start to recede, despite newer, more transmissible variants of the virus coming to the fore.

The UK’s House of Commons voted in favour of the Brexit deal on Wednesday, helping improve the long-term growth prospects for the badly beaten UK economy.

Bitcoin (BTC-USD) reached another record high earlier on Wednesday, surging to a record $28,500 (£21,086), quadrupling its value this year.

READ MORE: Bitcoin hits record high as it soars past $28,500

“On the fundamental front, the Bitcoin price is still moving higher despite unfavourable regulatory headlines,” said Aslam. “It is an assurance for Bitcoin lovers that the price is likely to continue its uptrend in 2021. The worst that could happen to the Bitcoin price is only a healthy correction.”

Chinese stocks outperformed, with the benchmark CSI 300 Index (000300.SS) at a five-year high after the country approved its first COVID-19 vaccine for general public use, as well as data showing a steady economic recovery. Markets in Japan and South Korea are closed due to holiday.

Asian markets were largely in positive territory as they focused on the global economic recovery. The Hong Kong Hang Seng (^HSI) was higher 0.3% at market close, and the Shanghai Composite (000001.SS) gained 1.7% at market close.

WATCH: UK approves use of AstraZeneca/Oxford vaccine

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