Around £72bn was wiped off the value of London’s top shares in a stock market rout sparked by the new Covid variant in southern Africa.
The FTSE100 suffered its worst one-day fall since the early days of the Covid pandemic on Friday, dropping by – 3.6 per cent.
And the FTSE250, which includes smaller companies, fell by 3.2 per cent, wiping a further £13.5bn off the London stock exchange.
They were in line with global movements of stock and oil prices, which tumbled worldwide.
Stocks also opened sharply lower on Wall Street, and Tokyo lost 2.5 per cent. Shanghai, Frankfurt and Hong Kong also declined sharply. Futures for the Dow Jones Industrial Average dropped more than 2 per cent.
The new Covid-19 variant detected in southern Africa, known as omicron, is believed to be more transmissible than the delta strain and vaccines may be less effective against it, scientists say.
Investors, public officials and the public are always jittery about any new variant spreading.
The dramatic fall in the City was led by airlines and Rolls-Royce, which makes plane engines.
British Airways owner IAG and cruise line Carnival had both lost more than 10 per cent of their market value. EasyJet, Tui and Wizz Air were not far behind, since the UK is stopping all direct flights from South Africa, Namibia, Zimbabwe, Botswana, Zimbabwe, Lesotho and Eswatini due to a surge in cases identified with the new mutation.
“Forget Black Friday; today has been renamed Red Friday after the colour of share price screens as stocks slump globally on fears over a new Covid strain,” said Russ Mould, investment director at AJ Bell.
“Headlines calling it the ‘worst-ever variant’ have caused investors to panic and dump shares in travel-related stocks for fear that we’re going to see tough travel restrictions once again.”
But less obvious companies were among some of the heavy losers.
The worry that office workers might switch back to working from home and ditch their lunchtime supermarket sandwiches hit Greencore Group, which makes sandwiches for the supermarkets.
Online supermarket Ocado, which stands to gain from a new lockdown, was one of only a few FTSE companies to gain.
Downing Street said there was nothing in the data to suggest that England should move to plan B restrictions yet, which would include mandatory masks, vaccine passes for crowded areas and guidance to work from home.
Additional reporting by agencies