The latest wave of pandemic panic sent global financial markets into a massive sell-off today as fears over a “terrible” new Covid-19 version loomed large.
The FTSE 100 was down 3.5%, or more than 250 points, in early trading – its worst day this year and one of the sharpest declines since the March 2019 crash of 8.6%.
British Airways owner IAG was the biggest casualty, having lost a fifth of its value at one point, as the slide wiped up to £65 billion from the total value of the UK’s major index.
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The recession comes amid fears that the B.1.1.529 variant found in South Africa is heavily mutated, meaning existing vaccines could be less effective and potentially derail the global economic recovery.
Brent crude futures fell 5% to $78.50 a barrel on a weak demand outlook, with BP shares falling as much as 9% in the process.
Safe havens such as the US dollar and gold rose, while investors also returned to stay-at-home stocks whose operations were boosted during earlier lockdowns.
Shares of Deliveroo rose 3% and grocery delivery firm Okado added 2% as one of only two risers on the FTSE 100.
A recession week has already ended for investors amid fears that additional lockdown restrictions may be needed in Europe this winter to tackle a new outbreak of current strains of the coronavirus.
Analysts said investors' outlook for the new version is one of "shoot first and ask questions later" until more information is known.
Russ Mold, investment director at AJ Bell, said: "It's a terrible end of the week for the markets and one of the big questions people will now be asking is whether this is a catalyst for a full-blown market correction."
The blast comes at the worst possible time for airlines, hotels and leisure companies, whose fortunes began to look brighter after major travel routes reopened, including in the United States.
The latest bout of unrest left EasyJet shares down more than 10%, with the low-cost carrier falling back to its lowest level since the discovery of the Pfizer vaccine last November.
Rolls-Royce, whose fortunes depend on improving engine flight hours, suffered a double-digit drop, and GKN owner Melrose Industries also took a dive. Mining giants including Anglo American fell 5% as the price of copper and other major metals fell.
The flip side of the fall in commodity prices is that weakness should provide some respite on inflation once consumer prices hit 30-year highs.
It also cast doubt on Citi's hopes that the Bank of England will raise interest rates from its emergency minimum of 0.1% next month.
This latest potential relief for borrowers dealt another blow to the margin outlook for banking stocks, with both NatWest and Lloyds Banking Group falling 5%.
Today's selloff was fueled by a liquidity crunch as Wall Street closed for the Thanksgiving holiday.
The Nikkei earlier fell nearly 3% in Tokyo and the Hang Seng in Hong Kong fell to its lowest levels in nearly two months in dummy text that could be used to indicate