London’s benchmark stock index has finally returned to the level it stood at in February 2020 before the Covid-19 crisis sent global markets into one of the biggest panics ever seen.
The FTSE 100 gained more than 1% on Wednesday morning after a two-day Christmas break, moving 50 points beyond the mark it was at just before the pandemic crash 22 months ago. It hit a high of 7,457.14 points.
The landmark came amid growing evidence that the Omicron coronavirus variant of concern may cause less severe symptoms – although record daily UK case numbers mean Wales, Scotland and Northern Ireland introduced new restrictions on Boxing Day.
The FTSE 100 closed on Friday 21 February 2020 at 7,403.92. When it opened again on Monday 24 February it slumped, the first day of an unfolding market panic that had few precedents.
The severity of the coronavirus outbreak was already clear by then in China but investors – not to mention politicians – had not yet appreciated the depth of the changes it would wreak on the global economy.
The World Health Organization that day said the outbreak was not yet a “pandemic”. Yet Italy had just reported its seventh death from Covid-19, and lockdowns were in place in its northern regions, a sign of the wave of infections that was about to sweep through Europe and the rest of the world’s richest economies. China had already announced its first lockdown a month earlier, on 23 January.
From that day until its low three weeks later, the FTSE lost more than a third of its value, or 2,500 points. It was the biggest quarterly contraction in London-listed share values since the aftermath of Black Monday in October 1987.
It was also the fastest fall into a bear market – 20% below the previous high – ever seen on Wall Street. Yet from that low point markets surged back, thanks to a combination of extraordinary monetary stimulus from central banks such as the US Federal Reserve and the Bank of England combined with a huge bout of government spending.
US markets recovered much faster than those in the UK thanks to the abundance of giant New York-listed technology companies, whose dominance was cemented by people across the world working from home during pandemic lockdowns.
By contrast, the UK’s FTSE 100 is dominated by old-economy stalwarts such as oil and gas companies, miners and banks. The technology sector represents only 1% of the FTSE 100 by market value, compared with 40% of the S&P 500, according to Refinitiv’s categorisation, which excludes other big tech-dependent gainers such as the electric carmaker Tesla.
The Wall Street benchmark hit a record closing high on Tuesday – its 69th of the year – but the FTSE 100 remains well short of its record, hit in May 2018, of 7,903.50 points. It is also short of the 2020 high of 7,689.67.
The London Stock Exchange reopened on Wednesday for two full trading days, with a half-day also scheduled on New Year’s Eve. Trading volumes during this period are usually extremely thin as investors take holiday.