Fresh blow for savers as the FTSE plunges 12% in a year

THE stock market has suffered its worst year since the financial crisis in a dismal performance which wiped £242billion off the value of Britain’s biggest firms.

The FTSE 100 index closed 12.5 per cent down yesterday from where it started in 2018 – its biggest fall for a decade.

The drop will hit millions of savers whose pensions are invested in the market and suggests fears are growing over risk of damage from a no-deal Brexit.

The last time there was an annual fall was in 2008, when the FTSE 100 plummeted 31 per cent in its worst ever drop as the banking crisis plunged markets into turmoil.

Last month saw a particularly bad end to the year, with the FTSE 100 down 3.5 per cent in its worst December performance since 2002.

It reached record highs early last year, but suffered a sharp reversal as stock markets tumbled around the world.

In the US, the Dow Jones was on track for its worst December since the height of the Great Depression. It is down more than 13 per cent from the all-time closing high of 26,828.39 points it hit in October.

The FTSE closed almost flat yesterday, down 0.1 per cent, or 5.84 points, at 6,728.13 points after a shorter day of trading, when the market closed at 12.30pm.

This was almost 1,000 points lower than on December 29, 2017, when it closed at 7,687.77 points.

Traders are normally in jubilant mood as the year comes to an end – the socalled festive ‘Santa Rally’ – and in the past two decades the FTSE has ended December lower on only four occasions.

But the rout this year has left investors licking their wounds and fearful of the future. London’s index of smaller firms, the FTSE 250, had an even more dramatic fall. This lost 15.6 per cent of its value over the year, shedding £59billion compared to its year-end close in 2017.

European indexes also made a loss as concerns rose about infighting between eurozone countries and the impact of tough US trade policies.

France’s Cac 40 index ended 2018 down 11 per cent, while’s Germany’s Dax – which closed for the year on December 28 – finished 18 per cent lower.

Laith Khalaf, of trading firm Hargreaves Lansdown, said: ‘We’re unlikely to see the gloom lift in January. Brexit looks set to reach a parliamentary crescendo and a swathe of trading updates from the UK high street isn’t likely to lighten the mood.

‘Despite the negative sentiment, it’s unwise to bet on the direction of the stock market in the short-term as it’s prone to defy expectations, sometimes for the better, sometimes for the worse.’

Mr Khalaf urged investors to keep their funds in the market rather than selling up.

The FTSE 100 will eventually rise again, and anyone who takes money out now is likely to suffer a major loss, he said.

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