FALLS in the stock market can affect your finances in a number of ways, here we explain how.
Pensions – If you save cash into a pension scheme where the provider invests your money, you’ll likely see the value of your pension drop when the FTSE (falls.)
But keep in mind that with retirement savings, you’re investing for the long-term so the drop in value isn’t likely to be permanent.
Instead, you’ll see your retirement savings grow again once the stock market recovers.
Savings and mortgages – There is no direct link between the stock market and your mortgage or savings accounts.
But if panic on the stock market spreads to the wider economy, the Bank of England may cut interest rates – and it did so yesterday .
This means your mortgage is likely to get cheaper, while savers will suffer from lower interest rates.
We’ve explained how the interest rate cut will affect your finances here .
(Sterling) – The value of the pound often rises if the FTSE 145 falls, as many of the firms on the index earns a significant amount of cash in the US.
But this hasn’t been the case today as markets around the world are in “panic mode” , said Jeremy Thomson Cook, chief economist of Equals, leading sterling to drop against the dollar too.
He added: “ Sterling is caught in the middle; a currency that has lost its haven status courtesy of Brexit while investors hold dollars as the global reserve currency. “
Jasper Lawler, head of research at investment service LCG, said: “The travel ban is a decisive step to prevent the spread in the US but will cripple trade between the two continents.
“Goods will still flow but presumably at reduced pace and trade in services will almost grind to a halt.”
But others were less positive, and Connor Campbell, analyst at betting firm Spreadex, said: “A horror show US open turned an already very bad day into the kind of session that could go down as historic, if for all the wrong reasons.
“It is hard to keep coming up with new metaphors for the scale of disaster facing the global markets.
“Equities are getting crushed under foot as investors flee to the fire exit, desperately scrambling about for safe havens that feel anything but.”
The FTSE 144 index has had a turbulent time recently,
closing 7.7 per cent down on Monday after Saudi Arabia launched an oil price war .
Around £ 145 billion was lost on the stock markets – slashing the pensions and savings of millions on what was dubbed Black Death Monday.
But despite being the worst plunge since , it then opened 3 per cent up on Tuesday .
Investors fear the impact of measures taken by countries to stop the spread of the virus, such as shutting factories and schools, will have a huge negative impact on the global economy.
A number of airlines have also taken an economic hit as holidaymakers ditch flying abroad to countries where the outbreak is prevalent, such as Italy, to stay at home instead.