FTSE 100 Expected to Take a Hit Following Wall Street’s Plummet
The FTSE 100 is set to drop more than 1% after Dow Jones suffered its biggest fall since last October. This is a direct result of increasingly volatile trading on Wall Street. The so-called “Reddit stocks” have been surging in the US as retail investors egg each other on via social media. That has caused massive paper losses for certain hedge funds, who have had to sell off other stocks to compensate for the shortfall in their brokers’ margin accounts. Observers fear certain doom for many retail investors who face crushing losses.
In light of this, regulators recognize the need to establish new measures to curb share ramping on social media. So, what can the UK expect of this? David Schwimmer of the London Stock Exchange indicated there is a clear need to overhaul share listing rules. He said the UK would need to change its strict curbs to reverse the trend of tech companies going to New York or other exchanges.
The situation is highly uncertain and many are split on the subject of corporate governance. Some maintain that London should continue upholding its gold standard status while others point out that the FTSE is full of old tech, mining, oil and banking stocks. Schwimmer agreed that the rules should certainly be changed, but thoughtfully. That said, the rules are being reviewed as we speak, and findings are expected to be reported in a month.
This all comes against the ongoing COVID-19 backdrop. With reports of new Lockdowns coming in the next weeks, it is no surprise investors demand changes to avoid major hits to UK markets. If additional vaccines arrive quickly and lockdowns ease, we could see a fast resurgence of the economy within the next 6 months.
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