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Is the stock market about to crash again?

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As if this year’s stock market crash wasn’t enough. It seems like we may be on the brink of a second one, as governments around the world line up new Covid-19 restrictions.

People have been worrying about an autumn second wave for months, and it might just be upon us as infections rise. If it is, nobody would be surprised to see stock market crash part 2.

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You will remember what happened the first time. The FTSE 100 crashed by a third, from a peak of 7,674 in mid January, to just below 5,000 on 23 March. It recovered pretty dramatically too, although struggled to push much above 6,000.

The UK stock market has crashed more than 3% today to 5,800, as Covid-19 fears mount and local lockdowns look set to go national.

These FTSE 100 stocks are falling

The big FTSE 100 banks are taking a hammering, as HSBC Holdings and Standard Chartered face money laundering charges, on top of all their other worries. Domestic-focused banks such as Barclays and Lloyds Banking Group are also caught up in the stock market crash, amid growing fears about the impact of rising unemployment on bad debts, and low interest rates on net margins.  

The travel industry is in pain, as investors accept it’ll be even longer before we all start flying again. British Airways owner International Consolidated Airlines Group is down almost 11% today, while budget carrier easyJet is down 7% and Ryanair Holdings almost 6%. I’ve been warning against the temptation to take a punt on travel sector stocks for some time now, and feel vindicated today.

Companies that feed on the airline industry are also taking a hammering, with the Rolls Royce Holdings share price down more than 7%. High street bricks and mortar retailers and the hospitality sector are also stock market crash victims. Even high street survivor Next is down 5%. Pub chain JD Wetherspoon is down 8.7%, and the Restaurant Group has plummeted an incredible 15%.

There’s another worry looming, as the UK edges closer to a no-deal Brexit. I hoped some kind of last-minute deal would be cobbled together, but even I’m beginning to wonder. So will we see a second stock market crash?

Nobody can reliably second-guess where UK shares will go next. There are simply too many variables for the human brain (or computers) to take into account. Also, share price movements are often irrational, or at least, seem that way at the time.

Put the stock market crash to work

This Fool doesn’t claim to know the future. What we do know is that the FTSE 100 is already trading 25% below its pre-pandemic peak. That means you have a great opportunity to buy bargain shares today, regardless of whether we get a second stock market crash. Only buy if you aim to hold them for the long term though, as current volatility looks set to last.

If the stock market crashes after you invest, don’t worry. Simply buy more shares at the cheaper price. Choose your targets wisely though. Some companies face a sticky future.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of Next. The Motley Fool UK has recommended Barclays, HSBC Holdings, Lloyds Banking Group, and Standard Chartered. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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