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Bank of England slashes interest rates; UK economy is stagnating – business live Bank of England slashes interest rates; UK economy is stagnating – business live
(32 minutes later)
The escalating coronavirus crisis has forced the first emergency UK interest rate cut since 2008The escalating coronavirus crisis has forced the first emergency UK interest rate cut since 2008
Sunak says that the coronavirus response has been “clearly and closely coordinated with the Bank of England”.
He pledges to use fiscal action with a three-point plan:
Sterling is up by 0.2% for the day as Sunak says there will be supply-side and demand-side effects from coronavirus.
But he adds that it will be temporary.
Shares on the FTSE 100 have fallen back into the red, now down by 0.2% today.
Shares around the world appear to be back on the retreat, with US futures suggesting that there could be another steep selloff when the market opens.
Rishi Sunak is up now delivering his first budget.
Renowned emerging markets investor Mark Mobius has noted that not all of the global selloff has been warranted.
Speaking on Bloomberg television, he said that there are “incredible opportunities and bargains” in emerging markets and gold, the traditional safe-haven asset. The chaos on oil markets will hurt oil companies and exporters, but it could also cushion the blow for consumers. He said:
There are “terrific bargains in Turkey”, while Indonesia will also benefit from lower oil prices, he added. But there are still big risks out there (not least given potential disruption to financial markets). It is “time to buy like the way porcupines make love”, Mobius said. His interviewer helpfully chimed in with the answer: “Carefully”.
Hello, Jasper Jolly here. I’ll be focusing on global markets as the coronavirus turmoil continues, so head to the budget live blog for a UK focus (although I’m sure a bit of budget reaction will sneak in here as well).
That Goldman Sachs note from a few minutes ago does not appear to have helped global markets: US stock market futures have extended their declines – in spite of the Bank of England’s intervention today.
Futures for the S&P 500 are down by 2.8%, and Dow Jones industrial average futures are down by 2.6%.
Right, I’m off to give Andy Sparrow a hand covering the UK budget.Right, I’m off to give Andy Sparrow a hand covering the UK budget.
It should include a raft of measures to protect the UK economy from the coronavirus threat, plus a big increase in infrastructure spending - and new growth and borrowing forecasts.It should include a raft of measures to protect the UK economy from the coronavirus threat, plus a big increase in infrastructure spending - and new growth and borrowing forecasts.
Here’s the Budget liveblog:Here’s the Budget liveblog:
Jasper Jolly has the controls....Jasper Jolly has the controls....
The early rally in Europe’s stock markets is fizzling out, again, as traders brace for another bumpy session on Wall Street.The early rally in Europe’s stock markets is fizzling out, again, as traders brace for another bumpy session on Wall Street.
The FTSE 100 is now up just 12 points, or 0.2%, at 5970 -- close to a four-year low. Italy’s FTME MIB has dipped into the red, while the Stoxx 6o0 is only up 0.5%.The FTSE 100 is now up just 12 points, or 0.2%, at 5970 -- close to a four-year low. Italy’s FTME MIB has dipped into the red, while the Stoxx 6o0 is only up 0.5%.
Stocks are expected to fall on New York - having rallied last night on hopes of a stimulus package.Stocks are expected to fall on New York - having rallied last night on hopes of a stimulus package.
Investors are disappointed that president Trump hasn’t delivered any details of the measures he mentioned yesterday to protect the economy, such as a payroll tax cut.Investors are disappointed that president Trump hasn’t delivered any details of the measures he mentioned yesterday to protect the economy, such as a payroll tax cut.
Goldman Sach’s warning that the bull market is on borrowed time isn’t helping the mood either.Goldman Sach’s warning that the bull market is on borrowed time isn’t helping the mood either.
The Dow is being called 800 points down, a loss of almost 3%, having jumped by 1,167 points (nearly 5%) yesterday.The Dow is being called 800 points down, a loss of almost 3%, having jumped by 1,167 points (nearly 5%) yesterday.
Goldman Sachs has predicted that Wall Street’s 11-year old bull market will soon end.Goldman Sachs has predicted that Wall Street’s 11-year old bull market will soon end.
In a research note, the investment bank has predicted that S&P 500 index will have fallen by 15% by the summer.In a research note, the investment bank has predicted that S&P 500 index will have fallen by 15% by the summer.
Its new mid-year target for the S&P 500 is 2450 points - compared to 2,882 points last night (and 3,386 back in February!).Its new mid-year target for the S&P 500 is 2450 points - compared to 2,882 points last night (and 3,386 back in February!).
Italy’s prime minister has tweeted that his cabinet have approved plans for a €25bn package of “extraordinary” measures.Italy’s prime minister has tweeted that his cabinet have approved plans for a €25bn package of “extraordinary” measures.
Giuseppe Conte also pledged that “We are doing everything that is necessary, with every tool available. Together we’re going to make it”.Giuseppe Conte also pledged that “We are doing everything that is necessary, with every tool available. Together we’re going to make it”.
But is €25bn enough? Italy’s death toll is rising alarmingly each day (from 461 to 631 yesterday), and its streets are deserted as citizens are locked down. A deep recession and a tragic social cost seems inevitable.But is €25bn enough? Italy’s death toll is rising alarmingly each day (from 461 to 631 yesterday), and its streets are deserted as citizens are locked down. A deep recession and a tragic social cost seems inevitable.
Here’s a video clip of the key points from Mark Carney’s press conference:Here’s a video clip of the key points from Mark Carney’s press conference:
Over in Westminster, chancellor Rishi Sunak has told the cabinet that Britain has “one of the best placed economies” to survive the Covid-19 crisis.Over in Westminster, chancellor Rishi Sunak has told the cabinet that Britain has “one of the best placed economies” to survive the Covid-19 crisis.
Sunak also confirmed that the Budget, due at 12.30pm, will include an economic action plan to combat the damage caused by the outbreak.Sunak also confirmed that the Budget, due at 12.30pm, will include an economic action plan to combat the damage caused by the outbreak.
A spokesman for Number 10 Downing Street said:A spokesman for Number 10 Downing Street said:
Our Politics Live blog (where we’ll cover the Budget later) has the details:Our Politics Live blog (where we’ll cover the Budget later) has the details:
UK bank HSBC has announced a package of support for customers as they tackle the financial impact of Covid-19.UK bank HSBC has announced a package of support for customers as they tackle the financial impact of Covid-19.
For personal bank customers, it could let them defer mortgage payments, and/or switch to an interest-only mortgage. It is also waiving charges on its fixed-rate saving account, to let customers access cash if needed. HSBC is also offering to temporarily increase credit card and overdraft limits.For personal bank customers, it could let them defer mortgage payments, and/or switch to an interest-only mortgage. It is also waiving charges on its fixed-rate saving account, to let customers access cash if needed. HSBC is also offering to temporarily increase credit card and overdraft limits.
For business customers, the Bank has “allocated £5bn to help businesses that need support” (from its existing SME lending scheme), and could also give repayments holidays or review loans. That could free up cash, to help companies whose sales take a big hit this year.For business customers, the Bank has “allocated £5bn to help businesses that need support” (from its existing SME lending scheme), and could also give repayments holidays or review loans. That could free up cash, to help companies whose sales take a big hit this year.
The Italian government has hiked its coronavirus stimulus package to €25bn, as it tries to protect its economy from the most restrictive measures since World War Two.The Italian government has hiked its coronavirus stimulus package to €25bn, as it tries to protect its economy from the most restrictive measures since World War Two.
The AFP newswire has the story:The AFP newswire has the story:
Here’s a video clip of BoE governor Mark Carney pledging that the UK financial system is strong enough to help Britain cope with the coronavirus:Here’s a video clip of BoE governor Mark Carney pledging that the UK financial system is strong enough to help Britain cope with the coronavirus:
And here’s more reaction, first from Allianz’s chief economic advisor Mohamed El-Erian:And here’s more reaction, first from Allianz’s chief economic advisor Mohamed El-Erian:
Here’s Sky’s Ed Conway:Here’s Sky’s Ed Conway:
Plus Julianna Tatelbaum of CNBC:Plus Julianna Tatelbaum of CNBC:
City economists are very concerned that the UK economy stagnated in the last quarter.City economists are very concerned that the UK economy stagnated in the last quarter.
Howard Archer of EY Item Club says this morning’s data are “very disappointing” -- showing Britain’s economy was weak before the Covid-19 outbreak began.Howard Archer of EY Item Club says this morning’s data are “very disappointing” -- showing Britain’s economy was weak before the Covid-19 outbreak began.
Sam Tombs of Pantheon Economics says the UK economy is weak enough to justify an interest rate cut anyway!Sam Tombs of Pantheon Economics says the UK economy is weak enough to justify an interest rate cut anyway!