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| FTSE 100 suffers second worst day ever after 10.87% plunge - business live | |
| (32 minutes later) | |
| Britain’s FTSE 100 index has endured its worst day since 1987 as world stock markets plunge again | |
| NEWSFLASH: Britain’s FTSE 100 has suffered its biggest one-day loss since October 1987, and its second worst day ever. | |
| The escalating coronavirus crisis has triggered an absolute rout in the City again, and around Europe, as Donald Trump’s EU flight ban sparks alarm -- and fuels fears of a global recession. | |
| Investors appear to be pricing in a serious pandemic, with quarantine measures and lockdowns in major cities leading to huge economic cost, and losing faith that policymakers can prevent it. | |
| The FTSE 100 has just closed down 10.87% today at 5237, a loss of 639 points. | |
| Its only worse day was 20th October 1987 (as this chart shows). | |
| There are some deep, deep losses - mining giants Anglo American and Glencore shed 18% and 17% respectively. Cruise operator Carnival plunged 17% too, after suspending its Princess cruises line for two months. Holiday firm TUI also lost 17%. | |
| Insurance giant Prudential and asset manager Standard Life Aberdeen both lost at least 16%, with Barclays down 17%. Every single share fell, in a bigger wipeout than Monday’s slump. | |
| David Madden of CMC Markets sums up the day: | |
| Newsflash: Italy’s stock market has closed down 17%, Reuters is reporting - its worst day ever. | |
| The EU-wide Stoxx 600 also had a terrible day, down 11% at the close of trading. | |
| We’re just waiting for London to close now, but it’s going to be awful. | |
| Donald Trump continues to insist that the coronavirus will “go away”, speaking at the White House earlier. | |
| That will further alarm investors who fear the President isn’t taking the crisis seriously enough. | |
| Donald Trump’s decision to ban EU flights from America was “the most expensive speech in history”, says Luca Paolini, chief strategist at Pictet Asset Management. | |
| And with European markets down 10% today, and Wall Street down over 8%, it’s hard to argue. | |
| Global stock markets have plunged into a bear market today, Reuters reports. | Global stock markets have plunged into a bear market today, Reuters reports. |
| Today’s plunges in London, Paris, Frankfurt, New York, Tokyo, Seoul, Shanghai, Sydney and beyond have dragged the MSCI All-Country World index off over 20% from recent peak, less than a month ago. | Today’s plunges in London, Paris, Frankfurt, New York, Tokyo, Seoul, Shanghai, Sydney and beyond have dragged the MSCI All-Country World index off over 20% from recent peak, less than a month ago. |
| As Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas, puts it: | As Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas, puts it: |
| Christine Lagarde is trying to repair the damage from her comment about “not being here to close [bond] spreads”. | Christine Lagarde is trying to repair the damage from her comment about “not being here to close [bond] spreads”. |
| She’s told CNBC that the European Central Bank’s new package to protect the economy from the coronavirus will help close “dislocations” in the bond market: | She’s told CNBC that the European Central Bank’s new package to protect the economy from the coronavirus will help close “dislocations” in the bond market: |
| ECB chief Christine Lagarde appears to have caused serious panic in the market today. | ECB chief Christine Lagarde appears to have caused serious panic in the market today. |
| During her press conference, she was asked about the jump in bond spreads (the gap between yields on risky and less risky assets) -- and appeared to reply that it wasn’t her problem. | During her press conference, she was asked about the jump in bond spreads (the gap between yields on risky and less risky assets) -- and appeared to reply that it wasn’t her problem. |
| That has driven Italian bond yields soaring today. | That has driven Italian bond yields soaring today. |
| As I flagged earlier, Lagarde’s message was that government’s need to step up -- but investors are now panicking that the ECB is abandoning Mario Draghi’s pledge to do “whatever it takes”. | As I flagged earlier, Lagarde’s message was that government’s need to step up -- but investors are now panicking that the ECB is abandoning Mario Draghi’s pledge to do “whatever it takes”. |
| Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, says it is a “disaster” - far worse than the ECB’s notorious interest rates hikes in 2011 as the eurozone crisis was kicking off. | Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, says it is a “disaster” - far worse than the ECB’s notorious interest rates hikes in 2011 as the eurozone crisis was kicking off. |
| It is a major factor behind today’s rout (along with the shock of Donald Trump’s flight ban). | It is a major factor behind today’s rout (along with the shock of Donald Trump’s flight ban). |
| Vistesen writes: | Vistesen writes: |
| My god, Britain’s FTSE 100 is now down 10% - or 590 points, at 5287, as the sell-off accelerates in late trading. | My god, Britain’s FTSE 100 is now down 10% - or 590 points, at 5287, as the sell-off accelerates in late trading. |
| We’re into the last hour of possibly the worst session on the London stock market in over 30 years. | We’re into the last hour of possibly the worst session on the London stock market in over 30 years. |
| The FTSE 100 is still showing huge losses, down 9.3% or 547 points at 5330. That would be the third-worse session in the index’s history (going back to to 1984), exceeded only by the crash of 1987 [which took place over 2 days]. | The FTSE 100 is still showing huge losses, down 9.3% or 547 points at 5330. That would be the third-worse session in the index’s history (going back to to 1984), exceeded only by the crash of 1987 [which took place over 2 days]. |
| Every stock is down, still, with travel firms and financial stocks bottom of the pile. | Every stock is down, still, with travel firms and financial stocks bottom of the pile. |
| Back on Wall Street, traders are preparing for the official end of the Bull Market. | Back on Wall Street, traders are preparing for the official end of the Bull Market. |
| The S&P 500 index is down over 7.2%, or 196 points, at 2,544 -- or over 20% off its all-time high earlier this year. | The S&P 500 index is down over 7.2%, or 196 points, at 2,544 -- or over 20% off its all-time high earlier this year. |
| Unless there’s a miracle rebound, it will end in bear market territory (as the Dow did yesterday), ending a stretch dating back to March 2009. | Unless there’s a miracle rebound, it will end in bear market territory (as the Dow did yesterday), ending a stretch dating back to March 2009. |
| Norwegian Cruise Line Holdings (-28%) and Royal Caribbean Cruises (-25%) are the biggest faller. | Norwegian Cruise Line Holdings (-28%) and Royal Caribbean Cruises (-25%) are the biggest faller. |
| The Dow is down another 8%, or over 1,900 points right now -- chemicals firm Dow Inc (-16%), American Express (-12%) and Boeing (-11%) are leading the rout. | The Dow is down another 8%, or over 1,900 points right now -- chemicals firm Dow Inc (-16%), American Express (-12%) and Boeing (-11%) are leading the rout. |
| The chairman of Tesco has told UK shoppers not to panic about food shortages. | The chairman of Tesco has told UK shoppers not to panic about food shortages. |
| Chairman John Allan told BBC radio that the supermarket’s supply chains were coping, despite signs that shoppers are hoarding toilet roll, pasta, tinned goods and cleaning products. | Chairman John Allan told BBC radio that the supermarket’s supply chains were coping, despite signs that shoppers are hoarding toilet roll, pasta, tinned goods and cleaning products. |
| The ECB’s new stimulus measures are broadly positive for banks, so it’s concerning that financial stocks are plunging. So what’s going on? Investors are realising that central banks have pretty much extended themselves, using all the tools at their disposal. The problem is that their efforts aren’t being matched by fiscal stimulus by governments across the EU. (A point that ECB’s Christine Lagarde has made ad nauseam, not just today.) If governments fail to take action - primarily by spending money to support small businesses and individuals as they weather the effects of the coronavirus outbreak - it could result in a wave of defaults, which could wipe out investments and pile banks with bad debts. Benjie Creelan-Sandford, an equity analyst at Jeffries said: | The ECB’s new stimulus measures are broadly positive for banks, so it’s concerning that financial stocks are plunging. So what’s going on? Investors are realising that central banks have pretty much extended themselves, using all the tools at their disposal. The problem is that their efforts aren’t being matched by fiscal stimulus by governments across the EU. (A point that ECB’s Christine Lagarde has made ad nauseam, not just today.) If governments fail to take action - primarily by spending money to support small businesses and individuals as they weather the effects of the coronavirus outbreak - it could result in a wave of defaults, which could wipe out investments and pile banks with bad debts. Benjie Creelan-Sandford, an equity analyst at Jeffries said: |
| ECB president Christine Lagarde has called for European leaders to help the eurozone’s ailing economy, as the bond markets flash alarmingly. | ECB president Christine Lagarde has called for European leaders to help the eurozone’s ailing economy, as the bond markets flash alarmingly. |
| With markets plunging on both sides of the Atlantic, Lagarde told reporters in Frankfurt that Covid-19 was “a major shock” to the growth prospects of the global economy and the euro area economy. | With markets plunging on both sides of the Atlantic, Lagarde told reporters in Frankfurt that Covid-19 was “a major shock” to the growth prospects of the global economy and the euro area economy. |
| But she also argued the effect would be temporary, if the right measures are taken. | But she also argued the effect would be temporary, if the right measures are taken. |
| Lagarde told today’s (unusually sparsely attended) press conference that: | Lagarde told today’s (unusually sparsely attended) press conference that: |
| And those measures must include government spending -- in an “ambitious, co-ordinated” response which must also tackle the public health challenge before us. | And those measures must include government spending -- in an “ambitious, co-ordinated” response which must also tackle the public health challenge before us. |
| Lagarde demanded: | Lagarde demanded: |
| Lagarde also revealed that the ECB is splitting itself into teams, so it can keep working through the crisis. That includes its own executive board, and the next press conference in April will be online-only. | Lagarde also revealed that the ECB is splitting itself into teams, so it can keep working through the crisis. That includes its own executive board, and the next press conference in April will be online-only. |
| Lagarde also defended the stimulus measures announced today, saying that the new liquidity, cheap bank loans and extra asset-purchases would target the risks in the euro area. | Lagarde also defended the stimulus measures announced today, saying that the new liquidity, cheap bank loans and extra asset-purchases would target the risks in the euro area. |
| But there’s clearly disappointment -- the yields on Italian, Spanish and Portuguese bonds are surging, in their biggest one-day moves since 2016. That shows investors are ditching peripheral-area bonds, and fearing a new debt crisis could be brewing. | But there’s clearly disappointment -- the yields on Italian, Spanish and Portuguese bonds are surging, in their biggest one-day moves since 2016. That shows investors are ditching peripheral-area bonds, and fearing a new debt crisis could be brewing. |
| European bank shares are being routed, with ING down 16%, ABN Amro down 15%, Deutsche Bank down 14% and Credit Agricole down 12.7%. | European bank shares are being routed, with ING down 16%, ABN Amro down 15%, Deutsche Bank down 14% and Credit Agricole down 12.7%. |
| Financial stocks in London are also plunging; life insurance and financial services group Prudential are down 18%, while Legal & General are down 14%. | Financial stocks in London are also plunging; life insurance and financial services group Prudential are down 18%, while Legal & General are down 14%. |
| The market crash is sending investors racing to buy dollars. | The market crash is sending investors racing to buy dollars. |
| This has sent sterling reeling, down 2 cents today to $1.26 - the lowest since October. | This has sent sterling reeling, down 2 cents today to $1.26 - the lowest since October. |
| Trading has been briefly halted in Brazil too, where stocks plunged another 10%. | Trading has been briefly halted in Brazil too, where stocks plunged another 10%. |