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Stock markets tumble as ECB launches new stimulus - business live Stock markets tumble as ECB launches new stimulus - business live
(30 minutes later)
Rolling coverage of the latest economic and financial news, as world stock markets plunge againRolling coverage of the latest economic and financial news, as world stock markets plunge again
The coronavirus crisis has forced the Princess Cruises line to suspend global operations for the next two months.
Princess’s 18 cruise ships will be off duty for the next 60 days, a big blow to owner Carnival (whose shares were down 20% earlier)
Two Princess ships have been at the heart of the crisis.
The Diamond Princess was quarantined off the coast of Japan -- 700 passengers became infected, and 6 died. The Grand Princess was denied entry to San Francisco Bay last Wednesday en route back from Hawaii as authorities learned some passengers and crew had developed flu-like symptoms. It was finally allowed to dock on Monday:
The top faller on the FTSE 250 is Finablr, which runs Travelex. Shares are down 66% (!) after it warned it might struggle to access cash needed to manage its business as well as negotiate longer term financing.
Restaurant Group, which runs Frankie & Benny’s, Garfunkel’s and Wagamama, are down 23%. Clearly it would suffer from mass self-isolation in the coming weeks...
...as would airport food operator SSP, who are down 19%.
Shares in UK train and bus operators are slumping today, after Go-Ahead warned the coronavirus would hurt profits.
National Express are down 18%, First Group has lost 17%, Stagecoach are off 12%, and Trainline are down 11%. Their revenues would all suffer if fewer people travel into work (as seems imminent).
Go-Ahead itself is down 30%, making it one of the big fallers on the FTSE 250.
Back in the UK, Travel insurers Aviva, InsureandGo, and the Post Office have followed LV= and have withdrawn cove for future coronavirus claims, or stopped selling policies,.
On Wednesday night LV= shocked the travel industry when it announced that it would stop selling all travel insurance policies with immediate effect, due to the coronavirus outbreak.
The move appears to have been prompted by the World Health Organisation declaration of a pandemic, on Wednesday afternoon.
Industry regulator the European Banking Authority is delaying its EU-wide stress test by a year so that banks can focus on the challenges posed by the coronavirus outbreak.
Instead, the EBA said it would launch a transparency exercise to determine how much risk they hold on their balance sheets.
The EBA said.
It also urged national regulators to take advantage of existing rules that allow for some flexibility around the kind of capital that banks have to hold to cushion against potential downturns and risks.
The announcement comes just a week after EBA banned all external meetings at its Paris headquarters until 20 April to try tackle the spread of Covid-19.
By resisting a rate cut today, the ECB has left its benchmark rate at 0%.
It will continue to impose a negative rate of 0.5% on commercial bank deposits left at the ECB (to encourage lending).
And that means that today’s new cheap loans to banks will be priced at -0.75%. In other worse, the ECB will be paying commercial banks to borrow - as long as they actually pass this money onto the real econmy.
European stock markets are plunging deeper into the red following the ECB’s announcement.European stock markets are plunging deeper into the red following the ECB’s announcement.
The FTSE 100 is now down 420 points, or 7.1%, at 5456 -- which would be its lowest close since 2012.The FTSE 100 is now down 420 points, or 7.1%, at 5456 -- which would be its lowest close since 2012.
The German DAX is also sliding:The German DAX is also sliding:
And....the eurozone bank index has hit a record low.And....the eurozone bank index has hit a record low.
And also.... the gap between German and Italian government bonds has widened.And also.... the gap between German and Italian government bonds has widened.
That suggests there’s disappointment that the ECB hasn’t gone further today, either with a rate cut or some targeted help for Italy.That suggests there’s disappointment that the ECB hasn’t gone further today, either with a rate cut or some targeted help for Italy.
The European Central Bank is also relaxing the capital rules on banks, to help them through the crisis.The European Central Bank is also relaxing the capital rules on banks, to help them through the crisis.
It says:It says:
NEWSFLASH: The European Central Bank has announced new stimulus measure to support the eurozone economy through the coronavirus shock.NEWSFLASH: The European Central Bank has announced new stimulus measure to support the eurozone economy through the coronavirus shock.
It is launching new longer-term refinancing operations (LTROs), which will offer liquidity to the financial system, saying:It is launching new longer-term refinancing operations (LTROs), which will offer liquidity to the financial system, saying:
It is also offering new, very cheap loans for banks, to encourage lending:It is also offering new, very cheap loans for banks, to encourage lending:
Thirdly, it is boosting its quantitative easing (asset-purchase) scheme by €120bnThirdly, it is boosting its quantitative easing (asset-purchase) scheme by €120bn
BUT it has also left interest rates on hold at today’s meeting, resisting pressure to cut to new record lows.BUT it has also left interest rates on hold at today’s meeting, resisting pressure to cut to new record lows.
It’s just passed noon, and there’s no recovery in the City.It’s just passed noon, and there’s no recovery in the City.
The FTSE 100 is still being hammered, down 5.7% or 341 points at 5534. Every share is still down.The FTSE 100 is still being hammered, down 5.7% or 341 points at 5534. Every share is still down.
Holiday firms Carnival and TUI are among the worst of a very bad lot, down 14% each.Holiday firms Carnival and TUI are among the worst of a very bad lot, down 14% each.
Thameslink and Southeastern rail operator Go-Ahead is in discussions with the Government on relaxing the rules around timetable changes to cope with the conoravirus pandemic, reports the Press AssociationThameslink and Southeastern rail operator Go-Ahead is in discussions with the Government on relaxing the rules around timetable changes to cope with the conoravirus pandemic, reports the Press Association
Chief executive David Brown explained he is hoping to be allowed to make changes faster than the current 70-day notice period.Chief executive David Brown explained he is hoping to be allowed to make changes faster than the current 70-day notice period.
Food delivery group Deliveroo has introduced a “no contact drop-off service” as concern grows about the coronavirus pandemic in the UK.Food delivery group Deliveroo has introduced a “no contact drop-off service” as concern grows about the coronavirus pandemic in the UK.
The app-based food delivery company told customers they will be able to request in the app that their food is left on the doorstep, thus “removing the need for direct contact for both parties.”The app-based food delivery company told customers they will be able to request in the app that their food is left on the doorstep, thus “removing the need for direct contact for both parties.”
A spokesperson says this will keep customers, riders and restaurants safer.A spokesperson says this will keep customers, riders and restaurants safer.
The coronavirus crisis has forced housebuilder Berkeley Group to suspend a £455m payout to shareholders, a mixture of dividends and share buybacks, until there is greater clarity on the economic impact of the pandemic.The coronavirus crisis has forced housebuilder Berkeley Group to suspend a £455m payout to shareholders, a mixture of dividends and share buybacks, until there is greater clarity on the economic impact of the pandemic.
It added that there had been “no noticeable impact” on its business so far.It added that there had been “no noticeable impact” on its business so far.
The US travel ban could pile further pressure on oil markets by cutting demand for jet fuel, according to Rystad Energy.
Oil prices fell to just above $33 a barrel this morning after President Trump’s ban on European flights for the next 30 days.
The Norwegian energy analysts said traders received the news “very negatively” for three reasons: first, the cancelled flights could dent demand for oil by around 600,000 barrels; but importantly the move also stokes fear of further economic slowdown, and undermines confidence in the governments’ handling of the fall-out. The oil market was already reeling from a double-blow due to the impact of the coronavirus and plans for an oil price war between Saudi Arabia and Russia.
Rystad has warned that oil prices in the $20s are not far off if the pair battle for dominance by pouring more oil into the market while demand remains weakened by Covid-19.
(Contango is when the price of a commodity today is lower than the forward price)
Ireland has just announced that schools, universities and childcare facilities will close until 29 March, due to Covid-19.
Acting PM Leo Varadkar also said people should limit mass gatherings, work from home where possible, and stagger their break times.
Lloyd’s of London’s temporary, one-day closure will affect thousands of brokers and underwriters.
Just under 50,000 people hold a pass to the building, but don’t all turn up every day, and Friday is a quieter day, John Neal explains.
Newsflash: Lloyd’s of London will close its underwriting room for 24 hours from midnight, until midnight on Friday, says its chief executive John Neal.
This closure of the four-floor ‘room’ will allow Lloyd’s to test its emergency protocols, and to deep clean the market.
From next week, a third of workers on its risk team (around 100 people, out of 800 workers) will be working in the office, a third from home and a third from third party site, Neal explains.
Neal says the underwriting room has never been closed before. He says there are no confirmed coronavirus cases at the corporation, but added that there are “anecdotal stories of one to two cases”.
Bitcoin is tumbling too.
The crypto-currency has slumped from $7,859 last night to around $6,600 as I type, a drop of 15%. Trading is extremely volatile.
It appears to be suffering from the coronavirus pandemic, as people try to get hold of cash (perhaps to cover losses on other investments)
Richard Hunter, Head of Markets at interactive investor, warns that Wall Street is on track for another plunge in three hours time:
The number of brave souls trying to snap up shares, hoping we’re near the bottom of the slump, is falling too:
Warnings about corporate debt levels are coming home to roost en masse thanks to the coronavirus, flags up economics professor Nouriel Roubini:
After over two hours of frenzied trading, European markets are still a mess - trading at their lowest levels since 2016.
In London, the FTSE 100 is still down over 5%, having briefly hit its lowest level since 2012 this morning. That wipes another £80-odd billion off the index, pushing its coronavirus crisis losses over £450bn.
The top faller on the Footsie is now betting firm Flutter, after rival Betway was hit with an £11.6m penalty for taking stolen money from its VIP customers.
But otherwise, the top fallers are companies particularly exposed to president Trump’s travel ban - or the prospect of tighter movement controls in the UK.
Rolls-Royce, which makes engines for the world’s aeroplane manufacturers, are down 12.5%. Holiday firm TUI are down 12%, with the summer booking season looking a complete washout. Cruise operator Carnival are down 9.9%. Whitbread, which runs the UK Premier Inn hotel chain, has lost 10.7% - as companies ban staff from attending conferences.
In Frankfurt, car maker Daimler, airline Lufthansa and Deutsche Bank have all lost 8% this morning.
On the Paris market, steelmaker ArcelorMittal are down 9%, with carmaker Renault and airline manufacturer Airbus losing 8%.
Stoxx 600: down 18 points or 5.5% at 315
FTSE 100: down 320 points or 5.4% at 5558.
German DAX: down 553 points or 5.3% at 9,885
French CAC: down 251 points or 5.5% at 4,358
Italy’s FTSE MIB: down 983 points or 5.5% at 16,943
Spanish IBEX: down 440 points or 5.9% at 6,995
The US travel ban, and Italy’s increasingly severe lockdown, are triggering the rout, as analyst Marios Hadjikyriacos of City trading firm XM explains: