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Europe's share markets rise as global sell-off eases Share markets rise as global sell-off eases
(about 3 hours later)
European stock indexes are recovering some ground after huge falls on Thursday. US and European markets have recovered some ground amid signs authorities are implementing measures aimed at easing the economic pain caused by the coronavirus outbreak.
Markets have seen volatile trading as investors weigh the effect of the coronavirus against measures aimed at easing its economic impact. The main US indexes gained more than 3% in early trade, while London's FTSE 100 and other exchanges made similar moves.
Share markets across the Asia-Pacific region, including Japan, Australia and India, have experienced major swings. The rally comes a day after Wall Street suffered its biggest losses since 1987.
It came after the Dow and S&P 500 in the US saw their biggest one-day declines since 1987. Investors fear economies could slide into recession as a result of the pandemic and steps to tackle it.
In recent days authorities around the world have announced emergency measures in an attempt to avoid recession. In many countries business has been disrupted, events cancelled and schools closed in an effort to contain the spread of the virus.
On Friday, the UK's Financial Conduct Authority (FCA) prohibited short selling of a raft of shares in Italian and Spanish firms, after a request from authorities in those countries for the action, which is designed to protect that list of companies. On Friday, the European Union said it will put in place a package of measures, including a €37bn euro (£33bn) investment initiative.
The prohibition on short selling came after major falls in Italian and Spanish indexes on Thursday. And German finance minister Olaf Scholz said his country could part nationalise firms to tackle the crisis.
Short selling is speculation that the price of a stock will go down, and if there are more short sellers than buyers, the price will be pushed down. In the US, Congress is expected to vote later today on a bill that will provide sick pay and short-term loans for those affected by the outbreak, among other measures.
Firms including football clubs Lazio and Juventus were on the list, as well as luxury car manufacturer Ferrari. US Secretary Steven Mnuchin pledged the US would use "whatever tools we need".
Market bounce In an interview with US broadcaster CNBC, he said he believed the coronavirus slowdown would be short-term and said the situation in 1987, when markets dropped some 20%, was a "much scarier time".
Stock market volatility has been very high, with investors deeply concerned about the economic effects of coronavirus. "This is nothing compared to that," he said.
In early trading on Friday, the London markets rose more than 3%, and Spain's Ibex 35 rose more than 6%. Stock markets have been in turmoil in recent weeks with investors deeply concerned about the economic effects of coronavirus.
The FTSE MIB, the benchmark index for Milan's Borsa Italiana, climbed more than 3% after a 16% fall on Thursday. On Thursday, benchmark indexes on Wall Street and in the City of London saw their steepest daily falls since so-called Black Monday in 1987. In France and Germany, indexes lost more than 12%.
The European markets followed Asian exchanges in ticking up. Those declines came despite actions by the Federal Reserve and European Central Bank to support the market.
Japan's Nikkei 225 index was down by more than 10% in early trading before regaining some ground to end about 6% lower. On Friday, Japan's Nikkei 225 index was down by more than 10% in early trading before regaining some ground to end about 6% lower.
Australia's benchmark ASX 200 saw its biggest trading swing on record as it reversed a loss of 8.1% to end the day 4.4% higher.Australia's benchmark ASX 200 saw its biggest trading swing on record as it reversed a loss of 8.1% to end the day 4.4% higher.
Trading in India's Nifty 50 stock index was halted for 45 minutes on Friday morning after it fell 10% and hit a "circuit-breaker" and bounced back into positive territory once trading resumed.Trading in India's Nifty 50 stock index was halted for 45 minutes on Friday morning after it fell 10% and hit a "circuit-breaker" and bounced back into positive territory once trading resumed.
The Hang Seng in Hong Kong closed down more than 1%, and China's Shanghai Composite was 1.2% lower, both off their session lows.The Hang Seng in Hong Kong closed down more than 1%, and China's Shanghai Composite was 1.2% lower, both off their session lows.
"There is a sense of fear and panic," said James Tao, an analyst at stockbroker Commsec in Sydney."It's one of those situations where there is so much uncertainty that no-one quite knows how to respond... if it's fight or flight, many people are choosing flight at the moment," he added."There is a sense of fear and panic," said James Tao, an analyst at stockbroker Commsec in Sydney."It's one of those situations where there is so much uncertainty that no-one quite knows how to respond... if it's fight or flight, many people are choosing flight at the moment," he added.
Friday's moves follow steep losses in the US and Europe on Thursday, which gathered pace after US President Donald Trump spooked investors when he restricted travel from Europe, and the European Central Bank (ECB) disappointed markets by holding back on rate cuts. On Friday, the UK's Financial Conduct Authority (FCA) prohibited short selling of a raft of shares in Italian and Spanish firms, after a request from authorities in those countries for the action, which is designed to protect that list of companies.
Benchmark indexes on Wall Street and in the City of London saw their steepest daily falls since so-called Black Monday in 1987. In France and Germany, indexes lost more than 12%. The prohibition on short selling came after major falls in Italian and Spanish indexes on Thursday.
Those declines came despite actions by the Federal Reserve and ECB to support the market. Short selling is speculation that the price of a stock will go down, and if there are more short sellers than buyers, the price will be pushed down.
Firms including football clubs Lazio and Juventus were on the list, as well as luxury car manufacturer Ferrari.
Pound v dollarPound v dollar
Losses on European indexes accelerated after the eurozone's central bank failed to cut interest rates, although it did pledge fresh stimulus measures.
The New York branch of the Federal Reserve said it was pumping $1.5 trillion to ease strains in the debt markets, offering increased overnight loans to banks and expanding the kinds of assets it will buy to keep firms lending.
The announcement, which came after European markets had closed, briefly sent shares higher, but they dropped back by the end of the day. Last week the US central bank cut rates, followed on Wednesday by the Bank of England.
Why should I care if stock markets fall?Why should I care if stock markets fall?
Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.
Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.
So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.
Read more here.Read more here.
What are your experiences relating to the coronavirus outbreak? Share your experiences by emailing haveyoursay@bbc.co.uk.What are your experiences relating to the coronavirus outbreak? Share your experiences by emailing haveyoursay@bbc.co.uk.
Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways:Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways:
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