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| FTSE 100 sheds £275bn in worst week since 2008 amid coronavirus crisis – business live | FTSE 100 sheds £275bn in worst week since 2008 amid coronavirus crisis – business live |
| (32 minutes later) | |
| Rolling coverage of the latest economic and financial news | Rolling coverage of the latest economic and financial news |
| After today’s rally, all Europe’s stock markets were a healthy shade of green. | |
| But since the start of 2020, they’re flashing red - with losses of almost 30% since January 1. The coronavirus has already inflicted serious financial costs, well before the full economic and personal harm has taken place. | |
| Back on Wall Street, the rally is holding pretty firm. | |
| The main indices are all up around 4% today, a huge move in normal times, but rarely worth a second blink in the current climate of fear. | |
| Here’s the score card, with two hours of a mad week to go: | |
| Dow: up 992 points or 4.6% at 22,192 | |
| S&P 500: up 109 points or 4.4% at 2,590 | |
| Nasdaq: up 298 points ot 5.1% at 7,500 | |
| Boeing (+10%) and Goldman Sachs (+11%) are the top risers on the Dow, ahead of Walgreen Boots (+9.95%) and JP Morgan (+9.5%). | |
| Companies across America have been taking steps to address the coronavirus pandemic this week, with many such as AT&T and JP Morgan activating home work policies. | |
| But the long-term economic impact of the shuttering of America will take weeks if not longer to assess. | |
| Michael Pearce, senior US economist at Capital Economics, said the escalating response to the crisis from the US government, closing schools, banning large gatherings, will take a “sharp toll on the economy”. | |
| Capital Economics has cut its US growth forecast for 2020 to just 0.6%, down from 1.8%. | |
| More here: | |
| Russ Mould, investment director at AJ Bell, agrees that the last week was a nightmare for savers and investors - large and small. | Russ Mould, investment director at AJ Bell, agrees that the last week was a nightmare for savers and investors - large and small. |
| That rebound follows signs that authorities are “pulling out all the stops to prevent a sharp economic crash”, Mould adds: | That rebound follows signs that authorities are “pulling out all the stops to prevent a sharp economic crash”, Mould adds: |
| The best thing we can say about this week in the City is that it’s over. | The best thing we can say about this week in the City is that it’s over. |
| Both the UK and European stock markets have just endured their worst week since 2008 | Both the UK and European stock markets have just endured their worst week since 2008 |
| The FTSE 100 has shed 17% this week - its worst showing since Lehman Brothers failed. The Stoxx 600 has lost 18%, with Germany’s DAX losing 20% and Italy’s FTSE MIB down a breathtaking 23.3%. | The FTSE 100 has shed 17% this week - its worst showing since Lehman Brothers failed. The Stoxx 600 has lost 18%, with Germany’s DAX losing 20% and Italy’s FTSE MIB down a breathtaking 23.3%. |
| My rough calculation is that the FTSE 100 has lost £275bn this week, and over £500bn in the last three weeks of turmoil. | My rough calculation is that the FTSE 100 has lost £275bn this week, and over £500bn in the last three weeks of turmoil. |
| After all that early morning excitement, the London stock market has closed with rather less drama. | After all that early morning excitement, the London stock market has closed with rather less drama. |
| The FTSE 100 index has recovered less than a quarter of Thursday’s bleak losses. It’s closed 128 points higher at 5366, a gain of 2.5%. Mining companies BHP Billiton, Rio Tinto gained over 10%, with steel maker Evraz 12% higher. | The FTSE 100 index has recovered less than a quarter of Thursday’s bleak losses. It’s closed 128 points higher at 5366, a gain of 2.5%. Mining companies BHP Billiton, Rio Tinto gained over 10%, with steel maker Evraz 12% higher. |
| But cruise operator Carnival shed another 9%, and holiday operator TUI lost 6%. | But cruise operator Carnival shed another 9%, and holiday operator TUI lost 6%. |
| The FTSE 250 index also stumbled, losing 1% more. | The FTSE 250 index also stumbled, losing 1% more. |
| Phew! After Thursday’s historic slump, European stock markets have posted a small, modest recovery. | Phew! After Thursday’s historic slump, European stock markets have posted a small, modest recovery. |
| The Stoxx 600 index of the largest 600 European companies has closed around 1.1% higher. Italy’s FTSE MIB (+6.3%) and Spain’s IBEX (+4.7%) led the way, after both country’s banned some short-selling. | The Stoxx 600 index of the largest 600 European companies has closed around 1.1% higher. Italy’s FTSE MIB (+6.3%) and Spain’s IBEX (+4.7%) led the way, after both country’s banned some short-selling. |
| After slumping 10% yesterday, that’s only a small recovery. Germany’s DAX barely rose at all, despite today’s promise of financial aid. | After slumping 10% yesterday, that’s only a small recovery. Germany’s DAX barely rose at all, despite today’s promise of financial aid. |
| The leading German business daily, Handelsblatt, is reporting that Lufthansa, the nation’s flagship airline will apply to the German government’s multi-billion liquidity fund for help due to the financial fall-out from the coronavirus. In an internal video message to Lufthansa employees, the CEO Carten Spohr said the company would look to the German government for help, as well as entering discussions with governments in the other countries where it has a subsidiary, about possible state aid. | The leading German business daily, Handelsblatt, is reporting that Lufthansa, the nation’s flagship airline will apply to the German government’s multi-billion liquidity fund for help due to the financial fall-out from the coronavirus. In an internal video message to Lufthansa employees, the CEO Carten Spohr said the company would look to the German government for help, as well as entering discussions with governments in the other countries where it has a subsidiary, about possible state aid. |
| A spokesman for the company, Europe’s largest-grossing airline which last week announced it would cut its flights by 50 per cent in response to the health crisis, confirmed the reports. Spohr is due to participate in an emergency meeting with chancellor Angela Merkel and other industry bosses this evening at which the impact of the coronavirus on the German economy will be on the agenda. Thomas Jarzombek, the air industry coordinator in the government, has called representatives of the industry to a meeting this coming Monday, to discuss how to reduce the economic fallout. Jarzombek said the main aim was to work out what the air industry, just like other branches of industry, needed to get through the crisis. Jarzombek said: “The government is providing various instruments in order to help in cases of short term liquidity bottlenecks,” he said, citing various government lending programmes. | A spokesman for the company, Europe’s largest-grossing airline which last week announced it would cut its flights by 50 per cent in response to the health crisis, confirmed the reports. Spohr is due to participate in an emergency meeting with chancellor Angela Merkel and other industry bosses this evening at which the impact of the coronavirus on the German economy will be on the agenda. Thomas Jarzombek, the air industry coordinator in the government, has called representatives of the industry to a meeting this coming Monday, to discuss how to reduce the economic fallout. Jarzombek said the main aim was to work out what the air industry, just like other branches of industry, needed to get through the crisis. Jarzombek said: “The government is providing various instruments in order to help in cases of short term liquidity bottlenecks,” he said, citing various government lending programmes. |
| He said the main goal was to retain as many jobs as possible. | He said the main goal was to retain as many jobs as possible. |
| Germany has announced “unlimited” aid to see businesses through the coronavirus crisis, with a starter plan of half a trillion euros. Finance minister Olaf Scholz said there was no upper limit to credit on offer from the state-owned KfW development bank. The government unleashed €550bn (£492bn) in government backed loans, which economy minister Peter Altmaier said was “just for starters”. He vowed that no healthy company would find itself in trouble: | Germany has announced “unlimited” aid to see businesses through the coronavirus crisis, with a starter plan of half a trillion euros. Finance minister Olaf Scholz said there was no upper limit to credit on offer from the state-owned KfW development bank. The government unleashed €550bn (£492bn) in government backed loans, which economy minister Peter Altmaier said was “just for starters”. He vowed that no healthy company would find itself in trouble: |
| The package is bigger than the €500bn aid offered during the 2008 financial crisis. As of this morning, Germany had seen 2,369 cases and five deaths from coronavirus. Germany’s export-led economy is vulnerable to the rapid slowdown in world demand that began in China. More than half German companies surveyed by the ifo Institut this week reported negative effects from the coronavirus. Berlin, Bavaria and two other of Germany’s 16 states have announced the blanket closure of schools and kindergartens, with more expected to follow. Deka Bank chief economist Ulrich Kater said Friday’s guarantee package is a “whatever it takes from the government”. He said the measures to help particularly small and medium-sized companies through the crisis are “absolutely sensible”. | The package is bigger than the €500bn aid offered during the 2008 financial crisis. As of this morning, Germany had seen 2,369 cases and five deaths from coronavirus. Germany’s export-led economy is vulnerable to the rapid slowdown in world demand that began in China. More than half German companies surveyed by the ifo Institut this week reported negative effects from the coronavirus. Berlin, Bavaria and two other of Germany’s 16 states have announced the blanket closure of schools and kindergartens, with more expected to follow. Deka Bank chief economist Ulrich Kater said Friday’s guarantee package is a “whatever it takes from the government”. He said the measures to help particularly small and medium-sized companies through the crisis are “absolutely sensible”. |
| (thanks to AFP and Reuters for the quotes) | (thanks to AFP and Reuters for the quotes) |
| Just in: Insurance giant AVIVA has suspended travel insurance sales, following other industry players. | Just in: Insurance giant AVIVA has suspended travel insurance sales, following other industry players. |
| It says that travel insurance is designed to cover unforeseen events, while Coronavirus is a known event which creates a high likelihood that customers’ travel plans will be affected. | It says that travel insurance is designed to cover unforeseen events, while Coronavirus is a known event which creates a high likelihood that customers’ travel plans will be affected. |
| So insurance sales are now ‘paused’, from an hour ago. | So insurance sales are now ‘paused’, from an hour ago. |
| Investors are piling back into the US dollar...usually a sign that they’re getting panicky. | Investors are piling back into the US dollar...usually a sign that they’re getting panicky. |
| This dash for the greenback has driven the plucky British pound down below $1.24, the lowest since Boris Johnson agreed the new Brexit deal in October 2019. | This dash for the greenback has driven the plucky British pound down below $1.24, the lowest since Boris Johnson agreed the new Brexit deal in October 2019. |
| So much for the rally! The UK stock market is subsiding in the final hour. | So much for the rally! The UK stock market is subsiding in the final hour. |
| Traders must be getting edgy about what might happen this weekend, with Covid-19 cases continuing to rise in Europe and UK. | Traders must be getting edgy about what might happen this weekend, with Covid-19 cases continuing to rise in Europe and UK. |
| So the FTSE 100’s not up only 1%, making a tiny debt in last week’s rout. | So the FTSE 100’s not up only 1%, making a tiny debt in last week’s rout. |
| And the smaller FTSE 250 (which has more UK-focused firms) is now down another 1%. | And the smaller FTSE 250 (which has more UK-focused firms) is now down another 1%. |
| That’s despite French president Emmanuel Macron tweeting that leaders will hold a video conference on Monday to discuss a response to the crisis. | That’s despite French president Emmanuel Macron tweeting that leaders will hold a video conference on Monday to discuss a response to the crisis. |
| Back on Wall Street, the early rally is fading a little. | Back on Wall Street, the early rally is fading a little. |
| Stock are still up, with the Dow 520 points higher or 2.5% at 21,720. But after losing an incredible 2,350 points last night, investors were hoping for a stronger recovery. | Stock are still up, with the Dow 520 points higher or 2.5% at 21,720. But after losing an incredible 2,350 points last night, investors were hoping for a stronger recovery. |
| They’re joking. I think.... | They’re joking. I think.... |