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Markets stabilise after worst day since 1987 amid coronavirus panic – business live Markets stabilise after worst day since 1987 amid coronavirus panic – business live
(32 minutes later)
Rolling coverage of the latest economic and financial newsRolling coverage of the latest economic and financial news
Another central bank has eased monetary policy - and this time it’s China.
The People’s Bank of China is allowing Chinese banks to hold less capital in reserve, freeing up more funds to support their customers.
This cut in China’s reserve requirement ratio will free up 550 billion yuan (£60bn) into the economy, PBoC says.
The Spanish stock market authorities have also banned the short-selling of some stocks, which has pushed the IBEX index up 5% this morning.
But curbing speculation won’t fix the looming economic crisis, as Pierre Veyret of ActivTrades writes:
The Bank of Japan’s pledge to keep the markets flush with liquidity is helping markets recover, reckons IG’s Sara Walker.
Gracious, it’s choppy in the City today.
The FTSE 100 is clambering higher, up 210 points or 4% to 5452 after two hours of trading.
And a clear picture is emerging -- major international companies are rising today, with oil giant Royal Dutch Shell 8%, and miners such as BHP and Anglo American up around 10%.
But companies reliant on discretionary spending are falling again. Obviously that includes the holiday operators. Retailers, such as JD Sports (-2.5%) and housebuilders such as Barratt (-2%), are out of favour too, as traders anticipate the impact of a recession and isolation measures. Whitbread, which runs the Premier Inn chain of hotels, are down 1.7% too.
A reminder of Australia’s wild trading session overnight:A reminder of Australia’s wild trading session overnight:
There’s always a danger that stock market rebounds are merely ‘dead cat bounces’ -- a swift, but short recovery before another tumble.There’s always a danger that stock market rebounds are merely ‘dead cat bounces’ -- a swift, but short recovery before another tumble.
Fiona Cincotta of City Index has sent this chart over, showing how recent rises (white blocks) have been followed by sharper falls (the black blocks).Fiona Cincotta of City Index has sent this chart over, showing how recent rises (white blocks) have been followed by sharper falls (the black blocks).
She explains:She explains:
Italy’s stock market is having a better day, with the FTSE MIB index up almost 5% this morning.Italy’s stock market is having a better day, with the FTSE MIB index up almost 5% this morning.
The overnight ban on short-selling may be helping, as it prevents speculators driving a firm’s share price down.The overnight ban on short-selling may be helping, as it prevents speculators driving a firm’s share price down.
But it’s only a small relief, as the FTSE MIB slumped by almost 17% yesterday alone.But it’s only a small relief, as the FTSE MIB slumped by almost 17% yesterday alone.
France’s finance minister, Bruno Le Maire, is trying to calm the markets too.France’s finance minister, Bruno Le Maire, is trying to calm the markets too.
He told the BFM TV channel that Paris will support companies in which the government holds shares, pledging:He told the BFM TV channel that Paris will support companies in which the government holds shares, pledging:
Le Maire didn’t give more details. But he did suggest that the overall cost of helping French businesses and workers would run into “dozens of billions of euros.”Le Maire didn’t give more details. But he did suggest that the overall cost of helping French businesses and workers would run into “dozens of billions of euros.”
He also described Donald Trump’s EU travel ban as an “aberration”:He also described Donald Trump’s EU travel ban as an “aberration”:
An hour into the trading session, the FTSE 100 is 2% higher at 5347.An hour into the trading session, the FTSE 100 is 2% higher at 5347.
That’s 109 points higher than last night’s close (when the Footsie slumped 10% to its lowest point since 2012), but down on the 8am bounce.That’s 109 points higher than last night’s close (when the Footsie slumped 10% to its lowest point since 2012), but down on the 8am bounce.
Mining companies are leading the 78 risers, along with supermarket chains Morrisons (+5%) and Tesco (+4%).Mining companies are leading the 78 risers, along with supermarket chains Morrisons (+5%) and Tesco (+4%).
But there are now over 20 fallers, led by cruise firm Carnival (-11%),holiday firm TUI (-7%) and budget airline easyJet (-4%).But there are now over 20 fallers, led by cruise firm Carnival (-11%),holiday firm TUI (-7%) and budget airline easyJet (-4%).
Investors worldwide are extremely jittery, as Russ Mould of stockbrokers AJ Bell reports:Investors worldwide are extremely jittery, as Russ Mould of stockbrokers AJ Bell reports:
Japan’s central bank has announced it will take steps to boost the amount of liquidity in the markets.Japan’s central bank has announced it will take steps to boost the amount of liquidity in the markets.
This will include the use of ‘repo’ operations -- where a central bank provides cash in exchange for collateral such as government bonds. This would prevent a bank running out of liquidity, if other banks were too nervous to lend to it.This will include the use of ‘repo’ operations -- where a central bank provides cash in exchange for collateral such as government bonds. This would prevent a bank running out of liquidity, if other banks were too nervous to lend to it.
Reuters has the details:Reuters has the details:
Norway’s central bank has slashed interest rates this morning, in an unexpected move to protect its economy from Covid-19.
The emergency move cut Norwegian interest rates from 1.5% to 1%, and follows unscheduled rate cuts in the UK, US and Canada in recent days.
The Norges Bank warned:
It added that its rate-setting committee is “monitoring developments closely and is prepared to make further rate cuts.”
ING economist David Smith says the move was forced by the sharp fall in oil prices, and also in global interest rate expectations:
Hmmm... this morning’s rally is losing more momentum - with the FTSE 100 now up around one hundred points still (nearly 2%).
As Connor Campbell of SpreadEx puts it:
Savers and pension holders will welcome any rally today.
But today’s rebound looks rather unimpressive, in the context of the last few days:
After that early surge, the UK and other European markets have stabilised up around 3% to 4%.
Correction: Australia’s market finished UP 4%, not down as I mistyped earlier. Even better!
Britain’s FTSE 250 index of medium-sized firms is also rallying, but with less oomph than its big sibling.
The FTSE 250 has gained almost 2% in early trading. But Cineworld (which might breach its banking covenants if forced to close cinemas) are down 13%, and Restaurant Group (Frankie & Bennies, Wagamama) are down another 5%.
The threat of mass sporting cancellations is hitting gambling firms, with William Hill down 6%.
European stock markets are also recovering, after a historic 10% plunge on Thursday.
Germany’s DAX has risen by 3.5% at the open, with financial stocks such as Deutsche Bank (+7%) and Commerzbank (+11%) among the risers.
Shares are surging back in London, as the stock market reopens after Thursday’s rout.
A massive early burst of buying has lifting the market back up from last night’s seven-year lows.
The FTSE 100 has leapt by over 6%, or 332 points, back to 5565 points.
Almost every share is rising sharply. Mining giants BHP Billiton and Rio Tinto are leaving the rally, up over 13% each. Insurance firm L&G has gained 10%, as some calm returns to the City.
It’s still early days, but this might calm some nerves.
One company is still tumbling, though -- cruise operator Carnival is down another 7%.
Covid-19 has reached Britain’s business leaders.
Telecoms firm BT’s CEO, Philip Jansen, has tested positive for the virus -- making him (we think) the first publicly confirmed case among FTSE 100 bosses. He’s now self-isolating, and keeping working.
Jansen said in a statement:
More here:
Stock market regulators are taking steps to shore up the markets.
Overnight, Italy’s watchdog announced a temporary short-selling ban on some stocks - to prevent speculators from selling shares they don’t own (and buying them back cheaper). Britain’s FCA says the move will also affect Italian banks traded in the City.
South Korea has announced a similar move too:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
World markets are in panic mode, after the worst day since 1987 on both sides of the Atlantic yesterday.
Investors are grappling with three questions; how bad the coronavirus pandemic will become, how serious an economic downturn it will cause, and whether policymaker will intervene decisively and effectively.
(Many will also be pondering why they didn’t sell three weeks ago, but this is no time for introspection).
It’s already been a wild Friday in Asia-Pacific. Japan’s Nikkei index plunged by 10% at one stage, matching the horror scenes on the London and New York stock exchange on Thursday. Australia’s market saw blistering selling too, sending the S&P/ASX200 down 8% at one stage.
But.... there was a late mini-recovery, meaning Tokyo *only* finished 6% lower, with Sydney UP 4.4%. And that means European markets MIGHT have a better morning.
That late comeback in Asia may show hopes of a co-ordinated fiscal and monetary response to the crisis over the weekend, or may suggest that some investors think the sell-off has gone far enough.
Last night, the US Federal Reserve delved into its arsenal -- pledging to inject at least $1.5tn into the markets, and to restart its bond-buying programme. That, though, didn’t prevent fresh losses on Wall Street.
So what for Europe and the US today?
Frankly, who knows how the next few hours will play out. But it’s not going to be a gentle ride.
As things stand, the FTSE 100 is expected to rebound by at least 3% - bringing some relief to the City. Wall Street is also being called higher -- with Dow futures up over 800 points.
That wouldn’t even recover Thursday’s rout, though, let alone the losses of the last three weeks. But traders may be grateful for what they can get.
Ipek Ozkardeskaya, analyst at Swissquote, warns it could be a volatile day:
We’ll be tracking all the action through the day. Hold tight.
The agenda:
3pm GMT: University of Michigan survey of US consumer confidence