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Markets rebound amid coronavirus stimulus hopes – business live | Markets rebound amid coronavirus stimulus hopes – business live |
(32 minutes later) | |
Rolling coverage of the latest economic and financial news | Rolling coverage of the latest economic and financial news |
Another dramatic Wall Street session looms..... | |
Newsflash: The Bank of England has released the minutes of its emergency meeting this week, when it voted to cut UK interest rates from 0.75% to 0.25% | |
They show that the Monetary Policy Committee believes UK economic activity will “weaken materially” over the coming months. It expects to learn more about the economic shock of Covid-19 in the weeks and months ahead. | |
And if necessary, the MPC believes it has further tools to fight - including cutting bank rate again. It could also expand its offer of cheap loans for banks to pass onto businesses, also announced on Wednesday morning. | |
A reminder that the markets have been here before (and will doubtless be here again): | A reminder that the markets have been here before (and will doubtless be here again): |
The FTSE 100 index is surging higher, up 7.3% today on hopes of international co-operation and a US stimulus package. | The FTSE 100 index is surging higher, up 7.3% today on hopes of international co-operation and a US stimulus package. |
The blue-chip index has now gained 383 points, taking it back to 5620 and away from last night’s seven-year low. | The blue-chip index has now gained 383 points, taking it back to 5620 and away from last night’s seven-year low. |
The news that Wall Street will surge in 90 minutes time is pushing up stocks across Europe. The EU-wide Stoxx 600 is also up 7%. | The news that Wall Street will surge in 90 minutes time is pushing up stocks across Europe. The EU-wide Stoxx 600 is also up 7%. |
That doesn’t recover all of Thursday’s huge losses (when the FTSE 100 lost 639 points. or 10%). But it’s something of a boost to the City, where traders must be dizzy after the last few weeks. | That doesn’t recover all of Thursday’s huge losses (when the FTSE 100 lost 639 points. or 10%). But it’s something of a boost to the City, where traders must be dizzy after the last few weeks. |
British Prime Minister Boris Johnson will have conversations with other world leaders on Friday regarding the global response to the coronavirus outbreak, his spokesman said. | British Prime Minister Boris Johnson will have conversations with other world leaders on Friday regarding the global response to the coronavirus outbreak, his spokesman said. |
He added that planning staff from the Ministry of Defence would help local authorities work out how to support public services so they can deal with the outbreak (via Reuters). | He added that planning staff from the Ministry of Defence would help local authorities work out how to support public services so they can deal with the outbreak (via Reuters). |
That might reassure City investors that politicians could work together to limit the economic harm we face. | That might reassure City investors that politicians could work together to limit the economic harm we face. |
The US stock market is expected to rally strongly when trading begins in a couple of hours. | The US stock market is expected to rally strongly when trading begins in a couple of hours. |
Trading in Dow and S&P 500 futures has been frozen ‘limit-up’ at +5% -- meaning the market is likely to jump by more than 5% when the opening bell rings. | Trading in Dow and S&P 500 futures has been frozen ‘limit-up’ at +5% -- meaning the market is likely to jump by more than 5% when the opening bell rings. |
Perhaps the latest interventions from central banks, including the Federal Reserve’s $1.5trn liquidity push last night, is helping calm markets. | Perhaps the latest interventions from central banks, including the Federal Reserve’s $1.5trn liquidity push last night, is helping calm markets. |
Investors are also pinning hopes on a co-ordinated push by governments to calm the panic. | Investors are also pinning hopes on a co-ordinated push by governments to calm the panic. |
Yesterday, the US Congress cancelled its planned recess next week so policymakers could work on a economic stimulus package to protect the US economy from a severe downturn. | Yesterday, the US Congress cancelled its planned recess next week so policymakers could work on a economic stimulus package to protect the US economy from a severe downturn. |
From the Footsie to the footie.... | From the Footsie to the footie.... |
The Italian short-selling ban will include shares in two storied football clubs - Juventus and Lazio. Their revenues will be hit now Serie A games are being played behind closed doors. | The Italian short-selling ban will include shares in two storied football clubs - Juventus and Lazio. Their revenues will be hit now Serie A games are being played behind closed doors. |
English games, meanwhile, are being suspended altogether for a month - an unprecedented move, that will also hurt club revenues, and have a knock-on impact on the hospitality trade. | English games, meanwhile, are being suspended altogether for a month - an unprecedented move, that will also hurt club revenues, and have a knock-on impact on the hospitality trade. |
But as the Premier League says, “the health and welfare of players, staff and supporters are our priority”. | But as the Premier League says, “the health and welfare of players, staff and supporters are our priority”. |
Three hours in, and the European rally is holding firm. | Three hours in, and the European rally is holding firm. |
FTSE 100: up 255 points or 4.8% at 5492 | FTSE 100: up 255 points or 4.8% at 5492 |
German DAX: up 337 points or 3.7% at 9,498 | German DAX: up 337 points or 3.7% at 9,498 |
French CAC: up 182 points or 4.5% at 4226 | French CAC: up 182 points or 4.5% at 4226 |
Italian FTSE MIB: up 1,479 points or 9.9% at 16,373 | Italian FTSE MIB: up 1,479 points or 9.9% at 16,373 |
Up to 50 million people in the travel and holiday sector could lose their jobs due to the coronavirus, an industry body warned today. | Up to 50 million people in the travel and holiday sector could lose their jobs due to the coronavirus, an industry body warned today. |
The World Travel and Tourism Council fears that demand for international travel could slump by 25% this year -- causing 12-14% of workers in the sector to be laid off. | The World Travel and Tourism Council fears that demand for international travel could slump by 25% this year -- causing 12-14% of workers in the sector to be laid off. |
The WTTC wants governments to cut travel taxes, simplify the visa process, and support companies affected. | The WTTC wants governments to cut travel taxes, simplify the visa process, and support companies affected. |
Another central bank has eased monetary policy - and this time it’s China. | 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. | 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. | 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. | 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: | 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. | 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. | 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. | 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%. | 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. | 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: |