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Markets rebound amid coronavirus stimulus hopes – business live Markets rebound amid coronavirus stimulus hopes – business live
(30 minutes later)
Rolling coverage of the latest economic and financial newsRolling coverage of the latest economic and financial news
Talks about a potential US stimulus package are continuing in Washington....
US House Speaker Nancy Pelosi and U.S. Treasury Secretary Steven Mnuchin have spoken on the phone about an economic relief package to help protect the US people from the coronavirus economic shock.
This is from Pelosi’s chief of staff:
The two sides had been split about how to respond to the crisis, on predictable lines.
The Democrats are pushing for a package including paid leave for ill workers, higher jobless benefits and food aid, and free testing for coronavirus.
President Trump, though, is insisting on tax cuts - a message he’s just repeated on Twitter
The bounceback is gathering pace in the City, with the FTSE 100 now up over 8% today - a gain of 430 points.
Mining giants are leading the way, with BHP, Anglo and Glencore up around 15% each.
British Airways owner, IAG,is also recovering strongly - up 13%.
That would be match some of the wild swings we saw during the 2008 crisis.... the last time global markets were quite this spooked.
Another dramatic Wall Street session looms.....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%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.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.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 5492FTSE 100: up 255 points or 4.8% at 5492
German DAX: up 337 points or 3.7% at 9,498German DAX: up 337 points or 3.7% at 9,498
French CAC: up 182 points or 4.5% at 4226French CAC: up 182 points or 4.5% at 4226
Italian FTSE MIB: up 1,479 points or 9.9% at 16,373Italian 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.
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:
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).
She explains:
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.
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.
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.”
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.
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%).
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:
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.
Reuters has the details: