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G7 leaders pledge to act together to fight Covid-19, but markets still slide - business live Wall Street suffers worst day since 1987 as recession fears grow - business live
(about 1 hour later)
Rolling coverage of the latest economic and financial news, as shares fall sharply again in Asia and Europe Rolling coverage of the latest economic and financial news, as shares fall sharply again across the globe
Newsflash! Wall Street has just suffered its worst day since 1987.
A late tumble in New York has seen the main indices plunge by 12%.
The S&P 500 index has shed 324 points, or 11.98%, to 2,386 points.
The Dow has tumbled by almost 3,000 points -- its biggest points fall ever - as it slumped by 13% to 20,186.
This, the latest in a series of stomach-churning falls, is Wall Street’s worst day in over 30 years, as fears of a global downturn have accelerated sharply in recent days.
Donald Trump’s warning that the US could fall into recession has helped to push stocks lower.
Over in Washington, president Donald Tump has conceded that the US economy could fall into recession.
Trump is holding a media briefing at the White House now, with the US coronavirus task force.
Asked if the US economy is heading into recession, the president replied it “may be”, but that the important thing is to tackle the coronavirus. Once the virus “goes away”, the US will see a tremendous economic surge, he insisted.
But, Trump also suggested that the worst of the virus outbreak may be over by July or August, or possibly later.
US authorities are also tightening their guidelines, recommending avoiding social gatherings of more than 10 people over the next 15 days, to slow the virus’s spread.
These guidelines also recommend that places with evidence of “community spread” of the virus should close bars, restaurants, food courts, gyms and other places where people congregate -- which will have a very severe impact on companies in those areas.
Kristalina Georgieva, head of the IMF, has welcomed the G7 pledge:
Earlier today, Georgieva said the Fund “stands ready” to use its $1 trillion lending capacity to help countries that are struggling with the economic impact of the coronavirus.
Chris Giles of the Financial Times has put his finger on the problem with today’s G7 statement -- it’s a bit woolly (implying leaders haven’t achieved a major breakthrough).
It might be wrong to say that the Federal Reserve’s latest emergency measures have failed. It’s more that they can’t, alone, address the threat Covid-19 poses to global health and the global economy.
As Solita Marcelli of UBS Global Wealth Management puts it (via Reuters):
Goldman Sachs also dampened the mood on Wall Street todayGoldman Sachs also dampened the mood on Wall Street today
They predicted the US economy would stagnate in January-March, and then shrink dramatically - by 5% - in April-June. Serious, worrying stuff. But they also predict the economy would bounce back later in the year - meaning annual growth of 0.4% (down from 1.2% before.They predicted the US economy would stagnate in January-March, and then shrink dramatically - by 5% - in April-June. Serious, worrying stuff. But they also predict the economy would bounce back later in the year - meaning annual growth of 0.4% (down from 1.2% before.
Marketwatch has more details:Marketwatch has more details:
The G7’s combined statement has not lifted the mood on Wall Street.The G7’s combined statement has not lifted the mood on Wall Street.
Instead, the main indices are still down almost 10% in late trading - on track for another day of huge losses.Instead, the main indices are still down almost 10% in late trading - on track for another day of huge losses.
Dow: down 9.6% or 2,226 points at 20,959Dow: down 9.6% or 2,226 points at 20,959
S&P 500: down 8.6% or 235 points at 2,475S&P 500: down 8.6% or 235 points at 2,475
Boeing is having a desperately bad day, down 20% right now, as many of its customers slash services and start mothballing jets.Boeing is having a desperately bad day, down 20% right now, as many of its customers slash services and start mothballing jets.
House improvement group Home Depot are down 15%, with insurance group Travelers Companies losing 14%.House improvement group Home Depot are down 15%, with insurance group Travelers Companies losing 14%.
A review of UK company rules has opened the door for a raft of AGMs being delayed due to the coronavirus outbreak.A review of UK company rules has opened the door for a raft of AGMs being delayed due to the coronavirus outbreak.
It’s an important step that could safeguard the health of hundreds of shareholders, including elderly investors, as the UK government said it would no longer support mass gatherings.It’s an important step that could safeguard the health of hundreds of shareholders, including elderly investors, as the UK government said it would no longer support mass gatherings.
The business department has backed fresh guidance from the ICSA – known as the governance institute – which said this afternoon that companies have five options:The business department has backed fresh guidance from the ICSA – known as the governance institute – which said this afternoon that companies have five options:
Hold the AGM as planned, with appropriate modifications.Hold the AGM as planned, with appropriate modifications.
Delay convening the AGM, if notice has not yet been issued.Delay convening the AGM, if notice has not yet been issued.
Postpone the AGM, if permitted under the articles of association (Articles).Postpone the AGM, if permitted under the articles of association (Articles).
Adjourn the AGMAdjourn the AGM
Conduct a hybrid AGM, if permitted under the articlesConduct a hybrid AGM, if permitted under the articles
The guidance was provided with legal advice from law firm Slaughter and May, and has also been backed by other groups including accounting regulator the Financial Reporting Council, GC100, the Investment Association and the Quoted Companies Alliance.The guidance was provided with legal advice from law firm Slaughter and May, and has also been backed by other groups including accounting regulator the Financial Reporting Council, GC100, the Investment Association and the Quoted Companies Alliance.
But we’re expecting further updates tomorrow from the ICSA on this issue tomorrow, to reflect the government’s new guidance....But we’re expecting further updates tomorrow from the ICSA on this issue tomorrow, to reflect the government’s new guidance....
The leaders of the world’s biggest economies have pledged to work more closely together to tackle the coronavirus crisis.The leaders of the world’s biggest economies have pledged to work more closely together to tackle the coronavirus crisis.
Following their conference call today, G7 leaders have agreed to marshal “the full power of our governments” address Covid-19, which they say is “a major risk” for the world economy.Following their conference call today, G7 leaders have agreed to marshal “the full power of our governments” address Covid-19, which they say is “a major risk” for the world economy.
But there doesn’t seem to be a major new commitment, with a price tag attached, that might reassure the market.But there doesn’t seem to be a major new commitment, with a price tag attached, that might reassure the market.
The leaders of the US, UK, Canada, Germany, France, Italy and Japan have all agreed a four-point plan:The leaders of the US, UK, Canada, Germany, France, Italy and Japan have all agreed a four-point plan:
Coordinate on necessary public health measures to protect people at risk from COVID-19;Coordinate on necessary public health measures to protect people at risk from COVID-19;
Restore confidence, growth, and protect jobs;Restore confidence, growth, and protect jobs;
Support global trade and investment;Support global trade and investment;
Encourage science, research, and technology cooperation.Encourage science, research, and technology cooperation.
The G7 leaders say:The G7 leaders say:
The statement also contains a clear pledge to support companies and workers across the G7:The statement also contains a clear pledge to support companies and workers across the G7:
Over in Westminster, British PM Boris Johnson has talked up the prospect of an economic bounce back, once the coronavirus outbreak has been curbed.
He told a press conference on Covid-19 that:
However, Johnson also warned people to avoid going out to places like pubs, clubs and theatres. If one member of a family shows symptoms of the coronavirus, they must all self-isolate for two weeks.
That will all have a severe impact on workers, and the wider economy.
Especially as chief medical officer Chris Whitty warns that tackling Covid-19 will take “quite a number of weeks”.
European stock markets also had another torrid day, falling to their lowest point since 2013.
The Stoxx 600 has dropped by 4.8% to close at 284 points. Banks, consumer cyclical firms, energy companies, and industrial groups led the slide.
The FTSE 100 has now lost roughly a third of its value in the last two months.
That’s an astonishing slump, as the coronavirus has moved from a local problem in Wuhan, to a blow to China’s manufacturing sector, to a massive shock to world demand and supply.
By my maths, almost £54bn was knocked off the FTSE 100 index today.
That’s merely a flesh wound, compared to some of the worse days in recent weeks. But it’s yet another blow to pension-savers, ISAs and other funds.
It takes the FTSE 100’s total losses over the coronavirus rout (which began just over three weeks ago) to around £565bn, I reckon.
Newsflash: Britain’s FTSE 100 index has closed at its lowest level in eight years, after another wild day of trading.
The Footsie has ended the day down 215 points, or 4%, at 5151 -- the weakest close since November 2011.
British Airways’ parent company, IAG, was the top faller (-27%), with easyJet (-19%) close behind.
Both easyJet and IAG warned this morning that they are grounding large swathes of their fleet for the next couple of months, which will have a serious impact on revenues.
Banks and financial stocks have also sunk - Barclays lost 13%, Prudential lost 12%, while asset manager M&G has shed 25% of its value.
Clearly the latest central bank interventions last night, led by the US Federal Reserve, has not provided much support.
However... the FTSE 100 was 8% lower earlier today when Wall Street opened with another almighty bump. So there was a small recovery by the close (but traders won’t be cheering...)
Vauxhall’s major UK manufacturing facilities are to close until March 27 as part of a Europe-wide shutdown by owner PSA Group due to coronavirus.
Carmakers including Fiat Chrysler, Peugeot, Volkswagen and its premium unit Audi are reducing production at their European plants as they grapple with the Coronavirus.
Like factories in the UK they do not have clarity on social-distancing rules in the workplace.
Audi said workers have downed tools over concerns about exposure to the virus while Fiat Chrysler said it was halting production for two weeks to help protect staff and adjust to decline in demand.
French carmaker PSA, which owns the Peugeot, Opel and Vauxhall brands, also said it was closing its European factories until March 27.
Ford said it was closing its plant in Valencia, Spain, for the rest of this week following a flurry of infections, and would reassess after talks with trade unions.
A spokeswoman said on Monday:
Ford employees who had close contact with the affected workers are now in self-isolation. Ford adds:
Last week, some Spanish plants of the Renault-Nissan alliance and Volkswagen’s Spanish division Seat announced temporary stoppages that could last for days or weeks.
On Monday, Volkswagen’s Autoeuropa car assembly plant near Lisbon, Portugal, said it had reduced its daily output by 16% because of a shortage of workers after Portugal ordered all schools closed amid the coronavirus outbreak.
Volkswagen also said on Sunday it was preparing to suspend operations at its plant in Bratislava after Slovakia declared a state of emergency in response to the virus.
Another UK travel insurer has boarded itself up -- this time, the Post Office.
It’s one of the biggest suppliers of travel insurance policies in the UK. But, faced with the coronavirus crisis, and widespread flight cancellations, the Post Office has suspended its offerings - both online and in branches.
It says:
The markets might calm down if they had more idea about how bad the Covid-19 epidemic is, argues Robin Brooks of finance industry body IIF.
Testing levels are varying between countries, with the US in particular lagging behind.
The smaller FTSE 250 index of UK-focused companies is also clawing its way back.
It’s still looking weak - down almost 7% today, as pub chains, bookies, food groups and travel operators are pummelled. But at least it’s better than the 12% slump we saw this morning.
In another example of how Covid-19 is shaking Europe, the EU is now proposing suspending all non-essential travel for 30 days.
Ursula von der Leyen, the president of the EU commission, tweeted the news.
Our main coronavirus liveblog has more details.