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Coronavirus: UK stocks dive despite stimulus plans Coronavirus: UK and US stocks dive despite stimulus plans
(about 4 hours later)
UK stocks tumbled on Wednesday as major UK and US stimulus plans failed to quell worries about the economic impact of the coronavirus pandemic. Financial markets tumbled again on Wednesday as major stimulus plans failed to quell worries about the economic impact of the coronavirus.
The FTSE 100 index of top UK firms dived more than 5%, with aerospace firms, travel companies and housing firms leading the declines. The Dow led the declines in the US, falling more than 4%, while the S&P 500 and Nasdaq dropped more than 3%.
The pound meanwhile hit a six-month low against the dollar to trade at $1.1966. The FTSE 100 index of top UK firms fell more than 3%, with aerospace, travel and housing firm among the hardest hit.
It came despite the US on Tuesday outlining a $1tn (£830bn) package to support the world's biggest economy. The pound meanwhile fell to its lowest level against the dollar in over three decades, trading at $1.18.
The US on Tuesday outlined a $1tn (£830bn) package to support the world's biggest economy.
UK chancellor Rishi Sunak also revealed a £350bn stimulus package for UK firms, including £330bn of business loan guarantees.UK chancellor Rishi Sunak also revealed a £350bn stimulus package for UK firms, including £330bn of business loan guarantees.
It also included aid to cover a business rates holiday and grants for retailers and pubs. Help for airlines is also being considered.It also included aid to cover a business rates holiday and grants for retailers and pubs. Help for airlines is also being considered.
Mr Sunak told a news conference: "Never in peacetime have we faced an economic fight like this one."Mr Sunak told a news conference: "Never in peacetime have we faced an economic fight like this one."
US stock market futures were also indicating a weaker open for Wall Street on Wednesday, despite the main indexes rebounding more than 5% on Tuesday.
The stimulus measures taken globally also failed to buoy Asian stocks. Japan's benchmark Nikkei 225 ended Wednesday 1.7% lower, the Hang Seng in Hong Kong fell by 3.3%, and China's Shanghai Composite lost 1.8%.The stimulus measures taken globally also failed to buoy Asian stocks. Japan's benchmark Nikkei 225 ended Wednesday 1.7% lower, the Hang Seng in Hong Kong fell by 3.3%, and China's Shanghai Composite lost 1.8%.
On Tuesday, US Treasury Secretary Steven Mnuchin said he supports sending money directly to Americans as part of a $1tn stimulus plan aimed at averting an economic crisis caused by the virus.On Tuesday, US Treasury Secretary Steven Mnuchin said he supports sending money directly to Americans as part of a $1tn stimulus plan aimed at averting an economic crisis caused by the virus.
The overall aid package would be larger than the US response to the 2008 financial crisis, amounting to nearly a quarter of what the US federal government spent last year.The overall aid package would be larger than the US response to the 2008 financial crisis, amounting to nearly a quarter of what the US federal government spent last year.
In Japan Prime Minister Shinzo Abe is reportedly forming a panel of key economic ministers and Bank of Japan Governor Haruhiko Kuroda to discuss measures to prop up the economy.In Japan Prime Minister Shinzo Abe is reportedly forming a panel of key economic ministers and Bank of Japan Governor Haruhiko Kuroda to discuss measures to prop up the economy.
The move, which would bring Japan in line with other nations, is designed at averting an economic crisis in the country, which some fear could tip into recession. The move, which would bring Japan in line with other nations, is designed to avert an economic crisis in the country, which some fear could tip into recession.
Big shifts in the stock market are often in the news, whether they are booms or falls owing to coronavirus or the financial crisis. The corporate bond market is, according to traders who spoke to the BBC, in the midst of a full-blown rout - vindicating predictions by market experts such as Zero Hedge, Jesse Colombo, Peter Shiff or Albert Edwards that it was a bubble waiting to burst.
As companies grow, they issue shares. The largest companies in the UK have shares which are bought and sold on the London Stock Exchange. Bonds are a form of debt issued by large companies and governments - much like an "IOU" note - to investors willing to hand over money in exchange for a fixed rate of interest.
Their collective performance is often quoted amid a blizzard of numbers that may feel confusing and irrelevant. Rarely does anyone mention during a coffee with friends that the FTSE 100 has dropped well below 7,000 points. Traders tend sell them if they think the risks of not getting their money back have risen. If there are more sellers than buyers, the price of the bond falls and the fixed income from it - the yield - will increase.
But there are good reasons why this performance affects your life and finances. Right now, corporate bonds normally regarded as safe have seen yields jump to their highest since the financial crisis 12 years ago - a measure of just how worried investors are. In this crisis, traders would rather have cash.
Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.
Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.
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