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| FTSE 100 back over 6,000 points despite rising cost of Covid-19 crisis - business live | FTSE 100 back over 6,000 points despite rising cost of Covid-19 crisis - business live |
| (32 minutes later) | |
| UK stock market has hit its highest level since early March, despite coronavirus lockdown hitting retail sales and driving bad debts up | UK stock market has hit its highest level since early March, despite coronavirus lockdown hitting retail sales and driving bad debts up |
| Just in: Economic confidence across the eurozone has suffered its worst ever fall -- quite a contrast with the recent stock market rally. | |
| The European Commission’s economic sentiment index has slumped to just 67.0 points this month, down from 94.2 in March and 103.4 in February. | |
| The gloom is darkest in the service sector - where the confidence measure slumped to -35 points from -2.3 in March. | |
| The survey also showed the consumers are more worried about losing their jobs, and also expect prices in the shops to rise. | |
| The days of cramming thousands of bankers into skyscrapers may be numbered, due to Covid-19. | The days of cramming thousands of bankers into skyscrapers may be numbered, due to Covid-19. |
| The City of London and Canary Wharf are both pretty deserted right now, with financial services companies telling staff to work remotely where possible - either at remote sites, or from home. | The City of London and Canary Wharf are both pretty deserted right now, with financial services companies telling staff to work remotely where possible - either at remote sites, or from home. |
| Barclays has a large tower block at the Wharf, but CEO Jes Staley is pondering whether it needs to pack its staff into one place. | Barclays has a large tower block at the Wharf, but CEO Jes Staley is pondering whether it needs to pack its staff into one place. |
| He told reporters that the Canary Wharf offices will open gradually, with just two people allowed in an elevator at once. | He told reporters that the Canary Wharf offices will open gradually, with just two people allowed in an elevator at once. |
| And in the long term..... | And in the long term..... |
| Keeping staff two metres apart is pretty much impossible on a busy trading floor, unless you sharply reduce the number of people in the office at once. Bosses will also be very nervous about future disruption -- one Covid-19 case could force everyone to go home. | Keeping staff two metres apart is pretty much impossible on a busy trading floor, unless you sharply reduce the number of people in the office at once. Bosses will also be very nervous about future disruption -- one Covid-19 case could force everyone to go home. |
| Another factor: the City seems to have coped well with remote working. | Another factor: the City seems to have coped well with remote working. |
| Staley says it is “absolutely remarkable” that technology has allowed 70,000 staff to keep Barclays’ operations running properly “from their kitchens.” | Staley says it is “absolutely remarkable” that technology has allowed 70,000 staff to keep Barclays’ operations running properly “from their kitchens.” |
| But, there will be a knock-on impact if City workers stay home, as Neil Wilson of Markets.com explains: | But, there will be a knock-on impact if City workers stay home, as Neil Wilson of Markets.com explains: |
| The oil price is recovering this morning too, helping to nudge stocks higher. | The oil price is recovering this morning too, helping to nudge stocks higher. |
| Brent crude has gained 3% to $21.07 per barrel, while US crude has gained 13% to $13.94 per barrel. | Brent crude has gained 3% to $21.07 per barrel, while US crude has gained 13% to $13.94 per barrel. |
| David Madden, market analyst at CMC Markets, explains: | David Madden, market analyst at CMC Markets, explains: |
| Hitting 6,000 points again is a “significant milestone” in FTSE 100’s recovery from the pandemic-inspired stock market slump, says Russ Mould, investment director at AJ Bell. | Hitting 6,000 points again is a “significant milestone” in FTSE 100’s recovery from the pandemic-inspired stock market slump, says Russ Mould, investment director at AJ Bell. |
| He gives some of the credit to Barclays, where decent investment bank trading made up for growing problems in the UK economy. | He gives some of the credit to Barclays, where decent investment bank trading made up for growing problems in the UK economy. |
| Standard Chartered, the emerging markets-focused bank, has also reassured investors today despite reporting falling profits. | Standard Chartered, the emerging markets-focused bank, has also reassured investors today despite reporting falling profits. |
| The FTSE 100-listed lender told the City that it sees signs of recovery in its key markets in Asia, predicting: | The FTSE 100-listed lender told the City that it sees signs of recovery in its key markets in Asia, predicting: |
| Standard Chartered is also setting aside more money to cover bad loans, with a credit impairment of $956m for the last quarter. | Standard Chartered is also setting aside more money to cover bad loans, with a credit impairment of $956m for the last quarter. |
| Today’s rally follows encouraging results from Google’s parent company, Alphabet, last night. | Today’s rally follows encouraging results from Google’s parent company, Alphabet, last night. |
| Alphabet posted higher revenues in the last quarter than expected, despite a “significant and sudden slowdown in advertising” in March. | Alphabet posted higher revenues in the last quarter than expected, despite a “significant and sudden slowdown in advertising” in March. |
| CFO Ruth Porat also reported “some early signs” that customers are returning to more normal behaviour - helping to lift shares by 7% in pre-market trading.... | CFO Ruth Porat also reported “some early signs” that customers are returning to more normal behaviour - helping to lift shares by 7% in pre-market trading.... |
| Roughly two-thirds of the companies on the FTSE 100 are up this morning, pushign the index over 6,000 points. | Roughly two-thirds of the companies on the FTSE 100 are up this morning, pushign the index over 6,000 points. |
| The rally is being led by energy companies (+2.1%), telecoms firms (+1.5%), financial stocks (+1%) and miners (+0.95%). | The rally is being led by energy companies (+2.1%), telecoms firms (+1.5%), financial stocks (+1%) and miners (+0.95%). |
| Boom! Britain’s FTSE 100 index has just pushed over the 6,000 points mark for the first time since 11 March. | Boom! Britain’s FTSE 100 index has just pushed over the 6,000 points mark for the first time since 11 March. |
| That means it has clawed back all the losses since the stomach-churning crash on 12 March (the worst day since 1987). | That means it has clawed back all the losses since the stomach-churning crash on 12 March (the worst day since 1987). |
| Here are the top risers, and fallers, as investors continue to grasp hopes that Covid-19 lockdowns will end soon, helping the world economy to rebound. | Here are the top risers, and fallers, as investors continue to grasp hopes that Covid-19 lockdowns will end soon, helping the world economy to rebound. |
| UK clothing and homeware group Next has reported that sales plunged over 40% in the last quarter, due to the lockdown. | UK clothing and homeware group Next has reported that sales plunged over 40% in the last quarter, due to the lockdown. |
| Next told the City that the drop in sales has been “faster and steeper” than anticipated in its March stress test. | Next told the City that the drop in sales has been “faster and steeper” than anticipated in its March stress test. |
| It now expects lower sales for both the first and second half of the year. | It now expects lower sales for both the first and second half of the year. |
| It told shareholders this morning that customers had already voted with their feet before the lockdown: | It told shareholders this morning that customers had already voted with their feet before the lockdown: |
| Although Next’s stores are still closed, it began partially reopening its internet shopping offering two weeks ago. It says 70% of ranges are now available, with operations rejigged to comply with physical distancing rules. | Although Next’s stores are still closed, it began partially reopening its internet shopping offering two weeks ago. It says 70% of ranges are now available, with operations rejigged to comply with physical distancing rules. |
| It is also limiting daily orders, and will shut down until the next morning when this is hit. | It is also limiting daily orders, and will shut down until the next morning when this is hit. |
| The coronavirus crisis is bad news for the advertising industry too. | The coronavirus crisis is bad news for the advertising industry too. |
| Advertising giant WPP has reported that revenues fell 4.9% in the last quarter, including a 7.9% tumble in March, as companies began to slash their marketing programmes. | Advertising giant WPP has reported that revenues fell 4.9% in the last quarter, including a 7.9% tumble in March, as companies began to slash their marketing programmes. |
| WPP expects more pain ahead (understandably - you can hardly expect travel firms and restaurant groups to do much advertising right now). | WPP expects more pain ahead (understandably - you can hardly expect travel firms and restaurant groups to do much advertising right now). |
| CEO Mark Read told Reuters: | CEO Mark Read told Reuters: |
| The rising economic cost of Covid-19 has hit profits at UK bank Barclays. | The rising economic cost of Covid-19 has hit profits at UK bank Barclays. |
| Barclays is setting aside £2.1bn to cover a surge in bad debts, anticipating that its business and consumer customers will struggle to repay their loans. | Barclays is setting aside £2.1bn to cover a surge in bad debts, anticipating that its business and consumer customers will struggle to repay their loans. |
| This dragged profits for the first quarter of 2020 down to £923m, some 38% less than a year ago, and lower than hoped. | This dragged profits for the first quarter of 2020 down to £923m, some 38% less than a year ago, and lower than hoped. |
| CEO Jes Staley pinned the blame firmly on the coronavirus: | CEO Jes Staley pinned the blame firmly on the coronavirus: |
| Staley also warned of tough times ahead: | Staley also warned of tough times ahead: |
| Shares in Barclays are up 5% this morning, though - as its Investment Bank reported a “particularly strong Markets performance”. | Shares in Barclays are up 5% this morning, though - as its Investment Bank reported a “particularly strong Markets performance”. |
| IAG are the top faller in London, down almost 6%, after its British Airways division announced it would eliminate one in four jobs. | IAG are the top faller in London, down almost 6%, after its British Airways division announced it would eliminate one in four jobs. |
| Job cuts often go down well in the City (they’re a pragmatic lot). Not today, though. | Job cuts often go down well in the City (they’re a pragmatic lot). Not today, though. |
| Traders are alarmed that IAG also announced that it made a loss of €535m in the last quarter, with revenues down 13%, with worse to come. | Traders are alarmed that IAG also announced that it made a loss of €535m in the last quarter, with revenues down 13%, with worse to come. |
| CEO Alex Cruz told staff he was acting “decisively”to ensure that British Airways has a strong future. Unions, though, are furious that IAG is slashing staff rather than seeking government help. | CEO Alex Cruz told staff he was acting “decisively”to ensure that British Airways has a strong future. Unions, though, are furious that IAG is slashing staff rather than seeking government help. |
| Michael Hewson of CMC Markets comments: | Michael Hewson of CMC Markets comments: |
| The FTSE 100 has hit a new seven-week high at the start of trading in London. | The FTSE 100 has hit a new seven-week high at the start of trading in London. |
| The blue-chip index has gained 30 points to reach 5989 points, for the first time since Wednesday 11 March. | The blue-chip index has gained 30 points to reach 5989 points, for the first time since Wednesday 11 March. |
| Cruise operator Carnival are the top riser, up 7.4%, suggesting traders are anticipating the end of coronavirus restrictions. | Cruise operator Carnival are the top riser, up 7.4%, suggesting traders are anticipating the end of coronavirus restrictions. |
| April has been a good month for Wall Street. With two days to go, stocks are up 10% - their best performance for many a year (after a torrid March). | April has been a good month for Wall Street. With two days to go, stocks are up 10% - their best performance for many a year (after a torrid March). |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Today we learn how badly America’s economic growth was hit by the first phase of the Covid-19 crisis, and what its central bank will do to fight it. | Today we learn how badly America’s economic growth was hit by the first phase of the Covid-19 crisis, and what its central bank will do to fight it. |
| GDP figures for the first quarter of 2020 are expected to show that the US economy shrank in January-March, at an annualised rate of around 4%. That would reflect the early impact of the global pandemic, as lockdowns spread from Asia to Europe and then America. | GDP figures for the first quarter of 2020 are expected to show that the US economy shrank in January-March, at an annualised rate of around 4%. That would reflect the early impact of the global pandemic, as lockdowns spread from Asia to Europe and then America. |
| The threat of a deep recession has already spurred America’s Federal Reserve into a series of massive stimulus programmes. The Fed holds a policy meeting today, but isn’t expected to change monetary policy -- having already slashed borrowing costs to nearly zero. | The threat of a deep recession has already spurred America’s Federal Reserve into a series of massive stimulus programmes. The Fed holds a policy meeting today, but isn’t expected to change monetary policy -- having already slashed borrowing costs to nearly zero. |
| Instead, investors will be looking for signals that the Fed will continue to generously support the economy -- and thus asset prices -- until the Covid-19 pandemic is over. It has already pledged more than $2 trillion of loan guarantees and other financial help. | Instead, investors will be looking for signals that the Fed will continue to generously support the economy -- and thus asset prices -- until the Covid-19 pandemic is over. It has already pledged more than $2 trillion of loan guarantees and other financial help. |
| Optimism that policymakers will keep doing Whatever It Takes have lifted the markets to their highest levels in seven weeks. Britain’s FTSE 100 is only a whisker below the 6,000 point mark, having fallen through 5,000 points last month. | Optimism that policymakers will keep doing Whatever It Takes have lifted the markets to their highest levels in seven weeks. Britain’s FTSE 100 is only a whisker below the 6,000 point mark, having fallen through 5,000 points last month. |
| Stocks have rallied in Asia too, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.7% to its highest since 12 March. | Stocks have rallied in Asia too, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.7% to its highest since 12 March. |
| Australia’s S&P/ASX 200 index rose by 1.5%, while China’s CSI 300 inched up by 0.3%. | Australia’s S&P/ASX 200 index rose by 1.5%, while China’s CSI 300 inched up by 0.3%. |
| The FTSE 100 index has gained 5% in April, cutting its losses during 2020 to a mere 21%. | The FTSE 100 index has gained 5% in April, cutting its losses during 2020 to a mere 21%. |
| That reflects a lot of optimism that coronavirus lockdowns will ease, economies will return to something like normality, and a deep depression will be avoided. | That reflects a lot of optimism that coronavirus lockdowns will ease, economies will return to something like normality, and a deep depression will be avoided. |
| But given so many companies are reporting falling sales and profits, and suspending their dividends, does this rally have firm foundations? | But given so many companies are reporting falling sales and profits, and suspending their dividends, does this rally have firm foundations? |
| Last night, British Airways laid out plans to cut 12,000 jobs -- as it responds to the collapse in the travel business. | Last night, British Airways laid out plans to cut 12,000 jobs -- as it responds to the collapse in the travel business. |
| The big fear is that Covid-19 infections spike again once governments start to reopen offices, factories and schools. | The big fear is that Covid-19 infections spike again once governments start to reopen offices, factories and schools. |
| Fiona Cincotta of City Index explains: | Fiona Cincotta of City Index explains: |
| The agenda | The agenda |
| 10am BST: Eurozone consumer and economic confidence data | 10am BST: Eurozone consumer and economic confidence data |
| 1.30pm BST: US GDP for Q1 2020- expected to fall by an annnualised rate of 4% | 1.30pm BST: US GDP for Q1 2020- expected to fall by an annnualised rate of 4% |
| 7pm BST: US Federal Reserve interest rate decision | 7pm BST: US Federal Reserve interest rate decision |
| 7.30pm BST: Fed chair Jerome Powell’s press conference | 7.30pm BST: Fed chair Jerome Powell’s press conference |