1.10pm GMT13:10 Wall Street is heading for a 10% plunge — which would immediately activate circuit-breakers, and trigger a 15-minute suspension. Squawk Box (@SquawkCNBC) “I want to ensure to Wall Street and the American people that we are tackling this. We are working 24/7,” says White House adviser Peter Navarro. “It’s all hands on deck.”…
Wall Street is heading for a 10% plunge — which would immediately activate circuit-breakers, and trigger a 15-minute suspension.
Most airlines could be bankrupt by May, due to the restrictions being imposed on flights, according to the Center for Aviation (CAPA) consultancy.
In an sobering warning, CAPA says:
“Many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants. By the end of May 2020, most airlines in the world will be bankrupt.
Co-ordinated government and industry action is needed — now — if catastrophe is to be avoided.”
Virgin Atlantic has joined the ranks of airlines slashing its activity, as the travel industry reels from Covid-19.
Virgin is planning to slash flights by 80% by 26 March, and will terminate its London Heathrow-Newark route.
The coronavirus crisis hasn’t prevented Apple from being fined for anti-competitive conduct today in France.
France’s competition watchdog on Monday fined iPhone maker Apple €1.1bn for anti-competitive behaviour in its distribution network and an abuse of economic dependence on its resellers.
Two of Apple’s wholesalers, Tech Data and Ingram Micro, were fined €63 and €76m respectiely, for unlawfully agreeing on prices, the authority said.
“Apple and its two wholesalers have agreed not to compete with each other and to prevent distributors from competing with each other, thereby sterilising the wholesale market for Apple products,” it said.
Matt Weller, global head of market research at GAIN Capital, predicts a very rough day on Wall Street:
He’s picked out some stocks to watch:
- Apple (AAPL) is plunging -12% as of writing. Though the company has reopened its stores in mainland China, it’s closed all of its other outlets for the next two weeks.
- Airline stocks are collapsing, with Delta (DAL) and United (UAL) both poised to open down by more than -14%.
- Big bank stocks are also on the selling block, despite the Fed’s attempts to keep them well financed: Bank of America (BAC) -17%, JP Morgan Chase (JPM) -16%, Goldman Sachs (GS) -13%, Citigroup (C) -18%
- Even video conferencing standout Zoom Communications (ZM) is pointing to a -4% lower open.
Stocks will remain under pressure until governments bite the bullet and launch spending plans to support the economy, he says:
As it stands, traders are desperate for a big fiscal stimulus package from the US government. As others have noted, the fundamental nature of the virus and resulting quarantine cannot be solved by monetary policy; it will require direct payments and subsidies from the federal government to tide households and businesses over while they wait out the worst of the virus’s spread.
The clocks have struck noon in the City of London, and the markets are still a mess.
Fears of a global recession have driven the FTSE 100 down 7.2% this morning to 4976 points. That’s its lowest since late 2011, compared to 7404 points just over three weeks ago.
The FTSE 250 index of medium sized UK companies has slumped by over 12% today, with transport firm First Group and pub chain Marston’s almost halving.
European markets are suffering even more damage, as economies across the region lock down. The Stoxx 600 has shed 8.7%, back to its lowest since the debt crisis of 2012.
Wall Street is expected to plunge sharply when trading begins in 90 minutes, as the Fed’s interest rate cut fails to calm the panic.
In overnight trading, the Dow, S&P 500 and Nasdaq futures contracts have all slumped by 5% — the maximum allowed, meaning they’ll probably fall even further after the opening bell.
Oil slumps 10%!
The oil price is plunging dramatically today, as fears of a global recession ripple through the markets.
Brent crude has plunged by 10% to just $30 per barrel, its lowest since 2016.
With Saudi Arabia pressing on with its oil price war, and economic activity slowing thanks to Covid-19, energy prices are heading south.
Normally this would be a boost to energy importers – cutting transport costs, and easing inflation. But these aren’t terribly important, right now, in the face of such as severe supply and demand shock.
UK stock market investors must be feeling pretty bleak right now, watching their portfolios shrivel day by day.
And it’s certainly alarming to see the FTSE 100 at its lowest points level since autumn 2011 – a sign that UK company valuations are slumping.
But Jamie Powell of FT Alphaville makes an important point: the FTSE 100’s total returns are what matters. Factor in dividends over the years, and the picture is a bit rosier.
According to my Eikon terminal, the FTSE 100’s total returns since the start of 2012 are 33%, or roughly 3.5% per year.
Obviously it was a lot better before this crisis began (+80% back in January). But still better than sticking your money in the bank eight years ago.
New Bank of England governor: Keen to avoid economic damage
The first day in a new job is already tricky. But Andrew Bailey has walked into quite a crisis as he succeeds Mark Carney at the Bank of England.
Bailey has hit the airwaves in an attempt to calm nerves in the City, telling the BBC that the Bank will take “prompt action” when necessary to deal with the impact of Covid-19.
The new governor said the Bank is “very keen” to avoid permanent damage to the UK economy from the shock of the coronavirus outbreak.
“That’s why you saw prompt action last week, that’s why you will see prompt action again when we need to take it, and the public can be assured of that.
Bailey also hopes to help the UK negotiate its new relationship with the EU after Brexit, and “address our presence in the country as a whole”. That’s another hint that jobs may be moving out of London (once people are happy to move anywhere).
Full story: Markets are reeling again
If you’re just tuning in — take a deep breath, and catch up with the mayhem here:
Investors are absolutely reeling from the losses of recent weeks, and rightly so.
The FTSE 100 index has fallen faster than after the global financial crisis a decade ago, and much faster than after previous shocks.
Channel 4’s Paul McNamara has crunched the numbers:
After two and a half-hours of trading, European markets are still deep in the red as fears of a global recession swirl through the City.
The FTSE 100 is down 329 points, or 6%, at 5,034 – on track for its lowest close since 2011. Holiday and airline stocks are still being routed – with TUI down 32%, IAG down 22% and easyJet down 23%.
The Stoxx 600, which covers European companies, is down 8%, at its lowest since June 2013.
David Madden of CMC Markets UK says investors are “blindly” selling, with last night’s emergency action from global central bankers causing alarm.
It has been another brutal morning in the markets as traders are fearful the world economy is heading for a recession.
The fears surrounding the coronavirus crisis continues to rise in tandem with the number of new infections. Central banks around the world have stepped up their actions to combat the emergency, most notably the Federal Reserve – who slashed interest rates to 0-0.25%, as well as announcing a $700 billion quantitative easing scheme. We have seen rate cuts in South Korea and New Zealand too. Central bankers are doing their best to calm the markets but in reality it is having the opposite effect.
The radical measures have sent out a very worrying message to dealers, and that is why they are blindly dumping stocks.