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FTSE down again despite global central banks stepping in over coronavirus panic

The FTSE 100 plunged yet again today as it fell 8.7 per cent – losing another £117billion of its value – despite global central banks slashing interest rates after one of the worst weeks in its history.The index of Britain’s leading companies dropped 427 points or 8.7 per cent to 4,921 in the first 40…

The FTSE 100 plunged yet again today as it fell 8.7 per cent – losing another £117billion of its value – despite global central banks slashing interest rates after one of the worst weeks in its history.

The index of Britain’s leading companies dropped 427 points or 8.7 per cent to 4,921 in the first 40 minutes after opening this morning as the coronavirus outbreak continues to intensify. 

By 1pm today, the FTSE 100 was trading 7.8 per cent or 421 points down at 4,945 – still below the psychologically-important barrier of 5,000 – representing a loss of about £100billion. 

The index dropped to its lowest level since October 2011, adding to last week’s 17 per cent fall. It had already lost more than £500billion in the three weeks before today.

Meanwhile Frankfurt’s DAX shed 7.6 per cent to 8,532 today, the CAC 40 in Paris sank 8.8 per cent to 3,755.99 and the S&P 500 future in the US was down 4.8 per cent. 

Today, Boris Johnson will discuss strengthening coronavirus-tackling measures with officials and could make a decision on shielding elderly citizens, banning mass gatherings and household isolation. 

The FTSE 100 index is shown falling today (right) after plunging last Friday (left and centre)

The Prime Minister will chair an emergency meeting of the Cobra committee this afternoon before addressing the first of the daily press conferences being planned to update the public on Covid-19.

As the UK death toll reached 35 on Sunday, Health Secretary Matt Hancock said that over-70s could be told to stay home for up to four months within the ‘coming weeks’.

Top 10 fallers on the FTSE 100 index today

  1. TUI: -34.7%
  2. International Airlines Group: -23.8%
  3. M&G plc: -22.7% 
  4. JD Sports: -22.6% 
  5. Rolls Royce: -19.9% 
  6. Prudential: -18.3% 
  7. Coca-Cola: -18.2% 
  8. Taylor Wimpey: -17.8% 
  9. Melrose Industries: -16.9% 
  10. Meggitt: -16.9%

The number of confirmed positive tests reached 1,372, but the true figure of people in the UK with the disease is likely to be far higher.

Coronavirus has now infected almost 170,000 people and killed more than 6,000 with several countries going into lockdown as Europe becomes the new epicentre of the outbreak. 

And the coordinated stimulus actions by central banks has failed to calm investors who feared deeper economic damage from the pandemic.

AxiCorp investor Stephen Innes said: ‘The biggest concern has to be that the big G7 central banks have exhausted their policy tool kit.’

‘The markets now appear kind of defenceless to another selling onslaught, so the fiscal step is crucial in avoiding a dreaded global credit event.’

PAST THREE WEEKS: The FTSE 100 has tumbled over the past three weeks. Since the sell-off began in earnest, on February 24, the index has lost a quarter of its value, or £460billion

And Keith Temperton, trader at Tavira Securities, added: ‘The weight of this virus problem is so great that it’s greater than any central bank medicine.

‘What we really need is some sign that things can’t repeat. Once we even get close to peaking, the markets will rally hard. But until then, we just see selling.’

The UK’s biggest airlines were the clear losers today, as easyJet, Ryanair and British Airways all announced stinging cuts to their flight schedules.

EasyJet said a ‘majority’ of its planes could be grounded, Ryanair did not rule out a full grounding, and British Airways owner IAG revealed that its capacity for April and May would be cut by ‘at least 75 per cent’ compared with 2019’s levels.

An electronic signboard at KB Kookmin Bank shows the KOSPI index down in Seoul today

In response, IAG’s shares fell by around a quarter, easyJet’s by 17 per cent and Ryanair’s by 18 per per cent. Tui, which suspended all package holidays, dropped by a third.

Rolls-Royce, which builds aeroplane engines, also lost around a fifth of its value.

Getting a boost from self-isolating shoppers, online supermarket Ocado was one of the only positive performers, jumping 6 per cent.

Russ Mould, investment director at AJ Bell, said: ‘While central banks around the world continue to fire everything they have to mitigate against a coronavirus impact on the markets, they weren’t able to prevent further carnage on Monday. The FTSE 100 marked lows not seen since the financial crisis and is testing the 5,000 mark.’

People are reflected in a screen displaying the US Nasdaq outside a brokerage in Tokyo today

He added: ‘With scores of countries entering lockdown and little certainty on how long such draconian measures might be in place, investors are taking flight even if this means crystallising heavy losses which might ultimately be recovered once the crisis has been averted.’

Tui suspends vast majority of travel operations until further notice as BA axes 75 per cent of its flights

Tour operator TUI today suspended most of its operations until further notice due to the coronavirus pandemic as British Airways revealed it would slash routes by 75% and EasyJet announced further cancellations.

IAG, the owner of BA, said it would reduce capacity in April and May and its outgoing boss Willie Walsh would defer his retirement, days after a senior executive warned the airline’s survival was at stake.

EasyJet said it could ground the majority of its fleet on a rolling basis, while it joined Virgin Atlantic in calling for urgent government intervention to help the aviation industry survive.

Unite union warned thousands of jobs are under threat without the government’s help, as pilots’ association Balpa said the aviation industry risked ‘being wiped out’ by the pandemic.

In a bid to improve liquidity and ease strains in global funding markets, the U.S Federal Reserve slashed its interest rates to near zero on Sunday, while its peers in New Zealand, Australia and Japan unveiled their own measures.

Shares in major lenders including Barclays, Royal Bank of Scotland and LLoyds Banking Group fell between 4.6 per cent and 9 per cent.

The moves, however, gave little impetus for investors as things worsened over the weekend, with holiday destinations such as Spain declaring a state of emergency and the Donald Trump administration adding Britain and Ireland to its list of countries facing travel curbs.

Sydney led losses overnight, tumbling 9.7 per cent in its worst drop on record, while Manila shed nearly 8 per cent and Bangkok and Mumbai dropped more than 5 per cent.

Hong Kong, Singapore, Taipei and Jakarta all lost more than 4 per cent. Wellington and Seoul were more than 3 per cent off. Shanghai dropped tumbled 3.4 per cent and Tokyo ended 2.5 per cent down.

The unease has seen futures on Wall Street tumble around 5 per cent.

Oil also dropped again, hit by a price war between major producers Saudi Arabia and Russia adding to demand concerns caused by the virus.

Mr Johnson will also today ask British manufacturers including the Unipart Group to support the production of essential medical equipment for the NHS, such as ventilators which are desperately in need.

Bank of England teams up with central banks in Canada, Japan, Europe, the US and Switzerland in co-ordinated global response to virus crisis

The central banks of the United States, the euro zone, Canada, Britain, Japan and Switzerland agreed on Sunday to offer three-month credit in U.S. dollars on a regular basis and at a rate cheaper than usual.

The move, accompanying a second surprise rate cut by the Federal Reserve in as many weeks, was designed to bring down the price banks and companies pay to access U.S. dollars, which has surged in recent weeks as a coronavirus pandemic spooked investors.

Under the joint plan, the six central banks agreed to begin offering US dollars weekly with an 84-day maturity at 25 basis points over the overnight index swap (OIS), in addition to their existing operations with one-week duration.

‘The new pricing and maturity offerings will remain in place as long as appropriate to support the smooth functioning of US dollar funding markets,’ the ECB said in a press release.

‘The swap lines are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.

And he will speak with all G7 leaders including US President Donald Trump and German Chancellor Angela Merkel to discuss a co-ordinated global response to the pandemic.

Amid criticism over a lack of transparency, Downing Street announced plans to hold daily televised press conferences so either the PM or a senior minister can face scrutiny.

Last Friday, the FTSE enjoyed a brief rally but managed to cling onto gains of just 2.5 per cent as fears over coronavirus continued to chill the economy.

Over the course of week, £286billion was wiped off the value of FTSE 100 firms as investors dropped their shares, fearing coronavirus will cause a major economic slowdown and even a recession.

Since the sell-off began in earnest, on February 24, the index has lost a quarter of its value, or £460billion.

The Bank of England announced an emergency injection of money into the economy this week, including an interest rate cut from 0.75 per cent to 0.25 per cent.

Though this will make it cheaper for companies to borrow, it has hit savers who were already suffering with near record-low rates.

Since the sell-off began in earnest, on February 24, the index has lost a quarter of its value, or £460billion.

The Bank of England announced an emergency injection of money into the economy this week, including an interest rate cut from 0.75 per cent to 0.25 per cent.

Though this will make it cheaper for companies to borrow, it has hit savers who were already suffering with near record-low rates.

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