- Bank of England cuts rates for a second time in a fortnight
- MPC announces £200bn quantitative easing plan
- Pound jumps, bond yields plunge
- Threadneedle Street decides time is of the essence as Bailey moves again
- Lagarde unleashes major stimulus including bond-buying programme
- More companies warn on coronavirus
- Ambrose Evans-Pritchard: ECB moves to stop a financial firestorm – and save Italy
The Bank of England has made its second emergency cut to interest rates in a fortnight, slashing the Bank rate to an all-time low of 0.1pc as it tries to contain the economic shockwaves of the coronavirus outbreak.
三级成人视频The Monetary Policy Committee decided on the 0.15 percentage point cut at an emergency meeting on Thursday, simultaneously announcing it would buy £200bn in bonds as part of expanded quantitative easing measures.
The cut is likely as low as the Bank is willing to go – teeing up Chancellor Rishi Sunak to deliver increased fiscal stimulus to offset the shock from Covid-19.
T三级成人视频hat's all from us today but we'll be back bright and early tomorrow morning.
What to look forward to:
三级成人视频Wetherspoons has been typically bullish in the face of coronavirus, telling the City in an update last week that the bad weather has been a bigger factor than the virus on its trading so far.
The pub chain – led by outspoken Brexiteer Tim Martin – is well-known for bucking trends: against a backdrop of declining sales in the sector, the group has consistently managed to find space to grow, despite cost pressures. But if “social distancing” starts to hit footfall, there’s little the chain will be able to do to avoid taking a hit.
Interim results: 三级成人视频Wetherspoons
Trading statement: Investec
Economics:三级成人视频 Public sector net borrowing (UK), home sales (US)
And that's the bell!
U三级成人视频S markets have now closed, edging slightly higher after a volatile session. Investors weighed massive government stimulus measures against some of the first data pointing to the sharp US economic slowdown.
The Dow Jones climbed 0.95pc to 20,088 while the S&P 500 ended up 0.47pc at 2,409.
The tech-heavy Nasdaq performed the best, climbing 2.3pc.
Bloomsbury Publishing in line with expectations
Bloomsbury Publishing said that its performance for the year to Feb 29 was in line with expectations thanks to strong sales from its non-consumer academic and professional division.
The Harry Potter publisher said it was unclear how the health crisis would affect the firm as there is disruption to bookshops but audiobook downloads are available to order from home.
Supermarkets to join forces to feed the nation
The government is temporarily relaxing elements of competition law as part of a package of measures to allow supermarkets to work together to feed the nation.
The move allows retailers to share data with each other on stock levels, cooperate to keep shops open, or share distribution depots and delivery vans. It would also allow retailers to pool staff with one another to help meet demand.
三级成人视频The Environment Secretary George Eustice confirmed elements of the law would be temporarily waived in a meeting this afternoon with chief executives from the UK’s leading supermarkets and food industry representatives.
Business Secretary Alok Sharma said:
三级成人视频"In these extraordinary and challenging times it is important that we remove barriers to our supermarkets working together to serve customers, particularly those who are elderly, ill or vulnerable in all parts of the UK."
Meanwhile Andrew Opie, director of food and sustainability at the British Retail Consortium, said:
三级成人视频"This is a short term measure, in the spirit of working together, and will allow retailers to agree common specifications for products to bolster food production, and co-ordinate certain operations to ensure customers anywhere in the UK have access to the essential items they need."
Internet use could be rationed to prioritise health services and online lessons
Internet access to services such as entertainment and gaming could be rationed if networks come under severe strain, experts have warned.
"If we end up in a situation where worldwide, 850m children start to receive lessons virtually for an extended period of time, then networks might want to start prioritising video traffic over gaming traffic," said Matthew Howett, principal analyst at Assembly.
三级成人视频Broadband providers like BT have said they are confident their systems will be able to cope with the expected high levels of demand.
However, on Thursday, Netflix said it would reduce the quality of streaming across Europe for 30 days to ease internet overload - a move which is expected to reduce traffic by 25pc.
Currently high definition films on Netflix use around three times more data than standard definition.
CMA calls for extra penalty powers
The competition watchdog has reiterated its calls for extra powers to impose penalties after finding that insurer Paymentshield broke payment protection insurance (PPI) rules, my colleague Lucy Burton writes.
The Competition and Markets Authority (CMA) called it "unacceptable" that the company had broken its rules for the third time by failing to send customers annual information about their PPI policies.
三级成人视频The CMA said the "serious" breaches could have resulted in a fine if it had the power to enforce financial penalties for failures of this kind. It has asked the government for the ability to do.
The failures took place between April 2013 and August 2019. Following "legally binding directions" from the CMA the insurer now has to hire an independent auditor to review its processes and overhaul its systems. It has already refunded customers £380,000 and is expected to repay a further £170,000.
三级成人视频Scandal-hit PPI was designed to cover debt repayments if someone could no longer work and was sold to around 64m people alongside mortgages, credit cards, overdrafts and loans during the nineties and early noughties.
However many were signed up without their knowledge, while others would never have been able to make a claim. The mis-selling scandal has cost the UK banking industry over £50bn.
Great day for WTI crude
Brent Crude and WTI have bounced back today after three days of heavy losses.
"After yesterday's drubbing, people are coming into the market, because they see some production cuts ahead, but those are not enough to offset the demand in decline that the market is going to see in April and May," said Andrew Lipow, president of Lipow Oil Associates.
- Oil - US Crude 2550 +22.21%
- Oil - Brent Crude 2974 +13.87%
- Natural Gas 1700 +2.1%
- Heating Oil 10435 +8.31%
- Gasoline 6989 +8.93%
- London Gas Oil 303 +10.84%
Ikea to temporarily close UK and Ireland stores
Ikea has said it is closing all its UK stores at 6pm tomorrow amid the coronavirus epidemic.
The Swedish furniture chain said:
三级成人视频These are extraordinary times & our absolute priority is to ensure the health & safety of our customers & co-workers. As a precautionary measure against the ongoing risk of COVID-19, we will temporarily close all UK & Ireland stores to customers on 20th March, 6pm.
You will continue to be able to browse and purchase our range online or through the app, and have our products delivered directly to you. You will also be able to request a contact-free delivery if you prefer.
Industry races against time to build more ventilators
B三级成人视频ritish companies answering the Government’s call to turn their engineering expertise and production facilities to building medical ventilators to treat coronavirus patients are in a race against time - and could find themselves in a global battle.
Before the Covid-19 crisis, ventilators - which cost up to £40,000 each - accounted for just $2bn of the $350bn (£300bn) annual global market for medical devices.
But with ventilators’ importance in treating coronavirus patients who need help breathing suddenly realised, they have quickly become the most sought-after medical products on the planet.
三级成人视频Ventilators not only get oxygen into the lungs, they remove CO2, a complex procedure with which requires careful control and measurement of airflows, pressure and temperature.
The UK has about 5,000 ventilators, Italy three times that number and the US roughly 160,000 of these highly specialised machines.
FTSE 100 closes higher
S三级成人视频entiment in Europe was more positive today and the session ended with the FTSE 100 closing 1.83pc higher at 5,173.51. The domestically focused FTSE 250 however fell 1.08pc to 12,869.70.
三级成人视频In the eurozone, the DAX, CAC and MIB all closed 2pc up.
三级成人视频David Madden of CM Markets said: "It has been another rocky day in the markets as the FTSE 100, DAX and the CAC 40 were all in the red for a good portion of the day, but sentiment turned around shortly after trading got underway in New York."
三级成人视频In a surprise move, the Bank of England (BoE) cut interest rates to 0.1pc, and its holding of UK government and corporate bonds was increased by £200 billion.
Equity markets were already pushing higher in advance of the news, so the BoE update was a nice surprise. Keep in mind, the ECB revealed a €750 billion bond-buying scheme last night, and central bankers are clearly stepping up their responses to the coronavirus crisis.
Companies House extands filing deadlines
The FRC has announced that due to the current public health situation and the impact of coronavirus on companies (e.g. self-isolating), Companies House is now automatically granting a two month extension to file accounts.
Companies House advise that businesses should act before the filing deadline. The law presently gives a three month extension, but normally it is Companies House policy to not allow extensions unless there are extreme circumstances.
Due to coronavirus, Companies House has changed its policy to automatically allow for a two month extension and then another month after that if companies can demonstrate extreme circumstances.
三级成人视频Lucy Fergusson, corporate partner at law firm Linklaters says:
“The FRC’s announcement states that companies will be granted potentially much needed leeway by an extension of the deadlines for filing accounts if they are affected by Covid-19.
三级成人视频However, the Companies House website suggests companies will need to ask for this extension rather than assuming it applies automatically. Clear guidance on matters such as this will be essential in the coming weeks and months.”
Virus triggers spike in profit warnings
There’s been a marked pattern to recent days – markets swing, bonds and currencies go haywire, and companies warn that coronavirus is having a never-before-seen impact on British companies.
According to data compiled by EY, 87pc of all profit warnings issued by UK listed companies in the last three weeks cited coronavirus.
Since the start of the year, there have been 54 profit warnings – 25 in this week alone – that blamed Covid-19 for a material downgrade to profit expectations, the audit giant said.
T三级成人视频aylor Dewar, one of EY’s partners, said:
三级成人视频Covid-19 is fundamentally affecting companies’ ability to operate and plan on a global level. As a result, we are recording profit warnings at a pace that far exceeds anything we’ve seen in more than two decades.
What is noticeable is the shift in pressure since the start of the month - from Industrials to Consumer Discretionary – as the main driver behind profit warnings moves from supply chain disruption to the impact of ‘social isolation’.
Cineworld begins lay-offs
Cineworld has begun laying off staff with immediate effect after closing all its theatres as a result of the coronavirus pandemic.
A spokesman for the company said that "we are not firing all staff" but declined to comment on precisely how many employees had been let go.
My colleague Oliver Gill reports:
The world’s second-largest cinema chain has been plunged into turmoil as the coronavirus pandemic sweeps across the world.
Investors have taken a dim view of its finances after Cineworld expanding rapidly through a number of debt-fuelled acquisitions.
三级成人视频The proposed £1.6bn takeover Canadian chain Cineplex, which has been approved by shareholders but has not been completed, is hanging in the balance.
三级成人视频A spokesman for Cineworld said: “Like other businesses in the retail and leisure industry we are facing an incredibly challenging time as a consequence of the global coronavirus (COVID-19) pandemic. Following government guidance, we have taken the decision to close all our cinemas across the UK and Ireland to protect the health and wellbeing of our employees and customers.
"We value our employees and want to do everything we viably can to support them in these difficult and uncertain times. Our aim has been to preserve jobs and continue to pay as many staff as possible while they are not working.”
ING: Bank is now ‘all in’
The Bank of England has gone ‘all in’, and it’s up to Chancellor Rishi Sunak to deliver to a decisive bout of stimulus, writes ING’s James Smith:
三级成人视频This all means the Bank of England is effectively all-in, creating the space for the Chancellor to announce further measures to help cushion the blow.
三级成人视频The Treasury has announced a large-scale package of loan guarantees, although the jury is out on how rapidly this will filter through and whether it will be enough to stop firms from taking imminent steps to downsize. One potential concern is that if the Covid-19 shutdown is perceived to be relatively long-lasting, then firms may also have limited willingness to increase debt considerably.
With that in mind, the Chancellor has signalled that further measures are likely to be on their way for specific industries, as well as to provide further support for those self-isolating or unwell. The UK’s level of statutory sick pay is a little under 2pc of average weekly earnings, which is substantially lower than elsewhere in Europe and doesn’t cover self-employed workers, signalling further support will be required.
Ultimately none of this will – unfortunately – stop a UK recession, which like most of the developed world now looks inevitable. But the hope is that many of these measures can help limit the increase in unemployment, and foster a swifter and smoother recovery when the virus-shutdowns have passed.
Report & reaction: Bank cuts rates to new record low
My colleague Tim Wallace三级成人视频 has a full report on today’s interest rate action. He writes:
It is the second cut this month as the three policy committees held their second emergency meeting to deal with the crisis.
三级成人视频Rates only fell to 0.5pc even at the height of the financial crisis, and Andrew Bailey, the new Governor, believes 0.1pc is the lowest that rates can effectively go.
三级成人视频The aim is to pump more money into markets to loosen financial conditions and ease the pressure on businesses that need access to debt.
Our Economics Editor Russell Lynch 三级成人视频says the move shows Andrew Bailey is in a rush to act. He writes:
Andrew Bailey’s career as Bank of England Governor is still not even a week old and it is already guaranteed its place in the economic history books as an extraordinary one.
Cutting rates to an all-time low of just 0.1pc and a mammoth expansion of the Bank of England’s money-printing scheme by £200bn was looking inevitable at the Monetary Policy Committee’s meeting next week – so the rationale was clearly, why wait?
US stocks reverses losses
A bit of a turnaround on Wall Street – stock markets have reversed their early losses and are now push upwards slightly. Again though, everything is almost weirdly calm. Donald Trump’s holding a press conference currently – I’ll flag any salient business/economics/markets-y points.
Reaction: Bank of England is now stretched to the limit
A further cut by the Bank of England was not unexpected – in fact, it had been widely predicted – but the decision to once again make an emergency cut is interesting given ratesetters were scheduled to meet a week from now anyway.
It’s a testament to how chaotic things are right now that Threadneedle Street moved with such alacrity, but it raises serious questions about how much firepower the central bank has left.
Ranko Berich, an analyst from Monex Europe, said extreme options such as direct funding could be on the cards if the situations deteriorates further:
三级成人视频Next week’s BoE meeting is likely to feature some uncomfortable consideration of potential future moves. Given the BoE’s opposition to cutting rates into negative territory, we are now at the limit of conventional policy options. If further monetary easing is necessary, QE expansion and further liquidity operations are the likely options.
In the worst-case scenario where the crisis escalates and these options are also exhausted, the next frontier for policy experimentation would be direct financing of fiscal stimulus – an extreme option that would have been unthinkable even months ago.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said markets are right to welcome the BoE’s announcement.
三级成人视频“The Committee has gone big and early, again,” he wrote:
三级成人视频The MPC now has fired all of its arrows, though its QE programme might be extended once today’s £200B of purchases have been completed.
三级成人视频Details about the mix and timing of asset purchases are missing now but will provided by the Bank "in due course”. The MPC’s statement that the “majority” of the additional asset purchases will comprise government bonds leaves open the possibility that corporate bond purchases might play a bigger role than in the past.
Gym Group axes dividend
The Gym Group has axed its dividend, suspended expansion plans and lost more than 20,000 members in the last three weeks as it scrambles to deal with the fallout from the Covid-19 pandemic.
My colleague Simon Foy reports:
The budget fitness chain said it no longer anticipates putting a resolution to its annual meeting to pay any dividend in an attempt to cut costs. It previously proposed a full year dividend of 1.60p
It will also put expansion plans on ice until the period of uncertainty ends. It was expected to open a further 16 outlets this year.
Richard Darwin, the company’s chief executive, said: “To date, we have seen a small impact on trading… [but] we go into a period of anticipated disruption with an established membership base, a cash generative business model and a strong balance sheet.
“As the scale of the outbreak escalates we have contingency plans in place.”
Membership has fallen from 891,000 to 870,000 in less than three weeks as gym-goers heed the Government’s advice to restrict their movement and avoid public gatherings.
All of the group’s 179 branches remain open currently despite the Government’s guidance.
What the Bank Rate cut means for mortgages and savings
Bank Rate cuts are used to stimulate growth by making it less profitable for consumers to hold cash, encouraging them to spend and businesses to invest. They also encourage borrowing, as businesses and individuals can get lower rates on loans.
Telegraph Money has all the details on what you need to know about today’s decision:
Reaction: The QE is the crucial bit
T三级成人视频hat record-low Bank Rate peg is certainly eye-catching, but JP Morgan Asset Management’s Karen Ward reckons the asset purchases announced are the crucial measure. That’s because it means the Governor has a reliable buyer for plenty of the huge amount of debt it plans to sell to fund its response to coronavirus. She said:
In our view it is the additional quantitative easing in today’s Bank of England package that will have the most significant impact, both in terms of the market reaction, but also a solution to the economic challenges presented by the Covid-19 virus.
The support to the economy and health system will require vastly higher government borrowing. The central bank showing willing to buy government debt will ensure the market can absorb this additional issuance without undue stress.
Reaction: BoE surprises again
Some rapid responses in to the Bank’s latest cut, which has once again caught markets flat-footed.
三级成人视频Richard Falkenhäll, a senior FX strategist at Swedish bank SEB, said:
Again, the BOE managed to surprise by acting more swiftly than expected. After the rate cut today to 0.1% the bank rate has probably reached its lower bound. This is probably the reason why the MPC also decided to restart its asset purchase program focusing mainly on the government bond market. The increase in bond purchases by £200bn was much more extensive than after the Brexit referendum in 2016 when the BOE announced £10bn of corporate bond purchases and £60bn of government bond purchases. If more measures are needed in the future it will most likely be additional measures to provide more liquidity.
三级成人视频Jeremy Thomson-Cook, chief economist at Equals, said:
The base rate is now at the lowest level we think the Bank of England is prepared to go to and with that will come a not so unsubtle hand-off of the stimulus baton to the Treasury. Lower rates and additional quantitative easing can keep markets satisfied and borrowing costs for both businesses and the government down but unless money is forced into the hands of small businesses soon, then it will be for nothing; they are the ones laying off staff due to a liquidity shock.
Sebastien Clements, a currency analyst at OFX< added:
At the moment, the UK is using a blend of fiscal stimulus and monetary easing to bolster the economy, but as rates move closer to 0.0, further cuts will become a much less attractive prospect. The challenge officials now face is to eradicate the spread of coronavirus whilst maintaining something of a sustainable economic outlook moving forward, all with increasingly limited policy options.
Bond yields drop as investors pile into bonds
D三级成人视频emand for UK Government bonds (gilts) has jumped the wake of the Bank’s announcement, sending prices up and yields falling. Bloomberg says the two-year bond is posed for its biggest fall since 2016. Reuters adds:
三级成人视频Two-year gilt yields were last down 15 basis points* on the day at around 0.19pc, while 10-year gilt yields were almost 4 bps lower at 0.76pc reversing earlier rises.
三级成人视频*1bp = 0.01 percentage points
Snap wrap: Bank cuts again
The Bank of England has made its second emergency cut to interest rates in a fortnight, slashing the Bank rate to an all-time low of 0.1pc as it tries to contain the economic shockwaves of the coronavirus outbreak.
The Monetary Policy Committee decided on the 0.15 percentage point cut at an emergency meeting on Thursday, simultaneously announcing an expanded bond-buying scheme.
T三级成人视频he MPC said conditions in the UK gilt market had “deteriorated” in recent days. The pound, which hit a 35-year low against the dollar yesterday, rose following the announcement, while Rishi Sunak, the Chancellor, reiterated his pledge to do “whatever it takes” to soften the virus’s economic impact.
Their action follows the launch of a €770bn bond-buying scheme by the European central bank.
Here’s the full statement on the Monetary Policy Committee’s decision (my bolding):
三级成人视频In light of actions to tackle the spread of the virus, and evidence relating to the global and domestic economy and financial markets, the Monetary Policy Committee (MPC) held an additional special meeting on 19 March. Over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt market have deteriorated as investors have sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves. As a consequence, UK and global financial conditions have tightened.
At its special meeting on 19 March, the MPC judged that a further package of measures was warranted to meet its statutory objectives. It therefore voted unanimously to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves, and to reduce Bank Rate by 15 basis points to 0.1pc. The Committee also voted unanimously that the Bank of England should enlarge the TFSME scheme, financed by the issuance of central bank reserves.
三级成人视频The majority of additional asset purchases will comprise UK government bonds. The purchases announced today will be completed as soon as is operationally possible, consistent with improved market functioning. The Bank will issue further guidance to the market in due course.
US equities turn green
Less than an hour into trading in the US and the three major indices have recovered earlier losses and turned higher.
Not a sight we've seen a whole lot of recently and, given the volatility in the markets at present, it might not very last long.
But, here is where they stand:
- S&P 500: +0.2pc
- Dow Jones: +0.3pc
- NASDAQ: +2pc
Banks urged to do more to help vulnerable during crisis
The City of London is being urged to do more to help vulnerable customers during the Covid-19 crisis as concerns mount for UK business.
My colleague Lucy Burton reports:
The London Chamber of Commerce and Industry (LCCI) has urged bank bosses to “pull together to increase bank lending until the government's coronavirus support measures are in place" in order to save small businesses on the brink of going bust.
三级成人视频LCCI chief Richard Burge said the situation is now “desperately urgent” as the chancellor’s package of measures to help businesses are not yet ready and “in many respects may be insufficient to stem the tide of lay-offs and collapses”.
三级成人视频In a letter to City of London policy chair Catherine McGuinness, he wrote that most small businesses are “simply not capable of taking on increased debt, even if it is underwritten by government. They need to retain the cash they have and be certain that there will not be a future call on it which they will not be able to service”.
Ford suspends dividend and set to borrow $15bn to offset shutdown
Ford says it is drawing down $15.4bn from two existing credit lines to offset a production shutdown and suspending its dividend.
Management had previously vowed to maintain even the dividend through a downturn, highlighting the scale of the current crisis as firms look to protect cash reserves.
三级成人视频The automaker also withdrew its guidance for 2020.
Jim Hackett, the company’s chief executive, said:
三级成人视频While we obviously didn’t foresee the coronavirus pandemic, we have maintained a strong balance sheet and ample liquidity so that we could weather economic uncertainty and continue to invest in our future,
I’m confident in the actions we are taking to navigate the current uncertainty while continuing to build toward the future.
Shares fell as much as 8.4pc before recovering some losses to trade 2.7pc lower.
Wall Street drops narrowly at open
I三级成人视频t’s a fairly quiet start on Wall Street – the main indices have dropped around 1pc apiece, continuing what has been a calm, if downbeat, day for equity markets. Still, unless there’s a reversal later today, that means the end to the Trump bump is sealed (see 11:38am update).
South Africa cuts benchmark rate as Fed restarts dollar-swap lines
M三级成人视频ore stimulus news:
- South Africa has cut its benchmark rate to 5.25pc from 6.25pc, with the Reserve Bank warning the country’s economy will likely shrink by 0.2pc this year.
- The US Federal Reserve has established dollar liquidity-swap lines with nine more central banks as part of efforts to improve market stability. The swap lines are worth up to between $30bn and $60bn.
US jobless claims hit two-year high as surge begins
US jobless claims soared to a two-year high last week, in the first clear sign the coronavirus panic has triggered mass layoffs.
三级成人视频 There were 281,000 initial claims for unemployment benefit, blowing out predictions of (polled by Bloomberg) 220,000.
三级成人视频 Oxford Economics’ Nancy Vanden Houten said today’s numbers are the tip f the iceberg, writing:
We expect the coronavirus to produce significant job losses and lead to a sharp increase in the unemployment rate in the coming months.
三级成人视频Pantheon Macroeconomics’ Ian Shepherdson said there is “worse – an order of magnitude worse – to come”:
The consensus was a bad joke but the initial hit from bar and restaurant closures was bigger still than we expected. Next week’s number, however, will be an order of magnitude worse. Media reports from around the country make it clear that claims have rocketed since bars and restaurants started to close in large numbers over the weekend, in some cases buy a factor of 10 or more.
Manufacturers warn of mass layoffs as orders collapse
Massive layoffs across Britain’s manufacturing sector will come within days without immediate action to ease a cash crisis as orders collapse.
My colleague Alan Tovey reports:
Industry leaders are meeting with ministers on Thursday to ask for relief on VAT, PAYE and National Insurance bills.
One source said: “We’ve been hearing from companies since the start of the week warning that they can’t go on but the situation has ramped up suddenly in the past few days.
“Companies are saying that orders have simply gone off a cliff. Manufacturers are telling us that without something happening in the next few days, by Monday they’ll each be making layoffs ranging from the tens to the tens of hundreds.”
Smaller companies without the cash reserves of the bigger businesses that many of them supply are thought to be hardest hit.
Pound pushes upwards after Number 10 rules out London lockdown
The pound has clawed back a few cents against the dollar in recent minutes, as traders welcomed Number 10’s pledge to avoid a total lockdown of London, despite Boris Johnson’s warning he may introduce tighter measures within the capital.
Ambrose Evans-Pritchard: Europe finally gets its version of the fed
Our columnist Ambrose Evans-Pritchard has issued his verdict on the European Central Bank’s stimulus plans. He writes:
三级成人视频The meltdown in vulnerable bond markets has at last forced the European Central Bank to act seriously. The €750bn bazooka fired late on Wednesday night has prevented dangerous debt dynamics from spinning out of control altogether.
It is a watershed moment in the turbulent story of the euro. The ECB is stepping up to its proper role as a lender-of-last-resort, compelled yet again by fast-moving events to rescue monetary union – and the European Project itself – after the failure of EU states to come up with a coherent economic response to Covid-19.
This time it is tearing up the rule book entirely, announcing that it will not be bound by “self-imposed limits”. It will intervene in the sovereign debt markets wherever needed most – meaning that it can deploy its vast arsenal to defend Italy or Portugal – without strict conditions or ifs and buts. It has vastly expanded the range of assets on the menu. It will do “as much as necessary and for as long as needed”.
City AM: Lloyd’s of London to close underwriting room
Insurance market Lloyd’s of London will close its underwriting room today, , after a dummy run last week.
City AM says:
三级成人视频Lloyd’s chief executive Jon Neal said the test of its emergency trading protocols had been successful and “should provide confidence in our collective ability to trade electronically”.
三级成人视频Neal said footfall in the underwriting room was 5,000 on a typical day, but said this fell to 1,000 on Monday, and under 200 yesterday.
What Brits are panic-buying
The stockpiling frenzy is providing an interesting insight into the British psyche.
三级成人视频A few weeks into the panic buying and stockpiling frenzy, we know that British shoppers are desperate for loo roll and pasta. But retailers are now beginning to pull together more detailed analysis of the items that are flying off the shelves fastest.
My colleague Laura Onita reports:
This morning, B&M, the discount retailer, has produced a fascinating breakdown of the surge in demand for certain items.
It seems that, in times of crisis, many Brits are seeking solace in Pot Noodles and Spagetti Hoops.
Sales of handwash and other disinfectants have absolutely sky-rocketed. Clearly, these figures are effectively capped by the speed with which retailers can restock their shelves. It seems very likely that more of these items would have been sold had they been available.
- Read more: The products Brits are panic-buying
Clarks closes doors
Shoe shop Clarks has closed its doors due to coronavirus, telling customers in an email:
As part of our enduring commitment to the health and safety of our employees, customers and surrounding communities, we have temporarily closed all Clarks-owned stores in the UK and Republic of Ireland.
We reached this decision after considerable thought and input from our valued team. Our store employees will continue to receive pay and benefits during this temporary closure.
We will continue to monitor the situation and will be reviewing the decision of when to re-open our stores when the health and wellbeing of our employees and customers can be protected.
Playtech braces for virus impact
Gambling firm Playtech has axed its dividend in an attempt to protect cash flow despite the company reporting a rise in activity in online poker and bingo in recent weeks following advice from governments to restrict movement.
Simon Foy reports:
The FTSE 250 company said that the widespread cancellation of major sporting events worldwide will hit the firm’s earnings by €4m (£3.7m) per month.
It also announced that its share buyback programme will be postponed.
三级成人视频Playtech ended 2019 with net debt of €602.4m and €333m incash, It said its bank covenants permitted net debt to be three times its earnings.
Number 10: ‘Zero prospect’ of ban on travel in and out of London
Boris Johnson’s spokesperson has told reporters there is “zero prospect” of any restriction being placed on travel in and out of London, despite fears the capital is well ahead of the curve in term of coronavirus case numbers.
三级成人视频James Slack told reporters: “There is zero prospect of any restriction being placed on traveling in or out of London”, adding: “There are no plans to close the London transport network”.
三级成人视频However, given TfL has already announced the closing of 40 Underground stations, it looks like partial closure is already underway,
Direct Line scraps buyback plan
Here’s yet more from my colleague Michael O’Dwyer (who is certainly fulfilling the ‘working’ part of WFH):
Direct Line has cancelled the £150m share buyback programme it launched just 16 days ago due to the market volatility sparked by the spread of Covid-19.
The FTSE 250 insurer, which also owns Churchill, had already repurchased £29m worth of shares from investors before halting the programme against a backdrop of sinking asset prices that have reduced the value of the capital it holds to ensure it can pay out on claims.
三级成人视频Tim Harris, chief financial officer of Direct Line, said: "Given the uncertainty as a result of Covid-19 we've taken the prudent decision to pause our share buybacks until the situation becomes clearer. The Direct Line Group capital position remains strong.
“We hope to be able to resume the share buybacks in due course, but it’s right we seek to preserve the group's strong balance sheet during this period of heightened uncertainty.”
Travel insurance claims due to coronavirus rose from about £1m to £5m in the 12 days to March 15, Direct Line said. It is expecting claims to increase again after the Government imposed tighter restrictions on foreign travel but said it was too early to estimate the impact. It has mitigated its risk through reinsurance for a total of £18.5m.
One upside of the outbreak for the insurer is that it expects motor insurance claims to fall due to the Government discouraging non-essential travel.
三级成人视频The group is down about 6pc, having pulled back from a steeper fall earlier this morning:
The end of the ‘Trump bump’?
W三级成人视频ith Wall Street heading for a drop at the open (although things look pretty volatile), today could put the final nail in the so-called ‘Trump bump’ – eradicating all the gains the Dow Jones has made since Donald Trump became president.
The index briefly dipped below the inauguration-day threshold yesterday, but managed to pull back towards the end of the session.
The President has repeatedly invoked the stock markets as a gauge of his performance – he might be regretting that now.
German business sentiment reaction: ‘Deep recession’ coming
Here’s some reaction to this morning’s Ifo survey, which showed German business confidence cratering.
三级成人视频The business group’s president Clemens Fuest demanded “massive, targeted countermeasures”, adding:
三级成人视频There is an urgent need for additional support to be given to employees and the self employed who are losing their income
Oxford Economics’ Rosie Colthorpe said the data points toward a “deep recession” looming in Europe’s biggest economy, adding:
As Europe grapples with the impact of the coronavirus, today we got one of the first pieces of data showing just how bad it could be... Overall, the huge hit to the March’s ifo index is consistent with the German economy being in a deep recession. Although it will take weeks to gauge the full impact of the virus on real activity, the combined supply, demand and financial shock will ensure that it is a miserable year.
ING’s Carsten Brzeski said the drop shows the German economy has reached an “abrupt standstill”.
In case anyone had not realised it, yet. all European economies are going through an unprecedented turnaround within one month; from hopes for a rebound to complete standstill. Today’s Ifo index, as well as other sentiment indicators in the coming weeks and months, are nothing more than a snapshot, giving some idea of the size of the economic plunge without being able to give the full picture.
- Correction: Correcting my 11am post – IG Group’s shares are actually down quite sharply. I hope the opticians have not gone into self-isolation.
Self isolation and yoga?
H三级成人视频ere’s a little more on goings-on at IG Group, once again via Michael:
June Felix, chief executive of IG Group, wrote to staff yesterday – laying down the rules for traders logging in from their living rooms but also asking staff to keep their sense of fun.
三级成人视频"How do we sustain the sense of fun and friendship we all enjoy working at IG?” she wrote. “Someone commented yesterday that we are being asked to physically distance ourselves, but not socially distance ourselves – and that is so right.
“I have therefore been really pleased to hear of teams having virtual breakfasts together, virtual lunches or even virtual drinks! I've also loved reading all about the virtual yoga session later this week!"
It might be a bit early in the day for a virtual drink. Yoga, anyone?
IG Group says market turmoil has boosted revenues
Turmoil in financial markets has driven a boom in revenue for IG Group, the online trading firm.
三级成人视频The FTSE 250 company said that demand for its services has rocketed since the coronavirus outbreak.
My colleague Michael O’Dwyer reports:
The almost unprecedented market rout since the beginning of March helped the firm rack up £52m in transaction fees net of hedging costs in the first 12 trading days of the current quarter - more than a third of its takings for the entire third quarter. IG’s revenue is not affected by whether clients win or lose on their investments.
三级成人视频Revenues for the three months to Feb 29 reached £140m, an increase of 29pc on a year earlier when the industry was adapting to regulatory changes that limited the amount of leverage clients could take on when betting on the price of shares and other assets.
Business at IG Group has been helped not just by increased market volatility, which encourages trading because there is more money to be won and lost in a short space of time, but by a rise in the number of customers actively using its services.
三级成人视频IG Group is not the only firm benefiting from the extreme market volatility. Rival spreadbetting site Plus500 said on Monday it expects revenues and profits to be substantially ahead of current estimates as investors pile in.
The group’s shares have dropped sharply today:
Pound skates along near $1.15
T三级成人视频he pound is ticking along at just over $1.15, hovering over the 35-year low it hit yesterday, on a slightly calmer day for the currency. Yesterday, the mood was driven by doubts over sterling’s fundamental strength, as well as a worldwide ruse to dollar assets (including the ‘greenback’ itself).
Next warns of ‘significant downturn’
Next warned the Covid-19 pandemic will lead to a “very significant” drop in sales of as much as £1bn this year.
My colleague Simon Foy reports:
The high street bellwether said it is preparing for a “significant downturn” in 2020.
三级成人视频Simon Wolfson, Next chief executive, said: “When the pandemic first appeared in China, we assumed that the threat was to our supply chain.
“It is now very clear that the risk to demand is by far the greatest challenge we face and we need to prepare for a significant downturn in sales for the duration of the pandemic.”
In a detailed update, the retailer said it has conducted a coronavirus stress test. It found the company could “comfortably sustain” a loss of more than £1bn of annual full-price sales – a quarter of annual revenues - including some weeks with no sales at all.
The group is leading risers on the FTSE 100, rising more than 14pc:
ECB reaction: ‘Bring it on’
Let’s look at some of the reaction to the European Central Bank’s major overnight intervention. If you don’t want to scroll back to the start of the blog, here’s an outline of the detail announced, via Bloomberg:
三级成人视频The ECB last week agreed to pump more liquidity into the financial system and joined other central banks in a bid to ease a funding squeeze. The measures on Wednesday include:
- Buying public and private-sector securities until at least the end of 2020
- Program will cover all assets eligible under current quantitative-easing program, and will be extended to commercial papers of sufficient credit quality
- Greek government debt will be included
- Collateral standards will be eased
- Program will continue until ECB judges the crisis phase of the pandemic to be over, but not before the end of this year
- The ECB will consider raising its self-imposed limits on QE holdings, and will increase the size of its programs if needed
三级成人视频Capital Economics’ Andrew Kenningham was optimistic, writing:
The decision has three welcome elements. First, it is large. Together with the previous commitments, the Bank will be making net purchases of €1,060bn by the end of this year. This is a 40pc increase in the size of its Asset Purchase Programme and means the average monthly purchase (€110bn) will be faster pace than in any previous ECB programme.
三级成人视频Second, although the capital key will still be the “benchmark” for the allocation of purchases between member states, it will be applied “in a flexible manner”. In other words, the Bank can buy a lot more Italian and Greek bonds (which have now been included in the programme), if necessary.
And third, the timing of the purchases is flexible, which means that they can be front-loaded if the pressure on Italian bond markets resumes.
三级成人视频He added, however, that the announcement was “not the end of the story”, writing:
We continue to think the ECB will eventually need to remove the issuer limits completely and perhaps impose a cap on bond yields, as well as work with the ESM to mobilise more fiscal support.
I三级成人视频NG’s Carsten Brzeski said this is Christine Lagarde’s “whatever it takes” moment*, writing:
We don't know whether someone from the EuroTower made a phone call to Mario Draghi but the beating around the bush should be over, at least for now... The fact that the Eurozone has finally come to terms with the magnitude of the crisis should cushion the downswing and is an important prerequisite for a swift rebound.
Allianz’s Ludovic Subran said it was more “bring it on” than “whatever it takes”, adding:
The ECB stated that it is “fully prepared” to increase the program “by as much as necessary and for as long as needed” and stands ready to “explore all options and all contingencies to support the economy through this shock”. Hence, in the event of a further marked deterioration in financial conditions, expect additional unconventional and creative policy measures to be announced in the near-term.
三级成人视频*If you need to scratch the nostalgic itch for some Mario Draghi, here he is:
Pound at lowest level against euro since 2009
T三级成人视频he pound has picked up slightly today, after briefly touching its lowest level against the euro since 2009 overnight.
A三级成人视频s I wrote yesterday, the currency is suffering from its newfound independence:
三级成人视频Dominic Bunning, a senior FX analyst at HSBC, said “by leaving the EU, the UK has lost some of the safety of being linked to the big, closed economy of the EU”.
“Currencies of the big, closed economies – USD, JPY, EUR – all tend to outperform in these periods and are more ‘risk off’” he said. “Now we have ‘Global Britain’ we also have a ‘global GBP’ which is much more exposed to swings in risk sentiment than it was in the past.
4imprint: ‘Significant reduction’ in orders
A三级成人视频nother major dropper today: branded-goods-maker 4imprint – one of the FTSE 250’s best performers over recent years – has dropped by around a fifth, after warning it had experienced a “significant reduction” in daily orders.
The group said disruption from factory shutdown had been less bad than feared, but added:
We are unable to predict how long this lower level of order activity will last, but clearly the effects of COVID-19 will impact revenue and profitability in the current financial year.
It said it is “materially recalibrating” its marketing acttivities, adding it was being careful not to damage its long-term prospects while doing so.
There is no historical precedent in the business for the demand reduction that we are seeing. At this point the speed and volatility of the unfolding crisis makes accurate or responsible forecasting very challenging.
It insisted it remains well-financed, with around $51m in hand and no debts.
三级成人视频Peel Hunt analysts placed the group’s rating under review, writing:
三级成人视频We cannot actively buy until we see a clearer shape to revenue and cost trends. However, the company has cash resources to protect it and if 2008/09 is a guide it will emerge with a stronger market position after this collapse. A great company for sure, but facing a horrible quarter.
Meggitt: We’re monitoring situation
More virus updates: Meggitt – the aerospace, defence and energy engineering company – has said it is too early to provide financial guidance for the coming year due to the impact of coronavirus.
The FTSE 100 group said:
We have put in place a set of measures to tightly manage the business and navigate our way through these challenging times. We will continue to monitor external events and manage the situation closely and will keep the market updated on developments as appropriate.
三级成人视频It said it is leading a consortium of aerospace suppliers to help design and produce ventilators in large volumes, following a call by the Government for the private sector to help boost medical supplies.
三级成人视频It offered limited detail on its recent performance, saying:
Despite a rapidly changing external environment, trading in January and February was in line with our expectations. Details of our trading performance in the first quarter of 2020 will be contained within our Q1 trading statement scheduled for 23 April 2020.
三级成人视频Its shares have dropped more than 11pc this morning:
German business confidence lowest since crisis
German business confidence has gone off the cliff, rapidly plunging in March to its lowest level since the financial crisis after the sharpest drop since 1991.
Clemens Fuest, president of the Ifo institute, which gathers the data, said: “Germany is falling into recession.”
Virus latest: 40 Underground stations shut as London goes into lockdown
Dozens of stations on the London Underground network could be closed from Thursday following the outbreak of Covid-19.
Up to 40 stations which do not interchange with other lines could be closed, while the Waterloo and City line and Night Tube services will not run from Friday.
- Follow the latest updates here: Coronavirus latest news: Up to 40 London Underground stations to shut from today
OneSavings Bank tanks after refusing to offer forward guidance
FTSE 250 lender OneSavings banks is suffering its biggest one-day drop since June 2016, after saying coronavirus had left it unable to provide forward guidance for 2020.
Alongside preliminary full-year results, it said:
The UK and global economies are currently experiencing unprecedented uncertainty stemming from COVID-19. Whilst we entered the year with a robust pipeline, strong application levels in our core businesses and stable margins, it is too soon to say what the impact will be and we therefore consider it imprudent to provide forward guidance for 2020.
The drop belies a fairly strong set of results for last year, including a 14pc rise in profit before tax to £209.1m. Its loan book more than double in size, from £9bn in 2018 to £18.4bn. Chief executive Andy Golding said he was “delighted” with the result. He added:
We enter this period of uncertainty as an enlarged business with the strength of our combined lending and funding franchises, robust capital position, secured loan book and strong risk management capabilities
Shore Capital’s Gary Greenwood said the bank was “well-positioned to weather the storm”, adding:
Overall the group delivered a strong result for the financial year with pro-forma results largely in line with our expectations. However, the focus is really on the impact of Covid-19 and what this means for the outlook, for which management says it is too soon to provide guidance.
Goodbody’s John Cronin added:
While last year’s performance is somewhat academic given the current market environment, we think investors will be pleased with the capital print at a time of great uncertainty.
Autotrader scraps guidance and introduces measures to mitigate coronavirus impact
C三级成人视频ar sales website Autotrader has announced new measures to reduce the impact of coronavirus on its customers, and warned it “cannot sensibly provide guidance” for the coming year.
The FTSE 100 group said it will:
- not charge retailer customers for advertising packages during April.
- allow customers to defer payment of their March advertising costs by 30 days.
It warned the measures would result in an operating loss for April in the region of £6m to £7m.
三级成人视频Nathan Coe, its chief executive, said:
三级成人视频These are unprecedented times so I believe that it is vital that we pull together and support our people, our customers and our industry. We are committed to supporting our retailer customers throughout this uncertain time.
Stifel’s Bridie Barrett said Autotrader’s moved echoed others in the sector, adding:
三级成人视频These platform businesses are cash rich and it is in their longer term interests to ensure their customer base makes it through the coming months.
三级成人视频The group’s shares have fallen slightly this morning:
Government to cover energy bills for people impacted by virus
The Government has agreed to cover energy bills for at least four million vulnerable customers in its latest emergency move to support the public through the Covid-19 crisis.
My colleague Simon Foy reports:
Customers with pre-payment meters who may not be able to add credit can speak to their supplier about options to keep them supplied, the Department for Business and Energy said.
This could include nominating a third party for credit top ups, having a discretionary fund added to their credit, or being sent a pre-loaded top up card so that their supply is not interrupted.
- You can read his breaking report here (check back in a few minutes for developments): Government to cover energy bills for people caught up in coronavirus crisis
Burberry retail stores down 40pc to 50pc
Luxury group Burberry has warned of a 40pc to 50pc sales hit at its retail stores as trading is battered by coronavirus.
In an update on its performance heading into the final weeks of its financial year, the FTSE 100 group said “trading has deteriorated significantly” since late January.
Burberry said although trading in mainland China has “started to improve” once again as business re-opens there, more than 60pc of its European, Middle Eastern, African and Indian stores and 85pc of its US stores are currently closed.
三级成人视频It said the hit to its sales performance would be from 70pc to 80pc, resulting in a drop of about 30pc across the fourth quarter.
三级成人视频Marco Gobbetti, its chief executive, said:
Since our February update, the material negative effect of Covid-19 on luxury demand has intensified and is now impacting the industry in all regions... We are implementing mitigating actions to contain our costs and protect our financial position, underpinned by our strong balance sheet.
Jefferies analyst Falvio Cereda said the group’s performance drop had been “fast and furious”, adding: “This pain will last for a long time”.
The group’s shares are up about 7pc today, in a possible sign that investors have welcomed its report of improving conditions in China – one of its key markets.
European markets open slightly higher
European stock markets are registering a flicker of gains this morning, with the FTSE 100 up 0.6pc while the DAX in Germany puts in a similar performance.
Here’s a chart with delayed prices:
N三级成人视频B: Like many of our journalists, I’m currently working from home, which unfortunately means I’m victim to a slightly volatile home internet connect – please bear with if there are any unusual gaps today,
National Express in talks over loans
Coach operator National Express has said it is in talks with lenders to secure emergency short-term lending facilities, in case market conditions get even worse.
三级成人视频In an update this morning, the FTSE 250 group told the City:
As a highly diversified business, National Express Group is currently experiencing different impacts from Covid-19 across its portfolio. While there has been a significant decline in passenger numbers in recent weeks, globally National Express Group has taken decisive action and has contractual protections in place to help withstand the downturn.
It said the British and Spanish governments may also offer support.
Dean Finch, its chief executive, said:
These are unprecedented times and have had an immediate and direct impact on our business. Nevertheless we are taking action everywhere to reduce our cost base, whilst both our contractual customers and governments are being very supportive.
At this stage we cannot give precise guidance to what this means for our profitability this year, but our cash flow over the next three months is still anticipated to be positive even in light of the material downturn in passenger volumes. Our balance sheet is strong and we have borrowing headroom of around £500 million, while we are holding discussions to increase this further.
Ocado: Coronavirus causing ‘unprecedented strain’
With ‘unprecedented’ fast becoming the word of the week, Ocado is the latest group to warn of never-before-seen trading conditions spurred by coronavirus.
In a trading update covering the 13 weeks to the start of March, the group said it had seen “no significant impact” from the virus over the period, but said it had been under “unprecedented strain” since the start of the month.
The update comes after Ocado announced a temporary suspension of its website and app following a “staggering” amount of traffic. As my colleague Chris Johnston三级成人视频 reported yesterday:
The online supermarket said the closure will allow it to carry out essential work that will help ensure distribution of products and delivery slots is as fair and accessible as possible for all customers going forward.
三级成人视频Existing orders will still be honoured but customers will not be able to edit an existing order or book a new delivery for the next few days.
- From more: Ocado shuts website until Saturday
三级成人视频It reported retail revenue growth of 10.3pc for the quarter, the number of orders a week increasing even as order size remained fairly flat.
三级成人视频Melanie Smith, its chief executive, said:
The impact of higher basket values and order demand, amid growing public concern over the coronavirus, was limited in the quarter, although this has since picked up significantly and growth in the second quarter is so far double that of the first quarter. We expect the impact of forward buying, however, to unwind at some point.
In recent weeks, the company said, “we have experienced an increase in order demand and basket size as a result of customer behaviour changing in reaction to the spread of the COVID-19 virus. The mix of ambient goods within customer baskets has also increased.
三级成人视频The FTSE 100 group said its estimates for retail revenue growth for the full year were unchanged, adding: “we assume there to have been a large element of forward buying of ambient items and there may be further disruptions ahead”.
Agenda: Europe to open marginally in the green
Good morning. European stocks are set to open slightly higher after the European Central Bank announced a €750bn (£708bn) bond-buying programme late on Wednesday night.
三级成人视频The massive new stimulus is the latest attempt to calm markets, with the central bank saying all the extra asset purchases would be carried out this year and cover both sovereign bonds and corporate debt.
ECB chief Christine Lagard, said: “Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate."
Yesterday, the pound has fell to its lowest level against the dollar since 1985, as the spread of the coronavirus pandemic continues to shake investors. It is currently trading at $1.15 against the dollar.
5 things to start your day
1) Thousands of businesses could be locked out of Rishi Sunak’s £330bn coronavirus rescue fund because they lack strong enough credit ratings. The Chancellor’s flagship Covid-19 commercial financing facility (CCFF) is only being given to firms with an investment-grade short term credit rating from one of the big three ratings agencies.
2) An extra 25 million people around the world could become unemployed as the coronavirus ravages the global economy三级成人视频, the International Labour Organisation has warned. This worst-case scenario would be more severe than the 22m extra jobless in the financial crisis.
3) Holiday rescue fund perilously low on cash to fight coronavirus crisis after Thomas Cook collapse: The Atol scheme has relatively limited resources left to bring stranded passengers home and cover cancellation costs after it handed out almost £500m to holidaymakers whose future plans were ruined last September
4) Property funds worth £10bn shut due to coronavirus chaos:三级成人视频 Columbia Threadneedle, Aberdeen Standard Investments, BMO Global Asset Management and Legal & General became the latest asset managers to suspend withdrawals from their UK real estate funds.
5) Ocado.com has shut down its entire website and app until Saturday after struggling to cope with a "simply staggering amount of traffic". The online supermarket said the closure will allow it to carry out essential work that will help ensure distribution of products and delivery slots is as fair and accessible as possible.
What happened overnight
The European Central Bank on Wednesday unexpectedly said it would spend 750 billion euros (£709bn) on "emergency" bond purchases, as it joined other central banks in stepping up efforts to contain the economic damage from the coronavirus.
US stock futures were a hair's breadth from hitting session down limits. The growth-sensitive Australian dollar was crushed 4% to a more than 17-year low.
三级成人视频Nearly every stock market in Asia was down and circuit breakers were hit in Seoul, Jakarta and Manila. Traders reported huge strains in bond markets as distressed funds sold any liquid asset to cover losses in stocks and redemptions from investors.
三级成人视频MSCI's broadest index of Asia-Pacific shares outside Japan fell 5pc to a four-year low, with Korea and Hong Kong leading losses.
The Nikkei fell nearly 1pc, the ASX 200 nearly 3pc, while the Kospi lost 8pc and the Hang Seng 5pc.
Coming up today
Interim results: IG Group
Preliminary: Next, Sanne
Full-year: Energean Oil & Gas, OneSavings Bank, The Gym Group
Trading statement: Halma, Ocado
Economics: Current account balance (US)