MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. The risk-sensitive Australian dollar retreated from an overnight two-month high and safe-haven demand drove US Treasury yields back under 0.7 percent. The moves follow a downbeat end to the day on Wall Street, after a report from medical news website STAT cast doubt over positive early results from a Moderna Inc COVID-19 vaccine trial. The report said the results, which had rallied global stocks this week, lacked detail.
Chinese stocks began the day a little lower and Hong Kong’s Hang Seng slipped 0.1 percent. Australia’s benchmark was flat while a soft yen helped the Nikkei 0.7 percent higher.
“This is probably more a stabilisation than anything else, because markets have rallied hard on opening up and the potential for a V-shaped recovery,” said Jun Bei Liu, a portfolio manager at Australia’s Tribeca Investment Partners.
“The market is a little bit directionless…from here on, it certainly feels like we will see a lot more poor economic data,” she said, with investors likely to take their strongest cues from company outlook commentaries and confidence surveys.
Two thirds of 223 fund managers surveyed by Bank of America reckon recent gains are a bear-market rally.
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FTSE 100 LIVE: Asia stocks struggled on Wednesday
4.35pm update: ‘Foolish to rule out negative interest rates – Bank of England boss
Andrew Bailey has warned it would be “foolish” to rule out cutting interest rates below zero and said the bank’s policymakers are reviewing options to help see the economy through the coronavirus crisis.
In a hearing with the Treasury Select Committee, the Bank of England Governor said it was keeping the outlook for how low UK rates could go under “active review”.
Mr Bailey said: Mr Bailey said: “We do not rule things out as a matter of principle.
“That would be a foolish thing to do. But that doesn’t mean we rule things in either.”
He added: “We know that we may have to draw on our tool kit at any point… having that whole tool kit under review and assessed as the context changes is important.”
But the Bank of England governor believes the benefits of cutting rates beyond its current 0.1 percent rate could be “counterproductive”.
3.45pm update: The FTSE-100 index is up 50.09 points at 6052.32
3.10pm update: Global stocks surge to 10-week high as investor optimism builds
Global stocks have climbed to two-and-a-month high as investors regain hopes of a recovery from a recession fuelled by the coronavirus crisis.
Europe’s STOXX 600 index bounced back from a disappointing opening on Wednesday to add 0.4 percent, while the FTSE 100 was up by the same margin.
Wall Street started the day well again, with US stocks jumping more than one percent on encouraging earnings report from retailers.
Both the The S&P 500 and Dow Jones Industrial Average were up by just over a percentage point.
James Athey, investment director, Aberdeen Standard Investments, said: “We are in one of those situations where if there’s no bad news, the path of least resistance is for equities to move higher.”
Paul Withers taking over live reporting from Rebecca Perring.
2pm update: Poland’s economy to shrink
Poland’s economy may shrink in 2020 by 4-5 percent, more than the previously forecast 3.4 percent, as the coronavirus lockdown has lasted longer than anticipated, a senior finance ministry official said on Wednesday.
In a nod to the economic crisis, the deputy director in the ministry’s macroeconomic department said Poland plans to suspend a rule curbing public spending before the 2020 state budget is amended at the end of June or start of July.
“The European Commission has said that it saw Poland’s economy contracting by 4.3 percent. The market consensus is minus 4-5% and we are moving in this direction, but it’s not an official forecast,” Joanna Beza-Bojanowska told a news conference.
The UK is on a nationwide lockdown
1.40pm update: US stocks set for rise
Wall Street was set to open sharply higher on Wednesday as investors clung to hopes of a recovery from a coronavirus-fuelled slump amid signs of more stimulus for ailing sectors, while retailer Lowe’s jumped on upbeat quarterly results.
The home improvement chain rose 5.5 percent in premarket trading after posting higher first-quarter same-store sales as coronavirus lockdowns led people to spend more on home remodelling and repairs.
The US stock market has now rallied more than 30% from March lows on unprecedented stimulus, but gains have been limited this month as traders digest mixed headlines on progress in developing a coronavirus vaccine.
12.17pm update: Algarve unemployment soars
Unemployment in Portugal’s tourism-dependent Algarve region more than doubled in April compared with the same month last year, data showed on Wednesday, as a lockdown kept foreign visitors away and wiped out seasonal jobs.
In the southern Algarve, usually packed with tourists but now nearly deserted, just over 4,700 people registered as unemployed in April, bringing the total out of work to 26,379 – nearly 15,000 or 123 percent more than this time last year, data from the Institute for Employment and Vocational Training showed.
In Portugal as whole, just over 48,500 registered as unemployed in April, a 22 percent year-on-year jump, bringing the total of those without jobs to around 392,000 people.
Around 71 percent of the newly unemployed worked in the services sector including restaurants and retail stores, which were shut after Portugal declared a state of emergency on March 18 but are now slowly reopening as part of a sector-by-sector lockdown exit plan put in place from May 4.
11.35am update: Bank of England hint at negative rates
Some BoE officials have already hinted the central bank may resort to negative rates.
Fiona Cincotta, analyst at trading platform GAIN Capital, said: “With inflation significantly below the BoE’s 2 percent target, we can expect negative rates discussion to pick up at the June monetary policy meeting.”
Asian shares have struggled
11.24am update: Sterling stablises
Sterling edged up against the US dollar and was steady versus the euro on Wednesday, with clouds still lingering over the British currency after UK inflation fell below 1 percent to its lowest in nearly four years.
The drop in inflation fuelled speculation the Bank of England (BoE) could move to negative interest rates to bolster an economy hammered by the coronavirus pandemic.
Inflation sank to 0.8 percent in April, its lowest since August 2016, as lockdowns to contain the pandemic hit global oil prices and clothing retailers cut prices.
The pound fell modestly after the data as the reading was broadly in line with economists’ expectations.
Sterling then recovered with the dollar falling, and last traded up 0.1 percent against the US currency and flat at 89.24 pence versus the euro.
10.37am update: Rolls-Royce 9k job cuts
Rolls-Royce plans to cut at least 9,000 jobs, or more than a sixth of its workforce, in the latest blows to the UK economy and aviation industry dealt by the coronavirus pandemic.
The company, which makes engines for planes such as the Boeing 787 and Airbus 350, said on Wednesday it could also close factories as it shrinks to fit the smaller market it expects to emerge from the crisis.
Airlines and their supplies have been among the hardest hit businesses by lockdowns to contain the pandemic, with passenger air travel grinding to a virtual halt.
Britain, like many other economies, is also bracing for a deep recession, with jobless claims in April leaping to the highest in nearly 24 years.
Rolls-Royce chief executive Warren East said: “We have to reduce our cost base and adapt to the new world, matching our capacity with expected demand.”
Rolls Royce is set to cut 9,000 jobs
9.17am update: FTSE update
The FTSE 100 index at 9.15am was down 17.36 at 5984.87.
9am update: UK water supplier to pay final dividend
British water supplier Severn Trent said it would pay a final dividend, while warning the coronavirus crisis was likely to lead to unpaid household water bills over the next year and a decline in sales to businesses.
The company, one of Britain’s largest water firms, proposed a final dividend of 60.05 pence, in line with policy and higher than the 56.02 pence it paid last year.
Severn recorded a bad debt charge of £42.5 million ($51.96 million), including £2.2 million related to the pandemic, for the year ended March 31.
The company said: “We do expect to see an increase in related bad debt from higher unemployment and stressed household finances and expect to see further COVID-19 related increases to our bad debt in future periods.”
The company’s Water Plus joint venture with United Utilities , which supplies to businesses, was affected by lockdowns in place to contain the virus spread.
The British utility recorded an exceptional loss of £46.8 million related to Water Plus for the year.
8.46am update: FTSE down
The FTSE 100 index at 8.45am was down 26.49 at 5975.74.
8.01am update: FTSE 100 opens
The FTSE 100 index opened at 6002.23
The biggest financial contributors to the WHO
7.47am update: FTSE update
The FTSE 100 index at 7.44am was unchanged at 6002.23.
7.26am update: Inflation low in April
UK inflation plunged to its lowest level for nearly four years last month due to tumbling fuel costs and energy prices, according to official figures.
The rate of Consumer Price Index inflation decreased to 0.8 percent in April from 1.5 percent in March, the Office for National Statistics said.
Most economists expected inflation to fall to 0.9 percent.
CPI is now far wide of the Bank of England’s 2 percent target, while it is set to drop sharply lower still, with some economists bracing for a near-zero headline rate of inflation by the summer.
The ONS said average petrol prices dropped by 10.4p a litre between March and April – the biggest fall since unleaded petrol records began in 1990 – amid the global oil price rout.
Energy prices also pushed inflation lower as regulator Ofgem reduced its default tariff cap.
Jonathan Athow, deputy national statistician for economic statistics at the Office for National Statistics, said: “While the coronavirus limited the availability of some goods and services, its effect on prices was more muted.
“Falling petrol and diesel prices, combined with changes to the domestic energy price cap were the main reasons for lower inflation in April.
“Games, toys and hobbies saw rising prices, perhaps as people occupied their time at home.
“Food prices grew no more quickly than other goods and services, though fresh vegetables did see stronger rises.
7.20am update: Oil steady
Oil was steady and benchmark 10-year yields on US Treasuries dipped 1.5 basis points to 0.6948 percent.
Yields fall when prices rise.
Gold rose slightly to $1,745.84 per ounce down 0.3 percent.
7.11am update: EU futures flat
European futures were subdued with FTSE futures and EuroSTOXX 50 futures down 0.3 percent. S&P 500 futures rose 0.6 percent.
6.18am update: Business group cautions US on ‘reshoring’ too much China supply
The US Chamber of Commerce on Tuesday warned the US government against overdoing a major effort underway to rip US supply chains out of China in the wake of the coronavirus pandemic, saying such moves could harm the economy.
“Protecting the resiliency of our supply chain doesn’t have to mean reshoring all production in the United States,” Chamber Chief Executive Thomas Donohue told an online conference.
He said there may be a need in future to increase domestic production in some industries “but there will also need to continue to be a huge place in the U.S. economy for a global supply chain.”
President Donald Trump has long pledged to bring manufacturing back from overseas, but the coronavirus pandemic and concerns about dependency on Chinese imports have sparked a flurry of new activity on the issue.