London’s blue-chip FTSE 100 was down one percent, snapping a five-day winning streak and wiping out most of the gains it made this month on hopes that an easing in coronavirus lockdown restrictions would revive business activity. While the retail index tumbled 1.2 percent after figures showed British retail spending plunged by nearly a fifth and a broader measure of consumer spending fell by more than a third in April.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the first quarter fall was better than the 2.5 percent expected by most experts and the 3 percent forecast by the Bank of England last week.
He warned of a 20 percent drop to come as the COVID-19 takes its hold on the UK economy.
Mr Tombs said: “A quarter-on-quarter drop in the second quarter of about 20% looks plausible, even if we make some allowance for a marginal recovery in output in May, as employees in the construction, manufacturing and real estate sectors tentatively return to work, and then a more comprehensive recovery in June, when most shops and schools should reopen.”
The mid-cap FTSE 250 also shed 1 percent, with travel stocks plummeting again after a warning from European travel company TUI about thousands of job cuts to ride out a virtual halt in global travel.
Oil and gas producer Premier Oil slumped 6.2 percent after saying it expects to be free cash flow neutral this year following a crash in oil prices.
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FTSE 100 LIVE: Oil prices have fallen
9.12pm update: US stock market branded ‘second most overvalued’ on record
Billionaire hedge fund investor David Tepper claimed the US stock market is one of the most overpriced he has ever seen it, only behind the events of 1999.
He said some of the smaller companies listed on the Nasdaq, a stock market index, are “ridiculously” overvalued.
The comments prompted a stock sell-off, with many of the markets falling by close on Wednesday.
7.35pm update: FTSE 250 falls
The mid-cap FTSE 250 shed 1.8 percent on Wednesday, with travel stocks plummeting again after a warning from European travel company TUI about thousands of job cuts to ride out a virtual halt in global travel.
The retail index dipped 1.4 percent after surveys showed British retail spending plunged by nearly a fifth and a broader measure of consumer spending fell by more than a third in April.
6.13pm update: London stocks drop as economy shrinks at record pace
UK stocks fell on Wednesday after data showed the economy contracted in March at a pace never seen before in response to the coronavirus pandemic.
The FTSE 100 dropped by 1.5 percent, snapping a five-day winning streak and wiping out most of the gains it made this month on hopes that an easing in restrictions would revive business activity.
Britain’s economy shrank by a record 5.8 percent in March, while first-quarter GDP contracted by 2 precent, with figures for April likely to show an even bigger fall in economic output.
5.15pm update: FTSE 250 closes
The FTSE Mid-250 index closed down 294.92 at 15878.12.
5pm update: FTSE 100 closes
The FTSE-100 index at the close was down 90.72 at 5904.05.
4pm update: FTSE 100 update
The FTSE-100 index at 3:45pm was down 63.79 at 5930.98.
3.41pm update: Stock markets slide as fears of a second wave mount
Stock markets slid on Wednesday as fears about a second wave of coronavirus infections mount.
The US stock market also dropped in response to warnings from Federal Reserve Chairman Jerome Powell that the US faces a “significantly worse” recession than any since World War II.
Mr Powell’s comments come as parts of the global economy are starting to reopen following a deep freeze aimed at curbing the spread of the virus that has pushed unemployment rates to their highest since the Great Depression.
Benchmark equity indexes are up 25 percent or more since their March lows in anticipation of further government stimulus programs to help the global economy recover.
The UK is on lockdown to fight the coronavirus
2.50pm update: FTSE 100 update
The FTSE-100 index at 2.45pm was down 81.91 at 5912.86.
2.11pm update: UK government launches radical restart of housing market
Buyers and renters in England will be able to move house again from Wednesday under plans set out by the government to re-start a real estate market all but frozen by virus restrictions.
While people in the middle of buying a house have been allowed to move if “reasonably necessary” during the coronavirus lockdown which began in March, property viewings were halted and estate agents’ offices closed to the public.
Housing minister Robert Jenrick told parliament: “Today I am announcing a comprehensive, clear and coherent plan to reopen the housing market and to restart the construction industry.
It meant, he said, anyone who was not self-isolating could move “any time and for any reason”.
2.03pm update: FTSE 100 update
The FTSE-100 index at 1.45pm was down 56.99 at 5937.78.
12.13pm update: Concerns over economy
A survey by polling firm Kantar found worries about the economy grew and four in 10 people said coronavirus had hit their personal income.
11.34am update: US stocks edge higher
US stock index futures edged higher on Wednesday, a day after Wall Street’s main indexes fell, as investors kept an eye out for Federal Reserve Chairman Jerome Powell’s address.
Mr Powell’s remarks would be scrutinised amid rising bets that the US might adopt negative interest rates for the first time to combat the coronavirus pandemic’s severe economic blow.
The Labor Department’s data is expected to show US producer price index dropped 0.5 percent in April after slipping 0.2 percent a month earlier.
Meanwhile, Dow e-minis were up 131 points, or 0.56 percent. S&P 500 e-minis were up 13.25 points, or 0.46 percent and Nasdaq 100 e-minis were up 56.25 points, or 0.62 percent.
SPDR S&P 500 ETFs were up 0.1 percent.
US stock futures have risen
11.03am update: Tui faces job cuts
Holiday giant Tui is looking to cut up to 8,000 roles worldwide with the firm calling COVID-19 the “greatest crisis” the industry has faced.
The UK’s biggest tour operator posted losses of £747million in the first half of 2020, compared to £255million in the same period 12 months previously.
The Anglo-German company said: “We are targeting to permanently reduce our overhead cost base by 30 percent across the entire group.
“This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced.”
10.30am update: EU pushes to unlock borders
The EU’s executive is set to call for borders to reopen fast as coronavirus transmissions ease, with air passengers wearing masks, in efforts to salvage the ravaged tourism sector for the lucrative summer season.
Europe’s museums, castles, beaches and plazas have been empty since an almost continent-wide lockdown from mid-March, but the EU wants to revive what is possible of travel for the June-August season worth €150 billion.
Draft proposals seen by Reuters say the bloc’s executive, the European Commission, will on Wednesday urge a return to “unrestricted free movement”, though that push will stop if there is a major second wave of infections.
It was not clear whether non-Europeans would be allowed to visit this summer, with the Commission saying: “Domestic and intra-EU tourism will prevail in the short-term.”
9.50am update: FTSE down
The FTSE 100 index at 9.45am was down 60.79 at 5933.98.
9.17am update: FTSE update
The FTSE 100 index at 9.15am was down 61.53 at 5933.24.
The coronavirus crisis has crippled UK businesses
8.45am update: Pound sterling firms
The British pound firmed 0.3 percent to $1.2288 as bond yields fell after data showed that Britain’s economy contracted by a record 5.8 percent in March
8.31am update: EU futures down
Euro Stoxx 50 futures were down 1.32 percent and German DAX futures lost 1.29 percent.
8.17am update: London stocks hammered
The FTSE 100 index at 8.15am was down 58.48 at 5936.29.
8.01am update: FTSE 100 opens
The FTSE-100 index opened at 5994.77.
7.47am update: FTSE 100 update
The FTSE 100 index at 7.44am was unchanged at 5994.77.
People are being urged to follow the 2 metre social distancing rules
7.38am update: Grant Shapps warns there’s more to come amid economic crisis
Reacting to the ONS figures, transport minister Grant Shapps said everyone would have expected a blow to the economy before warning there was more to come.
He pledged that it was clear the UK would not go back to a period of austerity to pay for the economic measures taken during the pandemic.
7.12am update: UK hit by record monthly fall in GDP
Britain has been hit by a record monthly fall in GDP as the UK economy is crippled by the coronavirus pandemic.
Figures from the Office for National Statistics (ONS) found GDP fell 5.8 percent in March, services slumped by 6.2 percent and construction was hit by 5.9 percent – record monthly falls, while manufacturing also slumped 4.6 percent as the coronavirus firms its grip on the UK economy.
he first quarter fall was the worst since the end of 2008 at the height of the financial crisis, while the March monthly plunge marked a record tumble.
GDP fell by 2.0 percent in the three months to March 2020, following no growth in the three months to February, signalling the first direct impacts of the COVID-19 crisis on the economy.
The UK’s stages of easing the coronavirus lockdown
7.07am update: IMF under pressure to cancel poor countries’ debt
Over 300 MPs from around the world have urged the International Monetary Fund and World Bank to cancel the debt of the poorest countries in response to the coronavirus pandemic, and to boost funding to avert a global economic meltdown.
The initiative, led by former US presidential candidate Senator Bernie Sanders and Representative Ilham Omar, a Democrat from Minnesota, comes amid growing concern that developing countries and emerging economies will be devastated by the pandemic.
The virus has infected more than 4.2 million people globally and killed 287,349.
Widespread shutdowns aimed at containing the virus are taking a huge toll on the global economy, and especially poor countries with weak health systems, high debt levels and few resources to manage the dual health and economic crises.
IMF Managing Director Kristalina Georgieva on Tuesday said the Fund was “very likely” to revise downward its forecast that global output would shrink by 3 percent in 2020, and said developing countries would need more than $2.5 trillion in financing to weather the storm.
6.01am update: Coronavirus crisis leads to largest US consumer price decline since 2008
US consumer prices dropped by the most since the Great Recession in April, weighed down by a plunge in demand for gasoline and services including airline travel as Americans stayed home during the coronavirus crisis.
The report from the Labor Department on Tuesday also showed a record decrease in underlying prices last month, raising the specter of a bout of deflation as the economy sinks deeper into a recession triggered by lockdowns to slow the spread of COVID-19, the respiratory illness caused by the coronavirus.
The government reported last Friday that the economy lost 20.5 million jobs in April, the deepest drop since the Great Depression. The economy contracted in the first quarter at its steepest pace since the 2007-09 downturn.
Deflation, a decline in the general price level, is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices.
5.53am update: Oil prices plunge
Oil prices fell on Wednesday as fears about a second wave of coronavirus infections gripped financial markets.
Investors, many facing steep losses due to the pandemic-driven shakeout in assets over the past few months, have also had to contend with renewed US-China trade tensions.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent. Shares in China, where the coronavirus first emerged late last year, fell 0.5 percent.
The South Korean market was down for a third session. New coronavirus infections have appeared in Seoul after the country eased restrictions last week.
Oil markets, which have plummeted this year due to a combination of a collapse in demand and a supply glut, lost further ground in Asia.
Treasury yields also inched lower amid caution before a speech by U.S. Federal Reserve Chairman Jerome Powell and rising speculation the United States could one day adopt negative interest rates.
Michael McCarthy, chief market strategist at CMC Markets in Sydney, said: “It looks like we’re in for another negative day of trading here in the Asia Pacific region. It’s very clear that the containment has done economic damage and the recovery will take years and not weeks.”