The export-heavy FTSE 100 was today rocked by a plunge in Asian exports. Data showed Japan’s April exports had plunged the most since the global financial crisis with the coronavirus pandemic slamming demand for cars and industrial materials. Earlier this week Chancellor Rishi Sunak warned the UK will be hit by a severe recession “the likes of which the nation has never seen before”.
The mid-cap FTSE 250 shed 0.4 percent in a stop to the market’s a four-day winning streak withReal estate, financials and consumer discretionary stocks were among the most hit during morning trading.
However, EasyJet Plc jumped 4.6 percent after it said it would restart a small number of flights on June 15, becoming the latest airline to plan for the return of European travel.
Richard Dunbar, head of multi-asset research at Aberdeen Standard Investments: “There’s a two-way pull in the market between the impact of the monetary stimulus and, at the same time, evidence of a catastrophic slowdown in the global economy.”
The easing of coronavirus-induced shutdowns has seen the FTSE 100 recover slightly.
It is now only about 21 percent below its January record high.
The dip in London’s stock market comes as IHS Markit, which tracks market and index activity, warned the eurozone faces a second quarter-GDP that is “still likely to fall at an unprecedented rate” with “recovery to pre-COVID GDP levels not expected until 2024”.
However, his forecast for the UK was slightly more optimistic.
Chris Williamson, chief business economist at IHS Markit, said: “The eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April.
“Second-quarter GDP is still likely to fall at an unprecedented rate.”
On Twitter he added: “Eurozone #PMI rises in May as COVID-19 lockdowns ease, and should rise further in coming months, but output is still falling and longer term outlook remains gloomy.
“Recovery to pre-COVID GDP levels not expected until 2024.”
In regard to the UK, Mr Williamson, tweeted: “The UK flash #PMI signalled another steep month-on-month contraction of business activity in May, but the fall was less than seen in April.
“June should hopefully be better as lockdown restrictions ease.”
However, Andrew Wishart, an economist with Capital Economics reaffirmed his forecast of a 20 percent slump in the economy between April and June.
He said: “Much more importantly, we expect the pace of the recovery to be sluggish.”
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FTSE 100 LIVE: Asia exports have been hit by a huge blow
4.55pm update: Italian bond yields hold steady
Italian government 10-year bond yields held to near six-week lows on Thursday.
This hold happened as the EU contemplated the huge financial aid package put forward by Emmanuel Macron and Angela Macron.
Amid uncertainty over whether the fund will be financed by grants or loans, the 10-year yield was unchanged in late trade at 1.64 percent, not far from the 1.59 percent low it touched on Tuesday after the announcement of the fund on Monday.
4.24pm update: UK five-year yields go negative
The UK’s five-year bond yields fell below zero for the first time on Thursday.
The five-year gilt yield struck a record low this afternoon and is currently trading at 0.004 percent.
3.46pm update: Dow Jones plummets
The Dow Jones Industrial Average has plummeted in the last 15 minutes.
After a gradual rise to begin trading today, the Dow Jones has dropped down to 24,569.83 as of 3.47pm.
3.42pm update: FTSE 100 drops
The FTSE 100 is currently 0.25 percent down at 6,051.94 as of 3.43pm.
Additional reporting by Nicole Stinson.
The Bank of England is considering introducing negative interest rates
2.55pm update: US stock edge lower amid US-China tensions
American stock indexes edged lower at the open on Thursday as growing US-China tensions and mixed retail earnings added to worries about the pace of a recovery from a coronavirus-fuelled economic slump.
The Dow Jones Industrial Average fell 11.63 points, or 0.05 percent, at the open to 24,564.27.
The S&P 500 opened lower by 1.66 points, or 0.06 percent, at 2,969.95, while the Nasdaq Composite dropped 0.59 points, or 0.01 percent, to 9,375.19 at the opening bell.
2.30pm update: Euro set for a fifth consecutive day of gains
The European currency remained buoyed on Thursday as optimism about a closer fiscal union in Europe remained high among investors as dire economic data failed to change sentiment amid US-China tensions.
France and Germany proposed a €500 billion (£449billion) recovery fund on Monday to offer grants to regions and sectors hit hardest by the coronavirus pandemic.
The news lifted the euro from the $1.08 levels where it has been languishing for the last two months and pushed it towards $1.10, though the single currency remains more than 4 percent away from the 2020 highs of $1.15 levels tested in early March.
Jane Foley, a senior strategist at Rabobank, said: ”The Ascension holiday has thinned liquidity and with euro/dollar already back below 1.10 investors will be awaiting confirmation of any breach of that levels over the next few sessions.”
2.15pm update: GBP continues to drop against US dollar
The pound at 2pm was 1.2228 dollars compared to 1.2255 dollars at the previous close.
Meanwhile, the euro at 2pm was 0.8991 pounds compared to 0.8959 pounds at the previous close.
2.10pm update: The FTSE-100 index at 1.45pm was down 14.68 at 6052.48.
2.00pm update: UK secures antibody tests deal
Britain has agreed a deal to acquire antibody tests, a spokesman for Prime Minister Boris Johnson said on Thursday, saying the tests would be free and health and care workers would be prioritised.
The spokesman told reporters: “Have we now agreed a deal on the antibody testing? The answer to that is yes.”
Health minister Matt Hancock is expected to announce more details later.
The Government had been in talks with Roche for antibody tests.
Britain’s financial sector is working to bring staff back to city-centre workplaces
1.40pm update: Whitbread, owner of Premier Inn, sees shares slump
Whitbread shares drop after the Premier Inn owner disclosed plans to raise £1billion from investors as the British multinational hotel and restaurant company struggles with the closure of most its businesses under the Government lockdown measures.
Shares tumbled almost 13 percent and were just over £25 in afternoon trading.
Whitbread has suspended its dividend until March 2022.
Chief executive Alison Brittain said: “In response, the business took rapid and decisive action to protect our teams and our guests, and to secure our business to ensure that we will be in the best possible position to rebound strongly.
“Optimising the balance sheet in this way will enable the business to be in the best possible position to continue investing and taking market share in our fragmented sector when the current situation normalises.”
Whitbread has furloughed around 27,000 staff on full pay.
1.20pm update: Britain’s financial sector is working to bring staff back to city-centre workplaces
Limits on elevators, thermal imaging and temperature checks are expected to greet the first wave of traders and bankers returning to the City.
Firms will be restricted on how many of their staff can return in the initial wave as strict lockdown rules cut the capacity of Britain’s transport networks to 10 percent.
Around 400 staff at NatWest, whose jobs cannot be done from home for operational reasons, will be asked next month to return to work in offices and call centres, a memo seen by Reuters on Thursday showed.
Hot desking has been banned and screens have been put up where social distancing is not possible, while there will be limits of two people per lift, thermal imaging and temperature checks at building entrances, and one-way corridors.
1.10pm update: FTSE 100 index down down 30.70
The FTSE-100 index was down 30.70 at 6036.46 at 12.45pm.
Premier Inn owner Whitbread has announced plans to raise £1billion from investors
1.05pm update: Amazon rolls out food delivery services in India
Amazon.com Inc is rolling out services to deliver food in India, pitting it against established players Swiggy and Zomato.
Amazon already has a strong presence in India with its e-commerce business and according to an Amazon spokesman first trialled the food delivery rollout in the southern Indian city of Bengaluru.
The market has seen explosive growth in the last few years.
An Amazon spokesperson said in a statement: “Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other essentials.”
The company’s move comes at a time when both Swiggy and Zomato struggle in the face of the COVID-19 pandemic, which has forced the two startups to cut jobs and keep a tight lid on costs.
Indians went into the world’s biggest lockdown two months ago as the government tried to curb the spread of the virus, banning social gatherings and shuttering most restaurants and pubs.
12.55pm update: Boris Johnson welcomes dismissal of claims of impropriety
Boris Johnson’s spokesman said the Prime Minister welcomed the dismissal of what he said were vexatious and untrue claims of impropriety over his relationship with US tech entrepreneur Jennifer Arcuri.
Mr Johnson will not face criminal action, the police watchdog confirmed today.
The Prime Minister’s spokesman said: “We welcome the fact that this politically motivated complaint has been thrown out. Such vexatious claims of impropriety in office were untrue and unfounded.
“An independent review by the Government Internal Audit Agency similarly showed the claims made by the Labour Party were false.
“This was not a policing matter, and we consider this was a waste of police time.”
12.45pm update: “See-saw week in markets continues,” says analyst
Chris Beauchamp, chief market analyst at financial firm IG, said: “The see-saw week in markets continues, with the FTSE 100 down 40 points so far in early trading, given back some of yesterday’s gains.
“While the situation in Europe is improving, according to PMI data, markets are looking tired once again. What was a straight-line move higher in late March has turned into a grinding contest of attrition between the bulls and bears, and while the buyers have the upper hand for now, expectations of a sharp pullback are on the rise.
“Having reiterated their ability to do more if needed, central banks have now little to do but wait to see how the data, both economic and infection rates, plays out; in this environment, modest improvements compared to last month’s dire readings are unlikely to provide much fuel for further gains in stocks.
“Comments from Chair of the Federal Reserve, Jerome Powell this evening could lift the mood, but it is not clear how much more he can say, having already laid down markers with respect to more policy action and ruling out negative rates in the US.
“Some improvement in the UK figures has bolstered the pound as well, as cable looks to continue its recovery from Monday’s lows. But with so little data to go on, we are essentially still very much in the dark.
“Until lockdowns are fully ended the data tells us little apart from the fact that economies are operating at a fraction of their overall capacity, something that can be gleaned merely from going for a walk outside.”
12.30pm update: Italian bond yields up from a near six-week low reached this week
Italian government 10-year bond yields rose on Thursday from a near six-week low reached this week as nervous investors awaited more detail to emerge from the proposed £449billion (€500 billion) European Union recovery fund.
Amid continued uncertainty over whether the fund will be financed by grants or loans, the 10-year BTP yield was up 4.5 basis points at 1.68 percent, up from the 1.59 percent low it touched on Tuesday.
The premium Italy pays over the benchmark German 10-year Bund yield rose slightly as well to 213 bps.
Italy said it was keeping unchanged at 1.4 percent the real coupon for its new ‘BTP Italia’ inflation-linked bond, after the issue raised more than €14 billion from small savers in the past three days.
12.10pm update: Pound drops against US dollar but rise against euro
Pound sterling at 12pm was 1.2230 dollars compared to 1.2255 dollars at the previous close, according to Reuters.
While the euro was 0.8982 pounds compared to 0.8959 pounds at the previous close
12.00pm update: FTSE 100 continues downturn
The FTSE-100 index at 11.45am dropped 50.03 to 6017.13.
11.40am update: US stocks fall amid growing tensions with China
US stock index futures fell on Thursday as growing trade tensions with China added to worries about the pace of a recovery from a coronavirus-fuelled economic slump even with several countries easing lockdowns.
Simmering tensions between the world’s two biggest economies over the origin of the novel coronavirus have slowed a Wall Street rally this month, but the S&P 500 and Nasdaq have still inched up to hit multi-month highs amid some optimism over economic recovery.
Investors are also awaiting the latest weekly jobless claims data, which is due at 8.30 am. ET and is expected to show millions more Americans filing for unemployment benefits due to layoffs and mass furloughs as a result of the lockdown.
At 6.25am EDT, Dow e-minis were down 152 points, or 0.62 percent, S&P 500 e-minis were down 19 points, or 0.64 percent, and Nasdaq 100 e-minis were down 55.75 points, or 0.59 percent.
SPDR S&P 500 ETFs were down 0.56 percent.
The S&P 500 index closed up 1.67 percent at 2,971.61 on Wednesday.
Average UK gross pay in top percentiles last year
10.50am update: FTSE drops 52 points
The FTSE-100 index at 10.45am was down 52.10 at 6015.06.
10.30am update: US commits £980million ($1.2billion) to possible British COVID-19 vaccine
The United States will pump up to $1.2billion into developing AstraZeneca’s potential COVID-19 vaccine and said on Thursday it would order 300 million doses.
The commitment opens up a possibility of US-based clinical trial this summer involving 30,000 volunteers and adds fuel to the British drugmaker’s efforts to develop a vaccine for the disease, one of around 100 which are underway worldwide.
AstraZeneca is still waiting on results from an early stage trial in southern England before it moves towards late stage testing.
AstraZeneca had already signed an agreement to supply 100 million doses of the vaccine to the British government and it reiterated it hopes to start delivery in September.
The British company also said in a statement that it expects to be able to deliver a billion doses of the potential vaccine this year and next, if tests are successful.
10.20am update: The pound makes slight gains against US dollar and euro
The pound at 10am was trading at £1-$1.2221 dollars compared to £1-$.2255 dollars at the previous close.
The euro at 10am was trading at 0.8978 pounds compared to 0.8959 pounds at the previous close.
Michael Hewson, chief market analyst at CMC Markets UK, said that before hypothesising about the risks of deflation the Ban k of England needed to consider that prices are already going up.
He said: “Maybe our esteemed central bankers might do well to get out of the ivory towers of Threadneedle Street
“Prices in the shops are already starting to rise, as anyone who has been in a supermarket recently will tell you.
9.50am update: FTSE drops again
The FTSE-100 index at 9.45am dropped 49.14 to 6018.02.
8.45am update: FTSE suffers early losses on London Stock Exchange
The FTSE index was down 39.51 at 6027.65 at 8:45am.
8.00am update: Trading begins on the London Stock Exchange
The FTSE 100 index has opened at 6067.16.
7.45am update: Economist issues warning over negative interest rates
Kit Juckes, a macro strategist at French multinational investment bank Société Général, has warned the Bank of England against introducing negative interest rates.
He said: “The chancellor has dramatically increased government borrowing and the Bank of England is buying the economy time by mopping most of it up.
“How on earth does it make sense to even consider adding negative rates to the mix?”
7.20am update: Bank of England considering negative interest rates
The Bank of England has not ruled out introducing negative interest rates to stimulate the faltering UK economy.
Governor Andrew Bailey confirmed the Bank of England is considering all options to counter the effects of the looming recession.
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.”
In March the Bank of England cut the base rate of interest to a record low of 0.1 percent.
A negative interest rate would mean banks would have to pay to keep their excess reserves and in turn encourage lending.
The UK’s top earners
7.00am update: Turkey central bank cuts policy rate
Turkey’s central bank is expected to cut its policy rate by 50 basis points to 8.25% this week, easing policy for a ninth straight time.
The bank has cut its policy rate by 1,525 basis points since July last year in a bid to pull the economy out of a recession and counter the downturn caused by the coronavirus outbreak.
5.50am update: Asia shares temper rally as China policy meeting awaits
Asian shares stepped back slightly and US stock futures fell on Thursday as lingering caution about the long-term impact of the coronavirus outbreak offset some of this week’s enthusiasm over re-opening of economies.
Investors were also looking ahead to a key policy gathering in China that may yield more economic stimulus, while recent data around the world underscored that a sustainable recovery is several months away.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up just 0.04 percent, having rallied around 3% so far this week. S&P 500 e-mini stock futures fell 0.66 percent.
Broad risk appetite has been checked somewhat by escalating tensions between the United States and China due to President Donald Trump’s criticism of Beijing’s handling of the coronavirus outbreak.
Australian shares , which have been hampered by concerns about a trade row with China, pulled back slightly from a two-month high.
(Additional reporting by Rachel Russell and Luke Hawker)