Markets slide amid Covid-19 recession and trade war fears - as it happened

[NadiaWits]

Markets slide amid Covid-19 recession and trade war fears - as it happened

Shares have fallen across Europe, Asia and the US, as another 2.9m Americans file initial jobless claims 5pm: FTSE 100 closes down 162 points at 5741Another grim week for US unemploymentFed chair and WHO worry marketsCoronavirus – latest updatesSee all our coronavirus coverage 6.15pm BST Time for a brief recapStock markets have fallen sharply in Europe as investors worry about the economic damage caused by the Covid-19 pandemic.  Related: How will Britain dig itself out of a £300bn coronavirus hole?  6.01pm BST And finally... Britain’s budget watchdog has warned that the cost of the Covid-19 rescue packages keeps rising, as our economics editor Larry Elliott explains:The mounting cost of government schemes to help Britain through its worst recession in more than three centuries has risen by £20bn in the past two weeks and will result in a budget deficit of nearly £300bn in the current financial year, a report has forecast.Fresh figures from the Office for Budget Responsibility, the independent body responsible for forecasting the public finances, showed that measures such as the Treasury’s furlough scheme will total £123bn, up from £103bn in late April. Related: UK budget deficit to rise to £300bn this year, OBR says  4.45pm BST Newsflash: Britain’s stock market has closed at its lowest level in over three weeks.Despite clawing back some of its earlier losses, the FTSE 100 index of blue-chip shares has had its worst day since 30 April.Yesterday, the Fed chief, Jerome Powell, cautioned that downside risks are significant, and the economic pain might remain for a prolonged period. The warning from the central banker came at a time when there are growing concerns about the jump in new infection rates as a result of countries reopening parts of their economies.Governments will need to strike a balance between loosening restrictions, and keeping the health crisis in check. There is a feeling the coronavirus will be hanging over the markets for many months to come. 4.34pm BST The City watchdog, the FCA, has released a list of measures which financial firms should consider taking to help customers.They include: 4.20pm BST Insurance company Prudential is also among the fallers.Shares in Prudential are down 5% after sales in Asia were hit by the coronavirus pandemic, with its agents unable to see clients to sell health or life insurance or savings products. “People will look at risk differently.”  3.49pm BST Fears of a new US-China trade dispute have left markets sinking today, says Connor Campbell of Spreadex.Things got really nasty on Thursday afternoon, the growing concerns surrounding the US-China situation and another sharp increase in unemployment causing an intensification of the session’s already pronounced losses.Having fallen close to 1000 points in the last couple of sessions, the Dow Jones shed another 300 points after the bell, sinking back under 22950 for the first time in 5 weeks. 3.34pm BST Online grocer Ocado had been one of the few companies to do well through the Covid-19 crisis, but it’s leading the Footsie fallers right now (down 7.6%).Enterprise software firm Sage is close behind (-7.5%). 3.14pm BST European markets are now having a seriously bad day.Britain’s FTSE 100 has now shed almost 4%, or 227 points, to 5,677. That’s its lowest level in over 3 weeks, wiping out all May’s gains. 2.42pm BST The prospect of a new US-China trade dispute is helping to drive stocks down, given these quotes from Donald Trump on Fox News earlier today:*TRUMP SAYS HE'S VERY DISAPPOINTED IN CHINA -FOX BUSINESS NETWORK*TRUMP SAYS THE INFORMATION WE HAVE ON CHINA AND VIRUS IS 'NOT GOOD'*TRUMP SAYS HE IS NOT GOING TO RENEGOTIATE CHINA TRADE DEAL*TRUMP WONDERS WHAT WOULD HAPPEN IF U.S. CUTS TIES WITH CHINA pic.twitter.com/Gm2r2jcxcl 2.37pm BST Shares are dropping smartly at the start of trading in New York, as economic anxiety grips markets.The Dow Jones industrial average has dropped by 268 points, or 1.1%, to 22,979. The S&P 500 has also lost 1%, with the tech-focused Nasdaq down 0.7%. 2.22pm BST Bad economic data + worries about the Covid pandemic + Donald Trump attacking China = a falling stock market.US futures turning lower following jobless data & increasingly hostile rhetoric from the White House towards China.Here are the US Opening Calls:#DOW 22934 -1.34%#SPX 2788 -1.09%#NASDAQ 8908 -1.00%#RUSSELL 1200 -2.59%#FANG 3527 -1.28%#IGOpeningCall pic.twitter.com/5TN6jx6Jry 2.20pm BST This week the US Department of Labor started releasing figures for those eligible to file for benefits under the Pandemic Unemployment Assistance (PUA) program, a federal unemployment scheme set up for the self employed and gig workers like Uber drivers who had previously not been eligible to make claims.Some 841,995 people made claims under PUA for the week ending 9 May.  2.17pm BST This latest horrendous weekly unemployment report shows why the Federal Reserve is worried about the economic damage caused by the coronavirus pandemic.Neil Birrell, chief investment officer at Premier Miton, says it will add to the gloom in the markets today: “Hard on the heels of Jerome Powell’s downbeat comments on the US economy come initial jobless claims that are worse than expectations, although continuing claims are a bit better than thought.Equities have been struggling since Powell spoke and there is nothing in these numbers to provide respite. However, we seem to be immune to such data points, the worry must be that the cumulative effect will become overbearing.”Another week of declining initial jobless claims as the focus shifts to continuing claims. Those are still on the rise and until they peak, we can't talk about any good news on the jobs front.https://t.co/1p3RgiYbmeThe gap between the initial jobless of claims, of more than 36 million in the past 8 weeks, & continuing claims, which total a 22.8 million, highlights how many unemployed people aren't getting benefits yet.Six weeks in a row of initial jobless claims lower than the prior week. Pace of new joblessness has to slow before it reverses… Chg from prior week in new Jobless Claims:3/21= +3,025k3/28= +3,560k4/4= -261k4/11= -1,378k4/18= -795k4/25= -596k5/2= -670k5/9= -195k 1.42pm BST Here’s my colleagues Dominic Rushe and Lauren Aratani on today’s jump in US unemployment:The terrible toll of the coronavirus pandemic on the US economy continued unabated last week as another three million people filed for unemployment benefits, making a total of 36 million in the last two months.The latest figures from the labor department show the rate of claims is slowing but the record-breaking pace of layoffs has already pushed unemployment to levels unseen since the Great Depression of the 1930s. Related: 36m Americans now unemployed as another 3m file for benefits  1.37pm BST Over 22.8 million Americans filed ‘continuing claims’ for unemployment relief last week, meaning they had been out of work for more than a week.That’s a huge figure, showing the scale of the jobless crisis in the US. Some rare good news from the claims data? Although there were more initial claims than expected, at 2.9mn vs the consensus for 2.5, the number of continued claims rose by a far less than expected - perhaps reflecting some rehiring - and may finally be plateauing pic.twitter.com/xfZANfEp3S 1.34pm BST Newsflash: nearly three million Americans filed new unemployment claims last week, as the US recession deepened.The closely-watched initial jobless report, just released, shows that 2.981 million new claims were filed in the seven days to May 9th, down from 3.1m in the previous week. 2.9M initial claims. Down from 3.2 but still massive and 36.4M lost jobs in a month. Over 20% of the labor force. https://t.co/CEHJpuiiR5 1.25pm BST Cruise operator Carnival has announced it is cutting staff, after being forced to suspend sailings due to the pandemic.It tells shareholders:To further strengthen liquidity, Carnival Corporation and its brands are announcing a combination of layoffs, furloughs, reduced work weeks and salary reductions across the company, including senior management.These moves will contribute hundreds of millions of dollars in cash conservation on an annualized basis. Related: Cruise firm Carnival UK 'to cut 450 jobs' at Southampton HQ  1.18pm BST Donald Trump’s comments about China on Fox News haven’t helped the mood in the markets.The Dow is currently on track to open 180 points lower, or down 0.8%, having dropped 2% yesterday." Contracts on the S&P 500 Index and Dow Jones Industrial Average dropped modestly following a report that President Donald #Trump is “looking at” Chinese companies that trade on American exchanges. " The drama. Funny seeing Bloomberg using MACD as an indicator!#SPX #DJI pic.twitter.com/pgETR9W9jX 1.12pm BST The slide in equities is pushing up Wall Street’s fear index, the VIX.we ave a problem $Vix pic.twitter.com/BSZ25co8kVVIX sees largest 2-day move since 17 March highlighting the fragility of the market and how fast sentiment can change from positive to negative.  12.13pm BST Bank of England governor Andrew Bailey has warned that Britain’s economy will suffer longer-term damage from the current coronavirus shutdown.But speaking at a webinar organised by the Financial Times, Bailey warned that there’s much uncertainty over how severe it will be. We don’t yet know whether the BoE’s scenario of a 25% plunge in the current quarter is too pessimistic, or too optimistic. 11.45am BST Donald Trump also told Fox News that “I’m very disappointed in China.”This isn’t helping the mood in the markets, where the FTSE 100 index is now down 145 points or 2.5% at 5757. 11.27am BST Heads-up. Donald Trump has fired another warning shot at China.The president has told Fox News he’s ‘looking at’ Chinese companies who are listed on the US stock market, but don’t follow US accounting rules. “Right now it’s good to have a strong dollar. Right now having a strong dollar is a great thing.” Join us now ⁦@POTUS⁩ ⁦@realDonaldTrump⁩ now. ⁦@MorningsMaria⁩ ⁦@FoxBusiness⁩ pic.twitter.com/ejjfL2RQJsThis morning - ⁦@MorningsMaria⁩ ⁦@FoxBusiness⁩ ⁦@POTUS⁩ ⁦@realDonaldTrump⁩ tells me he is "looking at" Chinese companies that trade on ⁦@NYSE⁩ ⁦@Nasdaq⁩ but they do not follow US accounting rules. He already pulled $ from Thrift fund pic.twitter.com/xzkAcpXRDb“I call it a transition to greatness. You’re going to have the third quarter….That’s a transition quarter. We’re going to do well in the fourth quarter, and I think next year, with all of the stimulus, all of the things we’ve done, I think we’re going to have one of the best economic years we’ve ever had”Trump Wants Stronger Dollar As Coronavirus Economic Rebound Takes Hold - Fox Business $DXY $USDJPY $ES_Fhttps://t.co/Bvzj8a8sL8 10.49am BST The owner of British Airways will press ahead with cutbacks that could see up to 12,000 jobs lost, its boss Willie Walsh has said, despite the government’s extension of the furlough scheme.“I want to confirm therefore that we will not pause our consultations or put our plans on hold.” 10.46am BST US hedge fund manager Kyle Bass added to the gloom yesterday, by predicting that America’s economy will shrink 10% this year -- effectively a depression.Marketwatch has the details:Kyle Bass made his name Currency carry trade against the U.S. housing market more than a decade ago, and today he is predicting an economic contraction that could be more than three times as severe as that suffered during the Great Financial Crisis.“For the year I think you’re going to see U.S. GDP down somewhere between 7% to 10% in real terms,” as a result of the COVID-19 pandemic and the government’s efforts to contain the spread of the virus with business shutdowns, and “10% is an economic depression,” said the founder of hedge fund Hayman Capital Management, in an interview. 10.27am BST The sell-off is gathering pace, with the FTSE 100 now down 131 points or 2.2% at 5772 [still the lowest since 5th May].Almost every stock has fallen, including financial stocks like Legal & General (-5%) and Barclays (-4%), property companies Land Securities (-4.3%) and Persimmon (-4.5%), as well as travel firms like IAG (-4.7%). There are some sectors which may be facing a prolonged period of weakness. Aviation being perhaps the most obvious example. In recent weeks, several airlines have announced that they do not expect to resume normal operations until 2022 and Boeing, the aviation bell weather, expects it to take five years and anticipates the failure of at least one major airline.Similarly, with retail having to comply with social distancing measures for the foreseeable future, this sector also faces serious challenges. In the UK, an Ipsos Mori survey found that almost 50% of Britons would feel uncomfortable shopping, other than in supermarkets, and the British Independent Retailers Association has forecast that up to 20% of smaller shops may not even reopen once government support schemes begin to fade. Even after lockdowns are lifted, market participants should anticipate a wave of business failures across many sectors and across countries. 9.56am BST Lloyd’s of London, the world’s biggest insurance market, has predicted that Covid-19 will cost insurers more than $200bn, putting it alongside the worst disasters of recent years.My colleague Joanna Partridge explains;Lloyd’s expects to pay out between $3bn (£2.4bn) and $4.3bn (£3.5bn) to its customers due to the coronavirus pandemic, as it warned of a $203bn hit for the entire industry.Insurance companies around the world have suffered losses as widespread government shutdowns have prompted claims for business closures, and halted travel and events. Related: Lloyd's of London expects up to £3.5bn in coronavirus payouts  9.42am BST Just in: Many UK firms fear they don’t have enough cash to survive a lengthy period of Covid-19 disruption.That’s according to the Office for National Statistics, which just released its latest findings on the economic and social impact of the pandemic. 9.27am BST The International Energy Agency (IEA) has slightly raised its forecast for oil demand this year a little, as economies start to lift lockdown restrictions.The IEA now expects demand to fall by 8.6 million barrels per day in 2020 -- up from 9.3m bpd before, but still a record decline.DEMAND HIT: @IEA has revised upward its forecast for demand, saying peak consumption destruction in April was probably ~25m b/d (rather than ~29m b/d estimated in last month’s report). For the whole year, it sees an average -8.6m b/d drop (rather than -9.3m b/) #OOTT pic.twitter.com/g4j4nEMHDd“Economic activity is beginning a gradual-but-fragile recovery. However, major uncertainties remain. The biggest is whether governments can ease the lockdown measures without sparking a resurgence of COVID-19 outbreaks. 9.15am BST Recession anxiety has pushed the pound down to a five-week low against the US dollar.Sterling dropped below $1.22 for the first time since April 7th, as traders moved into safe-haven currencies. 9.09am BST High street and travel hub retailer WH Smith has reported that its sales were pretty much obliterated last month, under the lockdown.Since March, we have seen a significant impact on our business as a result of Covid-19, with the majority of our stores closed around the world. 8.48am BST Federal Reserve chair Jerome Powell gave investors a ‘dire warning’ about the economic prospects yesterday, says John Velis, strategist at BNY Mellon. Velis writes:In short, Powell is warning of a long, drawn-out recession, where productivity, income, and employment growth stagnate and where entire businesses and industries are wiped out and debt mounts “for years to come”. This is a dire risk, and one which Fed policy tools cannot do much to address without an assist from fiscal policy.The Fed had been content to “let the economy run hot” during the economic expansion. In recent years Powell frequently hailed the progress made in getting lower-income and previously marginalized members of society into the labor force. 8.33am BST Fears of a protracted global downturn have dragged Britain’s blue-chip stock index to its lowest point in over a week.Travel firms are among the top fallers on the FTSE 100, following WHO’s warning that the coronavirus ‘may never go away’. 8.17am BST As well as Covid-19, investors are also fretting that the US-China trade war could resume.US president Donald Trump fuelled these fears yesterday, with this tweet:As I have said for a long time, dealing with China is a very expensive thing to do. We just made a great Trade Deal, the ink was barely dry, and the World was hit by the Plague from China. 100 Trade Deals wouldn’t make up the difference - and all those innocent lives lost! We just about managed to cope with a downbeat assessment from Fed Chair Powell but couldn’t after additional evidence that the US/China relationship is souring further. This [Trump’s tweet] was followed by China Global Times headlines saying that China is “extremely dissatisfied” with the possibility of the US sanctioning or otherwise punishing China over the coronavirus epidemic and would look to retaliate and were “mulling punitive countermeasures on US individuals, entities and state officials like Missouri’s attorney general, who filed lawsuits against China in seeking damages over the coronavirus pandemic.”  8.08am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Worries over the human and economic cost of Covid-19 are continuing to dog the markets today.Powell called for further fiscal stimulus to help offset the economic fallout from the pandemic, but ruled out pushing US interest rates into negative territory. Given ongoing partisan tensions in Washington, the additional fiscal stimulus Powell called for seems unlikely to immediately materialize.” Related: Britain is facing 'significant recession', says Rishi Sunak “It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away.I think there are no promises in this and there are no dates. This disease may settle into a long problem, or it may not be.” Related: Global report: WHO says Covid-19 'may never go away' and warns of mental health crisis The UN warned that the coronavirus crisis could shed four years of growth and push 130 million people into extreme poverty. If the business reopening plans fail worldwide, these numbers could shoot up and paint an uglier economic picture for the decade to come. Continue reading...

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