Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After another torrid Monday, European and US stock markets are expected to bounce back today – lifted by hopes that policymaker will step in to fight the coronavirus recession.
Wall Street has an almighty tumble on Monday, with the Dow slumping almost 13% for the first time since the 1987 crash (and only the second time ever). The sell-off came as Donald Trump suggested Covid-19 might not be under control in the US until August.
But sentiment has turned around overnight, with Wall Street futures now up 5% — the maximum allowed in overnight trading.
With global activity contracting alarmingly, pressure is mounting on governments to take serious action to protect jobs and workers.
Overnight, the US airlines asked for $50bn bailout as the industry staggers in the wake of the Covid-19 pandemic.
The UK chancellor, Rishi Sunak, is expected to announce a new package of support for businesses hit by the outbreak today. He’s under massive pressure to protect firms.
The government’s advice to stop going out where possible will hurt pubs, restaurants and venues terribly badly – with some wondering how they’ll survive. Understandably, they’re distressed that the government won’t order them to close (which would trigger insurance payouts).
Australia’s central bank put its finger on the problem overnight. The minutes of its latest meeting warned:
“In considering the policy decision, members observed that it was becoming increasingly clear that COVID-19 would cause major disruption to economic activity around the world.”
But central bankers can’t solve this crisis. Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank points out:
What small and medium size businesses need is cash poured directly in, without passing through the financial system.
Hence, governments around the world are seeking other measures to calm down the markets’ nerves. The UK promised extra help for businesses battling the virus-led slowdown, and temporary business shutdowns. France pledged to allocate 300 billion euros of bank loans to companies hit by the pandemic. Spain banned short selling for a month to contain the heavy volatility that may cause additional damage to the financial system.
Coming up today:
The ZEW survey of economic confidence, due this morning, will show just how panicky investors are about the situation (spoiler alert: very!). We also get new UK jobs report, which may show a rise in the claimant count in February — the first sign of the downturn beginning?
The agenda
- 9.30am: UK unemployment data: Jobless rate expected to remain at 3.8% in November-January
- 10am GMT: ZEW survey of eurozone economic confidence: expected to slump to -26.4 in March from 8.7 in February