Coronavirus: Markets attempt to fight back after Europe reveals massive stimulus

Markets are attempting a fightback in early trading, after the European Central Bank revealed a massive stimulus package to help its economies battle the effects of coronavirus.

The main European markets and London’s FTSE 100 were all climbing in early trading but the optimism only seemed to last for a few hours.

By 10am, the FTSE had reversed its 1% gain to be down by more than 1% just after 10am.

And, after healthy opening gains, Italy’s MIB had climbed 1.4%, Germany’s DAX was up only marginally and the CAC 40 in France gained 1.7%.

The initial rise was probably also helped by the strong US dollar. Many of the index’s companies make their profits outside the UK in dollars before they are converted into sterling.

There were hopes that the European Central Bank’s monetary stimulus – €750bn (£708bn) of new bond purchases – will calm the markets.

Germany’s economy minister Peter Altmaier told Deutschlandfunk radio: “I hope these measures will also make it clear to the stock markets, to the markets today that Europe will protect its interests and Europe is determined to overcome this crisis.”

Sky’s business presenter Ian King agreed, saying: “You name it, they really are chucking the kitchen sink at it.”

Asian stocks fell overnight as investors braced for a prolonged recession and rushed to convert holdings to cash.

Japan’s Nikkei 225 index fell 1%, South Korea’s Kospi sank 7.5% and Hong Kong’s Hang Seng index slipped 2.6%. China, Australia, India and Taiwan were also down.

It comes a day after the pound hit its lowest level against the dollar in 35 years as investors fled from the ever deepening gloom over the coronavirus crisis.

The FTSE 100 plunged by just over 4% on Wednesday to 5,080 points, despite “unprecedented” measures announced by chancellor Rishi Sunak to help businesses and households weather the storm.

Markets had been lifted on Tuesday by the promise of stimulus measures, with New York’s Dow Jones climbing more than 5% after US President Donald Trump unveiled plans for an $850bn stimulus package, including help for airlines.

But on Wednesday, the Dow had bled more than 2,000 points – almost 10% – by the afternoon before recovering some of those losses late in the session to close 6.3% down.

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