Wall Street ends down after worst week since 2008 financial crisis - as it happened

Dominic Rushe (now) ,Jasper Jolly and Angela Monag

from on 2020-03-20 20:15 (#50ZYM)

European markets rebound but sterling falls back after chancellor announces plan to pay wages in response to Covid-19

New York sees 1,000% increase in unemployment claims
Pubs and shops to close; VAT holiday; tax delays and wages to be paid
Wall Street edges higher in early trading before falling back
UK will experience a deep, short recession, analysts say
Competition watchdog launches Covid-19 taskforce
Bank of England cancels 2020 stress tests
Coronavirus - latest updates
See all our coronavirus coverage

8.15pm GMT

Wall Street has closed for the week - and what a week.

The S&P 500 is down 15% for the week. The Dow fell over 900 points on Friday after a brief morning rally. The tech-heavy Nasdaq lost 12% over the week.

7.52pm GMT

Among those New Yorkers being laid off we mentioned earlier: billionaire would-be president Mike Bloomberg's staff.

They are not happy.

"I am disgusted by Mike Bloomberg and his staff," one of the Bloomberg aides told POLITICO on Friday. "He has left us with no health insurance during this pandemic. I have a family and do not know what we will do at the end of the month." https://t.co/Q5nHKhKzQR

7.42pm GMT

There is mounting anger among the self employed over what they regard as insufficient support for them in the emergency measures announced this evening in the UK by chancellor Rishi Sunak.

The self employed will gain access to the equivalent of Statutory Sick Pay, and be given tax deferrals, but are not part of the 80% earnings pledge.
The Federation of Small Business said: "The question at this point is - with firms beingforcedto close - why have the self-employed been excluded from the commitment to pay 80% of earnings?

7.34pm GMT

More frightening news on Covid-19's economic impact. Goldman Sachs is now predicting the pandemic will trigger an unprecedented 24% decline in the US economy in second quarter, following a 6% decline in the first quarter.

That's the most grisly prediction from a big bank economist so far.

7.08pm GMT

With less than an hour of trading left all the major markets are back in the red - again. If this holds, it will be the worst week on US stock markets since the financial crisis of 2008.

As it stands:

6.41pm GMT

New York - now a major center of new Covid-19 infections - is cracking under the strain of people applying for unemployment benefits.

As restaurants, bars, hotels and other businesses close thousands are trying to get benefits in order to meet their bills.

6.20pm GMT

Sterling is in retreat after chancellor Rishi Sunak announced some truly historic measures which will see a big increase in government borrowing.

You can read the main announcements for business here, and follow the reaction to Sunak's speech here.

6.06pm GMT

Here are some more reactions to the chancellor's emergency package.

Adam Marshall, director general of the British Chambers of Commerce, said:

The chancellor has given businesses desperately needed breathing room at this critical moment.

The deferral of VAT payments keeps money in the pockets of businesses so that they can pay their people and suppliers, and the commitment to cover wages of those unable to work will allow firms to retain jobs if they are forced to reduce their operations.

Today's steps by the chancellor are building on the confidence that we're now seeing from markets that the policy responses arriving are getting to the size that's needed. Within the gains in UK equities today, we're seeing relative outperformance in more UK-focused domestic companies, unwinding some of the weakness they've seen coming into today's announcement.

What is needed from governments and politicians is a 'right-now' plan, and it's good to see that the chancellor has finally recognised this with the measures he is taking today. For markets, the coronavirus outbreak will clearly drive a significant jolt to the UK economy over the next one or two quarters. But with UK policy makers now giving it both fiscal and monetary barrels, there are good chances that this stays a short-term impact. Today's actions should start to give investors some encouragement to take advantage of the pullback in valuations as they think about their longer-term investment horizons.

The UK is now running a 'virus war' economy. The usual rules do not apply.

Providing cash-strapped firms with generous subsidies to retain their staff will dramatically lower the risk of surging unemployment during the corona virus recession. Encouraging firms to hoard their labour while authorities tackle the medical emergency raises the chance that the economy can get back to normal quickly once any containment restrictions are lifted.

5.50pm GMT

And the pound is now back to a 1.5% gain, at $1.1665 against the US dollar.

5.46pm GMT

Some reaction is starting to come in from business groups and unions.

Michael Izza, chief executive of the ICAEW, an accountancy body, said:

The real battle now is for public confidence: if we can sustain that, the economics will follow. The chancellor's announcement of direct action by government to keep people in employment is a really good start. This should make a difference to how people feel, and keep them working and spending.

The government has finally acted to secure incomes during the pandemic and we welcome the steps they have taken on universal credit, tax delays and income protection for employees.

However this is far from the 'whatever it takes' approach the chancellor promised and his plan still contains gaping holes which could sink many family finances and ultimately the economy.

5.37pm GMT

There's a bit more movement in the pound now, and it's going in reverse.

One pound will buy you less than $1.17 - so it has given up some of the earlier gains. It's up by 1.8% for the day.

5.35pm GMT

Boris Johnson said all cafes, bars, pubs and restaurants must close tonight.

5.25pm GMT

The announcements appear to have barely affected the pound, which is still up by 2.1% against the US dollar. We will let you know if that changes.

One pound will buy you $1.1727 at the moment.

5.22pm GMT

The VAT holiday, which will affect almost every business in the UK, will represent a 30bn cash injection into the economy.

5.19pm GMT

Chancellor Rishi Sunak is announcing historic measures to help businesses.

No businesses will pay VAT until the end of June, a deferral of tax payments for another quarter.

5.09pm GMT

Boris Johnson has ordered pubs, cafes, bars and restaurants to close tonight as soon as they reasonably can.

Night clubs, gyms, cinemas and leisure centres should also close, he says.

5.06pm GMT

Boris Johnson is now talking in his daily briefing. He is joined by chancellor Rishi Sunak.

Please go to the UK coronavirus live blog to follow coverage live.

4.56pm GMT

EasyJet will ground the majority of its aircraft fleet from Tuesday 24 March, the airline has announced.

4.53pm GMT

Sterling is up by 2.2% against the US dollar this week - although it is down by 8.4% in the month to date, an indication of just how rough the past few months have been.

The British currency had been one of several to tank as investors rushed to put their money in dollars, the world's most liquid currency and seen as a safe haven in times of crisis.

Six central banks including the BoE announced coordinated action to enhance liquidity in US dollars on Friday by holding more frequent currency swap operations, further steadying nerves in money markets.

4.40pm GMT

The global aviation industry is going through unprecedented turmoil, and companies are desperate to secure their financial future.

British Airways pilots will be required to take two weeks' unpaid leave in both April and May while rival easyJet is reported to have asked staff to take three months' unpaid leave as the battered aviation sector frantically seeks to cut costs.

4.33pm GMT

A quick spin around global markets as Europe's trading day ends.

4.22pm GMT

The three main US stock market indices have now all fallen back into the red.

The S&P 500 has lost 1.6%, the Dow Jones industrial average has lost 1.2%, and the Nasdaq composite is down by 1%.

4.14pm GMT

The Farnborough air show, the UK aerospace industry's key event, has been cancelled because of the coronavirus outbreak.

After very careful consideration, the unprecedented impact of the global Coronavirus pandemic has forced this decision in the interests of the health and safety of our exhibitors, visitors, contractors and staff.

This decision was reached taking into consideration several major factors surrounding the outbreak of COVID-19, all of which we have concluded, make it is impossible for us to create and host the Airshow this July.

4.08pm GMT

JP Morgan is handing its front-line bank staff in the US $1000 each for working through the Covid-19 outbreak.

The measure is meant to support staff across its retail banking operations who have to keep its bank branches and call centres running and can't work from home.

3.58pm GMT

A sharp contraction of the global economy, at least in the second quarter, appears imminent, according to Moody's, the credit rating agency.

It points to data from China that show eye-watering declines in activity. There has been a sharp contraction relative to last year in retail sales (-20.5%), industrial production (-13.5%) and fixed-asset investment (-24.5%). Add 5m job losses in January and February and it's a stark illustration of what Europe, the USA and others could shortly face.

The short-term economic costs are likely to be steep, the world over. In advanced and emerging market countries alike, closures are crippling both the traded and non-traded sectors of the real economy. The long-term consequences will depend not only on the depth and duration of the hit to economic output, but on whether it will cause lasting damage to balance sheets of households and businesses. Without policy support, many businesses that depend on a constant stream of revenue will close and lay off their workers.

While the shock could disrupt many sectors, the burden will weigh disproportionately on the transportation sector, the energy industry, hospitality, healthcare and consumer services, especially hotels, restaurants and leisure. In the worst case, entire industries could be destroyed.

3.46pm GMT

Jack Wills, the clothing retailer, has announced the immediate closure of five stores.

The group has been working closely with landlords since acquiring Jack Wills to keep as many stores open as possible. Now faced by unprecedented uncertainty in the retail environment, further closures are inevitable.

3.38pm GMT

For more context on the US municipal bond market, here's Reuters' report from yesterday on rising yields (meaning prices are falling) for those borrowers:

Yields in the US municipal bond market, where states, cities, schools and other issuers sell debt, skyrocketed on Thursday amid a selling frenzy by virus-rattled investors who pulled a record amount of money out of muni funds in a race for cash.

The $3.8tn muni market has experienced big yield swings as the coronavirus has spread through the nation affecting businesses, governments and everyday life.

3.26pm GMT

The US Federal Reserve has made yet another intervention to support the US economy, this time expanding support to municipal bond markets, which are key for the funding of local city authorities.

Local government authorities are on the front line of the battle against coronavirus disruption in many countries, leading to fears from investors that they could come under financial pressure.

The Federal Reserve Board on Friday expanded its program of support for the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets. Through the Money Market Mutual Fund Liquidity Facility, or MMLF, the Federal Reserve Bank of Boston will now be able to make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds.

3.16pm GMT

Wall Street has extended its earlier gains, with sentiment boosted by the news that US taxpayers will have an extra 3 months to file their returns and expectations of further measures.

The latest from US markets:

3.10pm GMT

Ford has become the latest car maker to announce temporary factory closures in the UK due to the coronavirus pandemic.

The US manufacturer does not make cars in the UK but said its engine-making plants at Dagenham and Bridgend, which produced 1.1m engines between them last year, would be suspended from next Monday and Wednesday respectively.

2.58pm GMT

Airlines have been taking further measures to secure their businesses, faced with virtually no flights operating during April and May - at the very least.

2.39pm GMT

The Guardian US has more on the decision to extend the tax deadline by three months:

2.36pm GMT

Americans will have an extra three months to file their taxes, to ease the pressure on finances caused by Covid-19. The deadline has been extended to 15 July.

The measure was announced on Twitter by US Treasury secretary Steve Mnuchin:

At @realDonaldTrump's direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.

2.26pm GMT

The City regulator has told banks and building societies that they must not repossess people's homes during the coronavirus crisis, and cannot charge fees for payment holidays granted as a result of the pandemic.

2.10pm GMT

Here is our full story on the competition watchdog's decision to launch a Covid-19 taskforce.

The Competition and Markets Authority aims to identify traders that are unfairly raising prices on goods in short supply, such as hand sanitiser and loo roll.

2.00pm GMT

Kevin Loane, economist at the consultancy Fathom, says there is likely to be an unprecedented spike in US unemployment:

US initial jobless claims rose by a near record amount last week; they could rise by three million this week, indicating the negative shock to the US economy could be the largest on record.

California normally accounts for almost one-fifth of all US jobless claims. The state's governor has said that initial claims totalled 40,000 on Sunday, and doubled to 80,000 by Tuesday. If you average that over a week, it is consistent with initial claims in California alone spiking to 525,000 - a level that is entirely without precedent.

Based on an upward trend, and the recently announced lockdown, the risk is that the final figure ends up higher. Across the states for which we have data, claims so far this week are running at a rate that is 15 times higher than they were in March last year. That figure is consistent with a rise in jobless claims from 281,000 to around three million next week. That would be the largest such increase by a factor of more than ten.

1.34pm GMT

The bell has rung on Wall Street and markets have opened higher - but the gains are pretty limited so far.

1.27pm GMT

As employees, employers and investors await the chancellor's package of measures to protect pay and jobs during Covid-19 - expected later this afternoon - the ONS has published the latest snapshot on the public finances.

The figures show a slightly better borrowing picture than expected in February. The government borrowed around 300m last month, that's roughly half the amount in the same month a year ago.

Borrowing has however been steadily rising, by around 4.2bn more so far this year than the same period a year earlier. And attention is turning to the damage the coronavirus outbreak will cause.

1.19pm GMT

Asda has announced it will hire more than 5,000 temporary employees who have been laid off due to Covid-19.

Chief executive Roger Burnley said:

Never in my 30 years in retail have I ever felt so keenly the role played by supermarkets in our communities. The way our colleagues are working to support the nation is incredible and I want to support them - and those closest to them who are experiencing the other end of this crisis and need work.

Where we can provide opportunities for employment, even short term, to help people through this period, we want to play our part. And where we are able to reduce the strain on our smaller suppliers and tenants - we will do so.

Our store colleagues are doing an incredible job at keeping our shelves stocked, and serving communities during an extremely challenging period. Temporarily expanding our teams is one way we can help support our colleagues and customers, whilst providing work to those that have had their employment affected by the current situation.

12.44pm GMT

Time for a market update:

12.28pm GMT

More on the prospect of a UK recession from my colleague Richard Partington:

The early signs from the British economy are not looking good as the coronavirus causes mass disruption.

12.25pm GMT

The International Monetary Fund has posted a blog on China and the impact of Covid-19.

There are some positives:

While there are reassuring signs of economic normalization in China-most larger firms have reported reopening their doors and many local employees are back at their jobs-stark risks remain. This includes new infections rising again as national and international travel resumes.

Even in the absence of another outbreak in China, the ongoing pandemic is creating economic risks. For example, as more countries face outbreaks and global financial markets gyrate, consumers and firms may remain wary, depressing global demand for Chinese goods just as the economy is getting back to work.

12.15pm GMT

Oxford Economics has updated its forecasts for the UK economy, taking into account the social distancing measures announced by the government.

The research group now expects the UK to fall into a deep recession in the first half of 2020, with gross domestic product shrinking by 1.4% in 2020 as a whole (the economy grew by 1.4% in 2019).

The subsequent rebound in activity should be strong, as the resumption of discretionary spending is supported by low oil prices and monetary and fiscal stimulus. We now expect GDP growth of 3.7% in 2021.

However, there is huge uncertainty around the duration and impact of social distancing measures. Our downside scenario, involving a further worsening of the outbreak and financial stress, sees GDP falling by 2.5% this year.

12.00pm GMT

Here is our full story on Wetherspoons:

11.54am GMT

My colleague Jillian Ambrose reports:

US President Donald Trump has set out plans to stem the flood of oil into the global market by offering to spend $3bn buying up US oil to hold in the US government's 'strategic petroleum reserves'. Trump said he might also be willing to meddle in the oil price war between Russia and Saudi Arabia "at an appropriate time".

11.49am GMT

US markets are expected to rise when Wall Street opens, with futures showing gains:

11.38am GMT

Tesco has outlined some of the measures it is taking to help its staff and suppliers during the coronavirus crisis.

The UK's largest supermarket chain is closing its cafes and asking vulnerable staff including those pregnant and over 70 to take 12 weeks of paid holiday in its latest measures to support trading during the coronavirus outbreak.

11.32am GMT

M&S and Wetherspoons are not the only companies to issue statements today on Covid-19.

My colleague Sarah Butler reports on Just Eat and Wickes owner Travis Perkins:

11.22am GMT

David Madden, analyst at CMC Markets, says the rebound in European markets is a "welcome change of pace" after a period of heavy selling:

It would appear all the various measures taken by governments and central banks recently is finally calming the markets down. Wall Street closed higher last night and the optimistic feeling was then passed on to Asia, where indices gained ground.

This morning it was reported that Germany are looking to put together a a500 billion rescue package, and that has added to the bullish mood.

11.00am GMT

The pound's revival means that it has climbed above 1985 lows agains the dollar.

Kenneth Broux, currency strategist at Societe Generale, says the intervention from the Bank of England on Thursday was well-timed:

It's been extraordinary. The pound is acting more like an emergency markets currency.

Tuesday was panic stations and we had a big blow out in gilts. Investors have been liquidating all types of investments just to drum up cash (in dollars).

10.48am GMT

The Competition and Markets Authority has launched a Covid-19 taskforce to tackle the excessive prices being charged by some people for in-demand products such as hand sanitiser.

It will identify "harmful sales and pricing practices" as they emerge and "warn firms suspected of exploiting these exceptional circumstances - and people's vulnerability - through unjustifiable prices or misleading claims."

This is obviously a time when we all have to behave responsibly to protect our fellow citizens, and particularly those who are most vulnerable. We urge retailers to behave responsibly in the exceptional circumstances of the COVID -19 outbreak.

But if they do not, our taskforce is monitoring market developments to enable us to intervene as quickly as possible. We have a range of options at our disposal, from warnings to enforcement action to seeking emergency powers.

We hope that such action will not be necessary, but we will do whatever is required to stop a small minority of businesses that may seek to exploit the present situation.

10.07am GMT

Responding to suggestions that he should not be issuing pronouncements on how to deal with coronavirus, Wetherspoons boss Tim Martin said he was entitled to make public statements on the outbreak.

9.58am GMT

JD Wetherspoon has seen a significant change in customer behaviour since the prime minister Boris Johnson advised people to stay away from pubs and restaurants in an attempt to slow the spread of Covid-19.

The pub group, which operates 874 pubs, said its sales declined 4.5% in the week to Sunday 15 March.

9.47am GMT

Jaguar Land Rover and Bentley Motors have become the latest British carmakers to suspend production at their UK factories as the disruption from the coronavirus outbreak spreads.

JLR and Bentley both said that production at their plants will not start again until 20 April at least, with the restart dates under constant review.

9.27am GMT

More action from the Bank of England this morning, this time relating to banks.

It has cancelled this year's stress tests and said it may be hard to implement new global capital rules at a time when banks are being asked to step up support of businesses and households in response to Covid-19.

The recent 2019 stress test showed that the UK banking system was resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs.

We have announced our supervisory and prudential policy measures to address the challenges of Covid-19 https://t.co/vRDPChJYVZ

9.17am GMT

The pound is up sharply this morning, as optimism builds about a package of measures to protect jobs and wages as well as progress in coronavirus testing.

9.12am GMT

Here is our full story on the warning from M&S, which warned on profits and said it may have to close some stores temporarily as a response to Covid-19.

9.07am GMT

Train services across Britain will be reduced from Monday as people are urged not to travel in order to slow the spread of coronavirus.

We are taking decisive action to protect the public, which means reducing travel for the time being, whilst still ensuring key worker heroes can get to their jobs to keep this nation running.

For passengers in crucial roles, including essential workers in our emergency services and NHS, alongside people who need to attend medical appointments or care for loved ones, these changes protect the services they rely on.

8.55am GMT

Britain's bus operators have called on the government to provide 1bn in immediate help to maintain critical services as passenger numbers fall away with the coronavirus.

Operators say passenger numbers have already fallen by more than half outside London, with a loss of 50million per week in revenues, even before the closure of schools.

8.52am GMT

There is no sea of red in equity markets this morning.. instead all major European indices are higher (following gains on Wall Street on Thursday).

However, the FTSE 100 has lost some of its earlier gains and is now up 2.2% or 115 points at 5,269.

8.42am GMT

More on that warning from Marks & Spencer.

The company said that while it is not a destination for those consumers stockpiling food and other products, it does expect to benefit as people stay at home to eat instead of visiting pubs, cafes and restaurants.

We expect our food business to trade profitably throughout. At this stage we have benefited on a small scale as customers stock up but our heavy bias to chilled and fresh means we are not seeing the forward buying uplift experienced by the major grocers.

The significant shift to eating in home should however continue to benefit sales in the months ahead. Although there will undoubtedly be supply interruptions, we do not expect these to be prolonged or financially material.

There will be a substantial impact on Clothing and Home revenue at the very least in the first 3-4 months of the next financial year. Although it is possible that this may ease as we get into summer trading, margins are likely to be severely impacted by the surplus of unsold seasonal stock and probable clearance activity in the marketplace.

We are therefore taking all possible steps to defer supply. However, a very large part of our core business is less seasonal year-round essential product and this should provide some scope for carrying forward stock. At this stage we are not assuming a return to normal trading in the Autumn.

8.33am GMT

Shares in Marks & Spencer are down about 3% in early trading at 111p - underperforming the wider FTSE 100.

The warning from the retailer this morning really does bring home the uncertain path for businesses in the weeks and months ahead due to the coronavirus outbreak.

8.10am GMT

The FTSE 100 is rising in early trading, up 5 % or 256 points at 5,407.

Investors have welcomed the latest emergency action from the Bank of England, which cut rates to an all time low of 0.1% and announced 200bn of additional bond purchases on Thursday.

7.52am GMT

Good morning, and welcome to our live coverage of economics, business and markets in the UK, the eurozone and worldwide.

Marks and Spencer has issued a warning this morning about the impact of Covid-19.

It is too early to make any reasonable forecast for revenues in the next financial year but we are planning on the basis of a prolonged downturn in demand for Clothing and Home.

We are preparing for the contingency that some stores may have to close temporarily. However, our business model of operating parallel Clothing and Food businesses and our strategy to move online including the Ocado joint venture should provide more resilience than some single sector businesses.

The final result could be at or below the bottom end of the range of profit before tax of 440-460m, given probable very depressed trading in clothing and home.

European Opening Calls:#FTSE 5309 +3.06%#DAX 8868 +2.99%#CAC 3954 +2.55%#AEX 434 +2.55%#MIB 16027 +3.62%#IBEX 6538 +2.23%#OMX 1417 +2.61%#STOXX 2517 +2.58%#IGOpeningCall

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