European and US stock markets fall amid Covid-19 and trade fears - as it happened
Rolling coverage of the latest economic and financial news, as the IMF predicts a deeper recession and a slower recovery
- Latest: FTSE 100 has tumbled 3%
- Losses in US and Europe too
- Investors worried by Covid-19 cases in some US states
- US considering new tariffs on Europe'
- Coronavirus - latest updates
- See all our coronavirus coverage
6.24pm BST
Time for a quick recap
Fresh worries over the Covid-19 pandemic have hit shares on both sides of the Atlantic today.
There is growing concern about the number of new cases in countries that are in the midst of lifting lockdown measures. The road to the new normal was always going to be full of potholes and reopening will inevitably come at the cost of rising numbers of infections but how this is managed will be key to whether they'll be a success or lcokdown will return in full.
Germany has been widely commended for its handling of the first wave of the crisis, which will make its handling of the latest increase all-the-more interesting. Authorities in Beijing are already claiming to have its outbreak under control which is quite remarkable given how rapidly it was spreading in its early days.
Related: Global economy will take $12tn hit from coronavirus, says IMF
5.41pm BST
Just in (or Justin!, perhaps): Canada's credit rating has been downgraded.
Fitch has cut its rating on Canadian government debt from AAA (the highest rating), down to AA+ (the second highest).
JUST IN: Rating agency Fitch has downgraded Canada to AA+ status, but says the outlook is stable.
5.37pm BST
Global oil prices tumbled by $2 a barrel this afternoon after data from the US Energy Information Administration (EIA) revealed that stockpiles of US crude climbed to a third consecutive record high last week.
The EIA's data punctured the oil market's buoyant run to $43.83 a barrel earlier this week, highs not seen since early March before major economies brought in strict Covd-19 lockdown measures.
The #EIA reported a 1.4mn build in crude stocks last week, higher than the consensus expectation for a 0.3mn rise and which means crude stocks continue their march higher, which is unusual for this time of year #OOTT #Oil pic.twitter.com/DLJKvExBXp
#EIA #crude stocks jumped +1.4 million barrels, confirming our hunch that domestic production received a post Cristobal boost, and that the next couple weeks will continue to see moderate builds, unless US exports rapidly pick up. Lower imports should also keep builds in check. pic.twitter.com/RvxncPNlgS
5.27pm BST
IMF chief economist Gina Gopinath has warned the world's governments not to relax the fight against Covid-19, and the economic damage caused by the pandemic.
Speaking after the IMF slashed its growth forecasts, Gopinath said that central banks and governments must continue their substantial joint support", given the tremendous uncertainty" we still face.
We are definitely not out of the woods. We have not escaped the great lockdown.
"We are definitely not out of the woods. We have not escaped the great lockdown." IMF cautions policymakers to be vigilant. @IMFNews
Read more: https://t.co/gEpUfH5Nqv pic.twitter.com/r4Uafo67pe
5.04pm BST
Money has poured out of equities today, and oil too, in favour of bonds (safer than shares) and the US dollar.
This has pushed the pound down nearly one cent, to $1.243.
Worrying virus numbers + month/quarter end rebalancing + Biden leading the polls + Another front in the trade war =
Stocks
Oil
Gold
USD
Bonds
4.54pm BST
The travel sector bore the brunt of today's selloff, with cruise operator Carnival down 8.7% and holiday firm TUI shedding 8.8%.
That highlights the anxiety about a fresh wave of coronavirus outbreaks that could force governments to slam on the brakes, and impose lockdown measures again.
4.44pm BST
Oof! A late sell-off has left the FTSE 100 languishing deeper in the red at the close of trading.
The blue-chip index of leading shares closed 3.1% lower at 6,123, a loss of 196 points. That wipes out the last 10 day's gains, as fears of a new wave of Covid-19 cases sweeps the markets.
Equity markets are deep in the red this afternoon as health concerns are weighing on sentiment. Yesterday's update from Dr Anthony Fauci, a health advisor to the US government, spooked traders as he described the increase in Covid-19 cases in some US states as 'disturbing'. The statement comes as certain US states, such as California, have seen an increase in the infection rate, which is a result of loosening lockdown restrictions. The medical expert wasn't extremely pessimistic as he added there might not be a need for a total lockdown. As of 4 July, the UK will relax its social distancing policy from 2 metres to 1 metre, in addition to that, there some lockdown restrictions will be eased too. This should provide assistance to the UK economy, but there are worries we will see an increase in the infection rate in the months ahead.
Earlier today it was announced the US are considering introducing tariffs on $3.1 billion worth of goods from the EU and the UK. It would appear that President Trump is picking a trade fight with Europe in an effort to distract US citizens from the domestic health situation.
4.12pm BST
It's the same picture in London, where the FTSE 100 is now down 2.7% or 171 points at 6,148.
That's still the lowest since 16 June (the last time the market really soared), and would be the worst day since June 11.
The top 5 UK shares traded by IG clients today:
Lloyds Banking Group PLC -2.92%
International Consolidated Airlines Group SA (LSE) -8.3%
Barclays PLC -3.73%
UK Oil & Gas PLC -5.26%
Rolls-Royce Holdings PLC -3.55%https://t.co/W2NVKEw31Q
3.43pm BST
The selloff is accelerating, knocking almost 2% off the US Dow Jones industrial average after an hour's trading.
Yes, whatever Dave Portnoy may have told you, stocks can go down as well as up....
Stocks extend drop, Dow falls more than 500 points or nearly 2% https://t.co/ylez9JaBp8 pic.twitter.com/mA7ezoZzDN
3.22pm BST
Even the Nasdaq is being dragged down by today's sell-off.
The tech-focused index is down 1% today -- a rare sight, given it has surged by 30% this quarter and is actually up 11% this year despite the pandemic.
Amazon, Apple, Facebook, Alphabet & Microsoft as % of S&P 500 market cap
H/T @CNBC pic.twitter.com/FU7HmdTWE3
NASDAQ's rally has pushed it *16% above its 200 dma*, while only 45% of NASDAQ members are above their 200 dma!
There is only 1 other time this happened (big NASDAQ rally on weak breadth):
Feb 2020, just before stocks crashed
Only difference? Breadth now is *WORSE* than in Feb pic.twitter.com/0iFQZN3qmO
3.15pm BST
In another sign of the crazy times we're living in, Austria has been swamped with demand for a new 100-year old bond.
Bids for the 2bn bond totalled 17.7bn, Reuters says, meaning Austria will only have to pay 0.88% interest per year on the debt.
Good morning.
Starting today with another item to add to my list of once unlikely/unthinkable becoming reality:
A more than 10-times over-subscribed 100 year bond issued at less than 1%.
This is what happened this morning with #Austria's ultra-long bond issuance.#markets pic.twitter.com/D9axSajQUP
2.53pm BST
Every sector of the Dow Jones industrial average is in the red in early trading.
Basic materials, energy, industrials and banks are the worst hit sectors.
2.49pm BST
An unprecedented economic and health crisis requires unprecedented government intervention - and here's the result:
I thought this was an interesting chart from today's #IMF latest economic projections:
public debt reaching an all-time high, largely as a result of generous & one might say welcome fiscal measures across the globe,
@IMFNews @netwealth @Policy_Exchange pic.twitter.com/rJTweyx18p
2.46pm BST
The jump in Covid-19 cases, and the threat of a new US-EU trade war (see here) are both weighing on the minds of investors today.
Christopher Smart, Chief Global Strategist at Barings, explains:
U.S. markets that seemed impervious to the rising number of cases in Florida, Texas and Arizona, seem ready to pause now that governors of those states have issued fresh warnings to their citizens to wear masks. Public health officials testifying this week have also warned that much work remains to be done and the overall rise in U.S. cases stands in stark contrast to a much better record in Europe at keeping contagion under control. Still, as long as the base case remains that extensive lockdowns are behind us and vaccine options are on the horizon, risk assets will find buyers.
Yet familiar worries around trade friction have also re-appeared. Not only does the US-China deal look tenuous as Beijing remains behind on its promised purchases and the election campaign heats up, but reports have emerged that Washington is considering broad new tariffs against European luxury amid longstanding concerns about aircraft subsidies. Clearly, there is still much about the post-COVID world that looks a lot like the pre-COVID world!"
2.36pm BST
The US stock market has followed Europe into the red at the start of trading.
The Dow Jones industrial average has lost 256 points, or almost 1%, to 25,899, as sentiment is dented by the jump in Covid-19 cases in several US states including Arkansas, California and Texas.
Dow falls nearly 1% at the open https://t.co/pkhOyb4NvQ pic.twitter.com/SPF3MnhC95
2.33pm BST
The IMF's forecasts certainly don't sound like a V-shaped recovery.
Indeed, the Fund is emphasising just how uncertain the future is:
A high degree of uncertainty surrounds this forecast, with both upside and downside risks to the outlook. On the upside, better news on vaccines and treatments, and additional policy support can lead to a quicker resumption of economic activity.
On the downside, further waves of infections can reverse increased mobility and spending, and rapidly tighten financial conditions, triggering debt distress.
The #COVID19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated. Global growth is now projected at -4.9% in 2020, 1.9 percentage points below our April 2020 #WEO. Read the latest report https://t.co/WpXSzg9YxA pic.twitter.com/G7vvQXiGBn
IMF's Economic Counsellor @GitaGopinath did not respond whether global growth will have a V shape or a W shape and stressed that there is great uncertainty pic.twitter.com/Qzt69sRoMD
2.29pm BST
The IMF has now slashed its GDP forecast for 2020 twice in two months:
2.05pm BST
IMF cuts 2020 Global GDP forecast to -4.9% (Prev. -3.0%) pic.twitter.com/0n4MWEBKyc
2.04pm BST
Newsflash: The International Monetary Fund has slashed its growth forecasts, after concluding that the coronavirus is having an even worse impact than previously thought.
In its new World Economic Outlook, the Fund predicts global output will shrink by 4.9% this year, worse than the 3.0% decline expected in April.
There is a broad-based aggregate demand shock, compounding near-term supply disruptions due to lockdowns.
Related: Global economy will take $12tn hit from coronavirus, says IMF
1.56pm BST
More jobs news: Britain's largest steelmaker, Tata Steel, could be close to agreeing a government loan to 8,000 jobs....
Related: UK government and Tata Steel close to rescue deal saving 8,000 jobs
1.13pm BST
Ouch! The UK airport industry fears that 20,000 jobs are at risk across the country, as operators struggle to restart after the lockdown.
It's a timely warning, with 4,500 jobs being cut at Swissport today.
The Airport Operators Association (AOA), which represents more than 50 airports, said future passenger numbers at UK airports were expected to be significantly lower, and analysis of its members suggested up to 20,000 jobs were at risk.
Up to 110,000 jobs could be lost in industries supported by airports, AOA warned.
12.54pm BST
The UK government has now outlined how pubs, restaurants, hairdressers and hotels can reopen next month.
They'll be encouraged to keep the noise down, to prevent customer having to shout or get too close. Bars and eateries should use table service where possible, with a single staff member serving a table, while hotels should clean particularly often and close communal rooms (so no more fighting over the TV remote).
Related: PM issues key points to businesses in England on how to reopen
12.04pm BST
As the clock strikes noon, Europe's stock markets remain sharply lower:
12.00pm BST
The IMF's latest growth forecasts, due in two hours, will shed new light on whether the world economy may achieve a V-shaped recovery, or something rather more lethargic.
Professor Costas Milas of the University of Liverpool suspects Britain's recovery will be a long haul:
As far as the UK is concerned, current indicators (based on Google mobility data) point to a Nike swoosh' recovery. That is, UK GDP, which dropped steeply in the beginning of 2020, appears to be following a very slow rebound towards its pre-virus level (December 2019) as evidenced by the retail and recreation', grocery and pharmacy' and workplaces' mobility.
In fact, all three indicators suggest a slow rebound towards the baseline (the median value of the January to early February period).
A V-shaped recovery is impossible unless the rebound in consumer spending is V-shaped which is unlikely.
Given China is the birthplace of the pandemic, it is likely a canary in the coal mine for the rest of world. In March, retail sales were down 16% compared to March 2019. They are a figure to monitor closely as China keeps reopening its economy.
11.36am BST
As if Covid-19 wasn't enough, investors are also disconcerted by the prospect of a new trade dispute between America and Europe.
Bloomberg is reporting that Washington is considering imposing new tariffs on $3.1bn of exports from the UK, France, Germany and Spain. Such a move could fuel transatlantic trade tensions just as economies slowly reopen from lockdown this summer.
The U.S. Trade Representative wants to impose new tariffs on European exports like olives, beer, gin and trucks, while increasing duties on products including aircrafts, cheese and yogurt, according to a notice published late Tuesday evening. The statement lays out a month-long public comment period ending July 26....
If the U.S. follows through with its plan, it could hammer European luxury brands like Givenchy and Hermes -- which produce leather goods -- and Remy Cointreau and Pernod Ricard, which make cognac and champagne. LVMH Moet Hennessy Louis Vuitton would be particularly vulnerable because it produces a wide array of these products.
Full BBG Story on US vs EU/UK export tariffs pic.twitter.com/NB6sjLKZux
11.21am BST
Wall Street is expected to fall around 1% when trading begins in over three hours.
The surge in Covid-19 cases in some US states is threatening to derail reopening plans, Bloomberg reports:
Cases are surging in Texas, Florida, Arizona and in California, which on Tuesday broke its record for new cases for the fourth day in the past week. Even in New Jersey, where numbers have been falling, Governor Phil Murphy warned that the transmission rate is beginning to creep up."
Coronavirus cases in the U.S. increased by 35,695 from the same time Monday to 2.33 million, according to data collected by Johns Hopkins University and Bloomberg News. The 1.6% gain was higher than the average daily increase of 1.3% the past seven days. Deaths rose 0.7% to 120,913....
STOCKS PREMARKET:
- Dow down 298.10 points
- Nasdaq down 59.25
- S&P down 31.00
Here's what's moving markets Wednesday: https://t.co/k5aGbLgi6f
10.52am BST
UK pub chains are suffering a post-excitement hangover today.
J Wetherspoon's and Mitchells & Butler are among the top fallers on the FTSE 250 index, both down over 5%. They had rallied on Tuesday morning, as traders welcomed the reopening of pubs on 4th July.
Related: Businesses face privacy minefield over contact-tracing rules, say campaigners
10.43am BST
A fresh bout of coronavirus worries have put markets on their backs again today, says AJ Bell investment director Russ Mould.
The US is seeing a spike in new cases in some states, although whether this reflects a second wave or a continuation of the first wave is open to debate.
Other countries, such as Germany and China, have seen an increase in infections in some areas after emerging from lockdown.
10.37am BST
In a new blow to the UK economy, airport ground handling company Swissport is planning to cut more than 4,500 jobs.
The move follows the mass cancellation of flights since the pandemic struck, as my colleague Jasper Jolly explains:
The company, which handles services such as passenger baggage and cargo for airlines, on Wednesday began a consultation process that is expected to result in 4,556 workers being made redundant, more than half of its 8,500-strong UK workforce.
Swissport was already under pressure at the start of the crisis when the collapse of the regional airline Flybe put smaller UK airports at risk. However, the grounding of the vast majority of flights since the UK's lockdown began has all but wiped out revenues for many airlines and their suppliers.
Related: Aviation services firm Swissport to cut more than 4,500 UK jobs
10.27am BST
The sell-off is picking up pace in London, with the FTSE 100 now down 154 points or 2.5% at 6165 points.
That's the lowest sine June 16, and means the Footsie is down over 18% this year.
10.26am BST
It could be a grim day for Britain's commercial landlords.
Their tenants are due to stump up rent for the next quarter today, but many are expected to withhold their cash. After months of lockdown, shops simply don't have the funds, with many already trying to renegotiate their rent down.
Related: Commercial landlords expect shortfall on rent day for UK retailers
10.17am BST
Four years on from the Brexit referendum, the mighty British pound is diminishing towards becoming a mere emerging market currency.
At least, so claims Bank of America analyst Kamal Sharma. In a research note published this week, Sharma argued that investors are losing their trust in sterling (which was worth around $1.50 before the EU vote, vs $1.25 today).
In the four years since the UK voted to leave the EU, trading conditions in the pound and the big swings in exchange rates make it a better match with the Mexican peso than the US dollar, said Kamal Sharma, a currency analyst at BofA.
He said that movements in the currency since the June 2016 Brexit vote have become neurotic at best, unfathomable at worst".
Pound is becoming an emerging market currency, says BofA analyst https://t.co/HhdE8fQmFt
We've really seen a lot more volatility in the pound than we have in the other major currencies such as the US dollar, the Japanese yen, the euro even, and the Swiss franc.
9.49am BST
There are only five risers on the FTSE 100 this morning. They include online grocer Ocado (+1%) and supermarket chain Sainsbury's (+0.5%), who both saw sales jump during the lockdown.
Top fallers include catering company Compass (-4.8%), retail groups Next (-3.5%) and Kingfisher (-3.3%), housebuilder Persimmon (-3%) and British Airways parent company IAG (-4%). They would also suffer if a second wave of Covid-19 cases forced the UK government to tighten the lockdown again.
9.32am BST
Bit of a sharp sell off post Euro open. You'd have thought pubs re-opening was good news...#FTSE 6195 -1.98%#DAX 12269.37 -2.03%#CAC 4926.86 -1.81%#DOW 25899 -0.98%#SPX 3104 -0.87%#NASDAQ 10153 -0.55%
9.31am BST
It's early days, but the FTSE 100 (-1.8%) is currently on track for its worst day in almost two weeks.
Investors are trying to juggle hopes of an economic recovery against the risk of a jump in Covid-19 cases, which could lead to new lockdown measures.
Equity markets continue to trade the ranges as investors search for direction on how quickly the economy will recover and whether second waves threats are real.
On the second wave, the US looks clearly to have suffered a new, and in the words of Dr Fauci, disturbing surge' in cases. Virus hotspots like Texas, Florida, California and Arizona are seeing cases soar. Such is the worry the EU may ban Americans from travelling to its member states. Tokyo has also reported a spike in cases, whilst Germany is locking down two districts in North Rhine-Westphalia and there has been an outbreak in Lower Saxony.
9.16am BST
European stock markets are sliding deeper into the red.
After an hour's trading, the FTSE 100 is now down 1.8% or 114 points at 6,205. That more than wipes out yesterday's gains, and knocks shares to their lowest levels in nearly a week.
In the last 24 hours 7 states have reported record coronavirus hospitalisations - Arizona, Arkansas, California, North Carolina, South Carolina, Tennessee and Texas. The Lone Star state also saw an all-time high case increase on Tuesday, something that has become almost a daily occurrence.
It is a damning indictment of the Trump administration, and its laissez-faire attitude towards the pandemic from the off. This isn't a second wave, but rather a continuation of the first.
Related: Health leaders urge review of UK's readiness for Covid-19 second wave
9.03am BST
The lockdown has given people plenty of time to cook and eat at home (as well as drink), and Premier Foods has reaped the benefits.
During the outbreak of COVID-19, food has been identified by the Government as a key industry and we feel privileged to play our part in keeping the nation fed.
One of the most prevalent trends we have seen during the lockdown is that Britain has got cooking again, with particularly high levels of demand for items relating to meal preparation, including cooking sauces, gravy and baking ingredients.
8.48am BST
Online wine subscription company Naked Wines has benefited from a surge in demand from thirsty customers during the lockdown.
I'm delighted to report a strong set of results to conclude a year of transition for Naked Wines.
We are ending the year with great momentum behind our growth plans and a simplified, well-capitalised online pureplay model that is ideally suited to the current climate.
8.33am BST
Business conditions in France have improved this month, as Covid-19 lockdown measures have eased.
Statistics body INSEE says its business climate index has recovered from May's plunge, due to a pick-up in confidence at factories and service sector firms.
In June 2020, the business climate has recovered very clearly, in connection with the acceleration of the lockdown exit....
At 78, the business climate has exceeded the low point reached in March 2009 (70), but remains far below its long-term average (100).
FRENCH JUNE INDUSTRIAL CONFIDENCE 77 POINTS (FORECAST 80) VS REVISED 71 IN MAY - INSEE
FRENCH JUNE SERVICE SECTOR CONFIDENCE 77 POINTS VS REVISED 52 IN MAY - INSEE
FRENCH JUNE COMPOSITE BUSINESS CONFIDENCE 78 POINTS VS REVISED 60 IN MAY - INSEE
8.19am BST
Gold has hit an eight-year high this morning, extending its recent rally.
Bullion hit $1,773 per ounce for the first time since 2012, up from around $1,500/oz at the start of this year.
The major driver behind the gold rush is fear - fear of a seeing a burst in the actual risk bubble.
8.04am BST
Europe has taken the baton from Asia, and fumbled it.
Stocks are dipping at the start of trading in London, amid concerns over rising coronavirus cases in the US.
7.22am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Despite evidence of virus surges across the US, the market's faith in reduced likelihood of the return of massive lockdowns had enabled investors to largely shrug off that concern.
Related: Global report: seven US states report record Covid-19 hospitalisations
Reopening optimism is showing signs of fading with European stocks pointing to a lower open following two days of gains. The same stubborn optimism that saw Asian stocks creep up to 4-month highs overnight is not being felt here in Europe.
A quiet economic calendar will leave risk sentiment in the driving seat.
European Opening Calls:#FTSE 6293 -0.43%#DAX 12484 -0.32%#CAC 5005 -0.26%#AEX 572 -0.46%#MIB 19793 -0.25%#IBEX 7422 -0.23%#OMX 1677 -0.39%#STOXX 3288 -0.32%#IGOpeningCall
We're talking about a bunch of different ideas that we may need to do in another bill, and we want to take our time and make sure we're thoughtful.
So whatever we do it'll be much more targeted, much more focused on jobs, bringing back jobs and making sure we take care of our kids."
- US Treasury Secretary Mnuchin said the administration is very seriously considering another stimulus bill and that the bill may pass in July
Two months after its dire predictions of the steepest recession in almost a century, the International Monetary Fund will release new global economic forecasts this week that will probably look even worse.
Officials at the Washington-based Fund have warned that a revised outlook due on Wednesday may feature a more pessimistic view than in April. Back then, they said the Great Lockdown" caused by the coronavirus would force a global contraction of 3% this year.
Two months after its dire predictions of the steepest recession in almost a century, the IMF will release new global economic forecasts today - here's what to expect https://t.co/C4yytlVmdg pic.twitter.com/amk5c72RLP
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