Wall Street slides after Federal Reserve makes emergency US rate cut - as it happened
In an emergency move, the US central bank has cut borrowing costs by 50 basis points and warns that the coronavirus "poses evolving risks to economic activity"
- Summary: Fed cuts, but Wall Street slides
- Fed chair Jerome Powell's press conference
- NEWSFLASH: FED EMERGENCY RATE CUT
- Read the full statement
- Finance ministers and central bankers issue joint statement
- Mark Carney says Bank of England is preparing for coronavirus shock
9.12pm GMT
Ouch! The New York stock market has ended the day with steep losses again, as the Federal Reserve's emergency rate cut failed to reassure investors.
The Fed's 50-pointer initially supported market sentiment, as investors got a little giddy on the prospect of cheaper money. But the fundamental concerns about the coronavirus, and whether monetary policy would really stop a slow-down in the US and global economy, prevailed.
The VIX spiked once again, to trade back around the 40 mark - a level entirely unconducive taking confident long positions in risk assets.
Dow closes down 786 points after the Fed makes its first emergency interest rate cut since 2008.
Bottom line:
-Uncertainty is high
-More Fed rate cuts likely (JPM says 50% chance we hit ZERO this year)
-Fiscal policy needed!https://t.co/xQv0vK6sOx via @rachsieg @addedvalueth
Dow Jones closes down almost 800 points, as investors worried the Fed's emergency cut won't be enough to combat the economic impact of the coronavirus. US 10y yield drops <1% for first time. pic.twitter.com/PQgxAmskQQ
Fed failed in its bid to calm down investors & Dow crashes nearly 800 points. Marketwatch site has stopped loading as people run to watch the extent of final decline. This whole thing was such an ill-judged, desperate fiasco.
WALL STREET PLUNGES AS FED RATE CUT FAILS TO EASE #CORONAVIRUS FEARS
-DOW ai 785 POINTS, OR 3%
-S&P 500 ai 2.9%
-NASDAQ ai 3%
-VIX ai 10%$DIA $SPY $QQQ $VIX pic.twitter.com/Nlniyl1Boq
8.28pm GMT
We're into the last hour of trading in New York, and it's turning choppier.
The Dow has recovered some ground, but is still deep in the red today - down 652 points or 2.4% at 26,050.68.
Does a 50 basis point cut change things? That's a tough one to answer," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. "Fed cuts tend to be less effective in situations like this when there is a supply and demand shock."
8.01pm GMT
Fears that the US economy is slowing are driving investors into the safety of government debt.
With prices at new records, the yield on US 10-year Treasury bills has dropped below 1% for the first time. That signals pessimism about growth and inflation prospects.
Historic. Signals some deep worries over future growth prospects (but also confidence on inflation remaining low). https://t.co/73SQ7gDNvD
7.36pm GMT
Allianz's top economist, Mohamed El-Erian, tweets that investors have lost enthusiasm for buying the dip, for fear of missing out of the next rally:
Amazing the difference a day can make:
Dow almost 1,000 points and could erase all of yesterday's gain.
Reasons:
Worsening economic/corporate outlook and direct evidence of the risk of ineffective #CentralBanks' policies.
Together they seriously pressure the BTD/FOMO conditioning pic.twitter.com/OmetidXrko
7.28pm GMT
Interest rate cuts usually boost shares, as looser monetary conditions should lift consumer spending and benefit company earnings.
Not tonight, though...
Stocks at lows of the session ; Dow -1000 again
Rates rallying 10bps+ , new lows.
This isn't a normal reaction. 2 interpretations:
1- Fed have lost the plot/ being bullied by the mkt
2- The data is about to absolutely nosedive, send US into recession
Both
7.22pm GMT
Fed: "An emergency 50 bps cut will boost asset prices."
Dow: " Well yes, but actually no."#DOW 25951 -2.83% pic.twitter.com/YpdJcBTl6r
7.21pm GMT
Here we go again.....the Dow's now down 910 points, or 3.4%, as the Fed rate cut fails to shore up confidence.
It's shaping up to be another hefty selloff - pushing the index back towards last week's lows.
6.29pm GMT
The emergency cut to US interest rates has spooked Wall Street, says Reuters.
Having initially craved lower borrowing costs, traders are now fretting about why the Fed acted today, rather than waiting two weeks for its next policy meeting. How bad is the US economy right now?.....
"The market reaction now is negative because the Fed sent the wrong message to the market.
"All of a sudden the Fed is really worried about the economy and this is the reason why we are having this volatility."
6.25pm GMT
Back on Wall Street, stocks are moving deeper into the red - reversing last night's strong gains.
The Dow is currently down 596 points, or 2.3%, at 26,106 points - wiping out some of Monday's 1,297-point rally.
6.18pm GMT
Capital Economics have also predicted the Bank of England will cut interest rates this month -- either at its scheduled meeting in three weeks, or in an Fed-style emergency move.
In a note to clients, they say:
We are not epidemiologists, but judging by the progression of the virus in other countries it seems sensible to assume that over the coming weeks the number of coronavirus cases in the UK will rise from 51 now to somewhere in the hundreds or thousands.....
As such, we now expect the Bank to cut interest rates from 0.75% to 0.50% at its next meeting on 26th March, but it could easily follow the Fed's emergency 0.50% cut earlier today by taking action sooner.
6.10pm GMT
Heads-up. Analysts at Nomura have predicted that the Bank of England will make an emergency cut to UK interest rate before the end of this week.
In a note, just released, they say cutting rates from 0.75% to 0.5% would buy the Bank time to "collect its thoughts" before its scheduled meeting later this month.
At that point the Bank could then make a further decision to lower interest rates again if deemed necessary (another 25bp, or even 35bp if it wanted to take rates down to what we think would be the lowest the Bank would be willing - i.e. 0.10%) and at the same time deliver some sort of easing targeted to addressing issues raised by the virus.
6.00pm GMT
The International Monetary Fund and World Bank are planning to turn their Spring Meetings, due in April, into a 'virtual event'.
The Spring Meetings are a major event in the economic calendar, with thousands of delegates usually flying to downtown Washington DC from around the world. But not this year, it seems, given concerns over the coronavirus.
#Imf, #WorldBank say will shift 2020 spring meetings to a virtual format due to #coronavirus
perhaps the fed rate cut didnt go far enough for them?
*IMF, WORLD BANK TO HAVE VIRTUAL SPRING MTGS DUE TO VIRUS: REUTERS
5.43pm GMT
Time for a quick recap
Related: Coronavirus: Iran to mobilise 300,000 soldiers and volunteers as 23 MPs infected - latest news
5.15pm GMT
European stock market have ended the day with gains, but have fallen back from their highs earlier in the day.
The emergency US interest rate cut boosted equities initially, but that quickly unravelled as investors questioned how much good it would do.
S&P 5001.5%
Dow1.8%
Nasdaq1.3%
Historically, each time (except for once), the day an emergency rate cut was announced, stocks ended the day at least 1% in the red. We're way past that.
Oil also taking its cue from risk. Likely fading more on broader sentiment, not OPEC.
"For a start, rate cuts reduce bank income, at a time banks need to be supporting the economy through a potential cash flow squeeze. Rate cuts also help little if consumers stay at home in large numbers.
"What is needed is targeted central bank help for the corporate sector - loans and bond purchases - and targeted government help for workers - tax holidays and sick pay."
4.57pm GMT
Marc Ostwald, chief economist at ADM Investor Services, argues that the Fed's rate cut is a mistake.
He argues that the coronavirus is fundamentally a supply shock (undermining company supply chains), so lower rates will simply drive asset prices higher.
Remember that observation about extended periods of economic growth 'not dying of old age', but all too frequently of policy mistakes - sort this into that category.
This is a supply side shock, it will along with the array of trade tensions sharpen the minds of the corporate world in terms of their supply chains and 'just in time' processes, but there is a structural shift, interest rates and monetary can do little to change that.
4.37pm GMT
It's been a choppy day in the markets....
U.S. Equities pic.twitter.com/NoYDS9XdxQ
U.S. Equities Intraday pic.twitter.com/lp3T60JuFm
4.34pm GMT
Wall Street is now sliding deeper into the red, as investors digest today's rate cut.
The Dow Jones industrial average has now slumped by 546 points, or 2%, back to 26,157.
Fed Chairman Powell doesn't look happy about the market's response - Dow ai gives up all post cut gains. pic.twitter.com/8XfkJbueI0
4.28pm GMT
Here are the key points from Jerome Powell's short press conference to explain today's emergency rate cut:
U.S. Fed Chairman Jerome Powell says Fed acted in face of new risks to economy.
Read more: https://t.co/EmaFccWRvM pic.twitter.com/SXmICWmPfb
13 minute press conference by Chair Powell is over
Key takeaways:
1. "We saw a risk to the outlook of the economy and we chose to act."
2. Not b/c of Trump
3. More cuts are possible
4. Support to prevent biz/individual defaults is likelyhttps://t.co/khcSXbKyDv #Fed
4.17pm GMT
Q: What damage is the coronavirus causing to the US economy?
Jerome Powell says the effects are still at an early stage, but the Fed is hearing concerns from industries such as travel. Those effects aren't visible in the data yet.
4.14pm GMT
Q: How will a rate cut protect America from a coronavirus outbreak?
Powell argues that lower borrowing costs will provide economic support, by avoiding a tightening of financial conditions. But he agrees that it won't fix broken supply chains or lower the rate of infection.
Powell : we believe our actions will provide meaningful boost to the economy #Coronavirus #FederalReserve cuts rates 50Bps
4.11pm GMT
Q: Could you cut interest rates again at your scheduled meeting later this month?
Powell says the Fed is happy with the current level of interest rates, but it will consider all the facts when it meets in a fortnight.
4.09pm GMT
Q: Should we expect other central banks to follow suit?
Jerome Powell says the Fed is in "active discussions" with its counterparts in other countries -- including today's teleconference with other G7 policymakers.
FED'S POWELL SAYS WE ARE IN ACTIVE DISCUSSIONS WITH OTHER CENTRAL BANKS
POWELL SAYS EXPECTS TO SEE ACTION FROM OTHER G7 MEASURES
4.07pm GMT
Q: What changed over the last week, and how quickly with the US economy recover?
Jerome Powell replies that the coronavirus has spread further in recent days, with more cases in the US, meaning the Fed now saw risks to the economy.
4.05pm GMT
Over in Washington, Jerome Powell has arrived for a press conference to explain today's emergency rate cut.
The Federal Reserve chair confirms that the Fed has cut borrowing costs by 50 basis points today, to help keep the US economy "strong" in the face of the risk posed by the coronavirus.
This will be by far one of the most important press conference's of Jay Powell's tenure at the @federalreserve.
3.59pm GMT
Emergency Fed rate cuts really are unusual. They only happen in times of economic distress, financial peril, or terrorism attacks, as this tweet shows:
Last Emergency Fed Cuts
Oct 2008 Lehman ai 50bp
Jan 2008 Stock Crash ai 75bp
Aug 2007 - Subprime ai 50bp
Sept 2001 - 9/11 ai 50bp
April 2001 - Weak economy ai50bp
March 2001 Tech bubble ai 50bp
Oct 1998 - Russia / LTCM ai 50bp
Courtesy of @Yogi_Chan
3.55pm GMT
Seema Shah, chief strategist at Principal Global Investors, agrees that monetary policy can't protect the US economy on its own.
The surprise cut will deliver a confidence boost and should lead to an easing of financial conditions that had tightened sharply in recent weeks.
But, beyond that, questions still remain about how policy rate cuts can help the economy if quarantines and travel barriers are introduced. Certainly, rate cuts will not help re-stock emptying grocery shelves. Monetary policy is hopeless when supply simply cannot feed demand.
3.48pm GMT
Some traders suspect the Federal Reserve could announce another rate cut at its scheduled meeting in mid-March.
Ahead of Jay Powell's impromptu press conference this morning, futures are indicating roughly even odds of another 25 bps cut when Fed officials gather for their regularly-scheduled meeting in two weeks
3.47pm GMT
Newsflash: Donald Trump is demanding deeper cuts to US interest rates.
The Federal Reserve is cuting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!
3.41pm GMT
That early bounce on Wall Street is fizzling out.....
The S&P 500 and the Dow are only slightly positive now -- a small reaction to such a dramatic move from the Fed.
What sign is it to the Fed if stocks are unable to maintain early gains in response to today's 50bp emergency rate cut? "The equity market thinks the Fed is pulling the wrong lever:" @GinaMartinAdams via @BloombergRadio
3.33pm GMT
Edward Park of asset managers Brooks Macdonald says the Fed is trying to create a feeling of "shock and awe" stimulus, to reassure markets about Covid-19.
Today's emergency rate cut is designed to signal a "strong intent" to protect the US economy, Park adds.
The US joins a rolling wave of stimulus from across the globe which has previously been focused within economies strongly impacted by the outbreak.
Markets are trying to weigh up the unknown risk of the virus with the known stimulus efforts by governments and central banks, the decisive cut by the Federal Reserve provides an additional reason for investors to consider buying the dip.
3.31pm GMT
Neil Birrell, chief investment officer at Premier Miton, predicts that more central banks will follow the Fed's lead:
The move by the Fed comes as a big surprise but will be welcomed by markets. Cuts were already discounted, but not so much so soon. It's likely that other central banks will follow.
It won't have much immediate impact on the economy but investors will be encouraged by the positive action.
3.29pm GMT
This feels like a victory for Donald Trump.
The president has been a persistent, and vocal, critic of the Federal Reserve for not cutting interest rates faster.
3.24pm GMT
The dollar is weakening following the Fed's rate cut, down around 0.5%.
This has pushed the pound up to $1.282, with the euro rising to $1.119.
Fed cuts benchmark rate 50bps to offset the economic impact of coronavirus #CODVID19
- Decision is unanimous; #Fed: Virus poses evolving risks
- G7 ready to use all appropriate policy tools
- US dollar basket $DX drops on the newshttps://t.co/2F2TrHzYO1 pic.twitter.com/OqP0mEecaX
3.20pm GMT
This is the first emergency cut in US interest rates since 2008, when the global economy was reeling from the financial crisis.
It means the Fed has now cut rates four times since last July as this tweet shows:
Fed cuts rates half a point because of covid
https://t.co/6YgAx1szOt pic.twitter.com/r76aFrWPjj
3.16pm GMT
Federal Reserve chair Jerome Powell will hold a press conference at 11am EST (4pm UK time) to discuss today's shock rate cut.
Fed Chair Jerome Powell to hold press conference in Washington DV at 11 am EST.
This is why such moves made ahead of blackout window which begins Friday.
3.12pm GMT
This emergency cut in US interest rates has sent shares rallying.
The S&P 500 index has shaken off its earlier losses, and is now up nearly 1%.
3.03pm GMT
NEWSFLASH: The US Federal Reserve has slashed US interest rates in an emergency measure to protect America's economy from the economic impact of the coronavirus.
In an unscheduled move, the Fed is cutting its benchmark rate to between 1% and 1.25%. That's down from 1.5% to 1.75%.
The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1-1/4 percent.
The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.
2.55pm GMT
The Dow Jones industrial average is now down 327 points, or over 1%, at 26,375 as stocks are continuing to dip in New York.
2.41pm GMT
Ding ding! Stocks in Wall Street have dipped in early trading -- quite a contrast with Monday's 5% surge.
The main indices are in the red, as New York shows its disappointment with the G7 statement on the coronavirus.
2.27pm GMT
It's worth noting that the US Federal Reserve's overnight liquidity scheme has just proved very popular.
This scheme makes $100bn of cash available to banks for overnight purposes, as long as they provide US treasury bills and mortgage-backed securities as collateral. It's meant to keep the plumbing of the financial system running smoothly.
First time since Sept that Fed overnight repo operation has been oversubscribed, term over 3x subscribed. Demand rising just as the Fed trys to taper its offerings PDs have more to repo alongside this TBill rally - don't see the Fed tapering any further this month
1.28pm GMT
Jennifer McKeown of Capital Economics says today's G7 statement "falls short of hopes of a coordinated policy response."
It raises the risk that central banks will disappoint markets' expectations in the months ahead, she cautions, telling clients:
This is a disappointment compared to previous hopes of an immediate and coordinated fiscal package and interest rate cuts, although such hopes had already been dampened by information leaked from "G7 officials" early this morning.
1.27pm GMT
The G7 appears to have disappointed the markets.
Wall Street is currently expected to open lower, after posting its strongest jump in five years on Monday.
US Opening Calls:#DOW 26544 -0.61%#SPX 3068 -0.76%#NASDAQ 8826 -0.57%#RUSSELL 1507 -0.77%#FANG 3532 +0.63%#IGOpeningCall
S&P 500 futures turned negative and Dow futures lost 390 points following the statement.And there are limits to what central banks can do in the current environment. Their policy arsenal is already depleted after years of low interest rates and bond-buying programs.
1.12pm GMT
Jens Nordvig, analyst at Exante Data has put his finger on the G7's problem - not enough ammo:
This is not 2008, and the policy response is not 2009 either (think: the big G20 bazooka then). What have policy makers got left? Almost no room on rates, and many have little fiscal space (and also, only G7 was able to coordinate; no G20 team play in sight).
Today's COVID-19 G7 statement a far cry from 2008 when the G7 didn't just pledge its readiness to act but actually DID act.
Back then that meant cutting int rates & recapitalising banks
Problem today is they haven't yet agreed what a coordinated response to Coronavirus wld entail
12.59pm GMT
Snap reaction: The G7 statement is a disappointment, to anyone who was hoping for dramatic action from the world's top policymakers today.
Andreas Steno Larsen of Nordea Markets says ministers and bankers are operating in the dark, so they can't agree action yet.
"G7 Finance Ministers and Central Bank Governors stand ready to cooperate further on timely and effective measures"
Let me translate that for you
"We have no clue what's going on, but we will cut interest rates and taxes should this uncertainty worsen. "
No shock. No awe. G7 pledges to coordinate response to use policy tools to support economics. Not the big coordinated rate cuts some were hoping for - but more likely to come down the road.
I'm really not seeing anything in this #G7statement that is particularly groundbreaking... apart from a pledge for joint commitment.
For cuts: we will have to wait until each Central Bank has their own meeting.
12.47pm GMT
NEWSFLASH: The world's top finance ministers and central bankers have just pledged to do what they can to protect the global economy from the coronavirus.
That could include extra government spending, they say, or changes to monetary policy (such as interest rate cuts or more asset purchase programmes).
"We, G7 Finance Ministers and Central Bank Governors, are closely monitoring the spread of the coronavirus disease 2019 (COVID-19) and its impact on markets and economic conditions.
Given the potential impacts of COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks. Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase. G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system.
Mnuchin and Powell say G7 finance ministers are "ready to take action" including fiscal measures in response to virus. pic.twitter.com/aor8TbtTwI
12.43pm GMT
Vietnam is planning to launch a 27 trillion dong (900m) stimulus package to help businesses cope with the coronavirus epidemic, according to state media.
The plan could also help Vietnam stick to its 6.8% growth target this year, despite the supply chain disruption caused by the coronavirus.
Vietnam announces $1.16bln stimulus package to help virus-hit businesses -state media https://t.co/J4GDIxSX9H
12.25pm GMT
Media entertainment group Disney has been forced to cancel a major media launch of its new Disney Plus streaming service in London, due to the coronavirus.
Journalists from across Europe were due to travel to the UK for the event on Thursday. But as my colleague Mark Sweney explains, the press launch is now canned.
NEW: The coronavirus has claimed the @disneyplus European media launch event on Thursday - hundreds expected - and press conference on Friday. Both cancelled. Product demos for media only on Friday. Doesn't affect consumer launch on 24th March
12.02pm GMT
French finance minister Bruno Le Maire is really banging the drum for a powerful economic response to the coronavirus.
He's just told a press conference in Paris that European authorities must show flexibility and solidarity.
Le Maire also told a press conference it was important to consider all options including budgetary measures to deal with the economic impact of the coronavirus outbreak.
"If there is a time we need to be flexible, it is when we are facing a crisis as important as the one we are facing today", Le Maire said.
11.44am GMT
And now for a public service announcement from the UK's new Chancellor of the Exchequer:
The whole government is working closely together to tackle COVID-19. We are taking firm action to support your families, your businesses and the public services on which you rely.
We can all help fight this virus by washing our hands with soap and water for at least 20 seconds. pic.twitter.com/9q6CJeKKLa
11.22am GMT
Elsewhere in London, a crucial meeting to decide the future of Yorkshire fertiliser miner Sirius Minerals is getting underway.
Sirius wants shareholders to approve a rescue deal from Anglo American which values the firm at 405m, or just 5.5p per share.
I'm down at the meeting at which shareholders in Sirius Minerals, which was planning to dig the UK's first deep mine for 40 years before financing problems hit. Anglo American wants to buy it on the cheap. Many small shareholders (1/?)
...telling me this morning they rather vote down the deal and lose what value there is left for them in the shares than approve a deal they see as a total steal.
Company says there is no option but to accept and the alternative is administration.
It has become very acrimonious. Chairman Russell Scrimshaw points to increased security presence due to "credible threats" of violence against directors.
Scrimshaw says if investors vote down the takeover, Anglo could buy the project out of administration.
This is true but many shareholders I've spoken to don't care. Some have sold all but one share they'll retain just to vote against.
11.01am GMT
Back in parliament, Labour MP Alison McGovern asks Mark Carney whether the Bank actually has enough firepower to fight a coronavirus downturn.
With interest rates at just 0.75%, and 475bn of quantitative easing already conducted - there's not much left, is there?
10.42am GMT
Shares are pushing higher in London, as the markets recover some of last week's heavy losses.
Traders are welcoming the Bank of England's pledge to take "all necessary steps" to protect Britain from the economic shock of coronavirus.
10.36am GMT
Conservative MP Felicity Buchan asks Mark Carney if the Bank of England could cut interest rates before its next scheduled meeting (on Thursday 26 March).
Carney takes a couple of moments to gather his thoughts, before making two points:
The committee would make a decision at the appropriate time and not before.
10.28am GMT
Angela Eagle MP asks Mark Carney about the impact of coronavirus on the labour market -- including gig economy staff who only get paid if they work.
Carney replies this is indeed an issue - but one where fiscal tools (government spending) work better than monetary ones.
I don't want to lead the government, but these are considerations we all need to take into account.
10.21am GMT
Deputy governor Sir Dave Ramsden, weighs in too - saying the Bank is now reassessing its January economic forecasts (which predicted a rise in global growth).
Ramsden adds that the Bank could launch "additional liquidity measures" to help the economy ride out the temporary shock of the coronavirus.
10.19am GMT
The Treasury Committee are also probing Mark Carney over the recent revelations that some traders gained early, unauthorised access to the audio feed from its press conferences.
Carney says that it is a "wholly unacceptable situation" that anyone should have used the Bank's backup audio feed in this way (as was revealed in December).
Related: Bank of England passed 'misuse' firm for due diligence three times
10.09am GMT
Under questioning from MPs, Mark Carney adds that he expects a "powerful and timely" global economic response to the coronavirus.
He say the Bank doesn't want "viable businesses" to collapse because of the impact of Covid-19.
10.03am GMT
Mark Carney then outlines to MPs how the Bank's various committees are taking action to protect the UK from the coronavirus.
9.53am GMT
Newsflash: Bank of England governor Mark Carney has warned MPs that the coronavirus could be a "large" but "temporary" economic shock.
The Bank of England's role is to help UK businesses and households manage through an economic shock which could prove large, but which will ultimately be temporary.
We're monitoring the situation closely across all our functions and ensuring all necessary contingency plans are in place.
9.41am GMT
In an encouraging sign, Britain's construction sector has returned to growth for the first time in nearly a year.
Output jumped in February, at its fastest rate since December 2018, according to data firm Markit.
UK construction companies signalled a return to business activity growth during February, following a nine-month period of declining workloads. The latest survey also pointed to the sharpest rise in new orders since December 2015. Anecdotal evidence mainly linked the recovery to a post- election improvement in business confidence and pent-up demand for new projects.
9.20am GMT
France's finance minister, Bruno Le Maire, has tweeted that he held a "very positive" phone call with ECB chief Christine Lagarde today.
Le Maire adds:
"We want a strong and coordinated answer at euro zone and G7."
Entretien ti(C)li(C)phonique tris positif ce matin avec la pri(C)sidente de la #BCE @Lagarde sur la ri(C)action i(C)conomique et financiire au #Coronavirus : nous voulons une ri(C)ponse forte et coordonni(C)e au niveau de la zone euro et du G7.
9.14am GMT
Analyst John Kemp has spotted that investor are expecting sharp cuts in US interest rates over the next two months - which would please Donald Trump.
U.S. INTEREST RATE traders are anticipating the Fed will cut its target by 50 basis points by Apr to reduce the risk of a coronavirus-induced recession: pic.twitter.com/VTt089sj47
9.03am GMT
Policymakers might be relieved to see shares going up again today, as it suggests last week's coronavirus panic is easing.
But there are more important things in life than the stock market -- the G7 should be more focused on protecting the wider economy.
Big variance in predictions about the virus and its economic impact. For The Economist "..25-70% of the population of any infected country may catch the disease...Across the world, the death toll could be in the millions."" we could have a global recession. /1
There are milder forecasts, depending on (difficult) containment success by the 60. countries already infected. For the economy, the supply and demand shocks are quickly conflating. Supply-side policies to help preserve vital supply-chains and demand stimulus are necessary/2
A few days ago I asked: Would rate cuts by some basis points produce visible results? Is a "gesture" unavoidable in the game with financial markets? Or is it more important the "game" with Treasuries for a bit of necessary fiscal policy? Its certainly a lot about fiscal./3
For CBs, its mostly about liquidity supply via QE and targeted liquidity to help the survival of viable firms (SMEs) that will lose revenues during months. Liquidity programmes with incentives for banks to continue to finance them and possibly some temporary forbearance./4
Fiscal policy needs to support affected sectors. The goal is that the economic shock doesn t morph into a financial crisis. Fortunately, the financial system is stronger now and rate cuts are not the first line of defense in Europe. Weaker banks would complicate the response /5
Some policy rate cuts will become unavoidable for the CBs that have space to do so. That may help stocks but the stock market should not be the focus of policy, but rather the general support to the economy./6
For some observers, the stock market crash raises the question of whether such events predict/cause recessions. In 1966 Samuelson quipped on Newsweek that the stock market had predicted 9 of the last 5 recessions. However, being correct more than 50% would not be too bad /7
But its worse. Since 1928 the US had 47 sell-offs, with 20 bear markets (at least -20%) and 27 corrections (between -10 and -20%). Only 16 were associated with recessions. The economic problems that can determine a global recession are now much broader than stock exchanges 8/8
8.49am GMT
Sales of hand sanitiser surged in the UK last month, as worried consumers tried to protect themselves from Covid-19.
"Given the media focus around the outbreak of COVID-19 in February, it's unsurprising to see shoppers prudently protecting themselves from illness."
Related: UK supermarkets draw up plan to 'feed the nation' as coronavirus spreads
8.42am GMT
Sales at bakery chain Greggs have been hit by the series of blustery storms that hit Britain last month.....and the coronavirus could hurt the business too.
"We made a very strong start to 2020 in January, but in February saw a significant slowdown in sales growth as a result of the storms that have affected the UK.
There is some uncertainty in the outlook, particularly given the potential impact of Coronavirus.
8.34am GMT
European markets are a sea of green, as optimism following Wall Street's huge rally ripples across the Atlantic.
As you can see, every index is up over 1% - with strong gains in London (+2%), Germany (+1.7%) and France (+1.7%).
There are rallies, and there are rallies - and boy did the Dow Jones RALLY on Monday night, posting its greatest ever points gain on the hopes that the world's central banks can muster a co-ordinated response to the coronavirus this Tuesday.
It is a sign of just how bad the final week of February was that the Dow's 1,297 point - or 5.1% - increase still leaves it almost 3,000 points off of where it was on Valentine's Day.
8.28am GMT
The stock market rally is gathering pace in London, driving shares higher.
The FTSE 100 is now 136 points up this morning, or 2%.
8.21am GMT
Shares in holidaymaker TUI jumped by 4% at the start of trading in London.
"At this point in time, we only see a marginal effect on our operations,"
Intertek is not immune to the impact of the Novel Coronavirus and our 2020 performance will be affected by the temporary disruption to the supply chains of our clients in China and any impact it might have on global trade activities. It is too early to quantify the impact of the Novel Coronavirus.
8.09am GMT
Boom! European stock markets have jumped at the start of trading, on hope of central bank intervention.
The FTSE 100 has gained 97 points, or 1.5%, taking the blue-chip index back to 6745 points. Nearly every stock is rallying. That's a solid rise, but it still leaves the Footsie 9% lower than in mid-February.
8.00am GMT
By calling on the Federal Reserve to "cut rate big", Donald Trump is demanding significant easing of US monetary policy.
The Fed funds rate is currently 1.50-1.75% -- compared to just 0.75% in the UK, and zero in the eurozone. So there is potential for chunky cuts, with the markets already pricing in three cuts this year.
7.52am GMT
Australia's central bank has already taken action to ward off a coronavirus recession, by slashing borrowing costs to a record low.
The Reserve Bank of Australia voted to lower its benchmark interest rate to just 0.5% today, from 0.75%, blaming the impact of the virus outbreak. That could set the tone for today's coronavirus conference call.
The Reserve Bank of Australia has cut official interest rates to a new record low of 0.5% due to the "significant effect" of the coronavirus outbreak on the Australian economy and has signalled it is prepared to cut further if needed.
"The global outbreak of the coronavirus is expected to delay progress in Australia towards full employment and the inflation target," the RBA governor, Philip Lowe, said.
Australia's Central Bank cut interest rates and stated it will most likely further ease in order to make up for China's Coronavirus situation and slowdown. They reduced to 0.5%, a record low. Other countries are doing the same thing, if not more so. Our Federal Reserve has us....
....paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big. Jerome Powell led Federal Reserve has called it wrong from day one. Sad!
7.40am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
European Opening Calls:#FTSE 6676 +0.32%#DAX 11933 +0.63%#CAC 5363 +0.55%#AEX 546 +0.79%#MIB 21790 +0.62%#IBEX 8802 +0.70%#OMX 1687 +0.44%#STOXX 3359 +0.62%#IGOpeningCall
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