Splat. The early Wall Street rally had fizzled out too, leaving the Dow flat and the S&P 500 down 0.9%.
Uh oh…. the pound has lost its earlier gains, and is now down against the US dollar at $1.172, and the euro at €1.084.
A US central bank chief has warned that unemployment will rocket, in the short term, as firms hunker down to help fight Covid-19.
St. Louis Federal Reserve president James Bullard said that around 46 million people currently due jobs with a ‘high contact’ with the public, so are at risk of layoff.
“They are people who are in some kind of occupation where they have interaction with the public and that is exactly what our health authorities say is not supposed to be occurring,”
In February there were 5,787,000 Americans classed as unemployed, down from over 15m in October 2009 – after the 2008 financial crisis.
Bullard predicted “unparalleled” disruption in the next few months — but hopes that the economy will bounce back. The last quarter of 2020 and the first quarter of 2021 could boom, he suggests.
Nearly every member of the 30-strong Dow Jones industrial average is up in early trading.
Aircraft maker Boeing is leading the way, up 18%, thanks to the Senate’s promise of $500bn in direct loan support to key industries such as aviation and aerospace.
Nike are up 8.8%, with American Express gaining 7.4%, amid hopes that the bailout package will support the US economy.
Wall Street opens higher
The US stock market is open (for electronic trading, anyway), and stocks are rallying.
Relief that lawmakers have agreed a $2trn stimulus package has pushed the Dow Jones industrial average up by over 2%, or 500 points — adding to last night’s 11% surge.
The S&P 500 and the tech-focused Nasdaq index are both strengthening too, as the prospect of a huge fiscal stimulus plan calms market nerves.
This is lifting the mood in Europe – pushing the FTSE 100 back up. It’s currently 91 points higher, or 1.87%, on top of Tuesday’s 9% leap.
Christopher Smart, Chief Global Strategist & Head of the Barings Investment Institute, reckons the US fiscal stimulus package is an important step.
It won’t solve the economic crisis overnight, but it’s better than watching the two sides on Capitol Hill tear pieces off each other:
“They say that you can’t just throw money at a problem, but it certainly helps. Last week, the Fed did all it could to stabilise financing channels and to make sure that companies could borrow at reasonable rates in spite of the current health crisis. But access to cheap financing only goes so far when you don’t have any revenues.
“In early reports, the fiscal package that looks like it’s headed for passage seems to have exactly what businesses and households really need right now: loans, tax breaks and benefits that help replace lost revenues and family income. It probably won’t be enough when all is said and done, but it’s much better than nothing at all.
“Besides, when was the last time you saw Mitch McConnell and Chuck Schumer say nice things about the same piece of legislation?
Here’s a breakdown of the stimulus package agreed (provisionally) by US lawmakers last night:
- Direct payment to most Americans.
- $350bn in loans for small businesses that may be forgiven if firms use them to keep workers on payroll.
- $500bn in aid for hard-hit industries and states and $50bn for airlines.
- At least $75bn in aid to hospitals.
Tomorrow we discover how many Americans lost their jobs last week, as the Covid-19 crisis stuck US firms. And it could be historically bad.
A week ago, the initial jobless claims figure jumped by 70,000, to 281,000 – a two-year high.
But given the wave of layoffs and closures, economists reckon several million Americans may have filed claims for unemployment support. That would be a record, exceeding the previous peak of nearly 700,000 set in 1982.
Obviously clothes are still needed, even in an era of home working.
But it’s hard to believe that satisfying online orders for Next’s t-shirts, blouses and kidswear is so essential that staff should be travelling to stores.. lured by a 20% pay rise.
Press Association has the story:
High street fashion chain Next is offering staff a 20% boost to their pay if they turn up to stores on Wednesday, despite Government warnings to stay home.
The retailer is asking workers to travel to shuttered sites and pick clothes for online orders “to keep the company operating”, according to a letter seen by the PA news agency.
Next has told staff that “we desperately need your support to keep the company operating”. But surely the company’s bankers will be understanding, given the stern warning from the Treasury and the Bank of England today?
Several UK manufacturers are ready to join the battle to create desperately needed ventilators, and are waiting for Westminster to pick which proposals to back.
My colleague Rob Davies explains:
Manufacturers including Airbus and Dyson are waiting for the government to give the green light to start producing medical ventilators, after separately finalising plans to make thousands needed to help the NHS fight Covid-19.
The proposals vary, with Dyson offering to design and build a new ventilator from scratch and a consortium called Ventilator Challenge UK, led by Airbus, planning to scale up production of existing models.
The government, which wants to increase the number of ventilators in the NHS from 8,175 to 30,000, is considering which option to choose or whether to press ahead with both. A decision could come as soon as Wednesday, according to sources in Westminster.
Here’s the full story:
Global oil market prices may still be under pressure but the market price for a niche petrochemical used to make hand sanitisers has more than doubled to reach a new record high.
Rising demand for sanitary and hygiene products to help contain the coronavirus outbreak caused the market price of isopropyl alcohol, or IPA, to skyrocket on Tuesday to a fresh record high of €3,100 per metric tonne, according to experts at S&P Global Platts.
The price surge means chemicals giant Ineos, owned by billionaire industrialist Jim Ratcliffe, should make a decent return on plans to ramp up production of the compound from its Grangemouth refinery in Scotland.
The commodity experts said some traders were offering to pay between €5,000 to €6,000 a tonne because the chemical ingredient has become so scarce in the market following a surge in demand for hand sanitiser.
The CBI’s latest survey of UK retailers is out….and confirms what we already knew: the public have been buying plenty of food, drink and essential household products, and not much else.
Grocers reported exceptionally strong growth in sales volumes in the year to March, as did specialist food and drink firms. However, most other sectors reported sharp falls in sales volumes, including clothing, furniture and ‘other normal goods’ (such as flowers, jewellery, cards etc).
So overall retail spending appears to have been flat (meaning a real ‘fast or famine’ for the high street).
You’ll be unsurprised to hear that retail sales volumes are expected to fall sharply in the year to April, with retailers more pessimistic than at any time since April 2009.
Orders placed upon suppliers fell for the eleventh consecutive month, despite a strong rise in orders placed by grocers. Orders are expected to fall across most sectors in the year to April (including grocers), with expectations the weakest since April 2009.
Just in: The government has announced that estate agents, lettings agencies and bingo halls that have closed to help stop Covid-19 spreading will be now be exempted from business rates in 2020-21.
Chancellor Rishi Sunak says the move follows the crackdown on non-essential companies :
We are determined to do whatever it takes to support businesses during Covid-19, which is why we have extended business rates relief for the high street.
Today, I am removing some the exclusions for this relief, so that retail, leisure, and hospitality properties that have closed as a result of the measures announced by the Prime Minister in his statement on Monday will now be eligible for the relief.
As traders take a break for elevenses, the rally has officially fizzled out – with stocks now slightly lower in London and Frankfurt.
Barclays is extending measures for personal banking customers and is automatically waiving interest on all arranged overdrafts from 27 March to 30 April.
It has also set up an online form for mortgage holiday applications for customers in financial difficulty, to speed up the process.
Barclays managing director Fillean Dooney said:
“It’s crucial we offer the right support to our customers through this challenging time. We have therefore decided to waive all overdraft interest until the end of April, meaning there will be no charges for customers to use their arranged overdraft.
We are reviewing all options to help customers after this time to ensure we support those in financial difficulty.”
As well as help from their banks, UK businesses also want more clarity about whose actually allowed to stay open during the government’s lockdown.
CBI director-general Carolyn Fairbairn has tweeted that many firms are confused by the guidance:
The situation is looking somewhat messy. First, Boris Johnson told the nation to stay at home wherever possible.
Then yesterday, health secretary Matt Hancock said those who cannot work from home should go to work “to keep the country running”. This is creating a grey area for companies — notoriously with Sports Direct trying to claim it was an essential service.