Closing summary: Wall Street bounces back - for a day
US markets have closed after a day that started with what looked like another selloff.
The Dow ended up more than 1,000 points after the White House and the Federal Reserve announced more plans to boost the economy.
Dow up 1,049 - +5.2%
S&P up 143 points - +5.9%
Nasdaq up 430 points - +6.2%
The news didn’t stop today.
Trump outlined plans for what looks likely to be a $1tn bailout for people hurt by the Covid-19 pandemic and the UK chancellor Rishi Sunak promised an “unprecedented” package to shore-up UK economy.
On the downside Macy’s became the latest retailer to shut up shop and it looks like New York City could be the next to order residents to “shelter in place.”
After the horrible sell off on Monday (wow, is it really only Tuesday?) US stock markets are still in recovery mode with 30 minutes until the close.
The S&P 500 is up 3.7%, and the Nasdaq Composite 4.2% and the Dow Jones Industrial Average is about 2.7% higher, after it briefly dipped below the 20,000 mark this morning.
All the news of stimulus from the Fed and the White House seems to be working on the markets. But a word of caution. This is far from over, bad news from DC could easily wipe out today’s gains.
Two of the biggest property funds in the UK are to close their doors to investors wanting to sell out, as the coronavirus claimed its first fund suspensions.
The £2bn Janus Henderson and £585m Kames funds will be gated after property valuers CBRE told the fund managers they could no longer accurately value properties within the funds.
The move means it could be months before savers can cash in their investments. Another property fund, M&G’s Property Portfolio, has been in lockdown since December.
In a statement to investors, Kames, which is part of the Aegon group and manages £37bn globally, said: “In the current turbulent market conditions the fund’s Standing Independent Valuer, CBRE, has advised that they are unable to accurately value the properties within our funds. Under these exceptional circumstances we believe it is in the best interests of our investors to suspend activity within our funds.”
Ryan Hughes of financial brokerage A J Bell said: “With M&G Property Portfolio having been suspended since December last year, it raises serious questions about whether we’ll see a chain-reaction effect and see other property funds suspending.”
Bad timing for corporate banking news but HSBC has finally announced interim boss Noel Quinn as its permanent CEO following the unexpected departure of John Flint last August.
Everyone had expected HSBC to announce the replacement back in February. But the delay raised questions about whether HSBC – which is in the midst of a major overhaul involving 35,000 job cuts – was struggling to find the right person for the job.
HSBC’s board may have stubbornly wanted to prove it would take its time. Or after being hit with a pandemic in both its major markets (Asia and Europe), it realized a decision needed to be made on who would steer the ship - and fast.
HSBC has also revealed details about the new CEO’s pay package:
HSBC's new CEO could earn more than his short-lived predecessor John Flint:
Flint in 2018 took home around £2.8m in fixed pay alone (base pay, the controversial "fixed allowance", and pension pay combined)
Noel Quinn will be handed at least £3m of fixed pay, before bonuses
Macy’s is the latest retailer to close its doors. News broke this week that a worker at its flagship Herald Square, Manhattan store tested positive for Covid-19.
The retailer will temporarily close all stores by end of business today. Macy’s, which also owns Bloomingdale’s, has about 840 stores across the US.
“The health and safety of our customers, colleagues and communities is our utmost priority,” the company said in a press release.
Retail closures now include Apple, Gap and Urban Outfitters. Given that retail is the US’s largest private employer, this is going to hurt.
With two hours of trading to go US stock markets are still up - the Dow is up 3.3% at present - but today’s economic stimulus proposals from the White House are getting a lukewarm reception from Capital Economics. Wait for the “but”...
The extra fiscal support announced in the past twenty-four hours is a welcome and necessary step to limit the longer-term economic damage that the coronavirus outbreak could cause. But even a huge fiscal expansion, plus the monetary measures already in place, will not be able to prevent a major short-term hit. We doubt that it will turn markets around by itself either.
Oil market prices sank below $30 a barrel for the first time since the global oil market downturn in 2016 amid growing fears that the economic slowdown could leave the market flooded with more oil than it can use.
Bjornar Tonhaguen, the head of oil markets at Rystad Energy, warned: “We believe we have not seen the worst of the price rout yet.”
Saudi Arabia and Russia plan to ramp up oil production from next month in a bitter battle for market share which could drive oil prices below the twelve year lows recorded in January 2016 at just under $28 a barrel.
“The market will soon come to realise that it may be facing one of the largest supply surpluses in modern oil market history in April,” Tonhaguen said.
The UK and US governments have announced new measures to protect their economies from the coronavirus crisis, as economists warn that the world faces a deep recession.
UK firms are starting to shed jobs because of the coronavirus crisis. Fashion and furniture company Laura Ashley fell into administration, with Covid-19 the final blow to its struggles.
Dixons Carphone is to close 531 stores in the UK, with the loss of 2,900 jobs, while restaurant chain Carluccio’s warned it is only days away from major restaurant closures.
Britain’s Chancellor Rishi Sunak gives a press conference about the ongoing situation with the COVID-19 coronavirus outbreak inside 10 Downing Street Photograph: Matt Dunham/AP
The UK government is also climbing onto the stimulus bandwagon, with a new £20bn package.
Chancellor Rishi Sunak has just announced £330bn of loan guarantees to businesses.
This means any business that needs funding will be able to access a loan on attractive terms, he pledges.
To support liquidity amongst larger firms, he has agreed anew lending facility with the the Bank of England. That sounds similar to the commercial paper guarantees announced by the Federal Reserve today.
And for smaller firms he will extend the business interruption loan scheme, which will offer loans of up to £5m,
Sunak is also promising three-month mortgage holidays for those in financial distress due to the coronavirus.
The overall package is worth over £20bn, says the chancellor. This comes on top of the £7bn package from last week’s Budget.
All the European indices gained ground in late trading, as Treasury secretary Mnuchin talked up the administrations plans for tax relief and stimulus checks.
Unfortunately, shares haven’t even recovered all Monday’s losses. But at least they’ve risen from their eight year lows.
FTSE 100: up 143 points or 2.8% at 5,294
Stoxx 600: up 6 points or 2.2% at 291
German DAX: up 196 points or 2.25% at 8,939
French CAC: up 110 points or 2.8% at 3,991
Meanwhile in New York, the Dow Jones industrial average is currently 2.2% higher at 20,635, a gain of 447 points.
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