London’s blue-chip FTSE 100 was down 1 percent, snapping a five-day winning streak and wiping out most of the gains it made this month on hopes that an easing in coronavirus lockdown restrictions would revive business activity. While the retail index tumbled 1.2 percent after figures showed British retail spending plunged by nearly a fifth and a broader measure of consumer spending fell by more than a third in April.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the first quarter fall was better than the 2.5 percent expected by most experts and the 3 percent forecast by the Bank of England last week.
He warned of a 20 percent drop to come as the COVID-19 takes its hold on the UK economy.
Mr Tombs said: “A quarter-on-quarter drop in the second quarter of about 20% looks plausible, even if we make some allowance for a marginal recovery in output in May, as employees in the construction, manufacturing and real estate sectors tentatively return to work, and then a more comprehensive recovery in June, when most shops and schools should reopen.”
The mid-cap FTSE 250 also shed 1 percent, with travel stocks plummeting again after a warning from European travel company TUI about thousands of job cuts to ride out a virtual halt in global travel.
Oil and gas producer Premier Oil slumped 6.2 percent after saying it expects to be free cash flow neutral this year following a crash in oil prices.
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FTSE 100 LIVE: Oil prices have fallen
8.17am update: London stocks hammered
The FTSE 100 index at 8.15am was down 58.48 at 5936.29.
8.01am update: FTSE 100 opens
The FTSE-100 index opened at 5994.77.
7.47am update: FTSE 100 update
The FTSE 100 index at 7.44am was unchanged at 5994.77.
The coronavirus crisis has crippled UK businesses
7.38am update: Grant Shapps warns there’s more to come amid economic crisis
Reacting to the ONS figures, transport minister Grant Shapps said everyone would have expected a blow to the economy before warning there was more to come.
He pledged that it was clear the UK would not go back to a period of austerity to pay for the economic measures taken during the pandemic.
7.12am update: UK hit by record monthly fall in GDP
Britain has been hit by a record monthly fall in GDP as the UK economy is crippled by the coronavirus pandemic.
Figures from the Office for National Statistics (ONS) found GDP fell 5.8 percent in March, services slumped by 6.2 percent and construction was hit by 5.9 percent – record monthly falls, while manufacturing also slumped 4.6 percent as the coronavirus firms its grip on the UK economy.
he first quarter fall was the worst since the end of 2008 at the height of the financial crisis, while the March monthly plunge marked a record tumble.
GDP fell by 2.0 percent in the three months to March 2020, following no growth in the three months to February, signalling the first direct impacts of the COVID-19 crisis on the economy.
People are being urged to follow the 2 metre social distancing rules
7.07am update: IMF under pressure to cancel poor countries’ debt
Over 300 MPs from around the world have urged the International Monetary Fund and World Bank to cancel the debt of the poorest countries in response to the coronavirus pandemic, and to boost funding to avert a global economic meltdown.
The initiative, led by former US presidential candidate Senator Bernie Sanders and Representative Ilham Omar, a Democrat from Minnesota, comes amid growing concern that developing countries and emerging economies will be devastated by the pandemic.
The virus has infected more than 4.2 million people globally and killed 287,349.
Widespread shutdowns aimed at containing the virus are taking a huge toll on the global economy, and especially poor countries with weak health systems, high debt levels and few resources to manage the dual health and economic crises.
IMF Managing Director Kristalina Georgieva on Tuesday said the Fund was “very likely” to revise downward its forecast that global output would shrink by 3 percent in 2020, and said developing countries would need more than $2.5 trillion in financing to weather the storm.
The UK’s stages of easing the coronavirus lockdown
6.01am update: Coronavirus crisis leads to largest US consumer price decline since 2008
US consumer prices dropped by the most since the Great Recession in April, weighed down by a plunge in demand for gasoline and services including airline travel as Americans stayed home during the coronavirus crisis.
The report from the Labor Department on Tuesday also showed a record decrease in underlying prices last month, raising the specter of a bout of deflation as the economy sinks deeper into a recession triggered by lockdowns to slow the spread of COVID-19, the respiratory illness caused by the coronavirus.
The government reported last Friday that the economy lost 20.5 million jobs in April, the deepest drop since the Great Depression. The economy contracted in the first quarter at its steepest pace since the 2007-09 downturn.
Deflation, a decline in the general price level, is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices.
5.53am update: Oil prices plunge
Oil prices fell on Wednesday as fears about a second wave of coronavirus infections gripped financial markets.
Investors, many facing steep losses due to the pandemic-driven shakeout in assets over the past few months, have also had to contend with renewed US-China trade tensions.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent. Shares in China, where the coronavirus first emerged late last year, fell 0.5 percent.
The South Korean market was down for a third session. New coronavirus infections have appeared in Seoul after the country eased restrictions last week.
Oil markets, which have plummeted this year due to a combination of a collapse in demand and a supply glut, lost further ground in Asia.
Treasury yields also inched lower amid caution before a speech by U.S. Federal Reserve Chairman Jerome Powell and rising speculation the United States could one day adopt negative interest rates.
Michael McCarthy, chief market strategist at CMC Markets in Sydney, said: “It looks like we’re in for another negative day of trading here in the Asia Pacific region. It’s very clear that the containment has done economic damage and the recovery will take years and not weeks.”
Published at Wed, 13 May 2020 04:52:00 +0000