In its latest global economic outlook, the OECD predicted Britain’s economy was likely to slump by a staggering 11.5 percent in 2020. But it warned that if there was a second peak of the coronavirus pandemic, the UK economy could contract by 14 percent this year.
Meanwhile, the OECD said the global economy wouldl suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession.
Updating its outlook, the Organisation for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0 percent this year before bouncing back with 5.2 percent growth in 2021 – providing the outbreak is kept under control.
However, the Paris-based policy forum said an equally possible scenario of a second wave of contagion this year could see the global econmy contract 7.6 percent before growing only 2.8 percent next year.
OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook: “By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”
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FTSE 100 LIVE: Global stocks struggled on Wednesday
10.13am update: Sterling rises against weak dollar
Sterling rose against the weaker dollar and stayed flat versus the euro on Wednesday as Brexit uncertainty, the prospect of negative interest rates and Britain’s large coronavirus death toll still weighed on the currency.
A gauge of sterling overnight implied volatility rose to a 2-1/2-month high of 11.50, suggesting traders expected higher-than-usual swings in the British currency on Wednesday .
The pound was last changing hands at $1.2774, up 0.4 percent on the day against the greenback. But was flat versus the euro at 89.02 pence.
9.51am update: Travel and leisure stocks make gains
Travel and leisure-related stocks, including airline EasyJet , cinema operator Cineworld and cruise operator Carnival, have risen.
Carnival, which is slated to leave the FTSE 100 later in the month, topped the index with a 3.1 percent gain.
8.20am update: FTSE update
The FTSE 100 index at 8.15am was up 50.94 at 6386.66.
8.01am update: FTSE 100 opens
The FTSE 100 index opened at 6335.72.
The blue-chip gained 0.8 percent, while British mid-cap index rose 1.1 percent.
7.50am update: FTSE unchanged
The FTSE 100 index at 7.44am was unchanged at 6335.72.
The biggest financial contributors to the WHO
7.28am update: Dollar falls against most currencies
The dollar fell against most currencies on Wednesday amid some speculation the US Federal Reserve could take steps to curb a recent rise in bond yields in a policy decision later in the day.
The Australian and New Zealand dollars extended their recent rally against the greenback as investors continue to cheer a resumption of economic activity in both countries following the lifting of coronavirus restrictions.
The dollar fell to 107.54 yen on Wednesday following a 0.6 percent decline in the previous session.
Against the British pound, the greenback fell to $1.2760, the lowest since March 12.
The dollar also fell slightly to 0.9495 Swiss franc , approaching the lowest since mid March.
7.14am update: FTSE 100 expected to make gains
The FTSE 100 is expected to gain 13.5 points to 6347.5 in early trading, according to futures markets.
7.10am update: Coronavirus economic shock set to trigger poverty in poorest countries
Economic shocks caused by the new coronavirus are set to fuel poverty, unrest and instability in heavily-indebted and politically fragile countries for years to come, found an international think-tank on Wednesday.
The pandemic’s impacts will undo years of socio-economic development for some countries, the Institute for Economics and Peace (IEP) said in a briefing released alongside its annual index measuring peace levels around the world.
Steve Killelea, head of the Australia-based IEP, which expects to see most of the peace indicators it measures fall for several years, said: “The worst is still to come.
“The countries which are going to suffer the most are those which are currently fragile because they are the ones which generally have higher levels of food insecurity, the governments are politically less stable and economies are less robust.”
Japan’s Topix was flat while Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 edged higher by 0.2 percent and 0.4 percent
7.06am update: Warning over Australian economy
Australia’s economy, facing its first recession in 30 years because of the coronavirus, would suffer if Chinese students heeded a warning from their government to stay away because of racist incidents, Australia’s trade minister said on Wednesday.
International education is Australia’s fourth-largest foreign exchange earner, worth A$38 billion ($26 billion) annually, and more critical to the economy than beef or barley, products hit with Chinese import bans and tariffs last month.
China is Australia’s most important trading partner and sends the most international students, accounting for 37.3% of 442,209 overseas students in higher education in 2019, according to Department of Education data.
On Tuesday, China’s Ministry of Education warned students to reconsider returning to Australia, saying there had been a spate of racist incidents targeting Asians during the coronavirus pandemic. It followed a warning last week for Chinese tourists to avoid Australia.
Trade minister Simon Birmingham said: “We would feel the effect – our universities would, if we saw a downturn in international student numbers.”
Birmingham said it would also be a loss for Chinese students and in the long term “would do nothing to help further the mutual understanding between our two nations”.
6.01am update: Asian shares creep higher as markets wait for Fed
Asian stock markets eked out a 10th consecutive session of gains on Wednesday, but momentum ebbed as doubts about the global recovery from the pandemic returned ahead of the US Federal Reserve meeting.
The sideways moves in equities cap two weeks of stock market gains, turbocharged by Friday’s data showing a completely unexpected rise in US employment last month. Safe havens from gold to the Japanese yen won support as optimism ebbed.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent and Japan’s Nikkei rose 0.1 percent. The yen held on to two days of big gains and commodity currencies nursed Tuesday’s losses. Gold rose slightly.
Focus has switched to the Fed’s economic outlook and whether a steepening of the US yield curve during last week’s bond market selloff might prompt intervention at longer tenors.
“The Fed tonight is a key variable in determining whether this is a pit-stop or U-turn,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.
Asia shares fell flat
6am update: Asia market shars flat
Japan’s Topix was flat while Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 edged higher by 0.2 percent and 0.4 percent.
China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks shed 0.2 percent. Overnight, Wall Street’s S&P 500 ended the session 0.7 percent lower while Europe’s Stoxx 600 fell 1.2 percent after weak German trade data raised concerns over the global economy’s recovery from the coronavirus pandemic.
Steve Englander, head of North America macro strategy at Standard Chartered told the FT: “This is dovish, but widely expected.
“Fed chair [Jerome] Powell is similarly expected to reaffirm the downside skew of economic and market risks, the expectation of easy money as far as the eye can see, and the willingness to take policy as far as is needed to generate recovery.”
Futures markets tipped the S&P 500 and FTSE 100 to climb by 0.6 percent when markets in the US and UK open later in the day.
Shares initially surged 19 per cent before paring gains to trade 3 per cent higher. Oil prices fell with international market Brent dropping 1.2 per cent to $40.70 a barrel. US marker West Texas Intermediate slipped 1.4 per cent to $38.38.
Published at Wed, 10 Jun 2020 05:01:00 +0000