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.”

We are continuing out general live coverage here:

See you Wednesday and don’t forget to wash your hands!

US markets are holding up in to the close

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.

More on that stimulus here:

Savers locked out

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.”

Bailout plans firm up

Treasury secretary Steve Mnuchin is talking now. “The president wants to put money into the economy now.”

CNBC is reporting that the White House emergency bailout plan will be made up of:

• $500bn in direct payments to Americans in direct payments and/or tax cuts
• $200bn-$300bn in small business relief
• $50bn-$100bn for the airlines

None of those numbers are firm and they would all need Congressional approval. Expect a lot of wrangling in the hours and days ahead.

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:

https://twitter.com/kalyeena/status/1239974492287336452

Shutting up shop

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 keeps falling

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 White House’s new stimulus push has helped markets to close higher in Europe tonight, as Wall Street pushes higher too.

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.

The coronavirus has claimed its first fund suspensions in the UK, with more than £500m worth of property funds run by the Kames group in Edinburgh closed today because of “exceptional circumstances”.
The asset manager has suspended the Kames Property Income fund and its Property Income Feeder funds – with some advisers predicting a possible chain-reaction leading to further fund suspensions. 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.”

The last fund update from Kames said the fund had £585m under management, with half the money invested in offices and around a quarter in retail premises.
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.”

Back in Europe, the UK has been told it is eligible to take part in a European Union wide-scheme on buying ventilators and other medical equipment needed in the coronavirus crisis.

A European commission spokesperson confirmed the UK was “eligible to participate in these joint procedures” despite leaving the EU on 31 January.

Under David Cameron, the British government in 2014 signed a voluntary “joint procurement agreement”, which was drawn up after the H1N1 pandemic of 2009 showed some countries found it difficult to get medical supplies on the open market. The agreement allows EU countries to band together to use their combined purchasing power to get a good deal on vaccines and other medical supplies.

The EU executive is currently organising joint procurement of protective clothing for medics, including masks, as well as ventilators. The commission spokesperson said “a very big majority of member states [were] interested” in taking part in the joint procurement on ventilators. The British government has not revealed whether it intends to take part in any of the procurement schemes.

Here’s a video clip of Steve Mnuchin speaking at the White House, telling Americans:

If you owe a payment to the IRS, you can defer up to a million dollars as an individual....and $10m to corporations, interest-free and penalty-free for 90 days.

All you have to do is file your taxes. You’ll automatically not get charged interest and penalties.

The IRS is the Internal Revenue Service, which collects taxes, for non-US readers....

Mnuchin is also opposed to closing Wall Street while the crisis rages (so no break for traders in London or New York...)

Bad news for any frazzled City traders (or reporters!) seeking a rest.

The London Stock Exchange says it has no plans to suspend trading, and will remain open for companies to access capital (though share sales) and for investors to buy or sell at a ‘transparent price’.

Shutting the markets would prevent shares falling, but it’s an extreme move. And unless leaders used the hiatus to devise a brilliant plan, stocks would surely resume falling when you reopened.

My colleague Nils Pratley makes a strong case for keeping them open, here:

First, the only guaranteed outcome would be more panic. There would be an immediate spill-over into markets that matter more for the functioning of economies in the real world, such as government debt.

Second, even if almost nobody is currently using stock markets for the traditional purpose of raising fresh capital, share prices are still giving useful price signals.

One of the most important came when stocks tumbled last week after President Trump tried to reassure the US public that his administration was on top of events. Investors’ verdict – that the president was still underestimating the size of the healthcare crisis – was brutal but necessary.

Over in Washington, Donald Trump is briefing the media on the crisis.

The US president is being typically upbeat - predicting the economy will “come back very rapidly” once the crisis is over. He also says Treasury Secretary Steven Mnuchin will discuss “additional stimulus measures” that could be rolled out to protect companies.

European markets are now rallying again too, as the Federal Reserve’s pledge to buy up short-term US company debt cheers investors.

It’s a reminder that central banks and governments can do more - although clearly we need a LOT more action to prevent a deep recession.

The FTSE 100 has gained 1%, with similar gains in Germany and Paris.

UK and European multinationals are also being boosted by currency moves - with the pound and the euro both sliding over 2% against the US dollar today.

Stocks are rallying on Wall Street again - as traders welcome the Fed’s move to shore up US corporate borrowing (see last post).

The S&P 500 is now up 2.5% again (but put those party poppers down, it fell 12% yesterday!), as is the Nasdaq.

The Dow has also broken clear of the 20,000 mark - up 1% to 20,349 (dragged back by Boeing, down 20% today).

Shares in UK broadcaster ITV have fallen 10% today, after the Euro 2020 football tournament was officially postponed until 2021.

ITV the postponement will actually save up to £50m in costs, with “no loss of sponsorship revenue as the tournament is pre-sponsored”.

But it still a blow to broadcasters in the short term, given football’s popularity:

British cinema chain Everyman Media Group is also locking its doors due to the Covid-19 crisis, joining Odeon, Cineworld and Vue today.

People won’t be able to watch a TV show being made instead, either:

Away from Wall Street, Moody’s has cut easyJet’s credit rating from Baa1 to Baa2 (that’s just two above junk status).

It has also put British Airways’ rating on review, along with parent company IAG.

Moody’s says:

“The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets.

The combined credit effects of these developments are unprecedented. The passenger airline sector has been one of the sectors most significantly affected by the shock given its exposure to travel restrictions and sensitivity to consumer demand and sentiment.”

The markets have already reached the same conclusion - easyJet’s shares have more than halved in the last month, from £15 to £6.

Back in February 2017, Wall Street traders were proudly wearing “Dow 20,000” hats to celebrate the index’s (then) record high.

I don’t think we’ll be seeing many today, as it takes the return trip below 20k.

What’s up, and what’s not, on Wall Street today, after its worst plunge sine 1987 yesterday?

Top risers on the Dow include chemicals firm Dow Inc (+9.5%), hypermarket giant Walmart (+4.5%) and chipmaker Intel (+3.75%).

But Boeing has shed another 8% at the open, amid reports that it’s been talking to congressional and White House officials about financial assistance .

Fast food chain McDonalds is down 6%, after deciding to close the dining areas at its corporate-owned restaurants, and urging franchisees, which operate over 90% of all locations, to follow suit.

The clampdown on gatherings has even reached the Wall Street opening bell.

Usually, there’s a merry crowd at the start of trading, from whichever company or organisation gets the honour. This week, though, the bells are a quieter place.

European markets are mostly in the red again, down 1.3% on average (although Spain is managing a small gain).

That’s an understandable reaction to today’s warnings of global recession, and Wall Street’s worst day since 1987 yesterday.

Matthew Cady, investment strategist at asset manager Brooks Macdonald, points out that the markets are misbehaving badly - and starting to price in a serious financial crisis.

As well as the fall in equities, we’ve now seen a breakdown in the traditional release valves that markets seek in times of stress. Government bond prices and gold prices, which both tend to move in the opposite direction to equities in times of uncertainty, are also down, with gold now off around -13% below recent highs.

These moves suggest that markets have moved past the question about the near-term impact to global growth and corporate earnings, and are now looking at the tail risks of either a liquidity or solvency crunch.

But... Cady also predicts that governments and central banks will deliver significant and overwhelming policy responses to address these fears.

Wine buffs have been stocking up on Italian, French and English wines as well as sherry and brandy amid fears that coronavirus lockdowns may interrupt supplies.
Sales of Italian and French wines soared 44% and 68% respectively at Majestic Wine over the weekend while sales of English wines were up 124% and sherry up 114%. Surprisingly, some were still in the mood for a celebrating with sales of sparkling wine up 34% and brandy up 54%. Majestic said it was ramping up its free delivery service which had seen a tripling of demand in a week. The chief executive John Colley said:

“Clearly customers are making sure their wine racks don’t go overlooked, with the prospect of more time at home increasingly likely.

Rest assured, however, we have worked closely with our fantastic supply base, and have brought forward our summer inventory across the country. We are confident that we will have the capacity to meet the increase in demand”

After another testing morning, most stocks are down in London again - and so is the pound.

• FTSE 100: Down 71 points at 5079, down 1.25%
• FTSE 250: down 546 points at 13,802, down 3.8%

It’s the same story -- firms in the travel, pub and transport business are sliding, along with housebuilders. Anything reliant on consumer spending that can’t be put off for another day (or month, or year).

Sterling has dropped one and a half cents against the US dollar, to $1.21 - its lowest since September 2019. Investors are piling into the dollar again, a sign they’re very nervous.

Another one goes....Cinema chain VUE is shutting its 91 cinemas in the UK and Ireland today, a spokesperson has told Reuters.

Laura Ashley could be an early domino in a wave of retail collapses, fears Neil Wilson of Markets.com.

He points out that the firm was already in difficulty, before Covid-19 fears kept shoppers away and forced it into administration:

It’s a classic case of being able to service high debt loads when cash flow remains steady but as soon as the revenues dry up, the debt crushes you whatever interest rate you may be able to get. It highlights the very real limitation in monetary policy right now - debt is about cashflow, not interest rates, for businesses.

As far as Laura Ashley is concerned it’s a retailer that has really failed to move with the changing retail landscape. Its fashion business, once its largest, became secondary to homeware and furnishings as it was slow to respond to evolving tastes. In terms of responding to consumer trends, it’s been slower than M&S even. Over the last few years there has been a series of profits warnings, a build up of debt and the business has required more capital to survive. But it’s a double shame as there were just signs of life with sales up 24% in the first part of the year before the outbreak hit.

Shares in Cineworld have tumbled 20% this morning, to below 30p.

They were worth 180p back in mid-February, before the coronavirus crisis struck. Last week it warned it could breach the terms of its bank loans if it was forced to close for three months (which it then hoped was unlikely)

Huge numbers of cinemas across the UK and Ireland are shutting down due to the coronavirus, my colleague Andrew Pulver writes:

Major chains, including Odeon, Cineworld and Picturehouse, as well as BFI Southbank, the screening complex operated by the British Film Institute, have announced they are closing their doors with largely immediate effect.

Cineworld, the UK and Ireland’s largest chain by market share with over 90 venues, said in a statement: “We are committed to providing safe and healthy environments for our employees and guests and have therefore made the difficult decision to close our cinemas in UK and Ireland until further notice.” The chain also owns the Picturehouse circuit, which operates smaller cinemas with boutique-style programming.

Odeon, the UK’s second largest operator, posted a statement on social media saying: “Following government guidelines Odeon cinemas are closed until further notice.”

BFI Southbank, located in London, said in a statement: “It is with great regret that, due to the rapidly evolving COVID-19 pandemic, and following Government’s updated advice on 16 March, we have taken the decision to close BFI Southbank effective immediately, and all forthcoming events and screenings are now cancelled or postponed.”

Martin McTague, head of policy at the Federation of Small Businesses, has confirmed that most firms won’t be covered for this crisis.

He has told the business, energy and industrial strategy (BEIS) select committee that very few small and medium-sized businesses bought insurance to cover business interruptions.

“Most of them think very short term. They don’t think about these things very far ahead.”

Odeon has tweeted that its cinemas are shut ‘until further notice’, following the UK government’s advice to avoid large gatherings and non-essential contact:

Cinema chain Odeon has shut all of its theatres due to the coronavirus.

The company, which operates about 122 sites across the UK, said that its theatres will remain closed “until further notice”.

Robert Chote’s call for Britain’s government to spend, spend, spend (and then spend some more) to protect stricken businesses may be calming the City.

The FTSE 100 is still in the red, but ‘only’ off 50 points or 1% at 5,097 points. European markets are mixed -- Italy is up 0.7%, but Germany is off 1%.

Trading is extremely choppy, again, with travel firms and leisure companies tumbling again.

Britain’s budget watchdog isn’t simply giving the government the green light to rip up its borrowing rules. It’s actually urging them to do to.

OBR chief Robert Chote went on to warn MPs that some businesses will ‘inevitably’ not survive the coronavirus pandemic.

This is no time to be squeamish about public debt, he insists - indeed, a large, temporary increased in borrowing makes sense.

He reminds the Treasury committee that the UK budget deficit hit 20% of GDP in the second world war (it was just 1.9% last year).

Chote also singles out gig economy workers - saying its crucial to make up their earnings in some way.

When the fire is large enough, you just spray water (or in this case money), Chote insists firmly. The mopping-up operation can wait!

Charlie Bean agrees, saying it’s better to spend too much than not enough.

Speaking of job losses... UK electricals business Dixons Carphone is laying off almost 3,000 staff, and closing 531 stores.

This grim news is being blamed on wider changes in consumer behaviour - although obviously the coronavirus outbreak hasn’t helped.

Pointing to a 16% drop in visits to smaller moble phone shops, CEO Alex Baldock says:

“Customers are changing very fast and we have to change with them

“We can’t wait, even in this very difficult environment. The turbulent times and uncertain outlook [underline] the importance of taking action now.”

But, Dixons Carphone is still on track to hit this year’s profit targets, thanks to increased sales of fridges, freezers, small domestic appliances and laptops as the UK prepares to self-isolate.

Mining stocks, healthcare firms, and companies who make essential consumer goods are doing OK today.

Cleaning products maker Reckitt Benckiser are up 3%, as are pharma firm AstraZeneca.

Chile-based copper miner Antofagasta have jumped 13%, after it reported rising profits and (more importantly) stuck to its guidance from January.

But the travel, hospitality and financial stocks are feeling the strain again.

The smaller FTSE 250, which contains more UK stocks, is down 3% today - pub chain Mitchells & Butler have shed 18%, as have newsagent WH Smiths, while Cineworld are down 16% after rival Regal announced the temporary closure of its US cinemas.

Anyone logging on late today have completely missed the early rally.

Stocks are turning south again - with the FTSE 100 now down 111 points (or 2%) at 5038 - which would be a new eight-year low if the markets closed now.

Fiona Cincotta of City Index says:

Governments across the globe put in more stringent restrictions to control the spread of coronavirus. As they do so, the greater the economic hit will be through this process. This still feels far to early to be calling the bottom of the sell off. Companies are still unable to quantify the economic hit that they expect.

Realistically we will only start to see meaningful moves higher in riskier assets when the coronavirus numbers start to improve. Until then investors will fear a recession in the first half of the year, as deep as in the financial crisis. With a depression also plausible.

Aircraft maker Airbus is stopping production and assembly activities at its plants in France and Spain for the next four days, as it adjusts to the coronavirus.

It says:

“This will allow sufficient time to implement stringent health and safety conditions in terms of hygiene, cleaning and self-distancing, while improving the efficiency of operations under the new working conditions.”

Wall Street is no longer expected to jump by over 5% later today, which is cutting Europe’s attempted rally off at the knees:

The EU-wide Stoxx 600 has erased its gains, and now down 0.7%. France’s pledge of billions of euros to fight the economic cost of Covid-19 isn’t helping much.

UK footwear retailer Shoe Zone has put its dividend on ice, after a drop in shopper numbers. Its shares are down 28% this morning.

We’re going to see a lot more of this....

Catering giant Compass has issued a profits warning this morning, as the coronavirus crisis hits its business hard.

With schools closed, and sports events off, Compass’s revenues are being ‘severely’ hit.

It told shareholders:

The acceleration of containment measures adopted by governments and clients in Continental Europe and North America have affected our expectations for the Half Year. The vast majority of our Sports & Leisure and Education business in these regions has been closed, and our Business & Industry volumes are being severely impacted.

This is expected to wipe between £125m and £225m off Compass’s operating profits fro the first half of 2020.

Shares in Compass have plunged 13% this morning, to the bottom of the FTSE 100 leaderboard.

Despite this morning’s small rally, European markets are still down 30% this year.

Stephen Innes, global chief markets strategist at AxiCorp, says we’re still locked in a scary bear market, due to signs that parts of the economy are shutting down.

Why on earth the S&P500 decided to rally back into a limit up mode again is anyone’s guess as the bear markets come in various sizes. But authentically, this is the monster Grizzly Bear market of them all. Disrupted supply chains didn’t miraculously get fixed this morning, nor did airplanes suddenly take flight, and neither has the ability of businesses and households to meet loan payments in the near term improve. Sure, G-7 had a Draghi “ whatever it takes “moment, but that is not going to get folks back on Expedia.

One essential 2008 comparison, we tend to overlook was that during the Lehman crash outside the financial sector, life went on. In essence, restaurants took bookings; taxis took rides, shops were still bustling. This time around, the entire world is on the precipice of shutting down.