Investors’ faith grows amid coronavirus crisis as FTSE rises again


The FTSE 100 rose further today as it soared nearly 5 per cent after US politicians agreed a mammoth stimulus package in the fight against coronavirus.

The index of Britain’s biggest companies went up by 259 points or 4.8 per cent to 5,705 points this morning, putting it at its  highest level for nearly two weeks.

This saw it build on early gains when it rose 2 per cent upon opening – and after its largest ever points gain yesterday. 

By 4pm today it was trading up 143 points or 2.6 per cent up at 5,590. The markets were also reacting today to data revealing UK inflation had slowed last month on the back of falling motor fuel and computer game prices.

Traders now have a rare semblance of optimism after weeks of carnage across global markets, with stock markets in Asia also soaring overnight. The FTSE 100 is now at its highest level since March 13.

While the deadly infection continues to spread, the eyes of investors fixed on Washington DC last night where politicians thrashed out an emergency bill worth as much as $2trillion (£1.7trillion) – around 10 per cent of US gross domestic product. 

Wall Street also soared yesterday, with the Dow Jones seeing its biggest rise since 1933, while the S&P 500 enjoyed its best day in more than a decade. 

But Russ Mould at AJ Bell, an investment platform, warned traders need to watch out for a so-called dead-cat bounce where shares fall again after a big rebound.

THIS WEEK: The FTSE posted a record points gain yesterday, before rising again today

He said: ‘Investors will still need to tread carefully. Six of the FTSE 100’s 10 single-largest percentage daily gains of modern times came between September and December in October 2008 but the index only bottomed in March 2009 after further heavy falls of nearly 30 per cent as the effects of the collapse of Lehman Brothers and the ongoing global recession continued to hit confidence, corporate earnings and cash flows.

‘A hefty rise in the FTSE 100 is welcome, should it transpire, but there remains the risk that any such advance proves fairly temporary should news on the viral outbreak continue to get worse and policy measures require a longer lockdown – and potentially deeper hit to global economic activity – than currently hoped.’

It comes after a record rise yesterday for the FTSE 100 which jumped 9 per cent, or 452.12 points, to 5446.01 – its largest ever points gain.

It was also the second biggest percentage gain for the index since a 9.8 per cent rise in November 2008 during the financial crisis.

PAST FORTNIGHT: The FTSE has started to recover some of its losses over the last two weeks

Yesterday’s surge added £113billion to the value of Britain’s biggest companies. 

However, the FTSE 100 index is still down 26 per cent from its value on February 24 – and analysts said that it was too early to call the end of the market rout. 

Joe Saluzzi, co-manager of trading at Themis Trading in New Jersey, said: ‘The answer is still, ‘you got to get it under control’. 

‘Everybody keeps saying it’s going to get worse before it gets better, so the markets are going to remain choppy and volatile.’

The prospect of a massive spending US spending splurge sent Wall Street into overdrive yesterday, with the Dow Jones (above) seeing its biggest rise since 1933

The prospect of a massive spending US spending splurge sent Wall Street into overdrive yesterday, with the Dow Jones (above) seeing its biggest rise since 1933

The New York Stock Exchange has shut temporarily over coronavirus fears (pictured yesterday)

The New York Stock Exchange has shut temporarily over coronavirus fears (pictured yesterday)

Speaking about the further FTSE 100 bounceback today, Roger Jones, London & Capital’s head of equities, added: ‘In terms of the follow through, it’s quite encouraging to see this morning. 

Inflation slows down on falling petrol prices 

UK inflation slowed last month on the back of falling motor fuel and computer game prices, official statisticians have revealed.

The Office for National Statistics (ONS) said the rate of the Consumer Price Index (CPI) decreased to 1.7 per cent in February.

Inflation was reported at 1.8 per cent in January, after the cost of energy and aeroplane tickets pushed household prices higher.

Analysts had forecast that inflation would slow to 1.6 per cent for February.

Mike Hardie, head of inflation at the ONS, said: “There was a slight slowing in the rate of inflation due mainly to falling prices for motor fuels and computer games.”

Motor fuels had a “large downward contribution” after petrol prices fell by 2.4p per litre between January and February 2020, the ONS said.

It added that diesel prices fell by 3.2p per litre between January and February this year.

Discounts saw computer game prices fall for the month, although this was partly offset by higher concert ticket prices.

Food inflation also slowed down to 0.2 per cent for the month, driven by cheaper bread, cereal and vegetables.

Higher prices for restaurants and hotels had the largest upward contribution to inflation, with the price of hotel accommodation increasing by 1.6 per cent.

The latest decline moves the inflation figure slightly further away from the Bank of England’s target rate of 2 per cent, but economists have warned that this figure is set to slip lower following the impact of the coronavirus pandemic.

‘We have a situation where all the central banks and governments are saying we’ll do whatever it takes.’ 

Mike Owens, global sales trader at Saxo Markets, told MailOnline today: ‘A mixture of factors are playing into the strong move higher that we’ve seen on the FTSE and for global equity markets more generally. 

‘Firstly, the agreement from the US Senate on a $2trillion coronavirus stimulus package which the market sees as a key needed support and secondly, equities were looking extremely oversold at their levels on Monday evening which justified a bounce technically. 

‘Lastly, investors seem to be dusting themselves off and taking the opportunity to pick up stocks at beaten up prices as the most heavily sold off companies gain the most.’ 

The FTSE 100 is up about 15 per cent since hitting an eight-year low last week as the Bank of England cut interest rates to a record low and the Government promised businesses loan guarantees and offered to pay 80 per cent of their wage bills if they put staff on leave rather than sack them. 

The new measures in the US will put cash directly into the hands of Americans, provides grants to small businesses and hundreds of billions of dollars in loans for corporations including embattled airlines, while expanding unemployment benefits.

The unprecedented moves are part of a worldwide response to the rapid financial shock caused by the coronavirus outbreak, which has locked down countries including the US and brought the global economy to a juddering halt.

The prospect of a massive spending splurge, combined with the Federal Reserve’s pledge to essentially print as much cash is needed, sent Wall Street into overdrive yesterday, with huge rises on the Dow and S&P 500.

And the gains spread into Asia, which rallied for a second straight day, with extra impetus later in the day coming from the news out of Washington.

A man walks past a board showing the 225-issue Nikkei Stock Average data in Tokyo today

A man walks past a board showing the 225-issue Nikkei Stock Average data in Tokyo today

People wearing face masks walk past a bank showing the Hong Kong Stock Exchange today

People wearing face masks walk past a bank showing the Hong Kong Stock Exchange today

Tokyo ended 8 per cent higher, with investors there also relieved that the 2020 Olympics had been postponed rather than cancelled.

Hong Kong and Singapore put on more than 3 per cent and Shanghai was up more than 2 per cent, Sydney and Manila rallied more than 5 per cent and Seoul piled on more than 4 per cent.

Taipei added almost 4 per cent, while Mumbai, Bangkok and Wellington were also well up. 

Adding to the more upbeat mood was the G7’s promise to do ‘whatever is necessary’. 

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