Shares surge on hopes of a Trump rescue: FTSE sees biggest-ever one-day rise index is still down 26% in 22 days of trading
The FTSE 100 index recorded its biggest points gain in history yesterday as global stock markets bounced back following weeks of heavy selling.
Shares around the world rallied as Donald Trump closed in on a deal with Congress to shore up the US economy in the face of the coronavirus outbreak.
The FTSE 100 jumped 9 per cent, or 452.12 points, to 5446.01 despite warnings that Britain is heading for ‘a recession of the scale we have not seen in modern history’.
Shares around the world rallied as Donald Trump closed in on a deal with Congress to shore up the US economy in the face of the coronavirus outbreak
It was the biggest points gain and second biggest percentage gain of all time.
The rally was echoed on Wall Street where the Dow Jones Industrial Average closed up 11.37 per cent, the S&P 500 gained 9.38 per cent and Nasdaq put on 8.12 per cent.
European benchmarks were also up by 11 per cent in Germany, 8.4 per cent in France, 7.8 per cent in Spain and 8.9 per cent in Italy.
However, stock markets are still well below where they were just over four weeks ago when the spread of Covid-19 triggered wave after wave of panic buying.
The FTSE 100 index is still down 26 per cent since February 24. David Madden, an analyst at CMC Markets, said: ‘Speculation about a major stimulus package from the US government has boosted sentiment in equity markets.
‘Recently there has been support from various governments and central banks, but there has been some to-ing and froing in Washington DC, so traders are waiting to see what the Trump administration will deliver.
‘In addition to the US, the German government are tipped to post a stimulus package in the near-term too.’
But Oliver Jones, senior markets economist at Capital Economics, said: ‘The positive reaction in stock markets belies the fact that central bank actions have yet to quell the strains showing up across the global financial system.
‘It is hard to see a lasting recovery in equity prices until those strains subside.’
US politicians have been in deadlock since the weekend over how to best help workers who lose their jobs and businesses which are struggling to cope with the coronavirus lockdown.
But senior Democrats and Republicans said last night that they were close to signing a deal agreeing a $2trillion stimulus package.
House of Representatives speaker Nancy Pelosi, the top Democrat in Congress, said the two sides had resolved a key sticking point as they agreed to more oversight provisions for a proposed $500billion fund to help hard-hit businesses.
But Joe Saluzzi, co-manager of trading at Themis Trading in New Jersey, said it was too early to say the market rout was over.
He added: ‘Everybody keeps saying it’s going to get worse before it gets better, so the markets are going to remain choppy and volatile.’
The proposed US bill will hand out $3,000, or £2,500, to millions of hard-up US families, costing the Government $500billion.
It is also expected to provide $350billion for small-business loans, $250billion to help the unemployed and at least $75billion to fund hospitals.
The extraordinary measures are part of a global response to the coronavirus which has seen the UK slash interest rates to 0.1 per cent, pledge to pump another £200billion into the economy through quantitative easing and launch a giant government rescue package.