A sea of red
European markets opened with a heavy weight on their collective shoulders Friday after the Dow Jones Index lost 4.4%, building up cumulative losses for this week that are beginning to resemble those in 2008.
The FTSE has dropped from 7,434 at the beginning of the week to 6,526 this morning, losing more than 12% in one week. British Airline parent IAG lost nearly 10% since the opening, closely followed by Scottish Mortgage Investment Trust and tour operator TUI.
The speed at which markets are declining is raising expectations that central banks will start stepping into the picture to try and soften the economic blow of the coronavirus, the Fed potentially being the first with the opportunity to cut rates as soon as next month.
Sterling perks up from yesterday’s loss
Amid all the coronavirus frenzy on the stock markets the focus has somewhat shifted away from Brexit, which is still corroding the pound, particularly after the government published its mandate for UK trade negotiators Thursday in which it rejected a number of EU demands. The mandate means that the UK could still end up with a no-deal Brexit. The pound is back above the $1.29 mark this morning, but only just.
Brent drops below $50
Declines in Brent crude have sped up over the last week as the coronavirus became far more active across the globe, making it far more difficult to estimate the eventual decline in demand not only in China but also in Europe and the US. Brent is now trading below $50, setting the stage for a fresh discussion on production cuts when OPEC meets in Vienna next week.
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