Calm after ‘Black Monday’ rout

Stock markets were calmer yesterday following one of the biggest routs since the financial crisis and lows not seen on the London Stock Exchange since the immediate aftermath of the Brexit referendum.

The FTSE 100 index of leading companies, which saw an 8% collapse wiping off £150 billion in value on Monday, recovered £45 billion by lunchtime – rising 2.9%, or 173.58 points, to 6,139.35.

Companies continue to draw up contingency plans and wait nervously for what potential impact today’s Budget could bring in support. Many are expecting short-term relief, a relaxation of rules and spending on tackling coronavirus.

But with Italy in lockdown, traders are predicting the rises could be short lived, calling it a “dead cat bounce”, where markets rise slightly before freefalling again.

Asian markets had been buoyed by calls from Japan’s prime minister Shinzo Abe for its central bank to act on the recent falls.

They also reacted positively to the US response that the White House would hold meetings on addressing the escalating outbreak.

The oil trade war between Russia and Saudi Arabia, which contributed to most of Monday’s falls, also cooled in the minds of investors.

Despite the Saudis seeing through on their vow to lower prices, in an attempt to squeeze out competition, a barrel of Brent Crude oil on the international markets was trading up 8.1% at 37.14 dollars (£28.51). But oil prices are still down following falls of up to 30% on Monday.

The Monday falls on stock markets capped a two-week period of uncertainty that saw nearly 20% wiped off the value of the companies on the index.

But the reversal came as Japan’s PM Mr Abe hinted the country’s central bank could follow the US Federal Reserve’s lead and announce an interest rate cut.

The next governor of the Bank of England, Andrew Bailey, who starts later this month, is also under pressure to cut interest rates in the UK if markets fail to stabilise.

European markets also opened strongly, with France’s Cac 40 and Germany’s Dax up 2.3% and 2.1% respectively.