MARKET REPORT
SPECULATION is rife in the City that the Bank of England may be minded to cut interest rates following a similar move by the US.
But if incoming governor Andrew Bailey was thinking of following the Federal Reserve’s lead with an emergency announcement of his own, he was not letting on.
Instead, he hinted to MPs on the Treasury Select Committee that any cut would need to be properly discussed among the Monetary Policy Committee.
Not that his words helped much, as traders decided to believe central banks and governments around the world will step up if the coronavirus outbreak leads to a severe slowdown.
As a result, the FTSE 100 closed yesterday up 97.39 points, or 1.45%, at 6,815.59.
The leading index is still a long way off the highs of two weeks ago, but most of the worst falls from last Friday have been reversed.
David Madden, CMC Markets analyst, said: “The positive move has been influenced by speculation that we might see interest rate cuts from the Bank of England as well as the European Central Bank in the near-term.
“Some traders feel the central banks might sit on their hands for a while and see how things play out. In light of the Fed’s emergency rate cut yesterday [Tuesday], the chatter about other central banks cutting too is likely to do the rounds for a while.”
Even worse-than-expected figures from the UK services sector and warnings of a global slowdown by the IMF failed to dampen the mood.
In Paris, the CAC 40 ended up 1.3%, while the DAX 30 in Frankfurt ended up 1.2%.
Company news remains littered with coronavirus updates, as businesses push forward into uncharted territory and attempt to keep shareholders and the public informed.
But the big news of the day was shopping centre owner Intu admitting it failed to raise the £1.5bn it wanted to pay down its debt mountain.
Investors took flight, sending shares crashing 41%, down 4.36p at 6.28p. They were trading at 113p just a year ago.
The biggest risers on the FTSE 100 were Reckitt Benckiser up 314p at 6,100p; Vodafone up 6.06p at 139.58p; Morrisons up 7.65p at 183.75p; SSE up 65p at 1,643p and Astrazeneca up 283p at 7,455p.
The biggest fallers were Rolls Royce down 28.4p at 607.4p; TUI down 26.2p at 582.6p; Whitbread down 148p at 3,620p; IAG down and 17.4p at 447p and Ashtead down 83p at 2,325p.