FTSE 100 opens flat on 5,510 as fears global coronavirus lockdowns could last for up to six months – after overall rise of 6% last week due to US Federal Reserve stimulus
The FTSE 100 opened flat today over mounting fears that the global shutdown to combat the coronavirus pandemic could last for months.
The index of Britain’s leading companies started the day in London at 5,510 where it finished last Friday, following a rise of 6 per cent overall last week.
It comes after Asian shares fell overnight and oil prices dipped again amid fears the crisis will cause major harm to economies despite the efforts of central banks.
JPMorgan economist Bruce Kasman said it continued to mark down GDP forecasts ‘as our assessment of both the global pandemic’s reach and the damage related to necessary containment policies has increased.’
LAST WEEK: The FTSE 100 index finished at 5,510 last Friday, rising 6 per cent overall last week
They now predict global GDP could contract at a 10.5 per cent annualised rate in the first half of the year.
Overnight, Japan’s Nikkei dropped 2.7 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.7 per cent, though that was up from early lows.
Central banks have mounted an all-out effort to bolster activity with rate cuts and massive asset-buying campaigns, which have at least eased liquidity strains in markets.
China today became the latest to add stimulus with a cut of 20 basis points in a key repo rate.
A woman wearing a face mask walks past a bank’s electronic board showing the Hong Kong share index at Hong Kong Stock Exchange today
Singapore also eased as the city-state’s bellwether economy braced for a deep recession, while New Zealand’s central bank said it would take corporate debt as collateral for loans.
Rodrigo Catril, a senior FX strategist at NAB, said the main question for markets was whether all the stimulus would be enough to help the global economy withstand the shock.
‘To answer this question, one needs to know the magnitude of the containment measures and for how long they will be implemented,’ he added.
‘This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved.’
People are reflected in a window showing a drop in share price numbers of the Tokyo Stock Exchange today
It was therefore not encouraging that UK authorities have now warned lockdown measures could last up to six months.
US President Donald Trump yesterday extended guidelines for social restrictions to April 30, despite earlier talking about reopening the economy for Easter.
Japan today expanded its entry ban to include citizens travelling from the United States, China, South Korea and most of Europe.