Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Anxiety over the ongoing Covid-19 pandemic is weighing on the markets today as some US states are forced to roll back their efforts to reopen their economies.
With cases rising in around 40 US states, central bankers are now worried that the recovery is faltering as some bars, cinemas, restaurants and gyms are forced to shut again.
Overnight, Cleveland Federal Reserve President Loretta Mester warned that more help will be needed to protect economies from the downturn, telling CNBC that:
“We saw a reopening in May and activity starting to come back pretty well.
Over the past week or so, there’s been some leveling off, and I think it’s probably due to the increase in cases not only in Ohio but across the country.”
With the global case load nearing 12 million worldwide (including Brazilian president Jair Bolsonaro), the pandemic’s grip on the world economy is tightening.
These concerns ended Wall Street’s latest rally last night, with the Dow Jones industrial average falling by almost 400 points or 1.5%.
Australia’s market has followed with a 1.5% tumble today, as the authorities imposed a hard border between Victoria into South Australia. That follows the surge in cases in Melbourne, which has highlighted just how hard it will be to stamp the virus out.
In London, the FTSE 100 has shed 42 points at the start of trading, or 0.7%, on top of Tuesday’s 96 point dive. European markets have also shed 0.6% (more details shortly)….
Fiona Cincotta of City Index says:
The mood in the market remains depressed on Wednesday as coronavirus concerns coupled with geopolitical tensions drag on risk sentiment. Equities across the board are out of favour whilst safe haven gold is consolidating just shy of $1800 after jumping 1% so far this week and hitting $1797, its highest level since 2012.
New daily US coronavirus cases dipped slightly at the start of the week. However, Tuesday’s figures have shown its premature to say that numbers are falling. COVID-19 concerns were further fuelled by warnings from several Federal Reserve officials that rising coronavirus numbers in the US could jeopardize the economic recovery. The timing here of the rising numbers in the sunbelt is extremely important given that some stimulus programmes are due to expire soon.
Also coming up today
The City will look to Westminster at lunchtime as chancellor Rishi Sunak announces a new swathe of measures to support the economy.
We’re expecting a £2bn temporary job creation scheme to encourage workers to hire young staff, a stamp duty holiday, a £3bn green investment drive, and perhaps a temporary cut to VAT.
9.45am BST: ECB vice-president Luis de Guindos speaks about the Covid-19 pandemic
12.30pm BST: Chancellor Rishi Sunak’s Summer economic update
3.30pm BST: US weekly oil inventory figures