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The European Central Bank said it will offer loans to central banks outside the Eurozone.
- FTSE 100 eases 10 points
- ECB addresses possible euro liquidity issues
- Auto Trader slides as it reveals impact of lockdown restrictions
The trading session is barely 90 minutes old and its already been a game of two halves.
After a weak opening, the FTSE 100 has recovered to 6,113 and is down just 10 points (0.2%).
Equity bulls drew encouragement from the announcement by the European Central Bank that it will offer loans to central banks outside the Eurozone.
“In response to the coronavirus (COVID-19) crisis, the Governing Council of the European Central Bank (ECB) decided to set up a new backstop facility, called the Eurosystem repo [repurchase] facility for central banks (EUREP), to provide precautionary euro repo lines to central banks outside the euro area.
“EUREP addresses possible euro liquidity needs in case of market dysfunction resulting from the COVID-19 shock that might adversely impact the smooth transmission of ECB monetary policy,” a statement from the ECB said.
Press release: New Eurosystem repo facility to provide euro liquidity to non-euro area central banks https://t.co/LlkkWWpfW0
— European Central Bank (@ecb) June 25, 2020
The results from () sent the share price into reverse.
The operator of a car sale listings website opted not to pay a final dividend in respect of the year to the end of March in view of the impact of the lockdown restrictions in the UK, which resulted in many car dealers closing their doors.
“Despite an increased number of vehicles on our platforms, the number of retailers has declined by 3%,” the company reported, referring to trading in the second quarter of 2020.
8.50am: Coronavirus resurgence hits shares
The surge in US coronavirus infections allied to worries over Sino-American trade relations sent the FTSE 100 into an early tailspin.
Wall Street’s sell-off was felt in Asia too, though the markets of Hong Kong, Taiwan, and mainland China were closed for a public holiday.
Earlier Japan supplied an economic reality check as activity in April plunged to a level below the troughs in the global financial crisis and following the 2011 earthquake.
Back here in the UK, struggling Royal Mail Group () hogged the corporate headlines with plans to cut 2,000 management jobs in a radical reshape of the delivery business. The shares fell 6.6%, though the news was welcomed by market commentators.
“[The company] clearly needs sorting and the latest plan to transform the business seeks to address its legacy issues,” said Richard Hunter, stock picker at Interactive Investor.
“The main thrust of the strategy is for the business to be an internationally-focused parcel business, as opposed to the traditionally UK-focused letters business. Of itself, this transformation is not only obvious and required but long overdue.”
Tuesday’s dour trading update from property portal Rightmove () continued to depress the share price, which fell 4.6%. Pressure is also mounting from disenchanted estate agents disgruntled at the company’s charging structure.
On the FTSE 250 there was a reality check for pubs group () and Cineworld () which fell respectively 7.9% and 7.2% after the recent strong rises following the easing of lockdown strictures.
6.55 am: FTSE 100 called lower
The FTSE 100 is set to start Thursday on the back foot as global equities continue to struggle for sentiment, as international trade friction and ‘second wave’ coronavirus fears remained.
CFD and spreadbetting firm IG Markets sees the London benchmark around 24 points lower, making a price of 6,107 to 6,111 with just over an hour to go until the open.
On trade, the headlines were centred around Trump’s tariff plans with particular note on some US$3.1bn of tariffs potentially being imposed on Europe and the UK.
COVID-19 case numbers in the United States, meanwhile, continue to be an emerging concern as companies such as Apple take localised action with a number of temporary store re-closures in selected cities.
“Sentiment in the markets was already weak and then it was revealed that a number of US states were experiencing a rise in new case numbers, so that sped up the sell-off in stocks.
“Florida, for example, posted a 5.3% increase in new cases, while the seven-day average was 3.7%. Covid-19 related hospitalisations in Texas jumped by more than 7%, while California posted its biggest daily jump in new cases for a second day in a row.
“Statistics like these prompted dealers to dump stocks as there were fears this could be the beginning of a second wave of cases.”
On Wall Street, the Dow Jones dropped 710 points or 2.7% to closed Wednesday’s session at 25,445 while the S&P 500 gave up 2.59% to finish at 3,050.
The Nasdaq similarly dropped 2.19% to a finish at 9,909, meanwhile, the Russell 2000 shed 3.45% to 1,389.
In Asia, Japan’s Nikkei fell just over 1% to 22,288. The Hong Kong market is today closed for a national holiday.
Around the markets
The pound: US$1.2418, down 0.01%
Gold: US$1,762 per ounce, down 0.04%
Brent crude: US$39.96 per barrel, down 6.2%
WTI crude: US$37.88 per barrel, down 6.1%
Bitcoin: US$9,170, down 4.9%
Thursday June 25:
Finals: Royal Mail Group PLC (), (), (LON:DC.), Mitie Group PLC (), (), XPS Pensions Group PLC ()
FTSE 100 ex-dividends to knock 1.68 points off the index: PLC (), ()
Economic data: US GDP, US weekly jobless claims
