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The tide of the virus, the ebb of money

The generous stimuli and support packages unveiled by the US, British and other European governments are slowing down the declines in the stock markets but are not enough to stem the corona-induced ebb of money from European and US markets.

The FTSE is leading the declines in Europe with an over 4% fall; Paris, Frankfurt and Milan are following suit to a lesser extent.

Stock markets themselves are considering how to respond to requirements for social distancing and the US is pondering shortening stock exchange trading hours. There have been discussions about a two week trading holiday in the US but for the time being Treasury Secretary Steven Mnuchin sent the message that it was crucial to keep the markets open.

In Europe, apart from the travel industry, car makers are bearing the brunt of the spread with BMW, Jaguar Land Rover and Toyota the latest to close production for a few weeks.  

A small group of businesses is still doing well on the FTSE. Super market chains are rallying as shelves have been emptied to a much wider degree than in the week before Christmas, while safe haven utilities are also performing well.

Lloyds Bank shares are the most traded in terms of volume, and that by a significant margin. Four to six times more Lloyds Bank shares were traded over the last few days than any of the nearest high trading stocks, such as BP, Vodafone, HSBC and Glencore; the same pattern is in place today.  

Soft commodities hold up as metals slump        

Industrial commodities like copper, aluminium and oil are continuing to slump but agricultural commodities are holding up around the flat line. The emptying of super market shelves is strengthening the argument in favour of wheat futures, cocoa, coffee and sugar, which are not yet turning the corner but are not slumping like their industrial peers.

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