There is a sense of relief in the markets this morning after yesterday’s assault on stocks and commodities stopped, and in some cases, reversed. In a first major reaction to the virus by the US President, Donald Trump said he will discuss tax cuts for industries that have been the worst affected by the spread of the coronavirus.
In London, investors are picking up stocks that were the most heavily sold off yesterday, such as oil firms and mining companies, and Brent crude is trading higher, close to $36/bbl. Airlines and travel firms have climbed to the top of the FTSE as news of new cases in Europe and China begins to ebb.
Xi visit to Wuhan signals turning point
Although the corona spread in Italy has become more dramatic and now the whole of the country is on lockdown, the number of new cases in France and Germany over the last 24 hours is actually very small. Also, in a symbolic gesture China’s president Xi Jinping visited Wuhan, the city at the epicenter of the virus outbreak, to signal that the country now has the spread of the disease under control.
Pound lower ahead of budget
The US spending package promised by President Trump is lifting the dollar against other majors, notably the pound and the euro. For sterling the main focus is now shifting to Wednesday when Britain’s new Chancellor Rishi Sunak will present his first budget and outline Britain’s financial response to the virus.