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World markets rally as US agrees $2 trillion stimulus package

After earlier strong gains, European shares were mixed today after an enormous $2 trillion US stimulus package and evidence of moves by companies to deal with the financial effects of the Covid-19~crisis failed to offset the impact on markets of a surge in cases around the world. 

After jumping as much as 5.1% in earlier trade, London’s FTSE index had gained 0.5% by lunchtime.

The Paris CAC was up 0.7%, but the Frankfurt DAX was down 1.6%. Markets in Paris and Frankfurt had traded over 4% higher earlier this morning. 

Dublin’s ISEQ index was up 1.4% this lunchtime after gaining as much as 5% in earlier trade. Shares in Dalata Hotel Group had jumped over 12%, while ICG sailed 7.4% higher. 

The Irish banks also managed to make back some of their recent losses.

US officials last night agreed on a whopping $2 trillion stimulus package.

Asian markets also soared in earlier trade after US lawmakers agreed that massive stimulus package to support the world’s number one economy as the coronavirus spreads.

Tokyo’s Nikkei index surged 8% while the Hang Seng index in Hong Kong closed with gains of 3.8%.

Wall Street posted its best performance in nearly 90 years last night, as indices rallied on hopes that lawmakers would agree on a massive $2 trillion stimulus package to blunt the coronavirus’ economic impact.  

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World market emerge from rout as stimulus hopes calm panic

Europe’s main stocks indices opened higher this morning, a day after markets suffered their biggest losses in more than a decade on crashing oil prices and coronavirus fears.

Shares in London and Paris had gained 1.5% in early trade, while the Frankfurt market was up 0.8%.

Shares in Dublin also rallied with the ISEQ index up 0.9% in early trade. 

Asian stocks also bounced today on hopes that global policymakers would introduce co-ordinated stimulus to cushion the economic impact of a coronavirus outbreak. 

Oil similarly clawed back some of its massive losses from yesterday, rallying 7% and offering hope that markets had found a floor, although sentiment was still fragile a day after prices plunged. 

Supporting the mood was a pledge from President Donald Trump to take “major” steps to protect the economy and float the idea of a payroll tax cut with congressional Republicans. 

“Talk of coordinated fiscal and monetary support is getting louder,” said Rodrigo Catril, a senior foreign exchange strategist at National Australia Bank. 

The gains in the US and European futures come on the back of a 1.36% rise in MSCI’s broadest index of Asia-Pacific shares outside Japan, having dropped more than 5% on Monday. 

But despite the bounce, analysts warned it was too early to call a trough in equity markets.

Japan’s Nikkei index ended the day up 0.85%, after touching its lowest level since April 2017 earlier in the day.

Japan will unveil a second stimulus package later today to offset the impact of the outbreak. 

The Australian market closed up 3.1% as some went hunting for bargains in beaten down stocks. 

China’s benchmark Shanghai Composite Index was trading up 1.7% as new domestic coronavirus cases tumbled and President Xi Jinping’s visit to the epicentre of the epidemic lifted sentiment. Shares in Hong Kong closed 1.4% higher.

Headlines on the coronavirus, however, were still no brighter with Italy ordering everyone across the country not to move around other than for work and emergencies, while banning all public gatherings. 

“Although uncertainty is very high, we now expect similar restrictions will be put in place across Europe in the coming weeks,” warned economists at JPMorgan. 

Such has been the conflagration of market wealth that analysts assumed policy makers would have to react aggressively to prevent a self-fulfilling economic crisis. 

The US Federal Reserve yesterday sharply stepped up the size of its fund injections into markets to head off stress. 

Having delivered an emergency rate cut only last week, investors are fully pricing an easing of at least 75 basis points at the next Fed meeting on March 18, while a cut to near zero was now seen as likely by April. 

Britain’s finance minister is due to deliver his annual budget tomorrow and there is much talk of coordinated stimulus with the Bank of England. 

The European Central Bank meets on Thursday and will be under intense pressure to act, even though rates there are already deeply negative. 

“Italy’s decision to quarantine the whole country will affect 15% of Europe’s GDP, putting thee ECB at the forefront of efforts to cushion the escalating economic deterioration,” said Brian Martin, a senior international economist at ANZ.

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Virus pandemic fears knock European markets

A jump in number of coronavirus cases outside China hit European shares this morning, as investors feared the outbreak will take a bigger toll on global growth than anticipated.

The pan-European STOXX 600 tumbled 2.5% in early trade, on pace for its biggest percentage loss since October, with all the major regional indexes down over 2%. 

Milan shares tumbled 3.7% to its lowest in nearly three weeks as Italy saw the biggest flare-up of coronavirus cases in Europe, with three people dying of the illness since Friday and more than 150 cases reported.

Shares on London’s FTSE index were down 2.1%, while the Paris CAC slumped 2.9% and the Frankfurt DAX shed 2.8%. 

Dublin shares were also much weaker this morning, falling by 3%. Shares in Bank of Ireland were down 3.1% as it reported a fall in operating profits for 2019. 

Among the worst performers on the STOXX 600 were airline stocks, with EasyJet, Ryanair, Air France and Lufthansa down between 7% and 11%. Europe’s travel & leisure index tumbled 4%.

Ryanair’s shares tumbled almost 9% in Dublin trade.

Europe’s travel and leisure index was also down 4% this morning. 

Luxury goods makers, miners, automakers, technology and banking shares all sensitive to global growth sentiment were down more than 3%.

Primark-owner Associated British Foods slid 3% as it warned of potential supply shortages on some lines later in the 2019-20 financial year if delays in factory production in China are prolonged due to coronavirus.

In Asia, Seoul led a sharp drop across the region’s equity markets after South Korea announced a surge in virus infections. 

Traders had been broadly optimistic that the virus – which has killed nearly 2,600 and infected 80,000 – was being contained outside China but a spurt of infections and deaths in other countries including South Korea, Italy and Iran has fanned fears of a wider outbreak.

With the outbreak showing little sign of easing, investors are increasingly concerned it could have a much longer-term impact on the world economy.

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Despite Brexit concerns, domestic economy doing well – SME Market Monitor

Despite Brexit concerns, domestic economy doing well – SME Market Monitor

The domestic economy is performing strongly despite a dip in consumer sentiment, according to the latest SME Market Monitor from the Banking and Payments Federation Ireland.

The BPFI said that businesses here have been boosted by improving employment, as well as a 2.1% rise in retail sales during April.

That is despite consumer sentiment falling in the first five months of the year as fears around Brexit weigh on the public.

The monitor, prepared by EY-DKM Economic Advisory Services, tracks trends across 15 different indicators which are important for the performance of the SME sector.

It reveals that despite Brexit uncertainty, Irish households continued to loosen the purse strings and retail sales reached a record high in April, increasing by 2.1% on the month.

The first quarter of the year also saw significant improvement in labour market indicators.

Annual employment growth accelerated to 3.7% in the first three months of the year – the largest increase since the third quarter of 2007 – while and unemployment fell to of 4.6% in April.

The monitor also noted that Brexit preparations boosted activity across the manufacturing sector, but the sector continues to lose momentum.

It also said that consumer sentiment decreased from 98.8 in January to 89.9 in May.

Annette Hughes, Director of EY-DKM Economic Advisory, said there is a significant mismatch evident between weaker consumer sentiment on one hand – driven in part by ongoing Brexit uncertainty – and the buoyant labour market and strong household spending on the other.

“For many, Brexit remains firmly in the background , despite the positive economic news at home. Until such a time as there is a clear outcome for Brexit, this ambiguity is likely to continue to weigh on consumer and business sentiment,” Ms Hughes said.

She said that while Brexit brings potentially severe implications for consumers and businesses here alike and is weighing on sentiment, current indicators point to a more positive story in the domestic economy.

“The labour market continues to outperform expectations – driving strong growth in consumer spending, a key indicator for SMEs,” Ms Hughes said.

“New SME lending in Q4 2018, although down 5.6% on the corresponding figure last year, was up strongly in year-on-year terms in the preceding four quarters, especially in the property and agri-food sectors,” she added.

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