The market gives, the market taketh away. Continuing their inconsistent relationship with stimulus news, the European indices tumbled sharply once again on Wednesday despite the announcement of a sizeable package in the UK.
Chancellor Rishi Sunak, less than a week on from the annual budget, continued to state that the government would do ‘whatever it takes’ to help the economy during the coronavirus crisis, the headline story being a £330 billion fund for business loans.
Some, however, thought this wasn’t actually enough; even Sunk himself seemed to suggest that he would be back sooner rather than later with a fresh round of measures (especially since renters, the self-employed and many other groups weren’t accounted for by the Tories).
It appeared investors took a dim view of Sunak’s announcement. Though, to be fair to the Chancellor, the uniformity of the European losses, and the prospective plunge once the bell rings on Wall Street, suggests that this is simply the inevitable swing back into the red following Tuesday’s moment of respite.
The FTSE fell 3.1% to sink back to 5120, with the DAX down 3.2% and the CAC slipping 2.7%. The Dow, meanwhile, is looking at a 5%-plus decline later this afternoon, something that could well accelerate the losses in Europe.
There were a few notable winners this Wednesday, however. One of the sectors to clearly benefit from the panic, the UK supermarket stocks all rose with varying degrees of vigour. For the full year Morrisons posted a 44% surge in pre-tax profit to £425 million, despite a 1% dip in revenue and a 0.8% slide in like-for-like sales (excluding fuel and VAT). An improving retail contribution to like-for-likes across the first 6 weeks of the new financial year – up 5%, a figure that is likely to increase when March is factored in – helped soften the blow of the postponement of its special dividend, sending Morrisons 5% higher. That placed the supermarket in the middle of Tesco (LON:TSCO), up 1.6%, and Sainsbury’s, which jumped 8%.
"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."