The ongoing concerns over a second wave of coronavirus cases in those countries that have started to reopen post-lockdown collided with confirmation that the UK sank into a recession in the first quarter.
If anything, the morning’s data was far better than anyone had forecast. With pre-release estimates at -2.5% to -3%, it was a surprise that the UK economy ‘only’ contracted 2%. Meanwhile analysts had been expecting a 7.9% collapse for March specifically; instead it came in at -5.8%. That trend persisted across the bulk of Wednesday’s readings, including manufacturing and industrial production.
That actually means the UK avoided the kind of Q1 contraction seen by its peers – France fell 5.8%, Italy 4.7% and Spain 5.2%. However, and it is a sledgehammer of a however, that is almost purely down to when lockdown was implemented rather than any actual outperformance, meaning even more pain is going to be felt in Q2.
Nevertheless, those numbers were better than expected, allowing the FTSE to keep its losses at the lower end of what was seen in the Eurozone. That still meant the UK index fell 1.3%, dragging it back below the 6000 mark it hit following Rishi Sunak’s furlough scheme extension on Tuesday.
The DAX, meanwhile, shed 2% as second wave fears gripped Germany, with the CAC, which may be regretting France’s gradually reopening this week, dropped 1.9%.
Currently the Dow Jones is only looking at a 0.2% decline when trading starts stateside. However, that’s because the Dow plunged more than 450 points on Tuesday evening after Dr Anthony Fauci warned the US of the dangers posed by reopening the economy too soon.
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