After the mayhem brief period of calm

European markets are picking up the pieces after one of the worst trading days in 30 years. The FTSE opened nearly 6% higher but wasn’t able to hold on to this level, slipping back to the 5,400 mark as investors try to assess how much of yesterday’s panic selling was actually called for, and how much was an overreaction.

This morning central banks stepped to the fore to settle the markets and provide a buffer against damage that could be inflicted not so much from the actual coronavirus but the stoppages and cancellations that have now become Europe’s norm. Norway’s Norges Bank cut rates by 50 basis points, Sweden’s central bank will lend 500 billion Swedish crowns to companies in need and although the ECB’s Christine Lagarde offered little by way of reassurance yesterday the ECB’s Chief Economist wrote a blog post leaving the door open for a future rate cut if financial conditions in Europe tighten.   

What might help markets more in the short term is the decision by the London Stock Exchange and the Spanish and Italian bourses to ban short selling of Italian and Spanish stocks for the moment. The spread of the coronavirus in Italy is well reported as the number of cases there hits 15,000, the second highest after China, but the creep higher in the number of cases in Spain has attracted less attention so far.

On the FTSE miners are clocking the highest gains, primarily because news from China is more positive with the number of cases over the last 24 hours increasing by only 21. Supermarkets are also trading higher as investors bet that some of the corona-related panic buying will boost the chains’ quarterly sales.