Investors are buying the dip this morning, picking up assets which plunged in value last week. Later today G7 finance minsters will have a phone call to discuss how to best to respond to the economic effect of the coronavirus and investors are hoping that they will decide on some form of financial stimulus to buffer their economies from a slowdown.
Over the last 24 hours the world-wide increase of new cases has been relatively small with only a few new cases registered in each country other than in South Korea and in China. It is possible that the 851 new cases reported by South Korea are also the result of a very stringent checking policy with company workers and officials having their temperatures measured as they enter official buildings. On the other end of the scale is the US which reported only three new cases overnight, possibly because many are passing undiagnosed.
The FTSE has rallied more than 2% not only on the corona-related recovery which included airlines, tour operators, oil majors and mining firms, but also due to a dip in sterling which helped boost UK-facing stocks such as housebuilders and DIY firms.
Sterling sinks to 1.2772
Britain’s fraught trade talks with the EU do not bode well for a quick resolution of the UK’s trade relations with the bloc and the prospect of the UK remaining in a trade limbo is eroding the pound. Sterling perked up 0.2% this morning, but only after falling to the lowest level in five months. Investors could be looking at a long and painful decline in the pound unless there is some progress in the EU trade talks over the coming month.
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