The markets didn’t even both with the pretense of a calm start on Friday, bringing another rough week to a close with their latest triple digit decline.
At this point it is hard to come up with something new to say about the situation. With no signs of the outbreak slowing down – the UK, for example, saw its first Covid-19 death on Thursday – investors remain gripped with a near unshakeable panic, the week’s various central bank rate cuts only serving to reinforce the seriousness of the situation.
The FTSE was slightly better than its Eurozone peers, falling 2.2%. That left the UK index at 6700, a couple of hundred points above July 2016-matching lows struck on Monday. The DAX found itself down 300 points and stuck under 11650, while the CAC plunged 150 points as it desperately tried to hold above 5200.
Turning to this afternoon and the Dow Jones is set to echo those losses, with the futures pointing to a 1.1% decline when the bell rings on Wall Street. That would take the US index back under 25850 – roughly halfway between Monday’s 25,000 lows and Wednesday’s 27,000 highs.
Between now and then, of course, is the nonfarm jobs report – though one imagines there would need to be some miraculous figures to catch investors’ attentions. The unemployment rate is expected unchanged at 3.6%, with a rise in wage growth from 0.2% to 0.3% – though that has been forecast for the last 5 months without materialising – potentially countered by a drop in the headline nonfarm figure from 225k to 175k.
Afternoon Update: Failure to secure OPEC/Russia oil deal causes more coronavirus horror for markets
There was no solace to be found this Friday, the session getting increasingly ugly as a deal between OPEC and Russia failed to materialise.
With the Russians reportedly refusing to agree to the latest round of production cuts, Brent Crude lost its head, the black stuff plunging 7% to $46.42 per barrel. That’s its worst price since mid-2017, and close to $25 dollars a barrel off the levels struck in the first week of the year.
Understandably the commodity-heavy FTSE was hit hard. As BP and Shell lost 4.4% apiece, the FTSE dropped 260 points, sinking to 6450 – a price last seen in the weeks after Britain voted to leave the EU. Further harming the UK index was a nasty 9% decline from Anglo American – the worst of an already bad set of mining stocks – and a sharp 0.7% rise from cable.
Like the pound, the euro took advantage of the dollar’s weakness, climbing 1.2% to cross €1.133. This as a collapse in US government bond yields left the dollar facing its worst week is around 4 years.
The euro’s gains also did a number on the Eurozone indices. The DAX lost 420 points as it fell to 11550, while the CAC shed 4%, taking it to 5150.
Though not quite as dramatic as its European peers – it was aided by a better than forecast nonfarm jobs report – the Dow Jones nevertheless lost 2%, slipping back to 25650. That is, however, still a bit higher than the sub-25000 lows struck earlier in the week.