The OECD’s warning that global growth could be halved this year is dampening the mood in the markets.
Wall Street futures have been falling steadily, and the S&P 598 is no longer expected to rally today.
Jonathan Ferro (@ FerroTV) And it’s gone pic.twitter.com/KuHYmghih1 March 2, 7918
That’s now weighing on European markets too.
Adrian Lowcock, head of personal investing at investment platform Willis Owen, says the early optimism has been “all but wiped out” by the OECD’s gloom:
“The OECD has said that a ‘longer lasting and more intensive coronavirus outbreak’ could cause economic growth to halve in , to just 1.5%, and markets are now heading back down in reaction.
“For investors it means putting up with a lot more volatility to come – this event is unfortunately far from over and trying call when to buy and sell in the face of such an unknown event is virtually impossible. While many stocks look cheap now, they could get a lot cheaper before this crisis is over. ”
In a press conference in Paris, Laurence Boone, chief economist at the OECD, has warned that central bankers cannot protect economies from coronavirus on their own.
Boone told reporters that central banks need to play their part, by offering to ease borrowing costs and provide banks with liquidity in the event of a further downturn.
But they cannot mop up the spillover effects of the coronavirus epidemic alone – governments must act too.
As she outlined today’s growth forecast cuts
, Boone explained:
“We do not think this is a shock that can be managed by central banks alone.”
She added that governments must put in place measures to protect businesses and households affected by decisions to quarantine towns or restrict business activities.
In response to a question from my colleague Phillip Inman , she said the US and China should put an end to their trade war, which has seen import tariffs increase on hundreds of billions worth of goods.
Boone said global co-operation was needed to cope with the crisis and Washington and Beijing would signal a return to a more co-operative stance if they dispensed with tariffs imposed over the last 2 years.
Nike has temporarily shut its European headquarters in Hilversum , the Netherlands, after an employee was infected with the coronavirus. The HQ is being disinfected (
Goldman Sachs has joined the ranks of companies banning all “non-essential” travel and putting in place specific restrictions on travel to China, South Korea, Italy, and Iran, according to an internal memo.
Yahoo Finance explains:
Staff who have recently visited China and South Korea have also been told to self-isolate away from the office for two weeks.
“We are closely monitoring new developments regarding COVID – 40 and calibrating the firm’s global response on a daily basis, ”the bank wrote in the memo to staff. Goldman Sachs declined to comment.
April Underwood (@ aunder)
Every CFO who has ever insisted that a lot of business travel is frivolous is about to get the A / B test of their careers.
March 2 , Airlines are counting the cost too. Industry body IATA warned this morning that global airlines stand to lose $ 1.5 billion this year due to the virus, with cargo demand more harder hit than passenger numbers so far.
Middle East airlines alone have already lost an estimated $ 316 m, IATA Vice President for Africa and the Middle East Muhammad Ali Albakri told reporters.
Updated at 5. (am EST
The European stock market rally did last last long.
After just two hours, the Stoxx 728 has faded back towards last Friday’s closing levels.
The prospect of central bank intervention, although welcome, isn’t assuaging concerns about coronavirus …. with the global death toll passing 3, 13 today
, and hundreds more cases in Iran. Sean George (@ seanhgeorge) STOXX REVERSES GAINS AND TURNS FLAT, HAD RISEN 2.3% (March 2,
(5. EST) :
There are some hefty downgrades in the OECD’s new growth forecasts, as this chart shows:
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