Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Anxiety over the health of the global economy is weighing on markets today, as Covid-19 restrictions threaten to derail the fragile recovery.
Stock markets across the Asia-Pacific have dropped back overnight, and we’re expecting a weaker start in Europe with the FTSE 100 heading back to Monday’s two-week lows.
Investors are fretting about the risks of a double-dip recession, after PMI surveys yesterday showed growth is slowing in the UK and US, and pretty much fizzled out in the eurozone.
UK chancellor Rishi Sunak will unveil his new plans to fight a surge in unemployment in the coming months, at lunchtime today.
He’s torn up plans for an autumn budget, in favour of a package of employment support and an extended business loan schemes, to help firms and workers.
So with some governments announcing more travel restrictions, and others restricting the hospitality sector, it could be a pretty gloomy winter in Europe.
Jim Reid of Deutsche Bank says:
On the virus it’s beginning to feel a bit like March-lite. In France, it was announced by Health Minister Veran last night that the country would be divided into “zones” by alert level and they would empower local authorities to tighten restrictions before a state of emergency would be declared within them. Marseille, the second largest city in the country and the Carribbean Island of Guadeloupe are the only “maximum” level zones today. The minster also announced that bars and restaurants in the Paris region as well as other major cities will close at 10pm, similar to the rules recently laid out in the UK. Attendance at large public events will be cut down to 1,000 from 5,000, while small gatherings over 10 people are banned in those “maximum” level areas.
Meanwhile in Germany, the foreign minister Heiko Maas went into quarantine as a result of one of his security detail having the virus, even though an initial test on Maas came up negative. Germany also issued travel warnings to more parts of France. Elsewhere, China will ease restrictions on entry of some foreign nationals as the country said foreigners holding residence permits for work, personal matters and reunions will be allowed to enter China starting September 28.
Stocks fell sharply on Wall Street last night, after the head of the US Federal Reserve warned that America’s economy needs more government support.
Jerome Powell told Congress that “direct fiscal support may be needed.” to help some struggling businesses.
“We need to stay with it… The recovery will go faster if there is support coming both from Congress and the Fed.”
But investors fear that Congress will not push through a new stimulus package soon, with the presidential election just six weeks away. The tech-focused Nasdaq index fell 3%, back into correction territory.
Worries over the race to the White House will have risen overnight, after Donald Trump declined to promise a ‘peaceful’ transfer of power if he loses in November:
- 7.45am BST: French business confidence for September
- 9am BST: European Central Bank releases its economic bulletin
- 9am BST: German IFO survey of business confidence
- 11am BST: CBI survey of UK retail sales (distributive sales)
- 12.30pm BST: UK chancellor Rishi Sunak announces Winter Economy Plan
- 1.30pm BST: US weekly jobless statistics