Share prices in London dropped about 1 per cent today as traders reacted to data showing 700,000 jobs were lost in the US last month and the global coronavirus infections total surpassing one million.
The FTSE 100 was trading down 50 points or 0.92 per cent at 5,430 this afternoon, with the index of Britain’s biggest firms on course for its fifth weekly decline in six.
And the share prices of UK insurers dropped after their EU counterparts were asked to suspend dividend payments.
The index had opened down by a similar level of about 1 per cent as doubts grew over an oil price deal between Saudi Arabia and Russia that Donald Trump said he had brokered.
But the price of crude oil later surged again after the Organization of the Petroleum Exporting Countries. said it would talk to non-members, notably Russia, giving investors hope that they will stop a price war which has created market chaos.
With the coronavirus pandemic raising the risk of a prolonged global downturn, investors are now seeking safety in the US dollar and government bonds.
It comes as global cases surpassed one million with 52,000 deaths as the pandemic further exploded in the US and the death toll climbed in Britain, Spain and Italy.
The US economy shed 701,000 jobs in March amid the damage inflicted by the coronavirus shutdowns – several times the market’s consensus forecast – while the unemployment rate surged to 4.4 per cent, the US Labor Department said today.
BP and Royal Dutch Shell shares fell slightly as oil prices reversed early losses, with US West Texas Intermediate crude having surged a record 24.7 per cent yesterday.
TODAY: The FTSE 100 index was down 50 points or 0.92 per cent at 5,430 this afternoon
YESTERDAY: The FTSE 100 finished up yesterday after a relatively steady day on the market
Stronger oil prices yesterday had seen gains in the US on Wall Street markets as the Dow Jones Industrial Average went up 2.2 per cent or 470 points to 21,413. Today, the Dow Jones was trading roughly flat at 21,390 – only 0.1 per cent or 22 points down.
Insurers fell today after their European Union counterparts were asked to suspend dividend payments to weather the economic hit from the coronavirus pandemic.
Shares in Legal & General, Aviva and Prudential were down by up to 7 per cent after the EU regulator asked insurers to temporarily suspend dividends and share buybacks.
CMC Markets analyst David Madden said: ‘The action from the European Central Bank and the Bank of England in relation to bank dividend should have been a warning for insurers. In this day and age, you want to make sure that you’re as liquid as possible.’
Defence company BAE Systems dropped 2.3 per cent on deferring a decision on whether to pay its dividend and said it had launched cost control measures after seeing significant disruption.
THIS WEEK: The FTSE rose on Monday and Tuesday, fell on Wednesday and rose yesterday
LAST WEEK: The FTSE 100 index finished at 5,510 last Friday, rising 6 per cent overall last week
London’s bus operators First Group, Go-Ahead Group, National Express and Stagecoach Group gained between 2 and 5 per cent as they welcomed £167million in aid from the Government to keep commuter services running for essential staff.
Mr Trump said yesterday he had spoken to Saudi Crown Prince Mohammed bin Salman, and expects Riyadh and Moscow to cut oil output by as much as 10 million to 15 million barrels, as the two countries signalled willingness to make a deal.
He tweeted last night: ‘Just spoke to my friend MBS (the crown prince) of Saudi Arabia, who spoke with President Putin of Russia and I expect and hope that they will be cutting back approximately 10 million barrels, and maybe substantially more which, if it happens, will be great for the oil and gas industry!’
OPEC’s move today meanwhile sparked fresh speculation of an oil production cut. ‘There’s certainly a lot of optimism that a deal is going to be done’ on the price war, said OANDA analyst Craig Erlam told AFP.
A currency dealer works today in the trading room of KB Kookmin Bank in Seoul, South Korea. The benchmark Korea Composite Stock Price Index finished roughly flat at to close at 1,725
Doubts have grown over an oil price deal between Saudi Arabia and Russia that US President Donald Trump (pictured at the White House in Washington DC yesterday) said he had brokered
The amount cited by Mr Trump would represent an unprecedented cut equal to 10 per cent to 15 per cent of global supply, in output per day terms, a common unit of measurement.
However, Mr Trump provided few details, an omission some analysts said was likely intentional.
Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, said: ‘He is a business man and smart enough to know these things. A cut of 10-15 million barrel per day (bpd) would be simply impossible.
‘How could Riyadh and Moscow agree on such a big cut, just about a month after they had fought over a cut of 1.5 million?’
The German share price index DAX is pictured at the stock exchange in Frankfurt yesterday
In early March, talks over production cuts between the two countries collapsed, leading them to start a price war that pushed oil prices to the lowest levels in nearly two decades.
Nor did Trump make any offer to reduce US production, which has become the world’s largest at the expense of Saudi and Russian output.
Royal Bank of Canada analysts said in a note: ‘Both Riyadh and Moscow will also be looking for participation from US producers, and this may prove now to be the biggest obstacle to an agreement.’
Any cut is unlikely to make up for near-term oil demand destruction, estimated to range between 20 million and 30 million bpd.