Shares in London nudged higher for the third day in the row on the day’s trading (March 26) in anticipation of the Bank of England injecting more cash into the economy.
The hopes came on the back of the G20 group of leading developed nations revealing a $5 trillion war chest was available to revive the world economy after the coronavirus outbreak subsides.
The FTSE 100 ended 2.24% up at 5815.73, followed by the FTSE 250 coming in 3.78% higher at 15380.71.
Sterling also had a rare good day, moving up 2.18% against the US Dollar to trade at $1.21 and 0.92% against the Euro to €1.10.
“These are unprecedented times. The pound is weaker now than at any point during the Brexit process, the 2008 financial crash, or 1992’s Black Wednesday when speculators forced the government’s hand in pulling the pound from the European Exchange Rate Mechanism,” said investment specialist Nigel Green, CEO and founder of world leading independent wealth management firm deVere Group.
This is happening for three main reasons, explained Green.
“First, the coronavirus pandemic has triggered a flight-to-safety. As is typical in times of economic turbulence, the U.S. dollar attracts more buyers, in turn pulling down the price of sterling,” he said.
“Second, investors are seeking liquidity and the most liquid assets of all are U.S. Treasuries, which explains why dollars are always in demand.
Asia markets fall back
“Third, before the pandemic, many investors had piled into sterling anticipating more gains following a decisive general election outcome.”
Meanwhile, across the Atlantic, worries about surging unemployment to 3.3 million and the rapid spread of coronavirus to more than 70,000 positive cases seemed not to perturb the markets.
Early afternoon, the Dow Jones was up 4.77% to 22210.86; the NASDAQ climbed 4.03% to 7682.21 and the S&P 500 hit 2592.73 – a rise of 4.73%.
European markets followed suit, with the Paris CAC 40 increasing by 2.51% to 4543.58; The DAX in Frankfurt rising 1.28% to 10000.96 and Madrid’s IBEX 35 closing at1.31% up to 7033.20.
Earlier in the day, Asian markets faltered, with the Hang Seng in Hong Kong falling 0.74% to 23352.34 and Tokyo’s Nikkei dropping 4.51% to 18664.60.