We’ve just seen one of the worst weeks in stock market history, with the FTSE100 ending on Friday 17 per cent down and billions of pounds wiped off British share values. This has been spurred on not by the fear of Covid-19 itself, but by the reaction to the virus: when sentiment switches from confidence to caution, panic can be self-reinforcing.
In response to the panic, the Bank of England slashed interest rates to 0.25 per cent; hours later, Chancellor Rishi Sunak used his first Budget to respond with a £30 billion stimulus package – the biggest giveaway of any Budget since 1992. In reality just £12bn of the £30bn is for the virus disruption: the rest is a debt-fuelled stimulus. But Covid eclipses all.
Below are seven graphs which sum up an extraordinary week of economic news:
FTSE 100 tumbles
There have been few weeks like this one…
(Source: Sky News)
Oil prices plummet
Once, cheap oil would have made the stock markets boom – usually resulting in lower costs and more profits. But this time, low prices badly hit the US fracking industry, which is now so big that a knock to its fortunes can send shares plunging. This week’s dip isn’t simply due to Covid-19 worries, but the sudden oil war launched by Saudi Arabia against Russia, which has sunk princes to $30 per barrel.
The drop this week was the second-biggest one-day oil price shock in history. While the oil war rages on between MBS and Putin, it’s thought America’s shale gas industry could be the biggest loser:
Bank of England slashes interest rates
The below graph shows the Bank of England base rate, now cut once again, and the gradually-declining market expectations for how that rate will recover.
Already a subscriber? Log in
Comments
Don't miss out
Join the conversation with other Spectator readers. Subscribe to leave a comment.
UNLOCK ACCESSAlready a subscriber? Log in