Wall Street rebounds from Crash Monday despite recession fears - as it happened

Time for a recap, after another wild day in the markets.

World stock markets have been hit by fresh turbulence, a day after their worst rout since the financial crisis.

Fears over the coronavirus outbreak and the launch of an oil price war continue to rattle traders, leading to very volatile trading.

The day began, and ended, with optimism that the White House was planning payroll tax cuts and support for businesses hurt by the current turmoil. But in between, fears of a global downturn weighed on stocks too.

European markets closed in the red for the second day running, suffering fresh losses after their worst day since 2008. The Stoxx 600 lost almost 1% more, with Italy leading the selloff as economists predicted a deep recession this year.

Britain’s FTSE 100 also began the day strongly, rising by over 3%, but that rally fizzled out. It closed flat at 5960. a four-year low, after slumping by almost 500 points yesterday.

However, Wall Street jumped by almost 5% tonight, after president Donald Trump said his administration were helping travel and holiday companies. Last night, Trump promised a big response to the Covid-19 threat (while still playing down the scale of the crisis).

According to Bloomberg, the risk of a US recession is now over 50%.

With this in mind, Trump’s White House appears to be aiming to persuade Congress to back a stimulus package to shield the economy from the fallout from the coronavirus outbreak.

According to one report, that could include assistance for the shale oil and gas production industry.

Trump also lashed out at the US central bank, calling it “pathetic” for not cutting interest rates faster.

Energy companies were in the firing line again today, with Saudi Aramco announcing plans to pump millions more barrels of oil each day - as part of a plan to drive down the oil price and put rivals out of business.

In the UK, banks promised help for small firms and mortgage holidays for consumers affected by the coronavirus outbreak, as the number of cases continues to rise.

On Wednesday, Britain’s new chancellor Rishi Sunak is expected to pledge billions of extra pounds to help the NHS, and boost infrastructure spending.

Meanwhile in Europe, officials are preparing to suspend the EU’s use-it-or-lose it rules on airport landing slots, ending the spectre of airlines running “ghost flights” with few or no passengers at all.

Thanks for reading and commenting. Goodnight! GW

Wall Street’s finest are looking more cheerful tonight, after watching stocks recover from Monday’s rout:

Speculation is mounting that Mark Carney will use his final week as governor of the Bank of England to announce a dramatic package of support for the British economy to help it through the coronavirus outbreak, my colleague Richard Partington writes.

City traders believe Threadneedle Street could announce an immediate cut in interest rates, and ease borrowing conditions for high street banks, to coincide with Rishi Sunak’s budget on Wednesday, as part of a concerted effort to help households and businesses amid the unfolding economic crisis.

Economists expect the Bank will cut interest rates by as much as 50 basis points to 0.25%, taking borrowing costs back down to the lowest level in the central bank’s 325-year history.

Does today’s Wall Street rally mean it’s time to pile into the markets again?

Not according to Oxford Economics, whose analysts urge caution.

They predict some companies (perhaps US shale producers?) will face financial problems in the coming weeks:

Specifically, investors face three key considerations: (1) continuing spread of coronavirus in the West, (2) the fall-out of the financial tightening for fragile US corporate balance sheets and weak European banks and (3) policy responses.

Only (3) is risk positive while (1) and (2) are continuing to develop. Moreover, there are legitimate doubts about whether policy response can be effective.

The key underlying vulnerability that the coronavirus-led impairment can expose and cause to unravel is US corporate sector balance-sheet weakness. Given high levels of debt, weak profitability and low interest cover, risks of corporate sector distress remain particularly high.

Tonight’s stock market rally came despite predictions that the US economy could start shrinking this year, due to the coronavirus.

Bloomberg News’s Recession Tracker has calculated that the probability of a US downturn has jumped over 50%, based on various financial indicators, economic data and other factors.

They explain:

The surge in the recession probability reflects a sharp deterioration in financial conditions that began in mid-to-late February. As the number of cases -- and deaths -- from the rapidly spreading coronavirus increased, stocks plummeted and credit spreads widened.

The market suffered yet another blow after a collapse of OPEC+ talks led to a price war between Russia and Saudi Arabia, sinking oil prices.

Optimism that the White House might launch a stimulus programme, or take steps to support oil companies, airlines and cruise operators, drove all three Wall Street indices higher tonight.

The S&P 500 bounced by almost 5%, recovering from its 7.6% slump on Monday -- worst day since the financial crisis more than a decade ago.

But as we’ve been covering tonight, there are some doubts about president Trump’s pledge to cut taxes.

As Marketwatch puts it:

Stock-index futures found support Tuesday after President Donald Trump advocated for payroll tax relief and other measures to help businesses deal with the economic slowdown resulting from the coronavirus epidemic.

Lawmakers in both parties though expressed skepticism about a payroll-tax cut to bolster the economy.

Boom! That’s last-minute scramble into stocks had helped Wall Street recover around half Monday’s crash.

The Dow has jumped by 4.89% to finish at 25,018.16 , a gain of 1,167 points.

Wall Street is ending the day with a rally!

The ‘plunge protection team’, as they’re known on Wall Street, appear to be back:

That suggests the White House is worried about the market selloff....

Bailing out the US shale industry would be controversial - especially if the White House resists calls for more paid sick leave for workers who may have the coronavirus.

Here’s why:

Washington Post is reporting that America’s shale oil producers could get a lifeline, to help them cope with the Saudi price war:

Here’s what’s I mean about Donald Trump downplaying Covid-19 (which has now killed 4,000 people)

Back in Washington, Donald Trump has told Republicans he favours a tax break that would run until the presidential election:

That might suit Trump’s electoral hopes - but it’s hardly the best and only way to protect Americans.

Especially as criticism of the White House’s approach of downplaying the virus is growing:

Europe’s top central banker is pushing for governments to boost spending - to fight the risk of a recession this year:

A Barclays employee in New York has tested positive for Covid-19, Reuters is reporting.

Meanwhile, the World Trade Organisation (WTO) has said all meetings are suspended for 10 days, after a colleague went down with the virus (as flagged earlier -- not the WHO as I wrongly typed, sorry).