FTSE 100 marks worst quarter since 1987 despite rise today
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The FTSE 100 rose marginally today after China’s factories showed signs of bouncing back in March, but still delivered its worst quarter since 1987 as investors panic over coronavirus.
Britain’s blue-chip index closed 1.68 per cent higher today at 5,657 points. That pushed on from yesterday, when the FTSE 100 rose as the spread of coronavirus cases slowed for the first time in weeks.
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Nonetheless, the FTSE 100 delivered its worst three-month performance since 1987, when UK stocks were hammered on Black Monday.
The FTSE 100 finished the quarter today more than 25 per cent lower than three months previously.
Joshua Mahony, senior market analyst at IG, said: “European markets are set to close out the month in positive fashion, with UK listed stocks posting another day of gains to wrap up a relatively positive end to March.
“Despite the welcome rise we have seen towards the end of the month, we look set to see the worst quarter for the FTSE 100 since 1987
The FTSE 100 was on track for its worst ever quarter earlier this month. But timely interventions by the US’s Federal Reserve and Congress lifted market sentiment last week.
“We have witnessed extreme market volatility in recent weeks,” said Paul Jackson, global head of asset allocation research at Invesco.
He said three things have the potential to ease uncertainty and see investors return to risk: “A working and approved vaccine, a clear reduction in Covid-19 cases and deaths outside of China, and policy support.”
Neil Wilson of Markets.com said: “Whilst the ‘08 and dotcom drawdowns were larger, it’s the speed at which we saw equities sold off earlier this month which was truly remarkable.
“Volatility is declining in a way that will give hope, albeit we would tend to think that whilst the bottom has on balance likely been found for equity markets, it could well be felt a few more times.”
European markets were choppy today after a torrid quarter. Germany’s Dax index was 1.2 per cent higher and France’s CAC 40 was up 0.4 per cent.
Wall Street opened marginally higher, with the S&P 500 up 0.3 per cent and the Dow up 0.4 per cent.
China factory data boosts European stocks
Investors were cheered this morning by the Chinese purchasing managers’ index (PMI), released overnight. It showed factory output unexpectedly grew in March after plunging to a record low in February.
Connor Campbell, financial analyst at online trader Spreadex, said the China factory data gave markets a reason for optimism.
“China provided Western investors with a light at the end of the tunnel on Tuesday,” he said, “showing it is possible to return to growth after the worst (hopefully) of the coronavirus crisis”.
“Analysts were expecting a healthy bounce,” he added. “Instead the [manufacturing and services] sectors saw a remarkable swing back into expansion territory.”
Nonetheless, the Chinese National Bureau of Statistics that the figures did not mean the economy has stabilised. It said companies still face big operational pressures. Markets have since slipped back from their earlier highs.
“The tone still remains understandably cautious,” said Jim Reid of Deutsche Bank. “But nonetheless the data does provide a sliver of hope for expectations of a ‘V or U’-shaped recovery for markets.”
FTSE 100 choppy after coronavirus data
Russ Mould, investment director at AJ Bell, said Italy’s lower number of daily coronavirus cases also helped the FTSE 100 this morning.
“Also giving investors hope was the fact that Italy had the lowest daily virus infections in two weeks,” he said. “Signs of a slowdown in new Covid-19 cases are important indicators for the market, particularly in Italy which has been one of the worst affected countries.
Yet optimism was quickly curtailed by news that Spain had suffered its biggest daily jump in coronavirus deaths so far. Between yesterday and today, 849 people died of the virus in Spain.
Spain is second only to Italy in the number of people in the country who have died from the virus. In Italy, 11,591 people have died.
Oil prices stabilise
Oil prices, which yesterday plumbed depths not seen since the early 2000s, were more stable today. Brent crude was trading 2.2 per cent higher at $23.25 per barrel. US crude was up 5.2 per cent at $21.13 per barrel.
Prices have plunged in recent weeks as Saudi Arabia ramps up production during a price war with Russia just as a global recession curtails demand.
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Michael Hewson, chief market analyst at CMC Markets, said the Chinese factory data “has helped oil prices undergo a semblance of rebound after their big declines yesterday”.
The pound was roughly flat against the dollar at $1.238. It was up 0.8 per cent against the euro at €1.13.