Government bides its time as markets panic
When sorrows come, they come not single spies but in battalions. Global markets were already nervous about the looming consequences of the coronavirus pandemic, so Saudi Arabia’s declaration of an oil price war obliterated what little confidence remained on trading floors around the globe.
Oil prices had already fallen as the virus took a bite out of demand. It was in that context, and for that reason, that members of the Opec Plus group of oil producing nations met in Vienna at the end of last week.
Instead of inking a deal to cut oil output, relations between Russia and Saudi Arabia descended into acrimony, with the former refusing to countenance a reduction in supply and the latter’s reaction (flooding the market) triggering the biggest global crash since 2008.
To coronavirus fears, markets can now add bitter geopolitical wrangling and prolonged uncertainty to the list of issues dragging down sentiment as well as valuations. In the US, Donald Trump is seeing his beloved bull run starting to splutter. His reaction yesterday was to lay the blame firmly on the Russia-Saudi spat while maintaining his baffling position that fears of the coronavirus are being ramped up by the “fake news media” and his political opponents.
At a time of crisis and uncertainty, leadership matters. Reports last night suggested that officials in Whitehall are increasingly concerned by Trump’s public statements on the virus, and it should be noted that his erratic and potentially highly damaging outbursts are in stark contrast to the response we’ve seen from leaders in the UK.
The health secretary, Matt Hancock, has appeared in command of the detail and on top of his brief while the Prime Minister has chosen his interventions carefully, often flanked by the reassuring presence of the government’s chief medical officer and chief scientific adviser.
The sense one gets from the latest appearance of this newly-formed trio is that we are in a waiting game. Rolling out far-reaching measures to limit the spread of the virus must be deployed at the right moment.
Going too early risks missing the target while leaving it too late would render the actions useless. As the number of confirmed cases creeps higher each day, the government bides its time — like a hunter waiting for a clear shot.
Meanwhile it’s the markets that panic, buffeted by events and forces beyond the control of any expert committee. Between them, government and markets will shape the future of our economy. One appears calm, the other looks decidedly panicked.
Main image: Getty