The Bank of England Cut Interest Rates in a Surprise Move - Barron's

AFP via Getty Images

There was mixed action in global financial markets Wednesday, as European stocks responded to a surprise rate cut by the Bank of England while U.S. stock futures signaled a retreat from the prior day’s massive gains.

The broader context to financial markets is the coronavirus scare that, in Italy, surpassed 10,000 cases and essentially locked down the nation of 62 million people.

More coverage

European stocks surged on Wednesday as the Bank of England surprised markets with the timing and size of an interest-rate cut, as expectations also built on a U.S. fiscal response.

The Stoxx Europe 600 climbed 1.2%

The Nikkei 225 slumped 2.3% in Tokyo. and the S&P ASX 100 slumped 3.6% in Sydney. Dow Jones Industrial Average futures have dropped 459 points, or 1.9%

The Bank of England, in a surprise move, cut interest rates by a half point, to just 0.25%. The U.K. central bank also took other steps, including lowering its counter-cyclical capital buffer and providing additional funds for bank lending to small and medium-sized businesses.

A few analysts had expected a rate cut to coincide with the presentation of the U.K. budget, due later on Wednesday, though most said the central bank would wait until its scheduled meeting on March 26.

“We would say the moves on the counter-cyclical buffer and term lending for SMEs are more important and more useful than the rate cut. The problem is not so much with the cost of credit as with the flow of credit, and the former two help with that,” said Paul Brain, head of fixed income at Newton Investment Management.

U.K. banks including Lloyds Banking Group rose.

Adidas and Puma both fell sharply as the two German apparel makers each issued statements warning that they could not quantify the hit to their business from the coronavirus. Nike, down 2.4% in premarket action, dropped in sympathy.

Oil prices have dropped 3% on reports that the Saudi Arabian government ordered Saudi Aramco to increase production to 13 million barrels a day, from 12 million.

Write to Steve Goldstein at steven.goldstein@wsj.com

Let's block ads! (Why?)

Business - Latest - Google News
March 11, 2020 at 07:37PM
https://ift.tt/33camDc

The Bank of England Cut Interest Rates in a Surprise Move - Barron's
Business - Latest - Google News
https://ift.tt/2Rx7A4Y

Bagikan Berita Ini