Sterling also continued its rally against the dollar, rising more than 2 per cent towards $1.22 having last week crashed to a 35-year low below $1.15
Stock markets soared for a third day as an unprecedented rise in unemployment in the United States fuelled hopes that a more aggressive economic stimulus package was on the way to support the economy as coronavirus spreads.
On another day of drama on trading floors around the world, the FTSE100 rose 2.2 per cent or 127.53 points to 5815.73 – taking gains in the past three sessions to 16.5 per cent – while the Dow Jones Industrial Average was up more than 6 per cent on Wall Street.
Sterling also continued its rally against the dollar, rising more than 2 per cent towards $1.22 having last week crashed to a 35-year low below $1.15.
The surge in share prices came despite a record increase in the number of Americans claiming unemployment benefit as the pandemic hammered the world’s largest economy.
With fears over the health of the global economy intensifying, a United Nations official warned that the number of jobs lost around the world due to Covid-19 would be ‘far higher’ than the 25m estimated just a week ago.
The deepening economic crisis fuelled speculation that governments and central banks around the world will take further action to support businesses and families hit by the pandemic – boosting share prices.
Quincy Krosby, chief market strategist at Prudential Financial in New Jersey, said if the jobs numbers continue ‘there will be demand for more fiscal support’.
In the UK, Chancellor Rishi Sunak launched measures to protect the self-employed. In the US, Federal Reserve chairman Jerome Powell said the central bank was taking every action to support the economy.
But taking a different approach to President Trump, who has said he wants the economy to be ‘roaring’ by Easter, Powell said progress in controlling the spread of coronavirus would determine when business resumes.
We are not experts in pandemic, he said. We would tend to listen to the experts. The first order of business will be to get the spread of the virus under control and then resume economic activity.
A record 3.28m Americans filed jobless claims last week – nearly five times higher than the previous high of 695,000 set in 1982 and up from 282,000 the previous week.
And with nearly half the US’s population under some form of a lockdown, economists expect further increases in jobless claims.
Gregory Daco, chief US economist at Oxford Economics in New York, said: We expect jobless claims will continue to climb as more economic activity shuts down.
Governments and central banks around the world have launched huge emergency packages to cushion the impact.
But a deep recession now looks inevitable as shops, factories and offices are shut down and people are told to stay at home.
The International Labour Organisation (ILO) – part of the UN – last week estimated that unemployment could rise by up to 25m worldwide due to coronavirus.
By comparison, the 2008-09 global financial crisis increased global unemployment by 22m.
But Sangheon Lee, director of the ILO’s employment policy department, said: The projection will be much bigger, far higher than the 25m we estimated.
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