FTSE 100 suffers worst quarter since 1987 as Covid-19 recession looms - as it happened

A late update from Wall Street, where the S&P 500 has closed 1.6% lower tonight.

And finally, here’s our news story on the financial markets’ dire start to 2020:

Tune in tomorrow to see if the second quarter of 2020 gets off to a better start. Goodnight! GW

One late development...JD Sports has become the latest store chain to stop paying rent to its landlords.

It’s another sign that the high street lockdown has a devastating impact on fashion retailers.

My colleague Zoe Wood explains:

JD confirmed that it had not paid the quarterly rent for its 390 UK stores which was due last week. The retailer is understood to be in discussions with its landlords about the next bill, which is due in June.

Last week, the value fashion chain Primark refused to pay £33m in rent after the closure of its UK stores due to the coronavirus outbreak.

The Swedish fashion retailer H&M is also pushing for waivers on its rent and service charge bill.

The sportswear giant’s stores in the UK, mainland Europe and the US all shut last week. In an update to investors it warned the shutdown would have a “significant impact” on its financial outlook.

Despite the recent easing of market jitters, investors should be cautious about the months ahead. Optimism that the Covid-19 crisis will soon be over could be badly misplaced.

So writes my colleague Nils Pratley tonight:

The rapid bounce-back theory rests on the idea that lockdowns will last only two or three months, at most, with no need to reimpose them.

Perhaps that will be accurate but, remember, the investment consensus eight weeks ago was that Covid-19 was mainly a China-only affair and would be over quickly. Projections have been made to look very silly very quickly in this crisis. It is why little should be read into Tuesday’s better-than-expected survey of business confidence in China: one unreliable piece of data does not imply a lasting rebound.

Nor do we know if governments’ support packages, though they seemed enormous on announcement, will be sufficient. Look at the calls for extra help already piling up at the UK Treasury’s door: even commercial landlords, who should be well placed to take some strain, are begging the state to cover shortfalls in their rental income.

What we know now is that there will be a big bill at the end. The UK Debt Management Office on Tuesday said it would raise £45bn just in April via sales of government debt, a stunning sum that compares with £9.5bn in the same month last year. In the coming financial year, the UK’s budget deficit could treble to £200bn, or 10% of GDP, the Institute of Fiscal Studies estimated last week. Meanwhile, companies, many of which were carrying too much debt in the first place, will be carrying even heavier levels. It all drags on investment.

More here:

Back on Wall Street, stocks have turned lower again.

The Dow’s currently down 191 points, or almost 0.9%, having been up 0.5% earlier.

View image in fullscreen

But after a month of wild lurches - the Dow gained over 2100 points one day, and lost nearly 3,000 on another - such moves are most sedate.

FTSE 100-listed cruise operator Carnival has had a rotten quarter, down 73%.

And today, it admitted that it never recover after the coronavirus pandemic, as it sought needs $6bn (£4.8bn) in new funding.

Carnival, which was forced to suspend sailings this month, is looking to raise $3bn in bonds secured on its ships, a further $1.75bn in convertible bonds and $1.25bn through issuing new shares.

But it also warned that the illness and deaths caused by Covid-19 could have “a long-term impact on the appeal of our brands, which would diminish demand for vacations on our vessels.”

Italy’s main stock index suffered its worst quarter on record, and its worst month too, Reuters reports.

The FTSE MIB sank by 27% in the first three months of this year, and by 22% in March alone - as Rome was forced to impose ever-more-stringent lockdown rules in an attempt to slow the spread of Covid-19.

The FTSE 250 index of medium-sized, UK-focused companies had an even worse quarter!

It fell 31% in Q1, dragged down by UK retailers, transport firms, property groups and pub chains badly hit by the Covid-19 crisis

Louis Ashworth of The Telegraph has calculated that it’s the FTSE 250’s worst quarter on record.

In other banking news, Barclays is offering to pay staff triple their usual wage, if they’ll help deal with the surge in requests for mortgage holidays and emergency loans.

31 Mar 202013.09 EDT

UK bank chief waives salary amid Covid-19 crisis

Kalyeena Makortoff

Monzo’s chief executive Tom Blomfield has told staff that he will be waiving his salary for the year, making him the first boss of a digital bank (or any UK bank for that matter) to take a personal cut in light of the coronavirus crisis.

In a memo to staff, the digital challenger bank boss said senior managers and board members would also take a 25% cut.

It’s understood that the bank is taking the move as part of precautionary measures to make sure they are ‘as prepared as possible’ if the economic situation worsens.

While Monzo has never confirmed Blomfield’s pay, the company’s last annual report shows that the highest paid director made £117,000 last year. That’s not tons in the banking world, but it sends a strong signal.

However, it’s worth worth stressing that there haven’t been any warning signs suggesting the bank is struggling. Like most digital banking start-ups in the UK, the bank hasn’t yet made made a profit, but it is privately backed by companies like Y Combinator (that’s the US-based investment firm best known for backing holiday letting platform Airbnb, file hosting service Dropbox and online forum Reddit).

Regardless, all deposits at Monzo are protected up to $85,000 by the Financial Services Compensation Scheme.

The news was first reported by TechCrunch.

Some small comfort for UK investors: it’s worse in Brazil!

Neil Wilson of Markets.com also reckons the markets are calming down a little, but that doesn’t mean volatility is over....

March comes in like a lion and goes out like a lamb. One can often twist an old saying to fit one’s narrative but in some ways that is indeed what we’ve seen in equity markets over the last month, although it depends on how you define roaring and bleating I suppose.

Despite a horrid quarter and a shocker of a month, there is something of relative calm descending on markets at the month-end. Call it exhaustion, but it is welcome respite from what has been about the worst bout of panic selling we have seen. 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. Daily ranges are tightening but resistance is holding.

31 Mar 202012.41 EDT

UK mid-sized firms 'shut out' of Covid-19 help

Rob Davies

The slump in UK shares this quarter was triggered by fears of a deep recession.

So it’s worrying to hear that some companies can’t access the emergency help which the British government is providing.

Business lobby group the CBI told MPs on the Treasury Committee today that there is a “stranded middle” of businesses that can’t get access to government support.

The business interruption scheme isn’t available to companies with a turnover of more than £45m, while the Bank of England’s corporate finance facility is only accessible to much larger firms.

Luxury motor yacht-builder Princess Yachts, which employs 3,000 people around Plymouth, says it has been left high and dry.

Executive chairman Antony Sheriff explains:

“We’re pleased the government stepped into the fray with support for British business. Unfortunately the two programmes they’ve put in place will put firms like ourselves in a massive chasm of non-coverage.

“We’re one of the few left that completely design, engineer and produce a British-made product in the UK

“Some of our suppliers may benefit but if mid-size companies aren’t supported, they’ll have nobody to supply to. Support needs to be given across British industry. It doesn’t make much sense.”

The company has 97% of its 3,000 staff on the furlough scheme but doesn’t know when it will be reimbursed for that money. Princess Yachts does not get paid until boats are delivered, so it has no money coming in.