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12.03.2020 19 INTERNATIONAL MARKETS EUROPEAN markets climbed on Wednesday after the Bank of England in- troduced a series of emergency measures to curb the economic impact of the coro- navirus outbreak on the UK. In London, the FTSE 100 rose by around 1%, with investors widely expecting the central bank's manoeuvres to coincide with the announcement of a government spending package in Wednesday's budget. Germany's DAX climbed by 1.6%, while France's CAC 40 was up by around 2%. e Bank of England slashed interest rates by 50 basis points, to 0.25%, and in- troduced a new funding scheme for loans to SMEs, in a move that could see banks provide more than £100bn in credit to businesses affected by the fallout. e bank also reduced a key capital buffer to 0%, in a move that it said would "further the ability of banks to supply the credit needed to bridge a potentially chal- lenging period." e package was agreed at an emergen- cy meeting of the bank's Monetary Policy Committee on Tuesday. It forms part of what the Bank of Eng- land calls a "comprehensive and timely package of measures to help UK busi- nesses and households bridge across the economic disruption that is likely to be associated with COVID-19." Questioning the efficacy of the bank's decision to slash its benchmark rate, Mi- chael Hewson, the chief market analyst at CMC Markets said that "lower rates won't get people travelling or spending if they are self-isolating." "e key component of this morning's announcement was the decision to roll out a new term funding scheme, with ad- ditional incentives for SMEs, financed by central bank reserves, at £100bn," Hew- son said on Wednesday. e gain for European stocks followed sharp losses in Asia. China's SSE Composite Index fell by 0.9% on Wednesday, while the Hang Seng was down 0.6% in Hong Kong at market close. Japan's Nikkei (^N225) fell by almost 2.3%. e KOSPI Composite Index (^KO- SPI) in South Korea closed almost 2.8% in the red. European markets climb after BoE's emergency coronavirus rate cut FOLLOWING a wild day of trading, Wall Street staged a big comeback late on Tuesday as stocks rebounded from the brink of a bear market amid news that the Trump administration is plan- ning to introduce an economic stimulus package to mitigate the fallout from the coronavirus outbreak. • e Dow Jones Industrial Av- erage ended the day up by over 1,100 points, gaining 4.9%, while the S&P 500 rose 5%—its biggest gain since December 2018. Both indexes halved their losses from Monday's historic market plunge. • President Trump has proposed the idea of a 0% payroll tax rate for the rest of 2020, as well as offering federal assistance to airlines, ho- tels and cruise operators that have been hit by cancellations due to the coronavirus. • Stocks pared back gains after starting the day positive, brief- ly falling into the red after news that the Trump administration is still far from ready to roll out any specific economic proposals in re- sponse to the outbreak, according to CNBC. • Stocks rallied again later in the afternoon, however, after Presi- dent Trump met with lawmakers: In a press conference, he down- played the economic severity of the coronavirus and promised a fiscal stimulus response to the outbreak—though specific details are yet to be announced. • Among other potential stimulus measures that may soon be intro- duced, the Trump administration is also pushing for federal aid to oil and natural gas companies— many of which are heavily levered, the Washington Post reports. • at helped oil prices as they jumped more than 11% amid hopes for renewed OPEC talks— one day after a price war between Russia and Saudi Arabia caused oil prices to fall 25% in the sharp- est decline since the 1991 Gulf War. "A lot of good things are going to hap- pen," Trump, who has promised "dra- matic" economic relief, told reporters after his meeting with Senate Republi- cans on Tuesday. He said that the gov- ernment was "working on a lot of dif- ferent things" and making progress in addressing the coronavirus health cri- sis, both economically and medically. Trump also highlighted the strength of consumer spending as an important in- dicator that the economy is still holding steady: "e consumer has never been in a better position than they are right now." e Federal Reserve last week made its largest emergency cut to interest rates since the 2008 financial crisis, slashing the benchmark rate by half a percentage point. With the current rate now sitting at 1% to 1.25%, pressure is mounting for further rate cuts when the Fed meets on March 17 and 18. Fed fund futures indicate that Wall Street analysts are expecting a rate cut of another 0.5% to 0.75%. Trump himself again criti- cized the Fed in a tweet on Tuesday, condemning the central bank for being "pathetic" and too "slow moving" in ad- dressing the economic impact from the coronavirus. Stocks rally, Dow gains more than 1,100 points after Trump promises economic response to coronavirus fallout Stocks rallied late in the day on Tuesday, halving their losses from Monday's historic plunge The Bank of England slashed interest rates by 50 basis points

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