Bank of England cut rates to combat the effects of coronavirus | Calamatta Cuschieri

Market Summary

The Maltese market closed in the red on Tuesday, with MSE total index ending the session 1.716% lower to 9,037.737 points. The best performer was FIMBank plc, by adding 8.62% to close at 0.63, followed by 0.97% increase of Bank of Valletta plc with a closing price of 1.04. Biggest fall was seen from Malta International Airport plc, 10.53% drop to 5.10, followed by 8.11% and 3.64% slid of International Hotel Investment plc and BMIT Technologies plc with a closing price of 0.68 and 0.53 respectively. HSBC Bank Malta plc and Malta Properties Company also declined, 2.86% and 1.56% to close at 1.02 and 0.63.

European stocks surrendered early gains amid reports of divisions in the US Congress regarding the need for stimulus measures to help the economy and signs that the oil price war between Russia and Saudi Arabia may just be starting to get underway. By the end of trading, the pan-European Stoxx 600 was 1.14% lower to 335.64, alongside a 1.51% drop for the Cac-40 to 4,636.61, while the FTSE Mibtel plummeted 3.28% to 17,870.18.

Stocks closed sharply higher on Tuesday following the Dow Jones and S&P 500's worst daily showings since the Global Financial Crisis in the previous session. At the close, the Dow Jones Industrial Average was up 4.89% at 25,018.16, while the S&P 500 was 4.94% firmer at 2,882.23 and the Nasdaq Composite saw out the session 4.95% stronger at 8,344.25.

Bank of England makes emergency rate cut to counter coronavirus shock

The Bank of England has made an emergency cut to interest rates in a wider package of measures designed to counter the shock of the coronavirus on the UK economy.

The Monetary Policy Committee unanimously agreed to reduce the main bank rate by half a percentage point to 0.25 per cent at a special meeting ending on Tuesday, leaving almost no room to cut rates further.

The BoE said that potentially more important than the rate cut was its decision to offer banks four years of cheap funding so that they could continue to lend through the coronavirus crisis and “bridge a potentially challenging period”.

Banks will also see their requirements to hold capital buffers loosened to allow them to take temporary losses without curtailing lending.

The UK central bank follows the US Federal Reserve in taking unscheduled action to combat the expected economic disruption from the virus.
 

This article was issued by Nadiia Grech, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

More in Business Comment