After early positivity, sellers are in charge again in London. Our Trader writer Neil Wilson says: 'The fiscal put is coming - Japan, France, Australia, NZ et al are starting to respond with bigger spending measures to counter the effects of the virus. The UK is beefing up its response after the Budget's £30bn offer was considered to be short of the mark, whilst the market enjoyed a small bounce overnight as Donald Trump was said to urge lawmakers to adopt his approach to open the spending spigots. The monetary measures are in place, the fiscal response is slowly getting there. All we need now is for the virus to peak and all the ingredients for an epic market rally are in place - the unknown is the virus and the economic damage, but equity markets are currently well priced for a sizeable hit to the global economy. Until then epic volatility remains our companion.' For Neil's full Market Outlook, click here.
IC TIP UPDATES:
Aviva (AV.) has sought to reassure investors of its capital levels, despite a 31 percentage point drop in its solvency coverage ratio to 175 per cent since the end of 2019. Of those, seven percentage points reflect the group’s final dividend, meaning the decrease in global interest rates, the widening of corporate bond spreads, and the sharp decrease in the value of Aviva’s own equity have already hit the group’s capital. Hedges may have lessened the blow, though the life insurer said the estimate does “not allow for any increase in insurance claims or changes in experience or assumptions that may arise from Covid-19”. Under review.