What to watch: Central banks on coronavirus, pressure on Barclays, UK construction

Edmund HeaphyFinance and news reporter
Yahoo Finance UK
President of European Central Bank Christine Lagarde speaks during a press conference following a meeting of the governing council in Frankfurt, Germany, Thursday, Jan. 23, 2020. (AP Photo/Michael Probst)
President of European Central Bank Christine Lagarde speaks during a press conference following a meeting of the governing council in Frankfurt, Germany, Thursday, Jan. 23, 2020. (AP Photo/Michael Probst)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

ECB working on loans for coronavirus-hit companies

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The European Central Bank (ECB) is considering the introduction of a lending scheme that would provide liquidity assistance to companies impacted by coronavirus.

The scheme, known as a longer-term refinancing operation (TLTRO), would provide cheaper credit to banks on the condition that it is loaned to small and medium-sized enterprises in the 19-member eurozone, according to Reuters.

The bank declined to confirm the proposal to Reuters.

ECB president Christine Lagarde said on Monday that the central bank was prepared to take “appropriate and targeted” measures to address the impact of the outbreak.

“The ECB is closely monitoring developments and their implications for the economy, medium-term inflation and the transmission of our monetary policy,” she said.

A previous TLTRO scheme gave loans to banks at the ECB's -0.5% deposit rate.

The bank initially announced such a scheme towards the end of 2011, hoping to ease the impact of the eurozone crisis.

Carney says Bank of England will take 'all necessary steps'

Bank of England governor Mark Carney said on Tuesday the central bank would take “all necessary steps to support the UK economy and financial system” in the face of the global coronavirus epidemic.

“The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove large but will ultimately be temporary,” Carney told MPs on Tuesday.

“The bank will take all necessary steps to support the UK economy and financial system.”

Asked directly about the possibility of extending loans to banks, ramping up asset purchase programmes, or even cutting interest rates, Carney said: “We are considering a variety of policy options.”

Carney told MPs to expect a coordinated response to the COVID-19 epidemic, including both fiscal and monetary policy measures. He said action would be “powerful and timely”.

“We will act as appropriately,” Carney said.

European stocks boosted by hopes of international action

European stocks climbed on Tuesday morning, amid hopes of co-ordinated international action to support the global economy.

The pan-European STOXX 600 index (^STOXX) was up by more than 3% on Tuesday morning.

The FTSE 100 (^FTSE) was up by almost 2% in London. Germany’s DAX (^GDAXI) was up by almost 3%, while France’s CAC 40 (^FCHI) rose by 2.5%.

The rally in European equities came ahead of an emergency call between G7 finance ministers and central bankers at 12pm GMT to discuss their response to the outbreak.

Possible actions include co-ordinated spending by governments, the buying up of debt, lending to banks to ease liquidity pressures, or even a co-ordinated interest rate cut — something not seen since the financial crisis.

Pressure mounts on Barclays to ditch fossil fuel lending

Pressure is growing on Barclays (BARC.L) to curb lending to fossil fuel companies, with a significant investor publicly backing calls for the bank to change its ways.

Jupiter Asset Management (JUP.L) on Tuesday said it would support a shareholder campaign calling for Barclays to put a stop lending to fossil fuel and utility companies that don’t align with the goals of the 2015 Paris agreement.

Investor campaign group ShareAction filed a resolution in January calling for Barclays to publish a plan to gradually reduce its fossil fuel lending.

Investors will vote on ShareAction’s proposal at Barclays’s annual general meeting (AGM) in May. It will be the first such vote at a European bank.

Fears coronavirus threatens recovery in UK construction

The UK construction industry has begun to recover from a nine-month slowdown, with the ‘Boris bounce’ unleashing pent-up demand for housebuilding and commercial building work.

But there are fears the coronavirus could disrupt construction supply chains and see firms put building plans on hold, threatening a fragile turnaround in fortunes.

A closely watched survey of the sector shows levels of work picking up, with more clients giving building projects the go-ahead since December’s election broke Britain’s political deadlock.

Levels of new work soared in February at their fastest pace since December 2015, while overall workloads increased for the first time in nine months.

The headline figure on the construction purchasing managers’ index (PMI) jumped to 52.6 in February, up from 48.4 last month. 

What to expect in the US

Futures are pointing to a higher open for US stocks on Tuesday.

S&P 500 futures (ES=F) are up by 0.8% and Dow Jones Industrial Average futures (YM=F) are up by more than 0.9%. Nasdaq futures (NQ=F) are up by more than 1%.

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