Virus fears spread but investors boosted by interest rate cuts

Investor sentiment was boosted by interest rate cuts from Australia and the US, as investors expected other central banks and institutions to follow with similar measures as well.

Sentiment remained positive, despite the negative outlook released by the Organisation for Economic Co-operation and Development (OECD), which forecast that the global economic growth could potentially halve in 2020, if the Coronavirus outbreak was far-spreading.

The Cboe UK 100 Index has been up by 1.92 per cent over the last week, which was helped by the IHS Markit’s positive UK composite PMI figures showing that the UK manufacturing and services sectors have continued their steady expansion in February.

Additionally, the Governor of the Bank of England (BoE) Mark Carney announced that the bank was prepared to make necessary rate cuts to soften the effect of the virus, which could damage cash flows, finance and confidence of businesses.

While short-term damage to the UK economy is anticipated, unlike the 2008 financial crisis, the BoE predicts that there will not be long-term lasting effects.

Globally, markets have also been positive, as a response to the US, Australia and Canada cutting interest rates by 0.5, 0.25 and 0.5 percentage points respectively.

In China newly reported Coronavirus infection cases continue to slow down daily, even though the disease is still spreading internationally.

The World Bank has announced it would provide up to US$12bn funding to help countries improve their measures against the outbreak.

The US S&P 500 has been up 5.24 per cent, Hong Kong’s Hang Seng has risen by 2.66 per cent and Japan’s Nikkei 225 Index has grown 2.35 per cent over the past week.

On Wednesday, the International Monetary Fund (IMF) reduced its forecast for 2020 global economic growth from 3.3 per cent to an unspecific, but potentially much smaller figure.

The IMF’s managing director Kristalina Georgieva said that the disease had spread to a third of member countries and that the global economy has turned to “a more adverse” situation regarding the disease.

Staffordshire-headquartered financial services firm Knights Group has announced a £20m acquisition of the Leeds independent law firm, Shulmans, to expand its legal and professional services operations.

The decision has been made to enter business into new a location and bolster existing offices.

The CEO of Knights Group David Beech said that Shulmans is a good cultural fit with a strong customer base, which is going to be a valuable addition alongside the newly-opened York office and provide better access to the £437m Yorkshire legal services market.

This is only one of ten acquisitions of Knights Group since its IPO in 2018, which has seen its share price expand 49.29 per cent in the last year.

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