Wall Street rallies after Trump declares virus emergency

Wall Street shares rallied on Friday after US President Donald Trump declared the coronavirus outbreak a national emergency, freeing up money to fight the spread of the disease.

As the president spoke, the three main US indexes jumped more than 9%.

Earlier, London’s FTSE 100 closed up 2.5%, retreating from an early surge, while other European indexes made similar moves.

The rally comes a day after Wall Street suffered its biggest losses since 1987.

Investors fear economies could slide into recession as a result of the pandemic, as business is disrupted, events are cancelled and schools in many countries close in an effort to contain the spread of the virus.

The prohibition on short selling came after major falls in Italian and Spanish indexes on Thursday.

Short selling is speculation that the price of a stock will go down, and if there are more short sellers than buyers, the price will be pushed down.

Firms including football clubs Lazio and Juventus were on the list, as well as luxury car manufacturer Ferrari.

The New York branch of the Federal Reserve also said it would speed up its planned purchases of US government debt, in response to ongoing strains in the US bond market.

In risky times, investors often look to buy Treasuries, driving prices up and yields lower. But in recent days, yields on many US notes have remained unexpectedly high.

Pound v dollar

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Why should I care if stock markets fall?

Many people’s initial reaction to “the markets” is that they are not directly affected, because they do not invest money.

Yet there are millions of people with a pension – either private or through work – who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.

So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.