MORNING BID-An emergency

A look at the day ahead from EMEA deputy markets editor Sujata
Rao. The views expressed are her own.

The Fed has moved on from backstopping financial markets to
helping support the real economy. It will now lend against
student loans, credit card loans and others, plus back loans to
employers and a funding programme for small and medium
businesses. In short, a package that could deliver $4 trillion
to non-financial firms.

It also announced endless purchases of assets, including for
the first time plans to buy municipal and corporate bonds. The
reaction was mixed, though, with markets eventually closing
lower on Monday. The view may have been that, while the Fed cash
injections will ensure financial market liquidity, they won't
stem the economic damage that's underway.

This morning, there seems to have been a bit of
reassessment. World stocks are 1% higher, U.S. equity futures
are up 4% and European markets look similar. One reason could be
the news that China's Hubei province, where the coronavirus
pandemic originated, is lifting travel restrictions, raising
hopes the Chinese economy can lead the world economy back toward
better times. China's blue-chip CSI300 index advanced 2.7%, its
best day in three weeks.

Global bond yields have ticked up. Following a
20-basis-point slump yesterday, U.S. 10-year yields have inched
higher. So two-year yields, which are now at seven-year lows. On
FX markets, the dollar has retreated against a basket of other
currencies for the second consecutive day and is down more than
1% from the highs in the previous session. The euro and sterling
are up more than 1%. The Aussie dollar has rallied 2% and most
EM currencies are up, too. Whether the rebound will last is
another question. As Deutsche Bank's Jim Reid put it this
morning: "Markets are continuing to bounce up on the latest
policy announcements and then sliding back down as the economic
reality of the situation re-emerges."

Meanwhile, we have an $80 billon economic rescue package
from South Korea that lifted its shares 9%. There are signs of
progress in the U.S. Congress on a $2 trillion fiscal stimulus
package. Brazil plans to inject $234 billion into the financial
system and even Germany has agreed a 750 billion-euro package
and is preparing to take on new debt for the first time since
2013.

And boy is it needed. Dire forecasts abound on the extent of
economic damage. Goldman Sachs, for instance, expects the world
economy to contract this year and predicts U.S. GDP will shrink
24% in the second quarter. Flash PMI surveys today for March
--albeit already outdated -- give us a picture of the
devastation.

Japan posted its biggest-ever services decline and factory
activity shrank at the fastest pace in a decade, signalling a 4%
economic contraction this year. The pain is exacerbated by the
almost certain postponement of the Olympics, which Japan's
economic planners had pinned hopes on. Australia is a similarly
awful picture; upcoming euro zone and U.S. data are likely to be
just as bad.

Corporate profit warnings are coming thick and fast. Pernod
Ricard is the latest, seeing a 20% hit to operating
profit. Britain's Travis Perkins said it will close all
its businesses as the country goes into lockdown.
The cost of insuring against junk-rated companies defaulting on
debt in Europe alone rose on Monday to eight year highs.

Among gainers, France's Biomérieux won approval from
the U.S. FDA for a product to test for coronavirus.
And Nordex is seen rising after the German wind
turbine maker forecast higher profits.

Interesting stat: The running aggregate already this year of
dividend cancellations comes to £1.5 billion in the UK alone,
stockbroker AJ Bell estimates.

Emerging-market stocks have rallied 4.3%, and the Fed's
pledge helped revive battered emerging currencies. The MSCI
benchmark rose 0.6% -- currencies such as Turkey's lira, South
Africa's rand and Russia's rouble are up 0.6% to 1.0%, lifted by
the global picture as well as their own growth-boosting
measures.

Tesco

Travis Perkins