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What to Watch: Next warns on 'significant downturn,' ECB package fails to calm markets

Tom Belger
Finance and policy reporter
Worcester high street during a normally busy lunch hour. (PA)

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

Next warns on ‘significant downturn’ in trading

The retailer Next (NXT.L) has warned of a “significant downturn” in sales, with even online orders likely to take a hit.

Chief executive Lord Simon Wolfson said it had become clear a drop in demand was now a bigger threat than disruption to Chinese supply chains as initially feared.

With the UK government advising against non-essential travel and social activities, Wolfson said: “Online sales are likely to fare better than retail but will also suffer significant losses. People do not buy a new outfit to stay at home.”

Full price sales have dropped 30% in recent days, it said on Thursday. But the group said it would be able to “comfortably sustain” more than £1bn ($1.2bn) loss of sales over the full year.

The group reported a 0.8% increase in pretax profits to £728.5m in the year to January. The announcement appeared to reassure investors, with Next trading 6.6% higher on Thursday.

ECB announces €750bn stimulus package

The European Central Bank (ECB) has announced plans to extend a €750bn (£684bn, $835bn) lifeline to Europe’s businesses and governments to keep them solvent during the coronavirus crisis.

The ECB said late on Wednesday it would launch a new programme dubbed the Pandemic Emergency Purchase Programme (PEPP).

PEPP will allow the central bank to buy up public and private sector securities on flexible terms — effectively offering €750bn to governments and businesses across Europe who need support.

PEPP will last until at least the end of the year and could stretch beyond if the coronavirus crisis is not over by then. Deutsche Bank warned on Wednesday that the world is facing a “severe” recession in 2020, with quarterly falls in GDP on a scale not seen since World War II.

PEPP also follows what many saw as a bungling week for the ECB. Comments made by new ECB President Christine Lagarde on the difference between German and Italian bond yields sparked a sell-off in European government bond.

Stocks continue to tumble despite ECB stimulus

Stocks in Europe reversed earlier gains on Thursday after the European Central Bank late on Wednesday announced a broad-ranging €750bn (£670bn) programme designed to tackle the economic effects of coronavirus.

The move came after the UK introduced a series of new measures related to the pandemic, including school closures and a ban on landlord evictions.

The pan-European STOXX 600 index (^STOXX), which had been up by around 1%, fell by 0.25%.

London’s FTSE 100 (^FTSE) fell by around 1.1%, while Germany’s DAX (^GDAXI) was down by around 0.8%. France’s CAC 40 (^FCHI), meanwhile, was 0.5% in the green.

Read more: Bank of England considers printing money for households

The gains for European stocks followed a weak trading session in Asia.

China’s SSE Composite Index (^SSEC) fell by almost 1% on Thursday, while the Hang Seng (^HSI) was down more than 2.6% in Hong Kong at market close.

Japan’s Nikkei (^N225) fell by more than 1%. The KOSPI Composite Index (^KOSPI) in South Korea closed around 8.4% in the red after the country announced 152 new coronavirus cases, reversing days of slowing infections.

What to expect in the US

Futures were pointing to a lower open for US stocks.

S&P 500 futures (ES=F) fell by around 1.7%, Dow Jones Industrial Average futures (YM=F) were down by almost 1.9%, while Nasdaq futures (NQ=F) fell by more than 0.8% on Thursday.