Stock markets have endured further volatile trading as investors remained nervous after the “Black Monday” meltdown saw the worst day for London blue chips since the 2008 financial crisis.
The FTSE 100 index of leading companies, which saw an 8% collapse wiping off £150 billion in value on Monday, closed another 5.5 points lower at 5960.2 as an early session bounce-back came to an abrupt halt.
The top flight index had at one stage rebounded by more than 260 points, or 4.4%, before seeing gains pare back quickly after trading opened in America on disappointment over the lack of any tax cuts or stimulus from President Trump to offset the hit from the outbreak.
There were further heavy falls elsewhere in Europe, with the Cac 40 in France tumbling another 1.4% and the Dax in Germany off 1.4%.
But the Dow Jones in America was holding on to gains of around 1% at the time of close in London.
David Madden, market analyst at CMC Markets, said: “Last night, President Trump said he will push for a payrolls tax cut as well as assistance for hourly employees who have been impacted by the health crisis.
“The proposal hasn’t come to fruition yet, and that is why stocks turned sharply lower.”
Companies continue to draw up contingency plans and wait nervously for what potential impact Wednesday’s Budget could bring in support.
Many are expecting short-term relief, a relaxation of rules and spending on tackling coronavirus.
But with Italy in lockdown, traders are predicting further turbulence on equity markets.
Asian markets overnight had been buoyed by calls from Japan’s prime minister Shinzo Abe for its central bank to act on the recent falls.
They also reacted positively to the US response that the White House would hold meetings on addressing the escalating outbreak.
The oil trade war between Russia and Saudi Arabia, which contributed to most of Monday’s falls, also cooled in the minds of investors.
Despite the Saudis seeing through on their vow to lower prices, in an attempt to squeeze out competition, a barrel of Brent crude oil on the international markets was trading up 11% at 37.14 dollars (£28.51).
But oil prices are still down following falls of up to 30% on Monday.
Stocks making gains on Tuesday were some of the businesses who took the hardest hits on Monday, with shares in oil majors Shell and BP gaining 3% each.
But having both fallen by close to 20% on Monday, both businesses have some way to returning to previous peaks.
Airline easyJet also boosted its share price by 2% despite the ongoing travel disruption – although operators tend to benefit when oil prices are low.
Energy firms were among those seeing falls on Tuesday, with SSE off 4.5%, National Grid down 4% and British Gas owner Centrica falling 4%.