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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Pound hits five-month low v dollar but markets recover amid Covid-19 worries – as it happened

Skyscrapers in the Shinjuku shopping and business district in Tokyo.
Skyscrapers in the Shinjuku shopping and business district in Tokyo. Photograph: Kiichiro Sato/AP

Closing summary

Time to wrap up.

US and European stock markets have stabilised after their biggest selloff in months yesterday.

The FTSE 100 index has gained 0.5% today, with hospitality stock, travel companies and housebuilders in demand, after a 2.3% slide yesterday.

European stocks also posted gains.... but analysts warn that anxiety over growth and the pandemic have not lifted.

Craig Erlam, senior market analyst at OANDA Europe, says:

These are nervy times for the markets, with surging Covid cases - particularly here in the UK - and inflation concerns dampening the optimism that we’ve seen at times this year. Vaccines should ensure case numbers don’t lead to the level of fatalities and lockdowns we’ve seen over the last 18 months but if that false sense of security also encourages greater risk taking - like removing all restrictions during a surge, for example - the second half of the year may not be as bright as many hoped.

Inflation makes life a little harder for policy makers as they debate how transitory it is and at what point action might be necessary. This perhaps complicates the belief that central banks will always have the markets back. Should the price pressures persist, policy makers hands will be more tied than they’ve been for some time.

That being said, this isn’t the time to panic and I would be surprised if we see too strong a reaction in the markets. We’re only seeing a very minor pullback at this stage and that’s perfectly healthy. Policy makers have plenty of time to determine the risk that inflation poses and what, if any, the response should be

The recovery came after Asia-Pacific markets caught up with Monday’s rout, with Japan’s Nikkei falling to a six-month low.

Stocks are bouncing back on Wall Street, where the Dow Jones industrial average is up 1.7% and the S&P 500 is 1.5% higher - recovering much of their losses yesterday.

The pound has dropped to a new five-month low against the US dollar, as the rise in Covid-19 cases worries traders - and sparks speculation that the UK could be forced into more restrictions this autumn.

Sterling has dropped back to $1.36, down half a cent today, further from the $1.42 seen at the start of June.

ING said in a note to clients.

“Driving the under-performance is the sense that the UK government will struggle to ride out the surging case numbers before resorting to fresh lockdowns,”

Bitcoin has dropped below $30,000, close to its lowest levels in 2021, hit by the move away from riskier assets and the prospect of tighter cyber-asset regulations in the US and Europe.

Here are today’s main stories:

Goodnight. GW

Updated

Other European markets also ended the day higher, with the Europe-wide Stoxx 600 up 0.5% -- also a small recovery from Monday.

Joshua Mahony, senior market analyst at IG, says fears over the delta variant of Covid-19 still abound:

“The rise in Covid cases continues to hamper sentiment, with dollar strength and falling treasury yields undermining the gains in stocks. In the UK, reopening stocks and housebuilders lead the gains.

“US markets have followed their European counterparts higher today, with traders opting to buy the dip in the wake of yesterday’s sharp decline.

“Fears around the rise of the Delta variant remain evident despite today’s reprieve, with a five-month low for the US 10-year highlighting the lack of full conviction behind this move.

“We are also seeing that risk-off sentiment exhibited throughout the FX-markets, with GBP-USD hitting a five-month low thanks to rising UK Covid cases and haven dollar demand.

“Crude prices have stabilised somewhat after a dramatic collapse in energy prices yesterday, with OPEC expected to gradually ramp-up demand in the months ahead.

“The recent UK market volatility has seen reopening stocks swing between outperformers and underperformers as investor sentiment shifts on a daily basis.

“Despite fears that the Delta variant could undermine travel and consumer activity, today’s gains for the likes of Rolls-Royce, Hammerson, and Cineworld highlight how reopening stocks are likely to be at the forefront of recent volatility.

“Housebuilders has been one sector in favour today, with the fall in treasury yields highlighting how many perceive this recent rise in Covid cases as lessening the risk of inflation-led monetary tightening.”

FTSE 100 closes higher

The UK stock market has ended the day higher, as stocks recover a little of Monday’s wild selloff.

The FTSE 100 index closed 36 points higher at 6881, up 0.5% -- a modest rise, after shedding 2.3% yesterday in the biggest selloff in two months.

Jet engine maker and servicer Rolls-Royce (+3.5%) led the risers, followed by housebuilder Berkeley Group (+3.15%), retailer JD Sports (-2.9%), engineering firm Melrose (-2.75%) and tech-focused Scottish Mortgage Investment Trust (+2.5%).

The smaller FTSE 250, which has a more UK-focus, jumped 0.8% (recovering about a third of yesterday’s fall). Travel and hospitality firms rallied, with cruise operator Carnival up 3.3% and Wagamama-owner Restaurant Group gaining 3.5%.

Wall Street is holding its gains, with the Dow now up 1.5% or 515 points today - recovering more than two-thirds of Monday’s tumble:

Updated

EU proposes tighter rules on cryptoasset transfers

Cryptocurrencies are also facing the threat of tighter regulation.

The Financial Times reports that top US officials including Treasury secretary Janet Yellen said they expect to issue recommendations on stablecoins - private tokens pegged to assets such as the dollar - in the coming months.

Yellen “underscored the need to act quickly to ensure there is an appropriate US regulatory framework in place” at a president’s working group on financial markets she convened on Monday to discuss the tokens, according to details released from the meeting.

Participants discussed the rapid growth of stablecoins and their potential use as means of payment, as well as potential risks to consumers, the financial system and national security, the Treasury said.

And in Europe, policymakers are proposing that companies that transfer bitcoin or other cryptoassets must collect details of senders and recipients to help authorities crack down on dirty money.

The law proposed by the European Commission, the EU executive, would apply Europe’s ‘travel rule’ to crypto transactions to make them traceable.

Reuters explains:

The rule, which is one of the recommendations of the inter-governmental watchdog, the Financial Action Task Force (FATF), already applies to wire transfers.

“Today’s amendments will ensure full traceability of crypto-asset transfers, such as bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing,” the Commission said in a statement.

A company handling cryptoassets for a customer must include the customer’s name, address, date of birth and account number, and the name of the person who will receive the cryptoassets.

More here: EU to tighten rules on cryptoasset transfers

Ursula von der Leyen, president of the European Commission, tweets:

Updated

Although stocks are up, bitcoin remains below the $30,000 mark.

It’s now down almost 4% today at $29,580, and on track for its lowest close since the start of the year.

The price of bitcoin
The price of bitcoin over the last two years Photograph: Refinitiv

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, says the crackdown on crypto assets, and growth worries, are both hitting bitcoin:

Bitcoin has not been immune to market volatility and is another casualty of the sell-off across financial markets. Investors edged away from crypto wallets after stocks plunged, with Bitcoin dropping below $30,000 to hit $29,577 the lowest level since June 22. Ethereum and Dogecoin have also suffered steep falls over the past 24 hours, with Cardano falling by more than 10% as investors pulled back from riskier assets in the search for safety.

As crypto holdings dropped, demand for government bonds have risen, with yields on 10 year treasuries falling to their lowest level in five months. In such a volatile market it seems more investors are heeding warnings from financial watchdogs, that they could risk losing all their money if they hold risky crypto assets.

Other traders are likely to be watching closely, to buy into assets they consider a cheap price, confident in the longer term outlook for crypto. But this sell off also comes as speculation mounts about what impact the development of central bank digital currencies will have on the crypto world, and whether the establishment of CBDCs will dent the long term crypto use case. The intensifying crackdown in some parts of the world, with Indonesian authorities destroying bitcoin mining factories using energy illegally, has again shone the light on crypto as a magnet for criminals.’’

Updated

Although dramatic, yesterday’s stock market tumbles shouldn’t long-term investors too much, argues George Lagarias, chief economist at Mazars.

Lagarias writes that anxiety over the Delta variant’s rise in the UK worried investors, showing that further lockdowns may be needed:

“As new cases surged in the UK, heightening concerns over new lockdowns in the western world’s most vaccinated country and what this would mean for the rest of the globe, it becomes apparent that the consequences of Covid-19 will remain with us for some time.

These may include local lockdowns, sustained supply chain pressures (and thus inflation), volatility in earnings and the general macroeconomic environment as well as possible social tensions as governments struggle to increase vaccination levels. What is slightly remarkable is that pandemic concerns don’t seem ongoing, but rather work in a risk-on/risk-off pattern. In March 2020, markets were passively watching Covid-19 in Wuhan and only panicked when the first European victim was reported. Similarly, the Delta variant has been concerning scientists for a few months, but market action was abrupt

“The confluence of lower oil prices, Delta concerns, expensive valuations and increased retail participation in equity markets during the last year explain a lot of what happened yesterday. Markets ended another long period of very low volatility, and, despite the positive note at the end of the session yesterday, we wouldn’t be too surprised if the correction persists for a while, until some of the retail-driven speculation is flushed out of markets.

However, there is little for long-term investors to fear from this particular market action, Lagarias adds:

The primary driver, oil price, moved very quickly and is now well within OPEC’s comfort range. This triggered volatility for a lot of retail traders who were already weary of high valuations and concerns over Covid. But traders tend to finish with their moves quickly, not cause prolonged drawdowns.

“Any drop until proven differently, has a floor: the ‘Fed put’. The US central bank continues to underwrite equity risk and would probably step in and further increase purchases if the correction becomes generalised and persisting. Additionally, another good earnings season, which just began, could provide further support for stocks.

“The spread of the Delta variant continues to be a key concern and it is the reason why we could see a wider re-rating of risk assets. However, as new generalised lockdowns will probably be avoided, the real focus is not equities, but bonds. If supply-side inflation persists it could affect long duration bond holdings which have become even more expensive after yesterday.”

The Dow is pushing higher, now up 425 points or 1.25% at 34,387 points.

IBM (+4.7%), conglomerates Honeywell (3.1%) and 3M (+2.1%) and financial services group American Express (+2.1%) are the top risers.

IBM are leading the Dow risers, up over 4%, after reporting forecast-beating results last night.

IBM grew its revenues by 3.4% in the last quarter, compared with a year ago. That’s its strongest result in three years, led by its software and cloud-computing operations.

This is the second consecutive quarter of growth, with IBM also reiterating its expectation that revenue will grow, rather than decline, in the full year.

Technology news site The Register has more details:

On the company’s earnings call for investors, Arvind Krishna, IBM chairman and chief executive officer, discussed how companies are using IBM technology to redesign their business processes and are pursuing digital transformations enabled by hybrid cloud environments.

He cited an AI-powered customer service assistant IBM built in a few weeks for CVS Health to help handle customer COVID-19 inquiries as an example of the sort of deals that will drive future revenue.

Wall Street open

In New York, stocks have opened slightly higher after Monday’s heavy losses.

The Dow Jones industrial average has risen by 192 points, or 0.6%, in early trading to 34,155 points - a day after shedding 726 points in its worst fall since last October.

The S&P 500 is up 0.4%, after sliding by 1.6% yesterday, while the tech-focused Nasdaq has gained 0.15%.

Healthcare, real estate and industrials are the best-performing sectors so far...

Investors are continuing to seek out the safety of US government bonds.

The yield, or interest rate, on 10-year Treasury bills has dropped to just 1.141% today, its lowest level since February.

Yields move inversely to prices, so this suggests investors are more worried about the economic outlook - rather than fretting about inflation.

Updated

Noted...

US housing starts rise but permits weaker

Over in the US, new housebuilding projects picked up more than expected last month... but there are also signs that demand may be peaking.

Housing starts jumped by 6.3% month-on-month in June, the Census Bureau reports, to an annual rate of 1,643,000. That’s 29% higher than a year ago, when the market was held back by Covid-19 lockdowns.

That suggests that US builders are catching up with projects delayed from earlier this year, when shortages of supplies sent raw material prices surging (lumber, for example, has since fallen back).

But... future demand may be weaker. The number of permits to build new homes fell by 5.1% during June, to an annual rate of 1,598,000.

Wall Street is set to claw back some of its losses when trading begins in under two hours.

The Dow Jones industrial average is up around 200 points in pre-market, having slumped by 726 points yesterday....

Bloomberg have a good take on yesterday’s stock market losses.

They explain how economic slowdown fears sparked a heavy selloff -- with investors worrying that we’ve reached ‘peak growth’, and fretting over the durability of the recovery.

Deutsche Bank’s George Saravelos said the market is hedging for “secular stagnation 2.0,” with consumers cutting back demand. A quantitative Danske Bank model, meanwhile, painted “a clear picture of a peak in the global industrial cycle.”

Nomura’s Jordan Rochester says markets are “pricing a global growth slowdown.”

To be sure, the moves may have been exaggerated by thin summer trading and could be technical as traders take some chips off the table of an ebullient rally. In a note to clients, Marko Kolanovic, the chief global market strategist at JPMorgan Chase & Co., forecast a rapid return of reflation trades such as cyclical stocks, bond yields, high beta stocks “as delta variant fears subside and inflation surprises persist.

More here (with charts).

HMV is celebrating a big birthday.

The music and film retailer is marking 100 years since the opening of its Oxford Street shop in central London - a store which it permanently closed along with several other branches in early 2019.

The company - named for a painting called His Master’s Voice and with the famous dog in its logo - has had a hard time of it in recent years, even before the pandemic led to all of its shops being temporarily shuttered.

HMV’s former flagship store on Oxford Street in central London, which has been empty since it was permanently closed in early 2019.
HMV’s former flagship store on Oxford Street in central London, which has been empty since it was permanently closed in early 2019. Photograph: Vuk Valcic/SOPA Images/REX/Shutterstock

Canadian businessman Doug Putnam, owner of Sunrise Records, rescued HMV out of administration in 2019. Under the toy entrepreneur’s leadership, HMV has 107 stores, and Putman has revealed plans to open a further 10 stores this year.

However, he’s calling on the UK government to sort out business rates or risk “a lot more vacancies” on the high street.

Sarah Butler has the rest of the story here:

Here’s a look back at HMV’s first 100 years:

Pound hits five-month low vs US dollar

The pound has dropped to a new five-month low against the US dollar this morning, amid anxiety over the Covid-19 pandemic.

Sterling is down half a cent at $1.3620, the lowest since early February.

Back at the start of June, the pound hit a three-year high above $1.42, as the vaccine rollout boosted optimism in the UK’s outlook. But it’s been pulled down since, by worries over the strength of the economic recovery.

Jeremy Thomson-Cook, chief economist at international business payments firm Equals Money, says worries about new lockdowns being introduced are hitting the pound.

Sterling is looking a little sickly this morning as markets both take money out of risky bets and doubts increase as to the veracity of the government’s program of easing restrictions during a spike in case numbers.

Fresh lockdowns are the “obvious next stage should the situation worsen for the NHS”, Thomson-Cook adds, although the government will be reluctant to row back on its previous assertions of no more lockdowns.

He adds:

In the meantime, sterling looks a little bit vulnerable. For a lot of this year Covid case numbers have not been the story; it has been the recovery.

With both cases increasing and the market focus intensifying, there is a lot of people out there who can see sterling driving ever lower from here, back towards the prices that became all too familiar during Brexit negotiations and disappointments.

The pound vs the US dollar
The pound vs the US dollar Photograph: Refinitiv

Anxiety about the UK’s relaxing of COVID-19 restrictions is also hitting the pound, Yahoo Finance reports:

The ‘vaccine euphoria,’ the hopes that the vaccine would end the pandemic and we’d soon be back to normal, is fading,” said Marshall Gittler, head of investment research at BDSwiss Holding.

“On the contrary, a return to normal could be much further away than people had thought, especially if the problem continues into the winter when people in the northern hemisphere spend more time inside and the virus has more chances to spread.”

Cinemagoers are starting to head back to the big screen, according to an update from Odeon.

The UK’s largest cinema chain said it welcomed more than a million customers to its cinemas across Europe between Friday 9th - Friday 16th July. It’s the first time since the pandemic hit last year that Odeon surpassed a million visitors over the course of a week.

Odeon said it has sold over 3 million tickets in the UK and Ireland since its venues reopened in May.

Manchester’s cinephiles seem especially keen to return. Odeon Trafford - a 20-screen complex located inside the city’s Trafford Centre shopping mall - has been the most-visited cinema from Friday-Sunday for the past four weeks.

Particularly popular among cinema fans is Space Jam: A New Legacy, which was responsible for almost a third (30%) of attendance at Odeon’s UK sites. The sequel to the 1996 movie sees basketball superstar LeBron James team up with Bugs Bunny and the rest of the Looney Tunes.

LeBron James and cast of Space Jam: A New Legacy at the movie’s LA premiere
LeBron James and cast of Space Jam: A New Legacy at the movie’s LA premiere Photograph: Jim Ruymen/UPI/REX/Shutterstock

Stretched global supply chains continues to cause problems for European manufacturers.

Electrolux, Europe’s biggest home appliances maker, warned that global supply chain woes would worsen in coming months, after returning to profit in the last quarter.

CEO Jonas Samuelson explained that ‘irregular deliveries’ had hampered production despite the firm’s best efforts, and warned that supply shortages may worsen in the current quarter.

Strong demand together with global supply shortages, especially of electronic components, continued to be successfully addressed through my colleagues’ hard work and tight collaboration with our suppliers. However, production efficiency and demand mix matching were negatively impacted by irregular deliveries.

The market for electronic components is expected to be somewhat more constrained in the third quarter and, hence, we anticipate challenges to fully meet the market’s product mix requirements. We continue to have a close dialogue with our suppliers to mitigate these supply challenges as we expect the situation to remain uncertain for an extended period of time.

Shares in Electrolux have dropped by 9% following its results (operating profits were slightly below expectations).

Semiconductors have been in particularly short supply. And this morning, Sweden’s Volvo flagged that it could experience more production disruptions and stoppages this year, due to chip shortages.

CEO Martin Lundstedt said in a statement that:

“There will be further disruptions and stoppages in both truck production and other parts of the group in the second half of the year,”

Lundstedt also told a conference call that Volvo would seek to boost capacity in the second half, but cautioned supplies of components would set the limits, Reuters adds.

Shares in Volvo are down 4% this morning

Analyst: spectre of stagflation stalks markets.

The market angst is being driven by the spectre of stagflation, says Neil Wilson of Markets.com:

Simply put, growth is already decelerating and downside risks to the growth outlook are darkening due to rising cases, Delta and other emerging variants, as well as worries about potentially lower vaccine efficacy.

At the same time, inflation is shooting higher. Supply side constraints (supply chain tightness, availability of labour/parts) are a problem central bankers cannot solve.

Updated

European stock markets are all higher this morning.

The Stoxx 600 is up 0.7% following its biggest losses of the year yesterday when it fell 2.3%.

The UK’s FTSE 100 has dipped back a little, but still up around 0.7% this morning (again, after a 2.3% slide).

But worries about Covid-19 certainly haven’t lifted, as Marios Hadjikyriacos, senior investment analyst at XM, explains:

Worries that the rampaging Delta variant will hamstring the global recovery took a bite out of riskier assets on Monday. Markets seem to be coming to the realization that the vaccines won’t be enough to completely obliterate the virus, as the mutations keep getting more resilient.

Many governments are also struggling with vaccine hesitancy, which is blocking the path towards herd immunity. Meanwhile, developing nations simply don’t have enough vaccines to escape the lockdown spiral. Add everything up and it looks like the pandemic might stick around for a long time.

European stock markets July 20
European stock markets this morning Photograph: Refinitiv

Online grocery sales fall for first time ever after Covid peak

England fans at BOXPARK Croydon watching the Italy v England, UEFA Euro 2020.
England fans at BOXPARK Croydon watching the Italy v England, UEFA Euro 2020.
 Photograph: Ashley Western/PA

Online grocery sales by UK supermarkets declined year-on-year for the first time ever in the four weeks to 11 July, as lockdown easing resulted in shoppers returning to physical stores and restaurants, bars, pubs and cafes were able to trade both indoors and outside.

The reopening of the majority of hospitality venues and the reopening of non-essential shops led to a 2.6% year-on-year decline in online sales, as 81,000 fewer people chose to buy their groceries that way than in July 2020 when the UK was in full lockdown.

Overall, grocery sales were down 5.1% year-on-year in the three months to 11 July.

The fall came despite a 24% surge in sales of alcohol, compared to pre-pandemic levels, as fans celebrating the England football team’s run to the final of the Euro 2020 tournament and tuning in to watch Wales and Scotland games spent £1.2bn spent on booze. Sales of crisps and snacks were also up 23% on 2019 according to the latest market share data from analysts Kantar.

Updated

Today’s falls mean that bitcoin has lost almost all this year’s gains.

At around $29,700, the crypto asset is only up 2.5% since the start of 2021, and more than 50% below its record highs back in April.

The price of bitcoin in 2021
The price of bitcoin in 2021 Photograph: Refinitiv

Steen Jakobsen, chief investment officer at Saxo Bank, says:

Cryptocurrencies seem to show some degree of correlation with risk sentiment more broadly in global markets, as Bitcoin has dropped below 30,000 overnight for only the second time since January, but has not closed below that level since January 1.

Ethereum is likewise on the ropes and trading near the lows levels since March, the series of lows in the low 1,700s.

The prospect of a full-blown bidding war for UK supermarket Morrisons has receded.

The US private equity firm Apollo Global Management, which had been considering making an offer, is now in talks to join a consortium led by Fortress Investment Group that has agreed a £6.3bn takeover of the British supermarket group Morrisons.

Apollo, which confirmed it was considering a bid for Morrisons earlier this month, said it would no longer be making an offer for the supermarket.

Instead, bosses said they were in early discussions with the rival US private equity firm Fortress to become part of its consortium to buy the grocer.

Apollo’s decision reduces the chance of a takeover battle for Morrisons, given that it had said it was evaluating its own bid.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a £5.52bn unsolicited proposal from Clayton, Dubilier and Rice, which Morrisons rejected in June. Fortress is owned by SoftBank.

Apollo said the discussions:

“may result in funds managed or advised by Apollo forming part of the investment group led by Fortress for the purposes of the Fortress offer. As a consequence of these discussions, Apollo confirms that it does not intend to make an offer for Morrisons other than as part of the Fortress offer.”

An easyJet plane at Gatwick Airport.
An easyJet plane at Gatwick Airport. Photograph: David Parry/PA

EasyJet is to ramp up the number of flights it operates to 60% of pre-pandemic levels during the summer holiday season, and has added new routes including Malta in response to rising customer demand.

The low cost airline will operate up to 1,400 flights a day between July and September. On Monday, it ran 1,000 flights.

EasyJet also said customers are booking much closer to departure, with 49% of its summer flights booked, compared with 65% in 2019. After the UK announced the waiving of the quarantine requirement for fully vaccinated passengers returning from amber list countries on 8 July, bookings surged by 400% on the previous week.

Here’s the full story:

ENAMI’s copper cathodes plant at Tierra Amarilla town, near Copiapo city, north of Santiago, Chile, December 15, 2015.
ENAMI’s copper cathodes plant at Tierra Amarilla town, near Copiapo city, north of Santiago, Chile, December 15, 2015. Photograph: Ivan Alvarado/Reuters

Over in Shanghai, the copper price has dropped to its lowest in nearly a month, as a surge in coronavirus cases threatened the outlook for a global economic recovery.

The most-traded August copper contract on the Shanghai Futures Exchange fell as much as 2.3% to 67,400 yuan ($10,393.86) a tonne, its lowest since June 23, before edging up to close at 68,130 yuan a tonne, still down 1.2%.

A Singapore-based metals trader told Reuters:

“It’s risk-off from U.S. selling and equities melting down. Recovery is fragile as it’s now threatened by the Delta variant spreading across the world and now going mainstream in the United States.”

FTSE opens higher

In the City, the blue-chip FTSE 100 index is rebounding from yesterday’s slump.

The FTSE 100 is up 1.2% at 6925, up 80 points in early trading.

Copper producer Antofagasta (+2.7%) and broadcaster ITV (+2.5%) are among the top risers, along with InterContinental Hotels (+2.5%), recovering some of Monday’s selloff.

On the FTSE 250, cinema chain Cineworld (+5%) and holiday firm TUI (+3%) are also recovering some ground.

Richard Hunter of Interactive Investors says traders may be snapping up bargains after the Footsie hit its lowest levels since April yesterday.

The opening of trade in the UK reflects something of a relief rally, with the possibility that investors are seeking buying opportunities given what may have been a slight overshoot of negative sentiment. Even so, it will be some weeks for the effects of the full easing of restrictions in the UK to become apparent.

As such, this may be a time to tread carefully until such time as the variant can be stopped in its tracks, thus allowing the full return to some kind of normality – and economic recovery - to resume.”

Bitcoin drops below $30k

Bitcoin has fallen below the $30,000 mark for the first time in a month, as the crypto market is caught up in the selloff.

It’s currently down 6.5% over the last 24 hours at $29,793.

CNBC has the details:

  • Bitcoin fell below $30,000 for the first time since Jun. 22 dragging other digital coins lower.
  • About $98 billion was wiped off the entire cryptocurrency market in 24 hours as of 12:29 a.m. ET on Tuesday, according to CoinMarketCap data.
  • Bitcoin was down more than 6% while ether fell nearly 9% and XRP tanked almost 11%, according to CoinDesk data.

“There’s been a broad sell-off in global markets, risk assets are down across the board,” Annabelle Huang, partner at cryptocurrency financial services firm Amber Group, said.

There are “concerns of the quality and strength of economic recovery” and “broader risk assets turned weaker including high yields,” Huang said. “Coupled with recent BTC (bitcoin) weakness, this just sent crypto market down further.”

More here: Nearly $100 billion wiped off crypto market as bitcoin drops below $30,000

Introduction: Japan's Nikkei joins selloff over Covid-19 fears

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Stock markets are on edge today as the surge in Covid-19 infections threatens to slow the global recovery and dash hopes of an end to restrictions soon.

Japan’s Nikkei has fallen to a six-month low today, dropping by almost 1% to its lowest since early January, as Asia-Pacific markets caught up with yesterday’s losses in the City and on Wall Street.

Hong Kong’s Hang Seng dropped 1%, while growth fears also knocked 0.5% off Australia’s S&P/ASX 200.

Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities, explains:

“Investors are increasingly concerned about a slowdown of economic recovery.

“Declines in U.S. equities hit investor appetite, which was already weak ahead of Japan’s four-day weekend and corporate earnings reports after that.”

Yesterday, £44bn was wiped off the UK’s FTSE 100, while in the US the Dow had its worst day in nine months - sliding by 726 points.

The global selloff saw investors ditch shares and pile into safe-haven US government bonds, on the prospect of weaker growth ahead thanks to the spread of the delta variant

Jim Reid of Deutsche Bank says investors fear that restrictions will be reimposed in the northern hemisphere this winter:

Unlike some previous Covid-related selloffs (or vaccine rallies indeed), there didn’t seem to be a single trigger point behind yesterday’s rout, which instead looked to be the culmination of rising fears that a return to “normality” could be quite a bit further out than many had hoped a few months back.

That’s partly because new variants mean that the vaccine rollout may not necessarily be enough to get everyday life back to its pre-Covid normal, but also a function of the fact that we’ll soon be heading back into the winter months in the northern hemisphere, in which respiratory viruses spread more easily. So investors are facing the very real prospect that limitations on daily life could be a factor affecting markets and corporates even into 2022, which is a far cry from the hopes many had at the start of this year when the vaccine rollout began.

European stock markets are rallying in early trading, though (more on this shortly) after their worst losses of 2021 so far, but it could still be an edgy day...

The agenda

  • 10.45am BST: BEIS committee hearing on UK steel industry with business secretary Kwasi Kwarteng MP.
  • 1.30pm BST: US building permits and housing starts

Updated

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Tom’s Guide
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