Closing summary
Time for a recap, after another hectic day in the markets.
The US stock market has roared back from its slump on Monday, in a highly volatile trading session. After initially sliding, the Dow Jones industrial average ended the day with its biggest jump in over a year - up 567 points.
Cue smiles on Wall Street between relieved traders.
The rally came as several analysts argued that the markets were going through a correction, not embarking on a crash.
The US government also tried to calm nerves, with Treasury Secretary Stephen Mnuchin arguing that the markets were functioning well.
European stock markets, though, suffered heavy falls. Britain’s FTSE 100 endured its biggest slump since the Brexit vote, falling by 193 points or 2.6% -- wiping £50bn off the index.
Asian markets also tumbled on Tuesday -- but there are signs that they will recover in the upcoming trading session. Australia’s benchmark index is being called higher.
But the bigger picture is that the markets look nervous, with investors worrying about potential US interest rate rises. With $4 trillion wiped off shares in the last week, further volatility seems highly likely in the days ahead.
That’s probably all from us today. Thanks for reading and commenting. Here’s our latest news story on the markets:
Goodnight!
Updated
What a difference a day makes. Traders on the floor of the New York stock exchange are grinning and sharing high fives, after seeing shares recover this afternoon.
Sarah Sanders, the White House press secretary, has commented on the US stock markets - and insisted that America’s economy is robust.
Sanders says:
“Look, the economy is incredibly strong right now. The president’s focus right now continues to be on the long term economic fundamentals which, like I just said, are very strong in this country. We’re infinitely better off today than we were before the president took office, particularly on the economy. We have historically low unemployment and we actually have increasing wages for American workers.
There’s nothing that’s taken place over the last couple of days in our economy that’s fundamentally different than it was two weeks ago and we’re very comfortable with where we are right now.”
Sanders added:
“Does the president have second thoughts about taking credit for a booming economy? Absolutely not.”
Today’s rally is the S&P 500’s best one-day gain, in percentage terms, since November 2016.
Quite a recovery, given it had its worst day in six years yesterday.
Here’s Reuters’ closing market report:
U.S. stocks posted sharp gains in another wild trading session on Tuesday, as indexes rebounded from the biggest one-day drops for the S&P 500 and the Dow in more than six years that stalled the market’s record run.
Stocks swung from negative to positive after indexes started the session 2% lower, underscoring a return of volatility to a market that until recently was marked by an absence of major shifts.
The Dow had a more than 1,100-point difference between its high and low on Tuesday.
The sharp declines in recent days marked a pullback that had been long awaited by investors after the market minted record high after record high in a relatively calm ascent.
“Despite violent moves in the last couple days in the market, fundamentals in the economy are very strong and it’s not just the U.S., it’s throughout the global economy,” said Alicia Levine, head of global investment strategy at BNY Mellon Investment Management in New York.
The Dow Jones Industrial Average rose 567.02 points,
or 2.33%, to 24,912.77, the S&P 500 gained 46.2
points, or 1.74%, to 2,695.14 and the Nasdaq Composite added 148.36 points, or 2.13%, to 7,115.88.
Technology, materials and consumer
discretionary were the top-performing sectors on
Tuesday. Defensive sectors utilities and real estate were the only major S&P groups to end negative.
Updated
The Dow’s revival was led by chemicals firm Dow DuPont, retail chain Home Depot, tech giant Apple and oil producer Chevron, which all gained at least 4%.
At the end of a wild session, the #Dow is more than 2% higher, led by a rebound in “quality names.” Yields on 10-year #bonds have retraced to 2.79%.
— Mohamed A. El-Erian (@elerianm) February 6, 2018
Behind the headline numbers: Crowded short #volatility positioning – in its many forms – getting flushed out.#markets #investors
DOW BOUNCES BACK FROM RECORD POINTS FALL
BREAKING: The US stock market has bounced from its worst day in six years.
As the closing bell rings out across the New York stock exchange, the Dow Jones is up around 567 points, or 2.33%.
It’s quite a swing, given the Dow fell over 500-points at the start of trading today.
BREAKING: Dow Jones industrial average closes up more than 560 points, or 2 percent, after another volatile day.
— AP Business News (@APBusiness) February 6, 2018
That means it has recovered around half Monday’s 1,175-point rout.
The broader S&P 500 also bounced back, as did the tech-focused Nasdaq.
Investors will be relieved that shares haven’t suffered further losses today. But...there’s no argument that volatility is back, after a long period of calm in the financial markets.
With just a few minutes trading left, Wall Street has managed to recover its poise. The Dow and the Nasdaq are both up over 2%.
Updated
Fact of the day....
We’ve had a few 1,000-point ranges, but today would be the first time the Dow has been both up and down more than 500 points in the same session.
— M. Caruso-Cabrera (@MCaruso_Cabrera) February 6, 2018
Thanks @HumOnTheMarkets
John Lynch, chief investment strategist at LPL Financial of North Carolina sums up the day:
“It’s been a crazy period and today the market is probably just trying to find some footing.”
In a stark contrast to yesterday’s wobbles, the Dow just surged by 600 points -- suggesting we could recover half of Monday’s losses...
#Dow +600 points
— Naeem Aslam (@NaeemAslam23) February 6, 2018
Can the Dow hang on?
With 30 minutes to go, the US stock market is up... but not so strongly that a late slump can be ruled out.
Full story: Stocks tumble amid concerns over febrile markets
Here’s our colleague Philip Inman on today’s market action:
Shares in London plunged for a sixth day and by the largest amount since the Brexit vote, as concerns grew that febrile global stock markets, which have lost $4tn (£2.9tn) in value since Friday, were in the grip of panic-selling.
The FTSE 100 slumped 2.6% to 7,141 to wipe all the gains from this year’s trading and set the index of Britain’s most valuable companies on course for a second week of losses. Investors took fright elsewhere in Europe, with markets in Germany, France and Spain all closing down by more than 2%.
Stocks also tumbled across Asia earlier in the day. The Tokyo Nikkei 225 index was among the worst affected after shares fell by more than 4% to 21,620, leaving them 12% down on last month’s peak of 24,120.
Wall Street, where the global stock market rout began on Monday, had a second day of volatile, high volume trading with wild swings in share prices. The Dow Jones industrial average fell by as much as 2.2% following the opening bell before recovering within half an hour to a gain of more than 1%, then see-sawing further through the session....
One reason the Australian market is set to bounce back is that another record half-yearly profit is expected from Commonwealth Bank, the country’s biggest company.
It is forecast by analysts to announce six-month earnings of about A$5.2 billion – up 6% – despite its regulatory woes.
The Australian banking sector is enormous and has benefited from the country’s extended house prices boom, although there are signs that is stalling. The big four retail banks - Commonwealth, Westpac, ANZ and NAB – together with Macquarie Bank make up a whopping 25% of the ASX200.
Updated
So, after shedding a record 1,175 points last night, the Dow is on track to recover a significant chunk of them......
Relevant to yesterdays thing about Dow declines in points vs % - right now, at +480, we're on track for the 11th biggest single-day *increase* in the Dow, ever.
— Tom Gara (@tomgara) February 6, 2018
The S&P 500 is also putting on a late spurt.
S&P 500 gains 1.6% to hit a session high https://t.co/T4KvFMu1hN pic.twitter.com/p71IxoUgRc
— Bloomberg TV (@BloombergTV) February 6, 2018
The Dow is continuing to rise in late trading - now up 504 points, or over 2%, at 24,850.
Updated
Australian market tipped to bounce back
There are signs that Asia-Pacific markets will rally on Wednesday.
Australia’s ASX200 benchmark has lost A$85bn in value in two days but is set to bounce back on Wednesday, according to futures trading.
It is expected to rise around 1.25% at the opening bell at 10am Sydney time, which is 11pm GMT (or two hours after Wall Street closes)
Updated
The rally is back on again!
As Wall Street enters its final hour of trading, the Dow Jones industrial average is making a late charge.
The Dow is now up 370 points, or 1.45% at 24,716.
Nils Pratley: Stock market groupthink is alarming
A lot of experts have argued today that the current selloff is just a much-needed correction, not the start of a crash.
But our financial editor, Nils Pratley, isn’t convinced by this breezy optimism. Instead, he highlights several reasons to be worried. For example:
The past couple of days have shown one thing – that there was an awful lot of money betting on tranquillity via various financial products manufactured by investment banks. Did a wipeout of some of these low-volatility funds feed the selling pressures on Monday? Almost certainly. But is that “technical” factor a temporary sideshow that can be ignored? Not necessarily. It may be evidence that other risks have been packaged up and sold as “low risk” when they’re actually the reverse. When investors are fed cheap money for a decade, dumb bets can be made.
Plus, the prelude to the drama was a rapid rise in the yield on 10-year US treasuries from 2.4% to 2.8%. This, we are told, happened because the strong news on jobs and wages means the US Federal Reserve will have to raise interest rates three times this year. That explanation is entirely plausible. But a 10-year yield of 2.8% is still low by historical standards. What would something more normal – say, 4% – do? If the deflation dragon really has been slain and the Trump administration is dishing out tax cuts, isn’t 4% a possibility? On the evidence of the past week, the stock market may not adjust easily.
More here:
Wall Street continues to see-saw, and with 90 minutes trading left the main indices are in the red.
The S&P 500 has shed 0.5% (on top of Monday’s 4.1% fall), while the Dow remains pretty volatile - currently down 0.2%.
Investors continue to blame the prospect of rising US interest rates, and signs that wages are finally picking up.
As Michael Arone, chief investment strategist at State Street Global Advisors, puts it (via the FT):
I still think this is a continued reaction to the very rapid rise in interest rates and inflation expectations over a short period of time.
We are just seeing some continued selling after a very long period of a complacent environment.”
How the market turmoil hit the world's wealthiest
Some of the world’s richest people are a little less rich today, thanks to yesterday’s market mayhem.
Bloomberg has calculated that Warren Buffett, the veteran investor, lost $5.1bn on Monday. But that won’t stop him buying a can of his favourite cherry coke, as the Sage of Omaha is still worth $85bn.
Facebook’s Mark Zuckerberg took the second-biggest hit - losing $3.6bn, with Amazon’s Jeff Bezos close behind. More here.
Update: Dow now down 85 points.
With about two and half hours trading left, the Dow is down 0.4% on the day,down 6.9% on the week, 4% on the month. And up 21% on the year.
— Andrew Neil (@afneil) February 6, 2018
£50bn wiped off FTSE 100
Back in London, traders are counting the damage after the FTSE 100 suffered its biggest one-day fall since the Brexit vote.
Financial stocks had a bad day, with Standard Life and Schroders down over 5%.
Utility stocks also suffered - National Grid and United Utilities lost over 4%. Healthcare and technology also brought up the rear.
The Evening Standard has worked out that £50bn was wiped off the value of companies on the Footsie today, as the index shed 193 points or 2.6%.
£50bn wiped off the FTSE 100 as global markets hit by more turmoil https://t.co/JZeqruoIhp
— Evening Standard (@standardnews) February 6, 2018
After Monday’s wild drama, and today’s losses in Asia and Europe, shares are finally looking calmer.
The Dow is now bobbing around its opening levels, as traders take a breather and try to anticipate the market’s next move.
But don’t relax! Wall Street has a habit of becoming more volatile towards the end of the day’s session. So with two hours to go, we could yet see big gains or losses.
Bet it'll be an interesting last hour
— Joe Weisenthal (@TheStalwart) February 6, 2018
Updated
And.... the Dow has turned negative again <drink!>, down 35 points.
Travelers Companies, the insurance group, is currently the biggest faller, down 2.6%. Oil giant Exxonis down 2.5%, followed by pharma group Merck (-2.15%) and Coca-Cola (-1.85%)
Having been up, and down, and up, and down, the Dow Jones is currently 100 points higher today (+0.4) at 24,446.
But trading remains jittery, so do not try this at home (or in the office!):
New drinking game: A shot for every time the Dow changes direction today.
— Georgi Kantchev (@georgikantchev) February 6, 2018
I'd be drunk by now.
Updated
Here’s investor and businessman Carl Icahn on the markets, courtesy CNBC:
Carl Icahn to CNBC: Think market will bounce back, but "one day this thing is just going to implode" https://t.co/YKho1O67Ek pic.twitter.com/bYSicU1F0x
— CNBC (@CNBC) February 6, 2018
Icahn on the markets: "Eventually there's a major problem coming -- a major storm, a major earthquake -- coming. But could be 5 years, 5 months, I don't know." https://t.co/ztPpiiil3P pic.twitter.com/yLH2XHSX9H
— CNBC Now (@CNBCnow) February 6, 2018
IMF chief economist Maurice Obstfeld has added his voice to those saying the economic fundamentals are strong despite the current market turmoil.
European markets slump
If Wall Street seems incapable of deciding which direction to stick with, there was no such hesitation in Europe. With the global concerns about rising interest rates and a spate of catching up with Monday’s slump in the Dow, European markets have suffered deep declines. The final scores showed:
- The FTSE 100 fell 193.58 points or 2.64% to 7141.40, its biggest daily percentage decline since the Brexit vote
- Germany’s Dax dropped 2.32% to 12,392.66
- France’s Cac closed down 2.35% at 5161.81
- Italy’s FTSE MIB fell 2.08% to 22,347.01
- Spain’s Ibex ended 2.53% lower at 9810.0
- In Greece, the Athens market lost 1.74% to 838.80
On Wall Street, the Dow Jones Industrial Average is currently up 201 points or 0.79% while the S&P 500 is up 2.2 points or 0.08%.
The VIX hit 50 then dropped to 24. Now at 37. A volatility index that's very volatile pic.twitter.com/dKi1pySTNV
— Adam Parsons (@AdamParsons1) February 6, 2018
The sell-off in stock markets does not relate to economic fundamentals, agrees City Index market analyst Fiona Cincotta:
Whipsaw action is sending equity indices on a wild ride on Tuesday. As the bulls battle the bears US stocks have opened trading a wide range. The Dow had moved through 934 points early on as investors were keen to pick up bargains but fear that it is still too early to call the bottom....
The CBOE volatility Index, also known as the VIX, or fear gauge remains at elevated levels on Tuesday spiking to 50 before retracing back to 40, an increase of 7% on the day. Stepping back from the trading ranges and looking at the levels that Wall Street is trading at and suddenly it is possible to gain some perspective on the numbers. The Dow is at 24,423 (now up on the day) trading at a level that was last seen just two months ago.
This sell off has been a technical phenomenon, there has not been a change in fundamentals. Right now, this is offering little comfort to traders looking to buy the dips and being wiped out by automated selling.
Here, from our colleagues in New York, is a quick run through some of the reasons for the current stock market uncertainty:
The stock market falls should have little impact on the overall global economy, say Capital Economics. Its chief global economist Andrew Kenningham said:
The slump in equity markets would have to go a lot further to cause economic growth to slow significantly. That may yet happen, but for now prospects for global growth still look fairly bright.
The fall in global equity prices over the past few days has been unusually sudden, but it is not yet exceptionally large. The MSCI World equity index has fallen by 6% from its peak last week. As a comparison, there have been four instances of double-digit percentage falls in the index since the financial crisis. These occurred in 2010 (-15%), 2011 (-20%), 2012 (-13%) and 2015/16 (-17%).
It is of course quite possible that equities will fall much further in the coming days or weeks, or even hours! After all, valuations are high by past standards and the MSCI World index is still 17% above its level a year ago. But even if this happens, the fallout for the economy may still be quite small.
... Stock markets often send a false signal about the outlook for economic growth. And there has been only a small increase in corporate bond yields, which have a better track record in signalling slowdowns. The most reliable leading indicators of economic activity, such as the global PMIs and the US ISM non-manufacturing index published yesterday, suggest that the world economy is firing on all cylinders.
FTSE 100 suffers biggest one day fall since Brexit vote
The FTSE 100 has dropped by 2.64% or 193 points to its lowest level since last April.
This is the biggest percentage drop since the day after the UK referendum on Europe, and marks the sixth successive trading day of declines.
The Dow’s uncertainty continues, and it is now down 141 points. David Madden, market analyst at CMC Markets UK, says:
The Dow Jones and S&P 500 started the day very much offside, and then managed to drive into positive territory only to slip back again.... Traders don’t know which way to turn as uncertainty is running high. The colossal range on the US indices sum up how irrational equity traders are at the moment, and while some go bargain hunting, others are fearful we could see another leg lower.
The S&P 500 by the way is down 12 points or 0.44%.
Market sell-off just a correction: Treasury secretary Mnuchin
The current market sell off is just a correction, said Treasury secretary Steven Mnuchin, but he also told senators that algorithmic trading had an impact.
He told the House Financial Services Committee that markets were functioning very well, although the administration was monitoring the situation.
He said he was not overly concerned about the recent sell-off, and that market fundamentals were strong. There were no financial stability implications in the recent market moves, he added.
Here’s a graph showing the volatility in the Dow Jones Industrial Average so far today:
And there appears to be real trading out there.
Volumes are around 250m compared to an average of about 139m, which appears to be the highest since the December Federal Reserve meeting (H/T Neil Wilson of ETX Capital).
It’s been a chaotic start on Wall Street, says Spreadex financial analyst Connor Campbell.
And with the Dow Jones Industrial Average now down 170 points, it is hard to disagree. Campbell says:
The Dow was all over the place after the bell. With the futures promising the index was going to spill its guts, it was a welcome relief that the index instead quickly shifted into the green. The index is still pretty damn volatile, however.... It’s also worth noting that the Dow did something similar yesterday, ducking an immediate bloodbath only to completely lose its bottle by the end of the session.
Elsewhere, the Vix volatility index has fallen back sharply (ironic, given how volatile the Dow is at the moment).
After hitting a level of 50 earlier, the Vix is now down 33% on the day at 24.7.
The Dow is all over the place. After the initial 550 point fall and the subsequent 350 point rise, the Dow is now up just 50 points or so. What it will close at is anyone’s guess, but the recent falls do seem to have attracted some buyers. Neil Wilson, senior market analyst at ETX Capital, said:
The valuations were certainly looking attractive on a forward earnings basis, providing attract entry points for a number of stocks. Some deep-pocketed funds may have stepped in to hoover up what they could – in this context it looks for the time being like the correction was exactly what the market needed – although we have a long way to go today still and sentiment is still fragile after two bruising sessions.
Updated
The White House, and specifically the recent tax cuts, have played a part in the current market volatility, says Royal London Asset Management:
US stock market volatility continues to spike higher as the strongest wage inflation in the US since 2009 triggered fears of faster than expected rises in interest rates. While Donald Trump’s White House has correctly pointed to strong economic fundamentals as a more important long term story and the role of the tax cuts in driving this, they’ve failed to appreciate the impact that their policies could have on inflation, and therefore the path of interest rates.
Royal London’s head of multi asset Trevor Greetham added:
Investors welcomed the announcements of tax cuts but are starting to get second thoughts as the consequences of adding stimulus late in the business cycle become clear. Unemployment is low and the potential for strong wage inflation once US tax cuts take effect has spooked markets, given what this means for US interest rate policy.
Although rising interest rates pose a challenge to the stock market, this will only become a serious one once they are high enough to cause the economy to roll over. With the Fed Funds rate still below the level of core inflation in the US, that could take quite a while.
We expect bouts of volatility like this to become more common now the Federal Reserve is in play, but expect stocks to recover over the coming weeks and months, making recent market moves look like an overreaction.
The early recovery in US markets gives some credence to those who believe the recent falls were a much needed market correction rather than the precursor to a wider sell-off. One of those is Sven Balzer, head of investment strategy at Coutts:
This week’s stock market falls show a much needed market correction after a long period of strong performance, and little more. Global economic growth remains strong and there are no signs of a US recession, which usually heralds a wider sell-off...
In our view, this is a short-term correction driven by technical factors rather than concerns about the underlying economic picture or corporate health. While this can be unnerving for investors, we see a robust economic and corporate environment that should continue to support equities.
Wall Street rally picks up pace
Go Wall Street!
Instead of sinking into the mire, the Dow is now up 350 points, or 1.4%. That means leading shares have recovered around a third of Monday’s tumble.
Although the Dow Jones industrial average gets a lot of attention, serious stock market traders pay more attention to the S&P 500.
That’s because it contains more companies (500, instead of the Dow’s 30), so it’s a better measure of the actual US stock market.
And after an early wobble, the S&P 500 is now positive too -- up 1% or 27 points at 2,676 points.
last one pic.twitter.com/cTdRnCrOpE
— Paul McNamara (@M_PaulMcNamara) February 6, 2018
DOW TURNS POSITIVE
Wall Street is fighting back! After Monday’s wild swings, the Dow has clawed back its opening falls - and is now up 0.13%.
That doesn’t make much of a dent in yesterday’s rout, but investors will be relieved that it’s not worse. Still early days though!
Dow now up on the day pic.twitter.com/r74dXGahyS
— WorldFirst (@World_First) February 6, 2018
After a rocky start, the tech-heavy Nasdaq index has turned positive.
Things are settling down on Wall Street.
After six minutes trading, the Dow is now down 157 points -- perhaps traders are resisting the temptation to sell everything.
DOW FALLS 547 POINTS AT THE OPEN
DING DING goes the opening bell of Wall Street, triggering another wave of selling.
The Dow Jones industrial average has swiftly shed 547 points, a fall of 2.25%, on top of Monday’s 1,175 slide.
That takes the Dow into correction territory, down more than 10% from its peak.
The Dow BRIEFLY hit a 10% correction before pulling back...
— Heather Long (@byHeatherLong) February 6, 2018
Are cooler heads prevailing?#stocks
But...the index is swiftly rebounding from those lows, as traders get stuck in.
More to follow!
#BREAKING Dow Jones Industrial Average opens more than 500 points lower#StockMarket pic.twitter.com/AdpcKoH6I7
— Peter Hoskins (@PeterHoskinsTV) February 6, 2018
Updated
Right. Deep breath time. After its biggest sell-off in six years, Wall Street is about to reopen.
The futures market is still jittery, as traders try to anticipate the market’s next move.
Just seven minutes to go......
US markets - DOW futures currently down 450 points courtesy of CORE SPREADS
— David Buik (@truemagic68) February 6, 2018
Veteran City analyst George Magnus has a deeply worrying take. He thinks markets are wobbling because the US government’s budget deficit is likely to spike over the next couple of years.
That’s because the new Tax Cut and Jobs Act will force Washington to borrow much more to balance its books -- at a time when the economy should be strong (so borrowing should be low).
Magnus writes:
Trillion dollar deficits are just over the horizon, which will cause US government debt as a share of GDP to rise in the next several years to over 100 per cent. While debt levels alone cannot predict what will happen to bond yields, the markets fear that significant unfunded government borrowing—especially when the economy is doing well—will cause the Federal Reserve to carry on raising interest rates, in turn pushing bond yields higher.
On current trends, this cyclical shift will eventually, maybe in 2019, puncture the stock market, corporate profits, and most likely the economy.
Behind the stock market fall, there is a bigger story of Republican fiscal irresponsibility writes @georgemagnus1 https://t.co/Z1Z0oFGrfQ
— Prospect Magazine (@prospect_uk) February 6, 2018
With 20 minutes until the Wall Street open, a chunky sell-off still looks likely....
The Dow is set to tumble another 600 points at the open https://t.co/4KFwfxv62J pic.twitter.com/rk5CNH2RqX
— Markets Insider (@MktsInsider) February 6, 2018
Bears are running rampant through the global markets today, following Monday’s rout on Wall Street, says Lukman Otunuga, Research Analyst at FXTM.
He questions whether the recent losses are merely a ‘healthy correction’, as some investors claim.
A sense of anxiety amongst investors over central banks raising interest rates faster than expected, remains one of the likely culprits behind the global sell-off. In Asia, equities were a sea of red during early trade and the negative domino effect has already punished European markets.
With Wall Street suffering its largest one-day decline in more than six years on Monday, US stocks could remain depressed this afternoon.
Ongoing weakness across stock markets may prompt investors to start questioning if the global sell-off could be more than a correction but something greater.
CNBC: Dow to fall 700 points
Take a deep breath, stock market traders. The opening of Wall Street is 50 minutes away, and heavy falls look likely:
Dow Futures down 313 points, pointing to nearly 700 point drop at the open pic.twitter.com/sseGLPidiJ
— CNBC Futures Now (@CNBCFuturesNow) February 6, 2018
Guy Foster, head of research at wealth manager Brewin Dolphin, says the financial markets are adjusting to a new world where central bankers aren’t propping assets up through loose monetary policy.
He writes:
Interest rates are rising at a time when the economy needs money for the increased corporate investment activity which is taking place. That means there won’t be the constant flow of money into the equity market which has been supporting prices over the last couple of years.
As I said before the year ended, the real challenge for investors after an environment of very low volatility is that they may be unnerved as it “normalises”. More volatility means more opportunity for active investors with strong nerves. We see the recent sell off as validating rather than challenging that assessment”
Newsflash: America’s trade deficit has widened to its highest level since the financial crisis.
New figures from the Commerce Department show that the US imported $53.1bn more than it exported in December 2017, an increase of 5.3%. That’s the biggest monthly deficit since 2008.
The data also show that America’s trade gap with China hit a new all-time high of over $375bn for 2017, despite Donald Trump’s efforts to cut it as part of his America First agenda.
#BREAKING US trade gap spiked 12% in 2017 on record imports: Commerce Dept.
— AFP news agency (@AFP) February 6, 2018
Traders on Wall Street are expecting fresh losses when the market opens in around 90 minutes time.
Yesterday’s 1,175-point slump on the Dow has left many traders bruised and nervous, as the long run of calm market conditions comes to an abrupt halt.
Volatility is continuing to rise today, to levels not seen since August 2015 -- adding to the anxiety in New Jork.
Andre Bakhos, managing director of New Vines Capital, has told Reuters that fear is stalking the markets.
“The one thing I could say with confidence is that volatility has suddenly come back into the market.
“The declines in markets are steep and vicious and are fostering a feeling of fear which begets irrational behavior. So this market is now driven on fear of rates and [rising] wages. That basically means good news now is bad news.
“The volatility has caused investors to be fast on their feet. It is a true traders’ atmosphere as opposed to the conditions we have been accustomed to - buy and go higher.”
Greek bond sale delayed by market turmoil
The turmoil in the markets today has disrupted Greece’s plans to issue a new government bond.
That seven-year bond was an important stage in Athens’ escape from its bailout programme.
Our correspondent Helena Smith in Athens explains:
Barely 24 hours after the mandate was announced, it was decided not to push ahead with what would have been the debt-stricken country’s boldest market foray in almost eight years under international bailout programmes.
It was assumed the seven-year issue would price today but one lead manager said: “we felt it would be prudent to wait for some stability. Greece doesn’t do deals very often and wants to make sure it works.”
Athens had hoped to raise €3bn.
The country is due to exit its current EU-IMF bailout programme – its third since May 2010 – in August and has pledged to make several market forays in order to build up a cash buffer of up to €19bn to cover debt repayments once the programme officially expires.
Updated
It’s shaping up for a rough opening on Wall Street.....
Stock futures point to Dow drop of about 550 points at the open, S&P drop of nearly 50 points and Nasdaq drop of 85 points https://t.co/ErtDja9VdQ pic.twitter.com/kO178liK1L
— CNBC Now (@CNBCnow) February 6, 2018
Our economics editor, Larry Elliott, says we’re looking at a stock market correction - not a crash.
He argues that America’s new top central banker, Jerome Powell, won’t stay on the sidelines for long. If the selloff continues, surely Powell’s Federal Reserve will wind back the tightening of monetary policy (the equivalent of pouring a bit more gin into the punch bowl).
Larry argues:
Trump has a lot riding on the stock market continuing to rise and certainly did not choose Jerome Powell to be the chairman of the Fed because he thought his appointee was an interest-rate hawk.
The falls on Wall Street were triggered by last week’s labour market report, which showed unemployment at 4.1% and a pick-up in average hourly earnings. But Powell would not have to look all that hard to find reasons for a gradual, market-pleasing, rise in interest rates rather than an aggressive tightening. If the current turmoil continues, Powell will no doubt seek to reassure the markets.
If this all sounds familiar, that’s because it is. During Alan Greenspan’s long reign at the Fed, Wall Street knew the central bank would ride to the rescue every time share prices plunged. It became known as “the Greenspan put”.
The problem for Powell is that the Greenspan put was ultimately disastrous. It encouraged recklessness, ever bigger bubbles and the crash to end all crashes
Every share on the FTSE 100 index is now down, as traders hunker down ahead of the Wall Street open in two hours time...
James Andrews, head of investment management at City firm Redmayne Bentley, reckons that the global selloff will abate soon.
He argues that investors have over-reacted to last week’s jump in US wages (which arguably makes rising inflation and higher interest rates more likely).
Andrews says:
“This isn’t to say the volatility can’t continue, as we have had a phase of very low volatility and some profit taking is natural following a prolonged period of exceptional returns.
However, given the positive fundamentals around the globe currently, it feels like any market pull-back should be relatively short in nature at this time until we see a material change in global interest rates, and therefore the return on cash and less risky assets, not to mention a less favourable outlook for companies globally.”
Reuters: Rolling world stock sell-off runs to $4 trillion
Here’s Reuters latest market update:
World stock markets nosedived for a fourth day running on Tuesday, having seen $4 trillion wiped off from what just eight days ago had been record high values.
Europe’s main bourses were down around 2 percent, leaving investors with little option but to seek traditional refuges such as gold and one of the initial triggers for the selloff - benchmark government bonds.
Wall Street futures offered a chink of light as they turned higher in Europe but commodities remained gloomy, with oil and industrial metals all tumbling backwards as the year’s upbeat start for markets soured rapidly.
“Playtime is officially over, kids,” analysts at Rabobank said. “Rising volatility painfully reminds some investors that one-way bets don’t exist.”
Markets wobble as Wall Street open approaches
European stock markets are heading lower as lunchtime approaches, as investors fear another day of losses on Wall Street.
Britain’s FTSE 100 is now down 180 points, or 2.5%, heading close to this morning’s one-year low.
That’s because the futures market is now indicating fresh losses in New York when the market opens (at 2.30pm UK time, or 8.30am on the East Coast).
Right now, the S&P 500 index (which covers the major US companies) is predicted to fall 1% - on top of Monday’s 4% slide.
The Dow is also being called lower - it could shed 400 points at the open, following yesterday’s 1,175 rout.
Neil Wilson of ETX Capital says investors will be glued to the Wall Street open, to get their next cue for where global markets are headed.
He adds:
Futures have been all over the place this morning but seem to be settling lower, ready to push through another run of levels on the downside.
Photos: The global sell off
It’s been a rough day for traders around the globe, as today’s correction has gathered pace.
Oh dear. Investors who had bet on low market volatility by putting money into that XIV security have been discussing their losses on Reddit.
One claims to have lost $4m, due to the surge in volatility yesterday, while other small traders are nursing smaller, but painful, losses.
Really begs the question of who was buying. $XIV markets itself as a tool for 'sophisticated investors' but there's *a lot* of naive retail interest...
— Tracy Alloway (@tracyalloway) February 6, 2018
Some sad stories starting to emerge. pic.twitter.com/Byyt2VgMMt
The Dow Jones futures price has been flailing around since Wall Street closed 14 hours ago:
Welcome to the jungle. Dow futures have been trading in a 1,000-point range Tuesday after a dark day for Wall Street. https://t.co/pI0SOJb4SP pic.twitter.com/nnQiEsANI4
— MarketWatch (@MarketWatch) February 6, 2018
Update: The FTSE 100 is currently down 150 points, or 2%, at 7183 points.
That’s the lowest level since April 2017, but a recovery on this morning’s one-year low (when the FTSE fell 250 points).
Nicholas Brooks, Head of Economic and Investment Research at Intermediate Capital Group, says the sell-off seems to be easing off.... for the moment.
The equity market corrections of the past few days were overdue and not unexpected.
The sell-off appears to be abating at the moment, with US government yields having dropped back to pre-correction levels and market indices and futures bouncing, but changes in market positioning and technicals make short-term predictions of market direction particularly difficult.
Updated
Fear index hits highest level since 2015 as volatility stalks the markets
Volatility in the world’s financial markets has soared in recent days, bringing a long period of calm to an abrupt end.
The CBOE VIX index, commonly known as the Wall Street ‘fear index’, has jumped by 14% this morning to 42.62, a gain of 5.3 points. That’s the highest level since August 2015 (when worries over China’s economy rocked the markets).
Yesterday the VIX more than doubled, as shares slumped in London, New York, and then across Asia. It has only closed higher on three previous occasions.
VIX: The 'fear index' has only been this high on 3 prior occasions https://t.co/LXp1FsmGr8 by @Jim_Edwards pic.twitter.com/Rd7hbugr2A
— Jim Edwards (@Jim_Edwards) February 6, 2018
This surge in volatility is bad news for speculators who had wagered that markets would remain calm. But how would you place such a bet?....
Well, Credit Suisse has the answer. It offers a financial product called the “inverse VIX”, which rises when volatility falls -- and allows traders to profit from calm markets.
Last night’s drama has sparked fears that some hedge funds will be sitting on heavy losses on their XIV holdings, which they weren’t able to unravel.
Credit Suisse has said this morning that it hasn’t incurred any trading losses on its inverse VIX product. But surely someone has lost money? After all, the XIV fell heavily in after-hours trading. CNBC has more details.
Obscure security linked to stock volatility plummets 80% after hours, sparking worries of bigger market effect https://t.co/T4XyGKmgfE
— Nancy Hungerford (@NancyCNBC) February 6, 2018
Updated
Carlo Alberto De Casa, chief analyst at ActivTrades, says the stock markets love affair with Donald Trump is over.
Rather than revelling in Trump’s tax cuts, investors are now focusing on the inflationary impact, and the likely surge in government borrowing to cover the shortfall in revenue.
He writes:
We are seeing the biggest correction for well over a year on the stock markets but it’s too early to call this a crash. In the last few years indices followed a strong bullish trend and so far, this is nothing more than a physiological correction. The violence of the fall seen in the US on Friday and Monday has to be kept in the context of the huge growth of Dow Jones and Wall Street in the last few years.
For Trump however, the long honeymoon between him and the stock markets is well and truly over. Significantly, after years of low inflation, we are now talking about the opposite scenario for the US.
Eek. The futures market is now indicating that the Dow Jones industrial average will fall further when trading resumes, in under four hours.
It’s still early days (many New York traders will still be asleep), but a sign that Wall Street is somewhat feverish after the biggest daily fall since 2011.
And now we're going down again https://t.co/8LGckFjN55 pic.twitter.com/GqAlFX4tDQ
— Joe Weisenthal (@TheStalwart) February 6, 2018
Volatility continues ahead of the opening bell, Dow futures were up briefly overnight before going back down to red. As of 5:21AM, down 1.09%. https://t.co/6HWdSAH1Wo
— Anaridis Rodriguez (@Anaridis) February 6, 2018
David Madden, market analyst at CMC Markets UK, warns that there could be more turmoil ahead:
Stock markets are still squarely in the red this morning even though we are seeing a recovery. After another horrendous session in New York last night and Asia overnight equity markets in Europe are feeling the pain.
The sheers size of the sell-offs has sent traders running for the exit. This morning there is some short covering and bargain going on, but the real acid test will be if this short-term move higher can be sustained. Markets don’t move in straight lines so this could be the calm before the next storm.
A top central banker has called on international authorities to rein in bitcoin.
Agustín Carstens, the new head of the Bank for International Settlements, warned this morning that bitcoin had become a combination of “a bubble, a Ponzi scheme and an environmental disaster”.
Bitcoin price falls below $6,000 as banker signals crackdown https://t.co/EhCEgbNIjG
— Guardian Business (@BusinessDesk) February 6, 2018
Market recap: Shares down, but off their lows
Time for a quick recap.
European stock markets have suffered sharp losses this morning after Wall Street was routed last night.
But markets are clawing their way back from their worst levels, as investors cross their fingers and hope that we’re experiencing a correction, not a full-blown crash.
After two hours trading, the FTSE 100 is down 146 points - or 2% - at 7189. It had earlier hit a one-year low, by shedding 255 points at the open. The Footsie has now fallen by around 6.3% this year, and shed all 2017’s gains.
Across Europe, traders have been selling hard - after the shock of seeing the Dow Jones industrial average tumble by 1,175 points on Monday, its biggest points fall ever (but a more modest percentage decline of 4.6%).
The benchmark Stoxx 600 is down 1.6%, with heavier losses in Germany (-1.9%).
European markets had initially plunged by 3%, their biggest fall since the Brexit vote, after a day of heavy losses in Asia. But shares are rebounding off their worst levels, thanks to indications that Wall Street may open higher.
$SPX futures are rebounding, as markets seem to have calmed down a bit. European stocks lke #EuroStoxx50 are still flashing red but have also rebounded from the initial declines. $VIX remains high though - interesting days ahead! pic.twitter.com/lProZJzojP
— Danske Bank Research (@Danske_Research) February 6, 2018
Several analysts are suggesting that today’s falls are a correction, following frothy rises during 2017.
Fiona Cincotta, Senior Market Analyst at City Index, says:
Whilst there was no single event which prompted Monday’s sell off, fears over rising interest rates dampening economic growth and the fact that the market is long due a correction, have been weighing on sentiment.
The first signs falling confidence and investors have been surprisingly quick to sell out and book profits from the phenomenal rally over the past few months.
Asian investors have already suffered a bad day, with Japan’s Nikkei sliding into correction territory (10% below its peak), the Hong Kong Hang Seng down 5%, China’s main markets down around 3%, and India’s Sensex down 1.5%.
Updated
Today’s sell-off is a great chance to buy stocks, says Michael Strobaek, Global CIO at Credit Suisse.
Strobaek is telling his clients that this week’s sell-off is not a crash, and actually an opportunity to snap up shares.
Here’s his reasoning:
“We still consider the equity bull market to be intact and to have the potential to go further. Yet, as we have said on numerous occasions, the bull market is not going to be as good as what we saw in 2017, and it will be associated with high levels of volatility, as short rates and now yields have left their bottoms and are moving higher.’’
Recent risk-off moves in equities do not shake our equities conviction. We see the latest developments as a healthy correction that offers a buying opportunity for clients who wish to deploy cash.”
Just 12 days ago, US president Donald Trump was bragging to the World Economic Forum that the markets were up 50% on his watch (a slight exaggeration).
He even claimed that they’d actually have fallen 50% if the Democrats had won the 2016 election, as he banged the drum for his tax cuts.
However, Trump’s trip to Davos may mark the top of the rally. As this charts shows, the Dow has fallen by around 8% since his trip to the ski resort:
Disappointingly, Trump hasn’t commented about the markets recently. The FT has called him out for this today, pointing out that he tweeted 60 times during the Dow’s surge of record highs in 2017.
Trolling @POTUS ... today's @FTLex column pic.twitter.com/rHTWz4tKVP
— Richard Fletcher (@fletcherr) February 6, 2018
Updated
The boss of oil giant BP, Bob Dudley, is relieved that the FTSE is only at a one-year low.
BP chief Bob Dudley nods to stock market turmoil today. "Markets in general are a bit turbulent, so I hope to give you some good news...the markets are about the same level as there were on 1 January"
— Adam Vaughan (@adamvaughan_uk) February 6, 2018
Breaking away from the markets briefly. Over at Parliament,former Carillion executives are being grilled over the collapse of the outsourcing company last month. It’s being streamed live here.
My colleague Rob Davies is watching. He reports that Carillion’s ex-boss is blaming certain clients for its demise, but MPs aren’t impressed....
At select committee inquiry into Carillion, former CEO Keith Cochrane says the company took a £400m hit from clients in Canada and the Middle East who heard it planned to exit those markets and, knowing that, tried to avoid paying bills.
— Rob Davies (@ByRobDavies) February 6, 2018
Former Carillion CEO Keith Cochrane: “Clearly with the benefit of hindsight, should the board have been asking further, more probing questions, perhaps.”
— Rob Davies (@ByRobDavies) February 6, 2018
Former Carillion CEO Keith Cochrane: The business got itself into this position.
— Rob Davies (@ByRobDavies) February 6, 2018
Frank Field MP: The business didn’t, the directors did. It’s like lads say, “I didn’t stab that guy, it was the beer.”
The mood in the City
Paul McNamara, investment director at asset management firm GAM, reports that it’s a rough morning - especially for any trader trying to persuade clients to bet that the markets will be calm:
from where i'm sitting, rough day in the office for most of us. Somewhat worse than that if you're punting vol from the short side.
— Paul McNamara (@M_PaulMcNamara) February 6, 2018
Peter Garnry, head of equity strategy at Saxo Bank, says the recent phase of unnatural calm in the markets is definitely over.
“The low volatility regime is likely dead – 2017 and early 2018 were a crazy anomaly. So far the blow up is scary but has been relatively contained. This is the largest two-day selloff since the flash crash of August 2015.
A 12% top-to-bottom move in S&P 500 futures is likely the product of a chain reaction that started last Friday when unexpectedly strong US wage growth figures pushed US rates higher. S&P 500 futures are now up 2.6% from their lows.”
But Jacob Deppe, head of trading at online trading platform, Infinox, argues that the sell off is actually healthy:
“While the fall in global equity markets looks dramatic, it is no more dramatic than the record rises we have seen since the end of November. For that reason alone many would argue a correction was on the cards.
“The party may be over for now but this could be more of a sobering correction than a rout.
“There have been plenty of warnings over the past few weeks that equities were overvalued and that US stock markets in particular were overheating.
Updated
The Dow Jones industrial average is now predicted to rise by 137 points later today.
That would barely make an impact on Mondays 1,175-point rout, but could calm fears that a crash is brewing....
Wall Street might struggle off the mat
There’s a glimmer of good news -- the futures market is suggesting that the US stock market may open higher after yesterday’s rout.
The S&P Futures contract is currently up around 0.8%, indicating that American shares will claw back some of Monday’s slump (when the S&P 500 shed 4.1%).
Wall Street doesn’t open for five hours, though, so the situation could change.
S&P futuren er nå opp +0.8% #aksjer 🎢 pic.twitter.com/SdlD7GDBSy
— Olav Chen (@olavchen) February 6, 2018
After one hour’s trading, European stock markets are a sea of red - although they’re coming back from their worst levels.
Richard Hunter, Head of Markets at interactive investor, points out that Britain’s stock market has underperformed Wall Street over the last year - even before today’s rout.
He writes:
The recent falls in the Dow Jones has left the index down 1.5% in the year to date – but over the last year, the index remains in positive territory to the tune of 21%.
In terms of the UK, rather more apples have fallen as the tree has been shaken. Over the last year the index is completely flat, whilst in the year to date it has fallen 6.4%. The previous benefit of weaker sterling has evaporated, and whilst participation in the previous rally was somewhat half-hearted, the same cannot be said of the UK market’s reaction to the current jitters.
Gemma Godfrey, founder of investment site Moola, also blames last week’s strong US jobs data for sparking a bloodbath in stocks.
Blood bath: When good news is bad news.. Strong US employment numbers triggered concern interest rates will rise. The US stock market fell by the most in 6 years & fear of an overdue correction has spread across the globe https://t.co/GvCWGWq69A @graemewearden
— Gemma Godfrey (@GCGodfrey) February 6, 2018
This is one of the roughest mornings for the markets in 18 months:
European stock markets are on track for one of their worst days since the Brexit vote as the global equity rout continues https://t.co/D3mtZ7iqTK pic.twitter.com/xQNAog2aER
— fastFT (@fastFT) February 6, 2018
The smaller FTSE 250 index, which contains more medium-sized UK firms, is also suffering big losses today.
The FTSE 250 is down over 2%, with almost every member falling.
Transport firm Stagecoach is the biggest faller, down almost 9% after losing its franchise to run Britain’s East Coast rail franchise. Online grocer Ocado has shed 7% after missing its profit expectations this morning.
It’s worth remembering that the stock markets posted some astonishing gains last year, with global stocks gaining 22% and Britain’s FTSE 100 up 7.6%..
Economics journalist Dharshini David says the markets are now coming back to earth:
Fall in US shares last 2 days unusual but so was scale of jump in 2017 when equities increasingly decoupled from economic prospects. Bump down to reality inevitable.
— Dharshini David (@DharshiniDavid) February 6, 2018
Mike van Dulken of Accendo Markets says the sell-off is being driven by a ‘perfect storm’.
They include:
A strong 2017 rally extending into January, low volatility, low interest rates, over-optimism and complacency, over-leverage and financial engineering, all coming to a head as investors react to the possibility of higher/faster interest rates rises with bond yields creeping higher to jeopardise the current market situation.
Why are markets falling?
It’s always hard to explain exactly why the financial markets are behaving in a certain way. But many City experts are attributing the sell-off to fears that central banks will soon raise interest rates, ending the era of cheap money.
Last Friday, we learned that American workers have enjoyed the biggest jump in earnings since 2009. That’s great news - except it could force the US central bank to hike borrowing costs more aggressively. Investors are now factoring in four American interest rate hikes this year - up from three before.
It’s also worth noting that markets surged in 2017, thanks to optimism over the global economy. Donald Trump’s tax cuts gave shares another lift -- because cutting corporation tax is good for profits.
But.. those same tax cuts could force America to borrow more money to cover its budget deficit. That would probably push down the value of US government debt, and push up the interest rate (or yield) on those bonds. Again, that could force the Federal Reserve to tighten monetary policy.
It could also make bonds a more attractive investment - another reason to ditch shares today.
Updated
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European stocks hit hard
European stocks have fallen to their lowest level since last August, as traders hit the sell button at bourses across the continent.
The Stoxx 600 index, which tracks Europe’s biggest companies, has fallen by 3.1% this morning. Germany is having a particularly bad morning, down over 3.5%.
The London stock market is still deep in the red, but might be bouncing off its opening slump.
The FTSE 100 has now lost 7% of its value so far this year, despite hitting a record high in January.
Here are the biggest fallers on the FTSE 100 in early trading:
FTSE 100 TUMBLES BY 255 points
Boom! Britain’s blue-chip index of top shares is tumbling at the start of trading, to its lowest level in a year.
The FTSE 100 fell by 255 points, or over 3.2%, to 7079 points, with every share losing ground. It’s not been that low since December 2016.
Investors are scrambling to sell shares following the tumbles on Wall Street last night, and Asia earlier today.
Jasper Lawler of London Capital Group tells us:
The stock market open in the UK and Europe looks about as bad as it can get. The bloodbath on Wall Street, which was repeated in Asia has seen confidence evaporate in Europe.
Updated
Hold onto your hats.... the European stock markets are about to open...
Bitcoin falls again
Cryptocurrencies are also being hammered hard this morning.
Bitcoin has tumbled by 12% this morning, taking the digital currency below $6,000 for the first time this year.
Hussein Sayed, Chief Market Strategist at FXTM, says:
The most famous digital currency has fallen 69% from December’s record high, and almost 56% from the start of the year. The slide comes after many banks in the U.S. and U.K. considered banning customers from buying cryptocurrencies using their credit cards.
It seems the war against the crypto-world is far from over, and how the situation involves from here remains unknown, but risks are certainly high.
If you missed last night’s turmoil (where were you?), here’s a reminder of how the Dow Jones Industrial Average took an almighty bath:
— Paul McNamara (@M_PaulMcNamara) February 5, 2018
Risk aversion is “high” in the City today as we head towards the start of trading., says Elsa Lignos of RBC Capital Markets.
She says RBS’s ‘risk aversion thermometer’ hit a 2.5 year high of 27 on Monday - the highest level since China stunned the markets by devaluing its currency in 2015.
Lignos adds:
That time it took six weeks to turn risk-seeking again.
Jamie McGeever of Reuters has a sobering fact -- $4 trillion has been wiped off global markets in the last week. That figure could be somewhat higher by the end of the day....
$4 trillion wiped off global equity markets in the last week pic.twitter.com/NoYS6STQgx
— Jamie McGeever (@ReutersJamie) February 6, 2018
Earlier today Japan’s Nikkei fell into ‘correction territory’, meaning it has shed more than 10% from its recent high.
The sharp losses on global stock markets in recent days may be a sign that the ‘Goldilocks’ era is over -- replaced by some aggressive and hungry bears.
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities., explains:
“Since last autumn, investors had been betting on the goldilocks economy - solid economic expansion, improving corporate earnings and stable inflation.
But the tide seems to have changed.”
Global stocks crumble in vicious sell-off as #goldilocks trade unravels. Asia stocks are suffering dramatically deep and broad losses. Dispersion is breathtakingly low, though recent outperformers are worst hit. European shares seen falling 4-6%. pic.twitter.com/NFSBx3btUP
— Holger Zschaepitz (@Schuldensuehner) February 6, 2018
Introduction: European markets facing heavy losses
Good morning from London.
Financial markets are in turmoil after America’s stocks suffered their biggest one-day slide in six years.
The Dow plunged by over 1,100 points on Monday, its worst points loss ever and the biggest one-day percentage decline since the Eurozone crisis of 2011.
This has sent shockwaves through the markets, as investors fear that the long bull market in shares and bonds may be ending.
Worries over rising inflation and the prospect of American interest rate rises sparked Monday’s sell off. Some traders warning that computer trading strategies has triggered a flash crash (at one stage the Dow was down by a vertiginous 1,500 points).
Already today, Asian markets have posted severe losses. Japan’s Nikkei has shed 4.7%, while Australia’s market shed 3.2%.
Asian markets fell sharply this morning - this is Japan’s Nikkei pic.twitter.com/ZzzJg0IqjC
— Adam Blenford (@adamblenford) February 6, 2018
My colleague Claire Phipps has been live-blogging all the action in Asia’s markets here:
European markets open in under an hour, and traders are already expecting heavy losses.
City firm IG are calling Britain’s FTSE 100 down around 3%, with the French, German, Italian and Spanish markets also heading for very sharp falls.
Jingyi Pan of IG warns that the markets are febrile today:
“There would be few places to hide from the risk-off atmosphere that is expected to extend its stay in Asian markets today in a significant manner.
This is fear rolling over itself,”
European Opening Calls:#FTSE 7093 -3.30%#DAX 12030 -5.18%#CAC 5037 -4.70%#MIB 21892 -4.08%#IBEX 9661 -4.01%
— IGSquawk (@IGSquawk) February 6, 2018
Michael Hewson of CMC Markets says this correction has been a long time coming...
These declines have been a long time coming and in a sense have already started to become self-accelerating. At the end of last year margin debt levels on US stocks were at record highs, helping fuel the rise we’ve seen in the last few months.
The sell-off in the last few days is likely to reverse this trend, and potentially accelerate it further, particularly if investors start to unwind it over concerns that we could fall further, which seems likely if events in Asia this morning are any guide.
It’s a volatile situation out there - traders will be looking to see whether Wall Street can recover, or whether it suffers fresh losses.
We’ll be tracking all the action through the day....
Updated
