- FTSE 100 down 120 points at 8,163
- Weak US jobs data and tech sell-off hits stocks
- British Airways owner revives its dividend
4.02pm: FTSE 100 tanks at the close
London's FTSE 100 has shed more than 120 points in one of its worst sessions in recent months, with the index down over 1.4%.
It comes as many of the markets across the globe react to an awful few days in the US, with worse-than-expected jobs and factory output data leaving economists questioning whether the Federal Reserve was right to leave interest rates uncut.
Chris Beauchamp, chief market analyst at online trading platform IG, said: "In the space of barely two days markets have gone from looking forward to a Fed rate cut in a growing economy to fretting about an impending recession.
"Today’s huge payrolls miss and the surge in the US unemployment rate has sparked a fresh flight from risk assets already reeling from some poor earnings reports and concerns about a wider conflict in the Middle East.
"Investors are now hoping for a [half a percentage point] rate cut in September, but worry that even this will be too little, too late to stave off a US recession."
Amazon bore the brunt of a widespread sell-off of technology stocks today after it saw close to US$200 billion wiped from its market cap earlier today.
The e-commerce group posted a 10% year-over-year increase in revenue to $148 billion, falling short of Street estimates of $148.6 billion.
Barring Apple, which lifted on its strong results, the Magnificent Seven have all declined, with Nvidia Corp down 5%, Microsoft Corp off 2.5%, and Amazon.com Inc falling a worrying 11.2%.
Back in the UK, British Airways owner IAG seems to have picked the right day to publish its results, with shares up more than 4% after it recommenced it dividend.
“The resumption of dividends highlights the strength of cash generation and the balance sheet," said Panmure Liberum.
“Management’s outlook for the year remains positive and we raise our already above-consensus forecasts modestly.”
3.38pm: Commodities and currencies today
As the FTSE 100 tumbles on the back of a global stock meltdown, here's a look at the performance of commodities and currencies today:
- Bitcoin/USD: -0.65% at $64,871
- GDP/USD: +0.75% at $1.282
- GDP/EUR: -0.4% at €1.175
- EURO/USD: +1.15% at $1.091
- Brent Crude: -3.15% at $77.02
- WTI Crude: -3.6% at $73.57
- Gold: +0.3% at $2,453
- Silver: +0.1% at $28.47
3.21pm: Economists react
Down 95 points of 1%, the FTSE 100 is moving closer to a one-month low - not quite as bad as the US, but still unwelcomed considering interest rates were cut only yesterday.
With global markets under pressure, here is how some economists have reacted.
Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Asset Management, said: “I didn’t expect stocks to fall this much.
“This is probably because there are concerns that the US economy will collapse in a big way, which is the most unpleasant pattern for Japanese stocks.”
José Torres, a senior economist at Interactive Brokers, said: “The short-lived satisfaction of Fed chief Powell communicating decent odds of a September rate cut has turned sour as investors are now panicking that the central bank isn’t trimming soon enough.”
????The private sector only added 97k jobs in July -- the weakest since March 2023 and December 2020 before that -- while the government sector once again contributed favorably to the headline print driven by a 26k gain in local education jobs pic.twitter.com/3wCB318kWW
— Gregory Daco (@GregDaco) August 2, 2024
2.54pm: US markets take a whacking as FTSE slides
The FTSE 100 is down 1% since the US released worse-than-expected non-farm payrolls and appears to moving in one direction.
Also dropping is the FTSE 250, down more than 2%, having also sunk around 1% since the release of US jobs data.
Over in the US, The Dow Jones fell 358 points to 40,008 as the day’s trading got underway, while the Nasdaq and S&P 500 were down 405 and 80 points respectively at the open.
According to Bureau of Labour Statistics non-farm payroll data, 114,000 jobs were added to the US economy in July - well below expectations for 175,000.
Unemployment climbed to 4.3% over the month too, the data showed, hitting its highest level since October 2021.
Gold and US Treasury prices jumped as investors fled from stocks, with the former climbing 0.8% to US$$2,470 per ounce for the day and yields on the latter plummeting.
Capital.com analyst Daniela Sabin Hathorn commented that the “meltdown” had been prompted by concerns the Federal Reserve made the wrong call in holding interest rates this week, placing the US economy at risk of recession.
She added: “What seems like a given now is that the Fed will cut rates in September, the question that now arises is by how much.”
2.45pm: Royal Mail faces security review by Cabinet
As London blue chips continue to slip lower on the back of weak US jobs data, with the FTSE 100 down more than 0.8%, Royal Mail has had an update on its takeover saga.
The takeover by Cech billionaire Daniel Kretinsky is now facing a national security probe, according to reports last night.
PA reported that the Cabinet Office was reviewing the offer under the National Security and Investment (NSI) Act, which gives the government the power to block a deal or ask for specific commitments from the suitor if the review raises major concerns.
According to the report, the investigation would also look at Kretinsky’s other interests including his gas pipeline interests in Russia.
It will be the second investigation into Kretzinsky by a UK body after the last government cleared him to build up a substantial stake in International Distributions Services PLC (LSE:IDS) (International Distributions Services PLC (LSE:IDS)) , the owner of Royal Mail.
2.23pm: FTSE 100 moves lower
The FTSE 100 continued to stumble in the wake of Friday’s weak US job data, falling 59 points to 8,223.
Melrose Industries PLC (LSE:MRO, OTC:MLSPF) topped the day’s fallers, down 7.7%, while Ashtead Group PLC (LSE:AHT) also faced a hefty drop of 6.3%. Barclays PLC (LSE:BARC) and Vistry Group PLC (LSE:VTY) were also among losers.
British Airways owner International Consolidated Airlines Group SA (LSE:IAG) remained the day’s top riser with a 5.9% gain following results this morning.
GSK PLC (LSE:GSK, NYSE:GSK) was also up 4.1% following expanded approval for its Jemperli cancer drug.
2.13pm: Gold spikes, US Treasury bond prices jump on jobs data
Yields on US Treasuries have slumped and gold prices soared as investors ditched stocks following weaker-than-expected jobs data on Friday.
At 3.79%, yields on 10-year bonds sunk to their lowest since December, whilst two-year yields fell below 4% for the first time since May 2023.
Gold spiked in the meantime, initially climbing to US$2,486 per ounce, before retreating to US$2,465 and a 0.6% gain for the day.
Data from the Bureau of Labour Statistics on Friday showed 114,000 jobs were added to the US economy in July - far off expectations for 175,000 and stoking fears the Federal Reserve had run the risk of recession by holding interest rates this week.
Former US National Economic Council deputy director Bharat Ramamurti looked to calm nerves following the data, reassuring there was still strength in the US economy.
“It’s not time to panic,” he wrote in a post on social media X.
“There are still many underlying signs of strength in the economy and unemployment remains low by historical standards.”
However, he continued that the Fed had made a mistake in not cutting rates in July’s call, adding a more drastic reduction would now be needed in September.
1.50pm: US jobs data hits global stocks
The FTSE 100 was among global indexes to take a battering after US non-farm payroll data, falling 40 points to 8,242.
In the US, the Dow Jones was down 546 points at 39,968 ahead of Friday’s opening bell, while the Nasdaq and S&P 500 fell 463 and 99 points respectively.
Non-farm payroll data from the Bureau of Labour Statistics on Friday showed 114,000 jobs were added to the US economy in July - far off expectations for 175,000.
Unemployment also rose over the month to 4.3%, climbing to its highest level since October 2021.
“Since inflation figures have come into shooting distance of the Fed’s target, [...] the balance of risks has begun to change,” Charles Schwab director Richard Flynn commented.
“Today’s figures may stir anxieties that central bankers haven’t moved fast enough to cut rates, nudging the jobs market into a downward spiral.”
Japan’s benchmark Nikkei 225 index had already taken a beating ahead of the data’s release, closing 2,216 points lower at 35,909 on Friday, while markets across Europe also fell into the red on the news.
1.40pm US economy adds fewer jobs than expected in July
A below-expected 114,000 jobs were added to the US economy in July as the unemployment rate rose to 4.3%.
Expectations were for the US economy to have added a far healthier 175,000 jobs, according to a Reuters poll.
The Bureau of Labour Statistic data comes as fears grow that the Federal Reserve's efforts to stem inflation by holding interest rates this week could put the US at risk of recession.
At 4.3%, unemployment across the US has reached its highest since October 2021, with the addition of non-farm payroll data showing the slimmest growth since April this year.
12.54pm: More Wizz Air woes
Wizz Air Holdings PLC (AIM:WIZZ)'s bad week continued on Friday as it shed another 5% after the budget airline revealed passenger numbers fell in July while its carbon emissions went up.
It follows a beating for its share price yesterday on a profit warning with interim results that followed it being rated the worst airline for customer service by consumer group Which?
Wizz carried 5.94 million passengers in July, down 1.4% from a year earlier with its load factor or how full its planes are, also down 1% at 93.8%.
The central Europe-based airline has been hamstrung by problems with engines supplied by the GTF consortium, which caused a grounding of its A321neo fleet, while the Crowdstrike/Microsoft IT outage on 19 July disrupted 1% of its scheduled flights.
Carbon emissions also rose in July due to the engine issue with Wizz Air having to use what it said was a suboptimal fleet mix or older and lower gauge aircraft.
12.31pm: Nintendo profits drop with no Switch successor announced
Nintendo shares dropped more than 2% in Tokyo overnight after it revealed profits had dropped by 55% in the three months to June.
With no information imparted regarding a successor to the Switch, Nintendo said sales had fallen in both its game software and machines divisions.
The Switch console has been on the market for eight years now, with the Japenese video game developer having sold around 140 million in that time.
However, attention is now turning to the next generation, with Nintendo's president Shuntaro Furukawa having promised an announcement would be made on the new console by April 2025.
Profits for the Super Mario maker reached 81 billion yen (£427 million) for the quarter, marking a 181 bilion yen drop compared to 2023.
Quarterly sales dropped by over 45% to 246.6 billion yen for the period.
12.12pm: Capita shares tumble
In the world of small caps, business outsourcing expert Capita has sunk 6.5% as its first-half profits were overshadowed by its need to cut costs and further contract losses.
Capita reported it was on track to save £160 million by June next year in its interims.
These results showed pre-tax profits of £60 million for the six months to June, against a £68 million loss last year, though this was aided by a £38.1 million boost from business sales.
Lower bidding activity saw Capita’s total value of contracts won over the half-year fall by 29% to £934.4 million.
Revenue also fell, by 16% to £1.2 billion, which Capita said in part reflected previously announced contract losses.
“We are implementing changes that will make us more competitive and drive growth by becoming more efficient and spending less,” chief executive Adolfo Hernandez commented.
11.50am: China feels effects of latest sell-off
With the US sell-off affecting stocks all around the globe, China has closed significantly down, with geopolitical tensions also adding to the issues.
The Shanghai Composite index finished the session down close to 1%, while the blue-chip CSI 300 index fell just over 1%.
Hong Kong's Hang Seng index closed the day down 2.1% at 16,945.51.
While fears about the US economy continue to grow, China is also have to deal with the tensions in the Middle East and its own contracting manufacturing sector.
Zheng Yufei, an analyst at Guosen Securities, said: “Global markets have experienced wild swings, with investors flocking to safe assets on expectations that the Federal Reserve may cut interest rates sharply, while concerns about an economic slowdown and investment returns from technology giants have led to uncertainty and defensive investment trends.”
11.30am: Intel plummets on job cuts and growing losses
As the FTSE 100 continues to trade around 0.5% lower today, over in the US the sell-off which occurred last night has continued in premarket trading.
One company coming under pressure is Intel, which dropped more than 5% yesterday and tumbled a further 20% ahead of the open after it unveiled a fresh round of job cuts.
The chipmaker said it plans to cut over 15,000 jobs in a bid to rightsize and save up to US$10 billion (£7.9 billion).
Some 15% of staff will be laid off through the move to “resize and refocus,” Intel announced in second-quarter results on Thursday.
This came after the company revealed a wider US$1.6 billion loss for the quarter and a 1% fall in revenue to US$12.8 billion.
11.05am: Luxury stocks face more pressure
Stocks in the luxury sector are facing yet again more pressure after Italian footwear and leather goods group Salvatore Ferragamo reported a sharp slump in profits.
Operating profits at the Florence-based company dropped by 41% in the first half of the year, with sales in all of its main regions slowing.
Underlying earnings at firm reached €28 million during the first six months of the financial year, bettering analysts expectations for €20 million despite revnues dropping by 6%.
Our aggregate financial results in the second quarter were significantly impacted by the challenging consumer environment, especially in Asia Pacific, which offset the positive trends in the rest of the world", chief executive Marco Gobbetti said following the results.
In reaction to the profit slump, shares in Burberry have slipped 1.6%, while LVMH and Hermes dropped by more than 1%.
10.46am: Aston Martin ups debt pile in sales push
Aston Martin shares have slipped by around 0.6% after it announced it raised £135 million through a debt issue as the luxury car marker prepares to scale up sales in the coming months.
Some US$90 million (£70.7 million) was raised through the issue of 10% senior secured notes, due to mature in 2029.
A further £65 million came from senior secured notes carrying interest of 10.375%.
Chief financial officer Doug Lafferty commented the bond issue came after encouraging feedback from existing lenders in the wake of first-half results last month.
“These new senior secured notes [...] provide Aston Martin with additional liquidity as we continue an exciting second half of the year,” he added.
Aston Martin had reiterated plans to grow volumes over the latter part of the year in last month’s results, which showed an expected fall in revenue.
10.04am: Global markets keep lower
London's FTSE 100 appear to be holding steady at around 0.25% lower today, but elsewhere in the world markets haven't fared as well in response to the US's sell-off.
Fears that the US Federal Reserve had waited too late to cut interest rates began to grow after factory output data came in worse than expected.
Europe's Stoxx 600 dropped by 1.25%, taking it to a three-month low, while Germany's Dax sunk fell by 1%. France's Cac 40 slipped 0.35%.
Other nations such as Italy and Switzerland were also affected to by the sell-off.
In Asia, Japan's Nikkei 225 closed more than 2,216 points lower, representing its second worst session of trading in its history.
US job data later today could either reverse some of these losses or worsen them.
9.45am: Reaction to British Airway owner results
Following British Airways owner IAG's interims, shares in the airline have shifted close to 6% higher, making it the best-performing constituent of the FTSE 100 this morning.
Analysts have welcomed the results and pointed out that it marks a sharp change in sentiment surrounding the wider industry, as only yesterday Wizz Air sunk more than 15% as headwinds appeared to be plaguing short-haul carriers.
Mark Crouch at eToro, said: “British Airways owner IAG has maintained a steady flight path in 2024 with the international carrier faring considerably better than its national counterparts.
"Long haul travel has held up well with robust demand for air travel fuelling increased free cash flow, boosting shareholder returns as a result.
“While profits were down a touch from last year, the company’s balance sheet is in a far healthier state. Investors would need to go back to before the pandemic for the last time IAG paid a dividend, so today's announcement of an interim dividend is a strong statement that the business has at last broken free of the pandemic fallout.
"However, as is usually the case with airlines, potential storm clouds are never far away.
"Air traffic controller strikes have been a constant headwind, while an economic slowdown has the potential to halt air travel demand in its tracks.
"A bigger concern perhaps are the rising tensions in the Middle East: should the conflict escalate further, a potential spike in oil prices is all but guaranteed."
9.24am: GSK shares surge on cancer drug approval
Shares in GSK have shifted close to 2% higher after its cancer drug recieved expanded approval from the US Food and Drug Administration (FDA).
The pharma giant's Jemperli (dostarlimab) in combination with chemotherapy will now be available for more patients with limited treatment options.
This includes patients with mismatch repair proficient or microsatellite stable tumours, which account for the majority of endometrial cancer cases.
The combination therapy of Jemperli and chemotherapy has shown a 31% reduction in the risk of death compared to chemotherapy alone.
9.01am: Stocks so far today...
As the FTSE 100 continues to hold lower in the first hour of trading, here's a look at how investors have reacted to results from overnight and this morning.
IAG is up close to 5% after it restarted its dividend and dropped its move to buy the outstanding 80% stake of Spanish budget carrier Air Europa.
Virgin Money held flat as its mortgage book shrank by 2.7% to £56 billion year on year in the third quarter.
Apple is predicted to open 0.5% higher after it reported stronger-than-expected earnings for the third quarter, but said performance in China was below analyst forecasts.
Amazon plummeted close to 7% in premarket trading as the eCommerce giant’s second quarter revenue came in short of expectations.
It posted a 10% year-over-year increase in revenue to $148 billion, missing estimates of $148.6 billion.
8.41am: Britain shelves tech and AI funding package
Britain has shelved its plans for a £1.3 billion funding package, aimed at supporting domestic tech and artificial intelligence projects, reports from the BBC revealed.
Starmer's new Labour government decided to scrap the funding, which was promised by the former Conservative leadership, as it looks to get the country's finances in order.
Part of the cash was set to be used to develop the £800 million exascale supercomputer at Edinburgh University, while another £500 million was earmarked for AI Research Resource, the fund supporting computing power for AI.
Both funds had been announced less than 12 months ago.
The Department for Science, Innovation and Technology (DSIT) said the cash was never allocated by Sunak's government in its budget, despite promising the funding.
"The government is taking difficult and necessary spending decisions across all departments in the face of billions of pounds of unfunded commitments," said DSIT in a statement.
8.21am: British Airways owner shares takes flight
The FTSE 100 has opened more than 0.5% lower this morning in reaction to the weakness in the US economy, but the same cannot be said for British Airways owner IAG.
Shares in the airline opened more than 3.5% higher after it said it is to start paying dividends again s it dropped its move to buy a remaining 80% stake of Spanish budget carrier Air Europa.
IAG made the announcements alongside half-year results showing revenues and profits both rising due to good performances on its core transatlantic routes between Europe, the US and Latin America.
Revenues in the six months to June rose 2.8% to €14.7 billion with operating profits up 3% at €1.3 billion.
Second quarter revenues were up 7.7% though operating profits eased slightly to €1.2 billion
For the full year, IAG forecasts continued strong demand for transatlantic travel, with capacity to grow by 7% though costs, not including fuel, will rise slightly over the whole of the year.
The interim dividend is 3c.
7.57am: US markets struggle after weak industry data
While the UK adjusts to slightly lower interest rates following yesterday's decision, a slightly different picture is building in the US, and it's affecting markets across the world.
Markets were spooked by new economic data that indicates the economy may be cooling at an unexpectedly rapid pace.
The US ISM manufacturing report, a key measure of factory output, dropped by 1.7 points in July to 46.8% indicating contraction in the industry and down from June's 48.5%.
The 10-year Treasury yield fell below 4% for the first time since February, driven by the report, rising jobless claims, and unexpected drops in construction spending, which raised recession concerns due to high interest rates.
The Nasdaq dropped around 2.3%, the S&P 500 dropped 1.4%, while the the Dow Jones slipped 1.2%.
Attention will now turn to the States' non-farm payrolls, an important indicator of the quality of the jobs market.
For July, the preliminary expectation is for 185,000 jobs to have been created and the unemployment rate to remain stable at 4.1%.
7.35am: British Airways owner quits Air Europa deal
British Airways owner International Consolidated Airlines Group has ended its move to buy the remaining 80% of Air Europa, the third largest Spanish airline after Vueling and Iberia, after deciding the investment was not in the best interest of the company.
Instead, IAG will pay vendor Globalia €50 million in the form of a break fee due to the cancelled plans, continuing instead with maintaining its 20% stake in the company.
Luis Gallego, IAG's chief executive, said: "We believe this decision is in the best interests of our shareholders. IAG remains committed to its strategy, including competing effectively from its Madrid hub."
IAG results will follow later this morning.
7.15am: FTSE to open lower
London stocks are set to start the final day of the week slightly higher as the markets as investors react to the Bank of England cutting interest for the first time in over four years.
Britain’s central bank cut rates to 5.0% from 5.25% at the monetary policy committee meeting saying it was a "finely balanced" decision and that further cuts might not be on their way.
Overnight, Asian markets Japan’s Nikkei experienced its worst session in nearly four years as the markets reacted to wider global macroeconomic movements.
Asia’s broadest index barring Japanese shares fell by more than 2.5% after sinking close to 1.9% the day prior, while Japan’s Nikkei dropped by around 6%.
Today, the results of British Airways’s owner IAG will reveal whether the issues plaguing short-haul airlines like Wizz Air and Ryanair are affecting continental carriers also.
While the holiday spending rebound is in full swing, this has primarily benefited budget airlines offering cheap fares to sunny European destinations.