- FTSE 100 falls 22 points to 8,277
- Nvidia suffers largest ever single-day market value loss overnight
- Direct Line and Barratt report mixed results
3.56pm: FTSE 250 and Wall Street back in the green
And just like that, the Wall Street sell-off is over, all the main indices are now in the green, with the S&P 500 and Nasdaq composite up 0.3% and the Dow Jones up 0.5%.
Losses for the FTSE have been pared, but it is still down 22 points or almost 0.3%.
That puts it among the best of Europe, with the DAX down 0.7% and the CAC 40 down 0.9%.
The FTSE 250, the more UK focused of the London benchmarks, is also in positive territory, up 32 points or 0.15%.
Topping the blue-chips is Rolls-Royce, up 2% as news about the fault found in-flight by Cathay Pacific in one of its Trent engines filters in.
Aerospace components firm Melrose is up 1.5%, second place on the leaderboard, where there are now 35 stocks in positive territory compared to just three at one point this morning (see below).
"US markets have managed to eke out some small gains in early trading, but in London the risk-off mood persists," says market analyst Chris Beauchamp at IG.
"Growth fears continue to be the big driver of losses, with the small US rebound merely a period of calm before another leg lower, potentially around Friday’s payroll report."
He adds that if the JOLTS report earlier is any guide, then Friday’s US payroll data is "unlikely to provide much comfort for investors".
After the Bank of Canada cut rates earlier, as expected, following two cuts in the past two meetings, Beauchamp says it is "remarkable" that expectations of 50bps cut from the US central bank has continued to eke higher.
"If this persists into the meeting itself, it will mean that markets are setting themselves up for disappointment. Today’s data shows that the market is cooling, not that a recession is round the corner."
3.40pm: VCT and EIS sunset clause extensions confirmed
Companies behind tax-efficient venture capital trust (VCT) and enterprise investment scheme (EIS) are celebrating after it was confirmed that 'sunset clauses' providing tax relief on them have been confirmed as extended for another 10 years.
The European Commission confirmed its decision "not to raise objections" to the former government's prolongation of both the VCT and EIS schemes
The VCT Association welcomed the news, with chair Chris Lewis saying: "The extension of the sunset clause will be welcomed by all those in the VCT & EIS sectors."
He says the industry looks forward to continuing its dialogue with HM Treasury to confirm the details of the extension.
"The VCT Association has continuously sought to demonstrate the positive impact made by our members throughout the UK, through their investment in the next generation of early-stage businesses. We are delighted that the response from the European Commission was informed by not only the VCTA’s own research, but also by a body of research from other associations across the industry.
"This a very good day for the UK’s VCT community.”
3.21pm: Oil prices could fall to $60 and maybe even $50 next year, says Citi
Oil prices are back down again, after flirting with a recovery earlier.
Brent front-month futures are down 0.6% at $73.28 a barrel, while West Texas Intermediate is down 0.65% at $69.98.
Analysts at Citi say Brent could average around $60 per barrel in 2025 if OPEC+ doesn't commit to extending current output cuts indefinitely, amid expected reduced demand.
Were Brent prices to fall into the $60s, financial markets could drive even lower, possibly to $50 per barrel, they add.
After waning from $90 a year ago, despite tensions in the Middle East and Ukraine, the Citi team say that the market now recognises geopolitics does not necessarily lead to reduced production or transit issues.
In a separate note, Goldman Sachs has also highlighted that AI is increasingly used by energy firms and could reduce oil prices over the next decade.
AI may cut shale production costs by 30%, lowering prices by $5/barrel, and increase oil reserves by 8-20%, analysts say.
Though AI may modestly boost oil demand by 0.7 million barrels a day, this pales compared to negative demand impacts from electric vehicles (EVs) and falling natural gas prices.
Overall, AI is expected to be a net negative for oil prices in the long term, "likely [to] be a modest net negative to oil prices in the medium-to-long term".
3.12pm: Short-term JOLT
US stocks slipped lower after the JOLTS job openings survey came in below expectations, before returning to roughly where they were before
Job openings for July were 7.673 million, below the consensus estimate of 8.1 million, and down from the previous month, which was revised down to 7.91 million.
Elsewhere, the Bank of Canada has cut interest rates for the third meeting in a row, as expected.
2.51pm: Wall Street mixed
It's been a mixed start so far for Wall Street, with the Nasdaq down 0.3%, the S&P 500 flat and the Dow Jones up 0.1%
Big tech are mostly behind the selling pressure, with Nvidia down more than 3% and ASML 4%, while Apple, Amazon, Broadcom all sit at least 1% lower.
But Google owner Alphabet, Tesla, Netflix and Adobe are all higher.
Topping the Dow are Travelers Companies, 3M, UnitedHealth and Visa.
Meanwhile, losses on the FTSE 100 are further pared, now down 0.3% compared to more than 0.8% earlier.
2.04pm: Good evening London, great to be here
Live music events contributed a record amount to the UK economy last year, aided by a string of tours by big-name artists following the pandemic, including Beyonce, Coldplay and Elton John.
Some £6.1 billion was added to the economy from such events last year, according to industry body Live, marking a 17% increase on 2022, with last year seeing direct concert ticket revenues making up three-quarters of the total.
The figure also represented a 35% jump against the industry’s impact in 2019, though rising costs for venues and for punters saw 125 grassroots venues forced to permanently close down.
1.31pm: US homeowners eying rate cuts
Data on US mortgages indicates the expected rate cuts from the Fed in two weeks and in coming months are driving demand for mortgages among US homeowners, with lenders trimming rates on offer for home loans in recent weeks as their peers in the UK have been doing.
Mortgage applications climbed 3% last week, the Mortgage Bankers Association says, though were still down 4% on a year ago.
Refinancing applications fell 0.3% for the week but were up 94% year on year.
MBA economist Joel Kan says: "Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments."
He says the share of refinancing applications averaged almost 46% in August, "the highest monthly average since March 2022".
12.42pm: US sell-off set to deepen
Looks like the sell-off/correction in the US is going to continue for another day, with futures markets pointing to more losses.
S&P 500 futures are down 0.4% and those for the Nasdaq 100 are down 0.7%, while Dow Jones futures are down 0.2%.
Chip giants Nvidia and Broadcom are down almost 2% premarket, while ASML is down over 5% in Amsterdam and will also weigh. Apple and Google parent Alphabet and Meta Platforms are all down over 0.9% premarket, with Microsoft 0.8% lower.
Later today the US JOLTS jobs openings report will be in focus (see below), for what it might tell us about the non-farm payrolls coming on Friday.
Further north, the Bank of Canada policy decision is widely expected to see rate cut for a third consecutive meeting.
Slowing inflation and rising unemployment are pressing the central bank to get policy to a more neutral level quickly, analysts say.
11.58am: Amazon workers get pay rise
Amazon.com Inc (NASDAQ:AMZN) has announced operational staff in the UK will be granted a 10% pay rise following a dispute which has seen workers repeatedly walk out in recent years.
Employees such as delivery drivers and those in fulfilment centres will receive between £13.50 and £14.50 an hour from September 29, the company said, increasing by an extra 25p an hour for those who have been at Amazon for over 36 months.
GMB organiser Rachel Fagan argued the rise was “too little, too late,” however.
“Amazon’s reputation is in the gutter over its treatment of its own workers, and now company bosses are trying to plaster over the facts,” she commented.
“Unsafe working conditions, low pay and excessive surveillance blight the lives of Amazon workers every single day.”
11.41am: Banks' fraud exposure to be lower despite new high for scams
Banks are set to see requirements over payments to fraud victims slashed under new UK rules as separate data on Wednesday showed scams had hit a six-year high.
Britain’s Payment Systems Regulator suggested last year banks would have to refund fraud victims up to £415,000 under a new regime due to come into force in October.
However, this limit is now expected to be slashed to £85,000, according to the Financial Times, following lobbying from the industry.
This comes as data from the Financial Ombudsman Service on Wednesday showed disputes in the UK over fraud and scams had hit a six-year high... Read more
10.54am: FTSE losses pared
The FTSE's losses have been pared a bit, now back to 51 points or 0.6%.
A recovery in oil prices has helped lessen the impact from heavyweights Shell and BP.
Rolls-Royce Holdings PLC (LSE:RR.) is also top of the risers, up 1.2% after news that Cathay Pacific expects to return all the Rolls-powered Airbus A350s to service by Saturday, after making fuel line repairs.
10.39am: Banks in focus
A couple of banking things this morning.
First, the Financial Conduct Authority has issued a report to encourage banks, building societies and payment firms to "do more" to support people who don't have accounts but want one.
It's not clear if this is about Nigel Farage, but the City watchdog says its research has found "several providers could make it easier to apply" for a basic account without an overdraft facility.
The second story follows up on the issue we reported last week, where UK bank shares have been hit by fears that they will face tax hikes in the government's October budget.
Bosses from the leading lenders are going to meet Rachel Reeves in the coming days, Reuters is reporting today, where the rise in taxes on profits is expected to be a key subject.
Industry sources told the newswire that they are anticipating that the Treasury will seek to hike the existing surcharge on profits, as this would be easiest to implement, though they are also wheeling out the perennial lobbying line that hiking taxes could hurt the economy.
10.13am: Alarming fall but perfectly normal market behaviour
The huge decline in Nvidia’s market value and the 3.3% drop in the Nasdaq index "illustrate the fragility of the market", says Russ Mould at AJ Bell.
"It goes to show that everything was not back to normal after markets quickly rebounded from their summer wobble, even thought it might have looked fine on the surface."
Following the 13% pull-back in late July and early August, he notes that it wasn't long before investors changed to a more optimistic view about the prospect of a soft economic landing for the US.
"In hindsight, that was a false dawn," Mould says, with US manufacturing figures yesterday worse than as expected, "acting like a gust of wind to topple the house of cards and once again put markets into reverse amid fears about the strength of the economy".
But he assures investors that while such share price slumps are alarming, "it’s perfectly normal to see further market pullbacks after you get the type of wobble seen over the summer".
And the market sell-off also brings a laser-sharp focus onto the labour market figures scheduled for release on Friday, with the key question they might help answer is how much the Fed will cut rates later this month.
"Traders currently see a greater probability of a quarter percentage point cut than a half percentage point reduction.
"There is a feeling that if the Fed cuts by 50 basis points, then it might send a worrying signal to the market that all is not well. In contrast, a smaller cut would show it has started the journey to ease monetary policy but is taking a steady approach rather than a cannonball jump."
9.48am: Services sector price inflation weakest in three years
On the services PMI report, Tim Moore, economics director at S&P Global Market Intelligence, says the August data "highlighted a recovery in UK service sector performance as improving economic conditions and domestic political stability helped to bolster customer demand".
He says new business increased at a "robust pace after a lull in decision-making earlier this summer", which fuelled the fastest upturn in service sector activity since April, with the index in growth territory for ten months now.
Job creation was also faster than the average in the first half, despite fewer candidates being available and elevated wage pressures.
While higher salary payments result in "another sharp rise in cost burdens", the overall rate of input price inflation resumed its descent to reached its lowest since January 2021, Moore says.
"Adding to meaningful signs of softer inflationary pressures in the service sector, the latest survey indicated that average prices charged increased at the weakest pace for three-and-a-half years."
Services company confidence was supported by hopes of interest rate cuts and steady improvements in broader economic conditions, he says, but firms also cited concerns about policy uncertainty in the run-up to Rachel Reeves' autumn budget statement.
9.41am: Services PMI better than expected
UK's services companies enjoyed their highest level of activity in four months in August, along with the slowest rate of services price inflation for three and a half years, according to the S&P Global purchasing managers' index survey that has just dropped.
The services PMI reading for August was 53.7, further above the 50 reading that separates expansion from contraction, above the 53.3 flash reading midway through the month and above the 52.5 for July.
S&P Global's composite PMI for August, combining services with manufacturing, came in at 53.8, beating the 53.4 expected.
Services businesses said the rise in business activity was due to customers increasing willingness to spend as the economic backdrop improves, while some suggested that the prospect of falling borrowing costs helped to support business and consumer sentiment.
Many still cite pressure on disposable incomes as a factor holding back customer demand.
9.28am: Barratt results OK, say analysts
UBS says results from Barratt are of "limited surprise", with adjusted PBT of £385 million above the consensus forecast of £368 million, while the final dividend was as expected.
Before regulatory clearance is received for the Redrow takeover, which is likely by October, the company's guidance for home completions was held and building costs are expected to be flat.
New guidance included flat admin costs, land spend of £800 million and net cash of £500 million, which UBS thinks "implies a modest profit drop for Barratt stand alone in FY25, which is slightly below our expectations".
Analysts at Stifel said the results included a "small beat on margin" and that the new financial year has "started well".
"The shares have lagged the other two majors (Persimmon and Taylor Wimpey) by 17-25% in 2024. This underperformance might start to narrow if the Redrow integration proceeds smoothly and the risks of the transaction reduce."
9.15am: Analyst thoughts on Direct Line
Some analyst thoughts on Direct Line, first from Abid Hussain at Panmure Liberum, as the shares currently sit down 1.4% at 190.4p, which puts them in 195th position in the FTSE 350 list this morning.
Gross written premiums were 5% ahead of consensus but he says "the worry for us is the shrinking volumes in the motor insurance book, with volumes down 7.5% since the start of the year, implying an acceleration of the shrinkage over Q2 as Admiral and Aviva have taken market share from them".
The combined ratio is also 1.4 percentage points worse than the City consensus, with PBT of 13% below consensus estimates, and the 2p dividend also below market expectations.
"Management is expecting to continue to improve margins by taking pricing and cost reductions; this will take time, in our view."
Max Georgiou at Third Bridge says the return to profitability will be welcomed as strong premium growth highlights repricing efforts, so in the future investors will be paying attention to the impact of price comparison websites distribution channels growing, "however, this may push down insurance margins as the carrier looks to compete more aggressively on price-impacting pricing momentum".
The £100 million of cost savings promised earlier this year "needs to come through streamlining operations and marketing spend, but risks cannibalising new business if marketing budgets are trimmed aggressively", he adds.
9am: Watch out for JOLTS this afternoon
Analysts on Rabobank's rates team say the market moves we're seeing (driven by concerns over a potential US recession, oil price declines due to Libyan developments, and global growth worries), may have been overdone.
US and European yields dropped, indicating a "flight-to-quality" as investors sought safety.
"We see a risk that the pronounced moves seen yesterday are prone to reversal," they say, especially given muted signals from Fed-related instruments, and they highlight that upcoming economic data, like US payrolls this coming Friday, will determine whether the market's current trajectory is sustainable or a short-lived reaction.
Friday’s jobs report release "will be a key near term staging post in terms of whether investors believe yesterday’s moves are indeed the beginning of a sustainable trend or if it will ultimately proves to be a head fake", as they put it.
Given the current pricing of Fed rates (see below), they say a more robust NFP report "is likely to trigger a stronger reaction" and the US JOLTS report this afternoon is "of some discernible importance in this regard".
8.46am: Oil prices at lowest since December
Oil prices are continued to plunge, which is why Shell PLC (LSE:SHEL, NYSE:SHEL) shares are down 1.2% and BP PLC (LSE:BP.) is down 0.8%.
Brent crude futures have dropped another 1.2% to $72.86, their lowest level so far this year, down 10% since the start of last week.
The US-priced West Texas Intermediate fell to US$69.84, with December the last time prices were below $70.
This seems to be on news that a dispute may have been resolved which had seen Libya’s output severely curtailed.
It also reflects speculation that the eight main members of the OPEC+ cartel are likely to ease off their voluntary production cuts and will turn the taps on more fully in October.
8.34am: Widespread selling
There are only three FTSE 100 companies in positive territory this morning, they are big tobacco pair BAT and Imperial, along with caterer Compass.
Telecoms duo Vodafone and BT were in green for a while but have dropped out of the exclusive list.
The index is down 0.8% so far, with Germany's DAX and France's CAC 40 also falling by roughly the same.
"Fresh worries about the health of the global economy have gripped markets, with the FTSE 100 far from immune given the international leaning of the index," says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
"Although the S&P 500 and FTSE 100 are still not far away from record highs, there is uncertainty creeping in about the prospects ahead," she adds.
"There could be an element of post-labour day holiday blues at work, but it appears concerns were prompted by weaker than expected US manufacturing data, highlighting the ongoing damage wrought on orders and output by high interest rates."
She notes that the last big wobble in late July and early August was followed by a rebound, but that September is historically the worst month for stock performance, "so it’s 'hold on to your hats' time, with more volatility expected".
8.23am: Barratt slashes dividend
Shares in Barratt Developments PLC (LSE:BDEV) are among the fallers, no surprise there this morning, but this comes on the day that it announces final results, where it cut its dividend by more than half to reflect a squeeze on earnings amid a strained housebuilding environment.
Basic earnings per share fell by 78% to 11.8p as home completions in the year came to 14,004, which was at the upper end of guidance but still nearly a fifth lower than in the 2023 financial year.
It expects these levels of demand to persist, reiterating expectations of between 13,000 and 13,500 home completions for the year to June 2025, but plans to deliver 1.5 million new homes over the next five years.
Chief executive David Thomas stated that Barratt is "well-positioned to meet the strong underlying demand" and welcomed the new government's proposed reforms of the planning system as "one of the key levers to increase housebuilding".
8.11am: FTSE 100 falls as expected
The FTSE 100 has fallen as the open, on track for a fourth day of losses, with a 55-point slide to 8,244 in the first few minutes of trading.
An intraday low of just over 8,219 in the first minute was the lowest since 13 August, three weeks ago.
Only four of the top 50 largest companies in the index are in positive territory.
Scottish Mortgage Investment Trust PLC (LSE:SMT) is one of the big fallers after the US tech sell-off last night.
But Airtel Africa, ConvaTec and JD Sports are bottom of the list, down 9.3%, 5% and 2.7% respectively.
7.58am: Direct Line resumes interim dividend but numbers disappoint
First-half results from Direct Line Insurance Group PLC (LSE:DLG) saw it resume paying an interim dividend but profits were below analyst expectations as new chief executive Adam Winslow makes some big changes for the insurer.
While the insurer reported a swing to a £61.6 million pre-tax profit from a loss of £76.3 million last time, it was not as big as the City was expecting.
Also, the combined ratio of 98.2% was down from 108.8% a year ago and worse than the City consensus forecast, with the dividend also not as big as predicted.
7.46am: SEGRO agrees takeover of European rival
OK some London-listed company news now - FTSE 100-listed warehouse property developer SEGRO PLC (LSE:SGRO) has agreed a takeover of Tritax Eurobox PLC (LSE:EBOX) in an all-share offer.
The two boards announced a deal has been struck where shareholders in Tritax EuroBox will for each share they own get 0.0765 new SEGRO shares, plus will be entitled to receive a dividend of 1.25 euro cents per share (1.05p at the current exchange rate) for the quarter ending 30 September.
Based on the last closing of 880p of SEGRO's shares, the share element of the offer is valued at 67.32p and with the dividend that makes an offer price of roughly 68.37p, in line with the Tritax EuroBox closing price of 68.4p.
SEGRO said the offer represents a premium of 27% compared to the Tritax EuroBox closing price of 53.8p on 31 May, which it said was the last day before it made the offer.
7.34am: Nvidia falls further afterhours
Nvidia tumbled almost 10% due to "the broader macroeconomic worries and suspected AI fatigue", says Swissquote Bank analyst Ipek Ozkardeskaya.
The fall erased $278.9 billion in value – the biggest single-day loss ever.
Then it fell another 2.42% in afterhours trading.
This was on news that the US Department of Justice sent subpoenas to the company because it suspects that Nvidia violated antitrust laws, made switching harder to other chipmakers and penalized companies that didn’t use Nvidia’s AI chips exclusively.
7.27am: Markets background
The main catalyst for yesterday's sell-off was initially the ISM manufacturing print, says Deutsche Bank Jim Reid, as it "renewed investors’ concerns that the US economy is running out of a bit of momentum".
But with that ISM release in hand, investors also "ratcheted up the chance that the Fed would start with a 50bp rate cut in a couple of weeks’ time", Reid noted.
Futures raised the probability to 34% by the close yesterday, up from 31% on Monday.
More dovish pricing was also evident at a longer horizon as well, with futures now pricing in 102 basis points of cuts by the December Fed meeting, ie one percentage point, and 205 bps of rate cuts over the next 12 months.
Since the 1980s, this amount of easing has only materialised amid recessions, Reid adds.
As investors priced in more rate cuts, that led to a fresh rally among US Treasuries, which hit yields and stocks.
As analyst Ipek Ozkardeskaya at Swissquote Bank says, "The rate cut expectations favour a sector rotation from highly valued Big Tech toward the non-tech pockets of the market. BUT the expectation of jumbo rate cut is bad for all stocks, regardless of their technology exposure."
7.17am: FTSE 100 to extend slump for fourth day
The FTSE 100 is set to slump to a three-week on Wednesday, extending declines to a fourth day after Nvidia lost $279 billion to lead a dramatic sell-off on Wall Street overnight.
This was the largest drop in market cap in history for a single stock as the microchip star fell 9.5% over the session, dragging the Nasdaq and S&P 500 to 3.3% and 2.1% declines respectively.
London's blue-chip index is predicted by future markets to fall around 45 points, or around 0.5%, adding to the loss of 65 points from the previous day to 8,298.5.
Today there are some company result for a few large FTSE names, including Barratt Developments and Direct Line.
Plus we will see services PMI data for the UK, Europe, US and other major economies.