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| Market turmoil: Wall Street volatile after FTSE 100 hits three-year low - as it happened | Market turmoil: Wall Street volatile after FTSE 100 hits three-year low - as it happened |
| (7 days later) | |
| 9.56pm GMT | 9.56pm GMT |
| 21:56 | 21:56 |
| Closing summary: Market mayhem continues | Closing summary: Market mayhem continues |
| It’s only Tuesday, but many investors may feel they need a break after two days of dramatic swings. | It’s only Tuesday, but many investors may feel they need a break after two days of dramatic swings. |
| But instead, they need to get ready for Wednesday - when Janet Yellen, head of the US Federal Reserve, will testify to Congress. America’s top central banker can expect a lot of questions about the financial markets and the global economy. | But instead, they need to get ready for Wednesday - when Janet Yellen, head of the US Federal Reserve, will testify to Congress. America’s top central banker can expect a lot of questions about the financial markets and the global economy. |
| Especially as some investors think the Fed is going to cut interest rates this year, having only just raised them in December. | Especially as some investors think the Fed is going to cut interest rates this year, having only just raised them in December. |
| The odds of a Fed rate cut in 2016 are risinghttps://t.co/EiEGFZxrG0 pic.twitter.com/1QO27o1GXN | The odds of a Fed rate cut in 2016 are risinghttps://t.co/EiEGFZxrG0 pic.twitter.com/1QO27o1GXN |
| Here’s a quick recap of today’s events. | Here’s a quick recap of today’s events. |
| Britain’s FTSE 100 index has fallen to a three-year low. The blue-chip index lost 1%, or 57 points, to 5632. | Britain’s FTSE 100 index has fallen to a three-year low. The blue-chip index lost 1%, or 57 points, to 5632. |
| Mining shares led the rout, with Anglo American losing 11%, as fears of a global recession keep swirling. | Mining shares led the rout, with Anglo American losing 11%, as fears of a global recession keep swirling. |
| After a turbulent session, Wall Street has closed pretty flat tonight. The Dow finished down just 12 points, with consumer goods, healthcare and industrial stocks rallying. | After a turbulent session, Wall Street has closed pretty flat tonight. The Dow finished down just 12 points, with consumer goods, healthcare and industrial stocks rallying. |
| But as Marketwatch reports, there is a lot of angst out there: | But as Marketwatch reports, there is a lot of angst out there: |
| “The fear is palpable,” said Kent Engelke, chief economic strategist at Capitol Securities Management, pointing to the heightened volatility in the stock market. “You feel smart for three seconds and then you get humbled again.” | “The fear is palpable,” said Kent Engelke, chief economic strategist at Capitol Securities Management, pointing to the heightened volatility in the stock market. “You feel smart for three seconds and then you get humbled again.” |
| Oil has stumbled. Brent crude has lost 2% to $30.79 per barrel, while US crude dropped below $29/barrel. | Oil has stumbled. Brent crude has lost 2% to $30.79 per barrel, while US crude dropped below $29/barrel. |
| Deutsche Bank is in the eye of the storm, buffeted by fears over its financial strength. The FT is reporting tonight that Deutsche is considering buying back several billion euros of its debt, to shore up its value. | Deutsche Bank is in the eye of the storm, buffeted by fears over its financial strength. The FT is reporting tonight that Deutsche is considering buying back several billion euros of its debt, to shore up its value. |
| But it’s not clear that will stem concerns over Deutsche’s CoCo debt, which could default if the crisis worsens. | But it’s not clear that will stem concerns over Deutsche’s CoCo debt, which could default if the crisis worsens. |
| The turmoil actually began 15 hours ago, when Japan’s Nikkei index suffered its biggest one-day drop in three years. | The turmoil actually began 15 hours ago, when Japan’s Nikkei index suffered its biggest one-day drop in three years. |
| We’ll be back tomorrow to pick up all the action again. Thanks for reading, and all the comments. Goodnight! GW | We’ll be back tomorrow to pick up all the action again. Thanks for reading, and all the comments. Goodnight! GW |
| Updated | Updated |
| at 10.02pm GMT | at 10.02pm GMT |
| 9.35pm GMT | 9.35pm GMT |
| 21:35 | 21:35 |
| One late story breaking... Disney has just announced record quarterly earnings for the last three months. | One late story breaking... Disney has just announced record quarterly earnings for the last three months. |
| The entertainment company made $1.73 per share, beating forecasts of $1.45 per share. And it attributed the success to the new Star Wars film, The Force Awakens. | The entertainment company made $1.73 per share, beating forecasts of $1.45 per share. And it attributed the success to the new Star Wars film, The Force Awakens. |
| Disney says: | Disney says: |
| Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our company. | Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our company. |
| Force Awakens boosted Disney's Q1 Studio Entertainment revenue by 46%, with profit up 86% #StarWars pic.twitter.com/GhwhYXcBrb | Force Awakens boosted Disney's Q1 Studio Entertainment revenue by 46%, with profit up 86% #StarWars pic.twitter.com/GhwhYXcBrb |
| Updated | Updated |
| at 9.41pm GMT | at 9.41pm GMT |
| 9.17pm GMT | 9.17pm GMT |
| 21:17 | 21:17 |
| Wall Street finishes flat | Wall Street finishes flat |
| It’s over.... And after a lively Shrove Tuesday, the Dow Jones industrial average has closed as flat as a pancake. | It’s over.... And after a lively Shrove Tuesday, the Dow Jones industrial average has closed as flat as a pancake. |
| After falling 145 points, turning higher by 109 points, the Dow ends the day flat https://t.co/PYSu7t2FC4 pic.twitter.com/UoVgj8mfes | After falling 145 points, turning higher by 109 points, the Dow ends the day flat https://t.co/PYSu7t2FC4 pic.twitter.com/UoVgj8mfes |
| After being down 145 points, then up 100 points, the Dow finished down just 12 points. The S&P 500 was also unchanged, while the Nasdaq dropped by 0.36%. | After being down 145 points, then up 100 points, the Dow finished down just 12 points. The S&P 500 was also unchanged, while the Nasdaq dropped by 0.36%. |
| Healthcare , materials, and biotech firms did well today, but energy stocks were kicked again, as concerns over global growth continue to mount. | Healthcare , materials, and biotech firms did well today, but energy stocks were kicked again, as concerns over global growth continue to mount. |
| And New York still remained nervous, given the widespread worries about the global economy. | And New York still remained nervous, given the widespread worries about the global economy. |
| As Steven Baffico, chief executive officer at Four Wood Capital Partners in New York, put it: | As Steven Baffico, chief executive officer at Four Wood Capital Partners in New York, put it: |
| It’s difficult to find a lot of momentum to the upside for any sustained period of time. | It’s difficult to find a lot of momentum to the upside for any sustained period of time. |
| 8.11pm GMT | 8.11pm GMT |
| 20:11 | 20:11 |
| The US stock market appears to be recovering its nerve.... | The US stock market appears to be recovering its nerve.... |
| Market Alert » Dow soars to new session high, up 104 points after earlier dropping 145 https://t.co/zjsifXGfqC pic.twitter.com/KuEirmz4ne | Market Alert » Dow soars to new session high, up 104 points after earlier dropping 145 https://t.co/zjsifXGfqC pic.twitter.com/KuEirmz4ne |
| 8.05pm GMT | 8.05pm GMT |
| 20:05 | 20:05 |
| With an hour to go until the closing bell, US retail giant Home Depot is leading the Dow Jones industrial average, by gaining 1.6%. | With an hour to go until the closing bell, US retail giant Home Depot is leading the Dow Jones industrial average, by gaining 1.6%. |
| Famous names such as Nike, Visa, McDonald’s and Coca-Cola have also turned green, as Wall Street traders regain their nerve after a couple of wild sessions. | Famous names such as Nike, Visa, McDonald’s and Coca-Cola have also turned green, as Wall Street traders regain their nerve after a couple of wild sessions. |
| But other companies are still sliding. Energy group Chevron is leading the Dow fallers, shedding 3.5%, mirroring the slump in the oil price today. | But other companies are still sliding. Energy group Chevron is leading the Dow fallers, shedding 3.5%, mirroring the slump in the oil price today. |
| IT giant IBM are also down, reflecting losses across the tech sector. | IT giant IBM are also down, reflecting losses across the tech sector. |
| Here’s the risers and fallers on the Dow, which is now up 46 points or 0.3%. | Here’s the risers and fallers on the Dow, which is now up 46 points or 0.3%. |
| 7.46pm GMT | 7.46pm GMT |
| 19:46 | 19:46 |
| Remarkable scenes on Wall Street....the Dow Jones index is now up! Only by 17 points, or a meagre 0.1%, but it’s a start.... | Remarkable scenes on Wall Street....the Dow Jones index is now up! Only by 17 points, or a meagre 0.1%, but it’s a start.... |
| 7.45pm GMT | 7.45pm GMT |
| 19:45 | 19:45 |
| Here’s our City editor, Jill Treanor, on the escalating concerns about the banking sector, which hit shares across Europe again today: | Here’s our City editor, Jill Treanor, on the escalating concerns about the banking sector, which hit shares across Europe again today: |
| Growing anxiety about whether banks can withstand continued low interest rates and fears of a re-run of the 2008 financial crisis continued to stalk markets when shares fell to a three-year low and bank shares remained volatile. | Growing anxiety about whether banks can withstand continued low interest rates and fears of a re-run of the 2008 financial crisis continued to stalk markets when shares fell to a three-year low and bank shares remained volatile. |
| As shares in Deutsche Bank plumbed new depths on Tuesday and the bank’s chief executive had to reassure its 100,000 staff that it was “rock solid”, concerns mounted about the health of the global banking sector. | As shares in Deutsche Bank plumbed new depths on Tuesday and the bank’s chief executive had to reassure its 100,000 staff that it was “rock solid”, concerns mounted about the health of the global banking sector. |
| “Many are asking ‘crisis’ questions: ‘Is there risk of a financial crisis re-run’ and ‘can a large European bank face a liquidity event’?” said analysts at Goldman Sachs. | “Many are asking ‘crisis’ questions: ‘Is there risk of a financial crisis re-run’ and ‘can a large European bank face a liquidity event’?” said analysts at Goldman Sachs. |
| The Goldman analysts reckon the alarm bells are ringing too loudly. They recognise that market confidence is “fast deteriorating” but point to the €800bn (£625bn) of capital that European banks have raised since the 2008 crisis as evidence that the fears are overdone – together with the fact that customers are continuing to make deposits and there are no signs of strain in the crucial money markets. | The Goldman analysts reckon the alarm bells are ringing too loudly. They recognise that market confidence is “fast deteriorating” but point to the €800bn (£625bn) of capital that European banks have raised since the 2008 crisis as evidence that the fears are overdone – together with the fact that customers are continuing to make deposits and there are no signs of strain in the crucial money markets. |
| The collapse in confidence in the banking sector since the start of the year has been dramatic. Shares in Deutsche Bank have slumped by almost 40%, UniCredit of Italy is down more than 40% while Credit Suisse is down 37% . The Europe-wide Stoxx 600 banking index is down 27%..... | The collapse in confidence in the banking sector since the start of the year has been dramatic. Shares in Deutsche Bank have slumped by almost 40%, UniCredit of Italy is down more than 40% while Credit Suisse is down 37% . The Europe-wide Stoxx 600 banking index is down 27%..... |
| And here’s the full story: | And here’s the full story: |
| Shares dive as fears mount for health of global banking https://t.co/hDlf5FFWwE | Shares dive as fears mount for health of global banking https://t.co/hDlf5FFWwE |
| 7.19pm GMT | 7.19pm GMT |
| 19:19 | 19:19 |
| Another dose of turbulence on Wall Street is driving shares higher! | Another dose of turbulence on Wall Street is driving shares higher! |
| The Dow is now down just 11 points, having been down more than 100 points earlier. | The Dow is now down just 11 points, having been down more than 100 points earlier. |
| *S&P 500 CUTS DECLINE TO 0.1%, DOW AVERAGE LITTLE CHANGED | *S&P 500 CUTS DECLINE TO 0.1%, DOW AVERAGE LITTLE CHANGED |
| 6.53pm GMT | 6.53pm GMT |
| 18:53 | 18:53 |
| Why everyone's worrying about CoCo debt | Why everyone's worrying about CoCo debt |
| The cloud of worry hovering over Deutsche Bank has sent investors, analysts and (especially) journalists dashing to swot up on a newish financial instrument, called CoCos. | The cloud of worry hovering over Deutsche Bank has sent investors, analysts and (especially) journalists dashing to swot up on a newish financial instrument, called CoCos. |
| These contingent convertible bonds were introduced after the 2008 financial crisis, to give European banks an extra wall of protection. They’re been very popular, because they provide a better interest rate than many other bonds. BUT.... that’s because they could potentially be turned into shares, or even wiped out. | These contingent convertible bonds were introduced after the 2008 financial crisis, to give European banks an extra wall of protection. They’re been very popular, because they provide a better interest rate than many other bonds. BUT.... that’s because they could potentially be turned into shares, or even wiped out. |
| Deutsche’s CoCos have been slumping in value recently, on fears that the bank will struggle to get enough cash to meet the repayments (last night, it insisted the April 2016 payment was safe). | Deutsche’s CoCos have been slumping in value recently, on fears that the bank will struggle to get enough cash to meet the repayments (last night, it insisted the April 2016 payment was safe). |
| Want to know more? Great. Bloomberg has published a useful Q&A. | Want to know more? Great. Bloomberg has published a useful Q&A. |
| Here’s a flavour: | Here’s a flavour: |
| So how does it work? | So how does it work? |
| CoCos typically allow a bank to stop interest payments when it runs into trouble, like when its capital ratios breach levels considered dangerous (that’s the “contingent” part). If the bank’s financial health deteriorates further, CoCos can force losses on bondholders. The bonds can lose their value entirely or change into common stock (that’s the “convertible” part). | CoCos typically allow a bank to stop interest payments when it runs into trouble, like when its capital ratios breach levels considered dangerous (that’s the “contingent” part). If the bank’s financial health deteriorates further, CoCos can force losses on bondholders. The bonds can lose their value entirely or change into common stock (that’s the “convertible” part). |
| How do banks determine whether they can pay? | How do banks determine whether they can pay? |
| This is where it gets really technical. To make optional payments such as dividends, bonuses and coupons on CoCos, banks must calculate their “available distributable items,” or ADIs. Deutsche Bank, which has to make the calculation based on its audited, unconsolidated accounts under German GAAP, has thinner coverage than other major banks, prompting the current volatility. | This is where it gets really technical. To make optional payments such as dividends, bonuses and coupons on CoCos, banks must calculate their “available distributable items,” or ADIs. Deutsche Bank, which has to make the calculation based on its audited, unconsolidated accounts under German GAAP, has thinner coverage than other major banks, prompting the current volatility. |
| Why did regulators create CoCos? | Why did regulators create CoCos? |
| During the financial crisis, taxpayers had to inject billions of dollars into failing banks, while investors in those lenders’ bonds were often fully repaid. Officials wanted to create ways to avoid this in the future. | During the financial crisis, taxpayers had to inject billions of dollars into failing banks, while investors in those lenders’ bonds were often fully repaid. Officials wanted to create ways to avoid this in the future. |
| Here’s the full piece: | Here’s the full piece: |
| How the Bank Debt That Everyone Is Talking About Works: Q&A | How the Bank Debt That Everyone Is Talking About Works: Q&A |
| 6.36pm GMT | 6.36pm GMT |
| 18:36 | 18:36 |
| It’s tough being a bank right now: | It’s tough being a bank right now: |
| As bank shares slump @tomstevenson63, investment director @Fidelity_UK tells @IanKingSky low rates are squeezing lenders' margins | As bank shares slump @tomstevenson63, investment director @Fidelity_UK tells @IanKingSky low rates are squeezing lenders' margins |
| .@patrickjenkins_ asst editor @FT says European banks are in the "eye of the storm" with Deutsche especially in focus | .@patrickjenkins_ asst editor @FT says European banks are in the "eye of the storm" with Deutsche especially in focus |
| Chins up, though. It could be worse: | Chins up, though. It could be worse: |
| Is it 2008 again? No, says @patrickjenkins_ - banks are now far more robust | Is it 2008 again? No, says @patrickjenkins_ - banks are now far more robust |
| Updated | Updated |
| at 6.39pm GMT | at 6.39pm GMT |
| 6.34pm GMT | 6.34pm GMT |
| 18:34 | 18:34 |
| Here’s that sudden slide in the Brent crude oil price, back down to $30.60/barrel. | Here’s that sudden slide in the Brent crude oil price, back down to $30.60/barrel. |
| Not what #IPWeek attendees like to see: Brent #oil down nearly 7% to $30.6 a barrel. WTI down 4.5% to $28.4 -- #OPEC pic.twitter.com/rgB7CxFQu5 | Not what #IPWeek attendees like to see: Brent #oil down nearly 7% to $30.6 a barrel. WTI down 4.5% to $28.4 -- #OPEC pic.twitter.com/rgB7CxFQu5 |
| That may alarm crude producers, as they gather in London for International Petroleum Week. | That may alarm crude producers, as they gather in London for International Petroleum Week. |
| Updated | Updated |
| at 6.35pm GMT | at 6.35pm GMT |
| 6.14pm GMT | 6.14pm GMT |
| 18:14 | 18:14 |
| And the oil slide is getting worse. Brent crude is now down 6% at $30.92 a barrel on reports that US stockpiles will show an increase in the latest weekly figures, adding to fears of lack of demand and a continuing supply glut. | And the oil slide is getting worse. Brent crude is now down 6% at $30.92 a barrel on reports that US stockpiles will show an increase in the latest weekly figures, adding to fears of lack of demand and a continuing supply glut. |
| According to a Reuters survey, crude stockpiles are expected to have risen by 3.9m barrels last week. Meanwhile the Energy Information Administration said it had cut its forecasts for oil demand in 2016 by 110,000 barrels a day and by 260,000 barrels in 2017. | According to a Reuters survey, crude stockpiles are expected to have risen by 3.9m barrels last week. Meanwhile the Energy Information Administration said it had cut its forecasts for oil demand in 2016 by 110,000 barrels a day and by 260,000 barrels in 2017. |
| That seems to have pushed Wall Street even lower, with the Dow Jones Industrial Average now down 136 points or 0.8%. | That seems to have pushed Wall Street even lower, with the Dow Jones Industrial Average now down 136 points or 0.8%. |
| Updated | Updated |
| at 6.15pm GMT | at 6.15pm GMT |
| 5.32pm GMT | 5.32pm GMT |
| 17:32 | 17:32 |
| Oil prices continue to fall, with Brent crude now down 3.8% at $31.63 a barrel and West Texas Intermediate - the US benchmark - down 2.2% at $29.01. | Oil prices continue to fall, with Brent crude now down 3.8% at $31.63 a barrel and West Texas Intermediate - the US benchmark - down 2.2% at $29.01. |
| Earlier the International Energy Agency said the world will be stockpiling excess oil for most of 2016, and cut its forecast for demand this year, meaning the supply glut will continue for some while yet. | Earlier the International Energy Agency said the world will be stockpiling excess oil for most of 2016, and cut its forecast for demand this year, meaning the supply glut will continue for some while yet. |
| Updated | Updated |
| at 5.56pm GMT | at 5.56pm GMT |