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| Wall Street falls 1%; Europe outpaces UK and US with strongest GDP growth in a decade - live | |
| (about 1 hour later) | |
| With falling bond prices and concerns that shares may be overvalued after their recent record run, stock markets suffered a severe sell-off. | |
| Investors have become nervous amid growing signs that central banks - whose supportive monetary policies have helped markets hit new peaks - are beginning to pull the plug on cheap borrowing and hefty bond buying programmes. | |
| Add to that a slump in US healthcare shares after Amazon and co decided to enter the market, and it was a bad day all round for equities. The final scores in Europe showed: | |
| The FTSE 100 finished 83.55 points or 1.09% lower at 7587.98 | |
| Germany’s Dax dropped 0.95% to 13,197.71 | |
| France’s Cac closed 0.87% lower at 5473.78 | |
| Italy’s FTSE MIB fell 1.35% to 23,480.92 | |
| Spain’s Ibex ended down 1.21% at 10,428.2 | |
| In Greece, the Athens market lost 2.08% to 868.08 | |
| Dow off over 330 points. https://t.co/7HBgVXvoLF pic.twitter.com/4AUFO9YwnF | |
| There is little sign of a recovery on Wall Street, with falling bond prices and a drop in heathcare stocks pushing markets lower. The Dow Jones Industrial Average is now down around 288 points or just over 1%. | There is little sign of a recovery on Wall Street, with falling bond prices and a drop in heathcare stocks pushing markets lower. The Dow Jones Industrial Average is now down around 288 points or just over 1%. |
| David Madden, market analyst at CMC Markets UK, says another factor for the US market decline is concern about what the Federal Reserve will say tomorrow at the end of its two day meeting: | David Madden, market analyst at CMC Markets UK, says another factor for the US market decline is concern about what the Federal Reserve will say tomorrow at the end of its two day meeting: |
| Profit taking is rife on Wall Street as the hefty declines last night has spooked traders and now the selling has intensified. Investors have been concerned about the US stock market being overbought for some time, and now it seems the jitters are setting in. | Profit taking is rife on Wall Street as the hefty declines last night has spooked traders and now the selling has intensified. Investors have been concerned about the US stock market being overbought for some time, and now it seems the jitters are setting in. |
| The chatter is the Federal Reserve will raise growth and inflation expectations, and that is pushing up US government bond yields, which are now at a rate that is attractive to investors. The jump from stocks to bonds could continue until we hear from the US central bank tomorrow. | The chatter is the Federal Reserve will raise growth and inflation expectations, and that is pushing up US government bond yields, which are now at a rate that is attractive to investors. The jump from stocks to bonds could continue until we hear from the US central bank tomorrow. |
| The US dollar index has fallen to a three year low, and that is likely to lead to inflation as imports are tipped to become more expensive. The perception that inflation will rise is fuelling the rise in US government bond yields. | The US dollar index has fallen to a three year low, and that is likely to lead to inflation as imports are tipped to become more expensive. The perception that inflation will rise is fuelling the rise in US government bond yields. |
| Despite Goldman Sachs talking of a possible market correction, not everyone agrees. | Despite Goldman Sachs talking of a possible market correction, not everyone agrees. |
| Joshua Mahony, market analyst at IG, says Donald Trump’s State of the Union address later could give a renewed lift to flagging markets: | Joshua Mahony, market analyst at IG, says Donald Trump’s State of the Union address later could give a renewed lift to flagging markets: |
| The global stock selloff has persisted into a second day, with overnight losses in Asia giving way to widespread selling in Europe and the US. | The global stock selloff has persisted into a second day, with overnight losses in Asia giving way to widespread selling in Europe and the US. |
| Interestingly, with gold and the yen gaining ground over recent weeks, there has clearly been an underlying risk-off move waiting to rear its head. | Interestingly, with gold and the yen gaining ground over recent weeks, there has clearly been an underlying risk-off move waiting to rear its head. |
| However, with treasuries selling off throughout the beginning of 2018, there is reason to believe that market confidence will not be gone for long, as investors shift away from bonds amid improved economic and corporate performance... | However, with treasuries selling off throughout the beginning of 2018, there is reason to believe that market confidence will not be gone for long, as investors shift away from bonds amid improved economic and corporate performance... |
| The focus is going to shift firmly onto the US from here on, as markets brace themselves for Donald Trump’s State of the Union address. Despite the pause in the US equity rally, there is reason to believe that Trump could provide enough of a boost to see us back into the highs yet again. Talk of a $1.5 trillion infrastructure package may simply be words for now, but with the tax reforms passed, there is a growing belief that Donald Trump can finally deliver. | The focus is going to shift firmly onto the US from here on, as markets brace themselves for Donald Trump’s State of the Union address. Despite the pause in the US equity rally, there is reason to believe that Trump could provide enough of a boost to see us back into the highs yet again. Talk of a $1.5 trillion infrastructure package may simply be words for now, but with the tax reforms passed, there is a growing belief that Donald Trump can finally deliver. |
| Away from the markets, and Bank of England governor Mark Carney is appearing in front of the House of Lords economic affairs committee. | Away from the markets, and Bank of England governor Mark Carney is appearing in front of the House of Lords economic affairs committee. |
| He is being quizzed on forecasting (timely, given the latest Brexit forecast confusion). | He is being quizzed on forecasting (timely, given the latest Brexit forecast confusion). |
| My colleague Andrew Sparrow is monitoring Carney’s performance in the politics live blog here: | My colleague Andrew Sparrow is monitoring Carney’s performance in the politics live blog here: |
| As markets continue to wobble, Spreadex financial analyst Connor Campbell said: | As markets continue to wobble, Spreadex financial analyst Connor Campbell said: |
| The US open was not a welcome sight for the European indices, with an ugly start from the Dow Jones infecting the FTSE et al. | The US open was not a welcome sight for the European indices, with an ugly start from the Dow Jones infecting the FTSE et al. |
| The Dow Jones plunged a stomach-churning 300 points after the bell, hitting an 8 day low of just under 26150 as investors stared down the barrel of an incredibly hectic rest of the week. There’s the unknown of this evening’s State of the Union address from Donald Trump; the first Fed meeting of the year on Wednesday, with rising bond yields suggesting something hawkish; and a non-farm Friday that may become even more important than normal dependant on what the central bank say mid-week. | The Dow Jones plunged a stomach-churning 300 points after the bell, hitting an 8 day low of just under 26150 as investors stared down the barrel of an incredibly hectic rest of the week. There’s the unknown of this evening’s State of the Union address from Donald Trump; the first Fed meeting of the year on Wednesday, with rising bond yields suggesting something hawkish; and a non-farm Friday that may become even more important than normal dependant on what the central bank say mid-week. |
| Interestingly the dollar, which had been mounting something of a comeback as recent as this morning, completely gave up the ghost this Tuesday afternoon. Having at one point fallen below $1.40, cable jumped 0.4% to re-cross $1.41, while against the euro the greenback shed 0.3%, allowing the single currency back above $1.24. | Interestingly the dollar, which had been mounting something of a comeback as recent as this morning, completely gave up the ghost this Tuesday afternoon. Having at one point fallen below $1.40, cable jumped 0.4% to re-cross $1.41, while against the euro the greenback shed 0.3%, allowing the single currency back above $1.24. |
| All this spelt disaster for the European indices. The FTSE plunged 70 points, falling below 7600 for the first time in more than a month. The DAX and CAC, meanwhile, dropped 0.8% apiece, hitting 13210 and 5475 respectively. | All this spelt disaster for the European indices. The FTSE plunged 70 points, falling below 7600 for the first time in more than a month. The DAX and CAC, meanwhile, dropped 0.8% apiece, hitting 13210 and 5475 respectively. |
| Healthcare names leading the decline following reports Amazon, Berkshire Hathaway and JPMorgan are joining forces, planning to create a healthcare company with the aim of cutting healthcare costs pic.twitter.com/KidYFmByEn | Healthcare names leading the decline following reports Amazon, Berkshire Hathaway and JPMorgan are joining forces, planning to create a healthcare company with the aim of cutting healthcare costs pic.twitter.com/KidYFmByEn |
| Buffett, Bezos, and Dimon are teaming up to cut healthcare costs and the market is straight up scared:$ESRX -10%$MET -7%$CVS -6%$CI -6%$ANTM -4%$UNH -4%$HUM -4%$CAH -4%https://t.co/9uINZ02HK4 | Buffett, Bezos, and Dimon are teaming up to cut healthcare costs and the market is straight up scared:$ESRX -10%$MET -7%$CVS -6%$CI -6%$ANTM -4%$UNH -4%$HUM -4%$CAH -4%https://t.co/9uINZ02HK4 |
| The Dow Jones Industrial Average is now down 300 points, which puts it on course for its biggest one day fall since May last year. | The Dow Jones Industrial Average is now down 300 points, which puts it on course for its biggest one day fall since May last year. |
| Added to Monday’s 177 point decline, it would be the biggest two day points fall since June 2016 after Britain voted to leave the EU. | Added to Monday’s 177 point decline, it would be the biggest two day points fall since June 2016 after Britain voted to leave the EU. |
| US consumer confidence remains strong, according to a new report from the Conference Board. | US consumer confidence remains strong, according to a new report from the Conference Board. |
| Its confidence index climbed to 125.4 in January from 1 revised figure of 123.1 in the previous month. Analysts had been expecting 123.1. (The survey was taken before this week’s decline on Wall Street of course.) | Its confidence index climbed to 125.4 in January from 1 revised figure of 123.1 in the previous month. Analysts had been expecting 123.1. (The survey was taken before this week’s decline on Wall Street of course.) |
| The decline on Wall Street has meant the falls in Europe have accelerated. | The decline on Wall Street has meant the falls in Europe have accelerated. |
| The FTSE 100 is now down nearly 1%, Germany’s Dax has dropped 0.9% and France’s Cac has fallen 0.8%. Trevor Greetham, head of multi asset at Royal London Asset Management, said: | The FTSE 100 is now down nearly 1%, Germany’s Dax has dropped 0.9% and France’s Cac has fallen 0.8%. Trevor Greetham, head of multi asset at Royal London Asset Management, said: |
| Global stock markets dipped on Tuesday on concerns about rising US interest rates and high equity valuations. | Global stock markets dipped on Tuesday on concerns about rising US interest rates and high equity valuations. |
| This sell-off doesn’t come as a surprise. Investor sentiment has been getting very frothy, with our composite sentiment indicator hitting its highest reading since March 2017 this week. | This sell-off doesn’t come as a surprise. Investor sentiment has been getting very frothy, with our composite sentiment indicator hitting its highest reading since March 2017 this week. |
| The recent increase in share prices has been powered by the prospect of large corporate tax cuts in America so it’s noteworthy that US company directors have started to sell shares in their own companies in large numbers. | The recent increase in share prices has been powered by the prospect of large corporate tax cuts in America so it’s noteworthy that US company directors have started to sell shares in their own companies in large numbers. |
| With expectations running high, we think the sell-off may have further to run and we reduced our exposure to equities in our multi asset funds yesterday, although we still remain overweight stocks. | With expectations running high, we think the sell-off may have further to run and we reduced our exposure to equities in our multi asset funds yesterday, although we still remain overweight stocks. |
| With the world economy strong and interest rates low, we would probably buy a more pronounced dip. | With the world economy strong and interest rates low, we would probably buy a more pronounced dip. |