Market turmoil: Wall Street volatile after FTSE 100 hits three-year low - as it happened
The London stock market hits lowest level since July 2012, after a 5% plunge in Japan overnight, while US markets are volatile
- US stock market finishes flat
- London closes at three-year low
- German finance minister has 'no concerns' about Deutsche Bank
- Deutsche Bank: We're rock solid
- Panic situation': Asian stocks tumble amid fears of new global recession
9.56pm GMT
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.
The odds of a Fed rate cut in 2016 are risinghttps://t.co/EiEGFZxrG0 pic.twitter.com/1QO27o1GXN
"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."
9.35pm GMT
One late story breaking... Disney has just announced record quarterly earnings for the last three months.
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
9.17pm GMT
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
It's difficult to find a lot of momentum to the upside for any sustained period of time.
8.11pm GMT
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
8.05pm GMT
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.
7.46pm GMT
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
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.
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.
Shares dive as fears mount for health of global banking https://t.co/hDlf5FFWwE
7.19pm GMT
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.
*S&P 500 CUTS DECLINE TO 0.1%, DOW AVERAGE LITTLE CHANGED
6.53pm GMT
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.
6.36pm GMT
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
.@patrickjenkins_ asst editor @FT says European banks are in the "eye of the storm" with Deutsche especially in focus
Is it 2008 again? No, says @patrickjenkins_ - banks are now far more robust
6.34pm GMT
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
6.14pm GMT
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.
5.32pm GMT
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.
5.25pm GMT
Global markets, as measured by the MSCI All-Country World Index, are close to a bear market, that is, 20% below their recent peak:
Global stocks are now close to a bear market https://t.co/ITExnDf2bu pic.twitter.com/HMFRSPjaAD
In the same week, #CAC40 tumbles past the 4000 points mark, #Ibex beyond 8000 and #DAX below 9000. And it's only Tuesday.
5.16pm GMT
In yet another volatile day, European markets were firmly in the red once more as investors shied away from risk. With Japanese 10 year bond yields turning negative in another sign of the growing fear of a global recession, poor German industrial figures and a widening trade gap in the UK, there was no shortage of downbeat news.
Banks were in the firing line again on worries about their exposure to struggling sectors and the implications of negative interest rates, in particular Deutsche Bank despite its attempts to calm worries about the state of its business. The Stoxx Europe 600 banking index - which includes the likes of Deutsche Bank, Barclays, and HSBC lost another 3.97% and is now down more than 27% on the year.
4.38pm GMT
Risk analyst and author of the bestseller The Black Swan, Nassim Nicholas Taleb on Deutsche Bank:
I had no concern over Deutsche B until the German Finance Minister stated we should have no concern over Deutsche B pic.twitter.com/w4YRC0fC8F
4.25pm GMT
More on the latest jobs data from the US, ahead of Federal Reserve chair Janet Yellen testifying to Congress on Wednesday. Economist Harm Bandholz at UniCredit said:
Following Friday's solid employment report, today's JOLTS report was another display of strength: Job openings rose to 5.6m, the second highest since the beginning of the series in 2001, while the number of quits - i.e. voluntary separations by employees - rose to 3.1m, the highest since late 2006. The latter suggests a growing number of more profitable job opportunities for workers as the labor market is approaching full employment. This notion is consistent with the recent pick-up in average hourly earnings at the turn of the year.
These underlying statistics, which usually get less attention that payroll gains or the unemployment rate, help to complete the assessment of the labor market situation. And chair Yellen is known to put particular emphasis on the JOLTS data. Accordingly, she should mention them tomorrow in the context of an improving labor market.
4.03pm GMT
JP Morgan has worked out what it thinks are the exposure of European and US banks to the struggling oil and gas sector - and it amounts to $250bn:
Bank exposure to oil & gas sector $250B ($170B European, $80B US). But losses likely to be minimal, says JP Morgan pic.twitter.com/1HiX8K0WUa
3.48pm GMT
The FTSE 100's fall to three year lows is an overreaction, according to the Centre for Economics and Business Research.
The research group said it had been warning about the weakness of the global economy for some time, and said in particular that the US Federal Reserve's rate rise in December was premature. But the current market falls were overdone. Scott Corfe, director and head of macroeconomics at Cebr, said:
Markets have somewhat belatedly woken up to the underlying state of economic reality. We will be in a world of sluggish growth, loose monetary policy and low commodity prices for some time.
As usual with the markets, it is either feast or famine. Our best view of the current circumstances is that, despite all the risks, we should avoid another financial crisis. In particular, Chinese policymakers have sufficient fiscal and monetary ammunition to revitalise the world's second largest economy. More quantitative easing in the Eurozone, and possibly the US, should also help.
3.29pm GMT
Here's a quick snapshot of how top banks have performed since the start of the year (spoilers: badly), courtesy of David Buik of Panmure Gordon:
3.25pm GMT
Some positive news on US jobs.
The number of job openings increased to 5.6m in December, up from 5.43m in the previous months and compared to expectations of a dip to 5.41m.
Whoa. BIG jump in quits in December. +196K. #JOLTS pic.twitter.com/xkeTD6tUt5
3.01pm GMT
Here are the moves in the Dow Jones Industrial Average:
2.41pm GMT
Wall Street is stabilising a little, but the main indices are still down.
2.34pm GMT
The New York opening bell is ringing, getting trading underway on Wall Street.
And shares are dropping.
Stocks open sharply lower amid growth concerns https://t.co/PYSu7t2FC4 pic.twitter.com/7zXr6tUXdr
2.28pm GMT
The European selloff is gathering speed, as investors brace for Wall Street to open any moment...
The FTSE 100 is now down 89 points at 5600, which by my reckoning is the lowest since July 2012
2.18pm GMT
Germany finance minister, Wolfgang Schiuble, has just weighed in, telling Bloomberg TV that he has 'no concerns' about Deutsche Bank.
German finance minister Wolfgang Schiuble said he isn't worried about Deutsche Bank, amid rising investor concern over the bank's finances.
"I have no concerns about Deutsche Bank," he told Bloomberg Television after a press conference in Paris.
German Finance Minister Schaeuble "No concerns over #DeutscheBank" > The dreaded vote of confidence.
2.11pm GMT
Make that 5%.....
1.53pm GMT
Deutsche Bank's shares have now lost another 3.5%, hitting a13.30.
That's just below the lowpoint set in early 2009, after Lehman Brothers failed, and is the lowest since at least 1992 (my data doesn't go back any further).
Deutsche Bank just dropped below its 2009 low pic.twitter.com/RCiHa89Qb7
1.43pm GMT
Wall Street is still expected to open in the red, at 9.30am New York time (2.30pm GMT).
According to IG, the Dow will shed around 150 points at the open, a drop of 0.9%.
Our US opening calls:#DOW 15886 -0.86%#SPX 1837.5 -0.84%#NDX 3923 -0.97%#VIX 26.6 +4.65%
1.30pm GMT
European stocks are now languishing at their lowest level since September 2013, as the market rout continues to ripple across trading floors.
The benchmark FTSeurofirst 100 index has lost 1.9% today, driven down by banking shares.
The banking index was set for its biggest weekly losing streak since 1998 as investors fret over the threat to banks' profitability and capital strength from compressed interest rate margins.
"The mood is clearly negative. What is needed is a strong and clear message from the ECB," said Activtrades chief market analyst Carlo Alberto De Casa.
1.01pm GMT
Shares in London are falling at a faster pace now, dragging the FTSE 100 down to its lowest intraday level since late 2012.
The blue-chip index has shed 76 points now, as jitters over the global economy rear up again.
12.49pm GMT
Wall Street is expected to suffer fresh losses when trading begins in under two hours time.
It must be understood that confidence towards the global economy remains strikingly low, while the bitter decline in oil prices has soured risk appetite consequently obstructing any solid recovery in the stock markets.
12.47pm GMT
I'm not sure Deutsche Bank should really be speculating about whether the market selloff has gone too far....
#DAX dropped below 9,000 points yesterday - worst start to a year ever: are the markets overreacting? #DrStephan
12.28pm GMT
Deutsche Bank's chief executive has issued an open letter to staff, in an attempt to calm fears over the company.
Last week, at one of our scheduled off-sites, the Management Board talked about progress on our strategy, and how recent market volatility and forecasts for slowing economic growth might impact our clients and us. Volatility in the fourth quarter impacted the earnings of most major banks, especially those in Europe, and clients may ask you about how the market-wide volatility is impacting Deutsche Bank.
You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position. On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital. This type of instrument has been the subject of recent market concern.
12.16pm GMT
Mining companies are leading the selloff in London:
Looks like the rally is over for now. The miners are getting smashed again pic.twitter.com/IHRwyLGXR6
12.15pm GMT
Heads-up, UK readers. The Economist Intelligence Unit has predicted that British interest rates will stay on hold until 2020!
The EIU argues that the UK recovery is much more vulnerable than previously thought.
We no longer expect tightening to begin in the final quarter of this year. We now expect the Bank of England to hold off on tightening for the next four years at least.
12.09pm GMT
European markets are falling deeper into the red, as lunchtime approaches.
The Stoxx 600 index, which tracks the 600 largest companies across Europe, has dropped by 0.7% to a new 16-month low.
11.48am GMT
Achilles Macris has just issued a response to the FCA's decision to fine him 792,000 today for not being open over the London Whale case.
Macris claims it's a "major climbdown" by the regulator, because the FCA has belatedly accepted that he never intentionally misled them.
The Final Notice issued to JP Morgan by the FCA in 2013 wrongly and unfairly accused me of deliberately misleading the FSA. That Notice was released to the public without the FCA ever having properly heard my side of the story. Today the FCA has finally accepted that this allegation against me was utterly wrong.
Today's result also vindicates my actions in bringing my third party reference seeking to have this allegation removed from the JP Morgan Notice. The FCA demonstrated a total disregard for my rights as an individual in its haste to issue the JP Morgan Notice and impose a large fine on the firm.
The FCA has had several opportunities to admit its mistakes, but instead, at every turn, it has until now sought to defend and justify its position, wasting public funds.
11.36am GMT
Yikes. The yield (interest rate) on Greek 10-year bonds has hit its highest level since last August.
Greek 10-year pic.twitter.com/m08KfhrfPT
11.29am GMT
Although European markets are rather calmer than yesterday, there's an awful lot of jitteriness around.
Ironically, the Asian Lunar New Year appears to have actually made things worse, rather than just remove the volatile Chinese indices from the mix.
The absence of many Asian market participants just adds to woeful liquidity conditions, while concerns about commodities, Chinese currency policy and global slowdown haven't gone away at all.
Add to that sharp widening in subordinated European bank spreads and we have the makings of a very nervous market.
11.21am GMT
Wondering whether to be fearful or cheerful today? Our video runs though the reasons to panic, or be optimistic
11.12am GMT
The banking sector likes to argue that it has mended its ways since the financial crisis struck. Critics aren't convinced.
So it's worth noting that Britain's City watchdog has just slapped a 792,900 fine on a former senior JP Morgan banker, over one of the biggest scandals of recent years.
"FCA fines former Head of JP Morgan's CIO International 792,900 for failing to be open and co-operative."
Sharing is caring.
'A failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis.
Regulators need open communication with firms so that better decisions can be made sooner. Mr Macris should have explained the position more squarely especially when he knew the Synthetic Credit Portfolio's losses had worsened.'
10.47am GMT
Here's a reminder of the most astonishing development of the day (so far) -- investors are now paying for the privilege to lend to the Japanese government for the next decade:
Historical day. Japan's 10y yield goes negative, the first time a G7 country's 10y yield has done so: pic.twitter.com/NvZk0GFsLd
10.37am GMT
Nice summary of the situation from Bloomberg:
- Europe stocks calmer
- Follows 6-day selloff
- Japan fell 5% earlier
- Oil back above $30https://t.co/llKqjOIhVI pic.twitter.com/5r8mbe7SZa
10.27am GMT
if you're just tuning in, here's our latest news story on the upheaval in the global markets:
Related: World markets in turmoil for a second day
10.20am GMT
The huge selloff in Japan overnight has hit sentiment hard in the City today.
Investors had been hoping that the Chinese New Year holiday would bring some calm; instead, traders have been staring at a 918-point tumble on the Nikkei.
Any hope investors might have had that the absence of China would enable markets to reduce volatility and rebalance some of the overly bearish sentiment has been quashed by Japan.
The situation in Greece was never resolved, merely delayed until later.
Greek 10-year sovereign debt is now yielding over 10% - a jump of 25% in little over a month, and 50% from its lows in November last year.
10.07am GMT
The gap between what Britain imports and exports has hit a record high, in a worrying signal.
During 2015, the UK imported around 10bn more physical stuff than it exported each month. And that means Britain posted a trade in goods deficit of 125bn last year, up from last year's all time high of 123.1bn.
The slower growth in UK exports to China may reflect the easing in output growth and domestic growth in China, lowering the demand for UK goods and services.
9.45am GMT
There's no prospect of the global oil glut ending anytime soon.
IEA: market awash in oil. Very hard to see how prices can rise significantly in short term. Short-term risk to the downside has increased.
9.33am GMT
Has the stock market selloff gone too far?
Looking at valuations, it appears that another Global Financial Crisis is already priced-in.
9.24am GMT
Banks are being hit by a "dangerous cocktail" of risks, warns Mike van Dulken of City firm Accendo Markets.
Those risks include:
9.14am GMT
Curious scenes in Frankfurt today, where traders have dressed up in carnival costumes for Shrove Tuesday....
8.58am GMT
European banks are coming under the cosh this morning, as investors anticipate further problems ahead.
The Stoxx 600 Banks index, which tracks financial stocks across Europe, has fallen by 1.7% already today. That follows a 5.6% fall yesterday.
8.39am GMT
Mining stocks are taking a hammering this morning, dragging the Footsie into the red again:
8.29am GMT
That positive London open didn't last long. The FTSE is now down 15 points.....
Blink and you miss it - from a positive open FTSE now in negative territory...
8.21am GMT
Shares in Deutsche Bank have risen by 2%, as investors gingerly return to the Frankfurt trading floor.
Deutsche plunged by 9% yesterday, prompting the bank to insist last night that it can meet an April repayment on its riskiest bonds.
Top tip:
BANKS: Boost your share price by reminding people that you are solvent https://t.co/RCuPKTl6uo
8.16am GMT
European stock markets are open....and staggering back from yesterday's turmoil.
8.09am GMT
Traders on the Philippine Stock Exchange had an interesting day -- a crowd of lion dancers and dragons popped in, to celebrate the Lunar New Year.
8.01am GMT
We have bad news from Germany -- industrial production at the eurozone's powerhouse economy tumbled by 1.2% in December.
That's much worse than expected; economists had pencilled in a 0.4% rise in factory output. It suggest the slowdown in emerging markets is now hitting Europe, threatening its fragile recovery since the eurozone crisis.
Crisis, here it comes. German industrial production drops by 1.2% MoM in December.
While the industry had been able to stomach the cooling of the Chinese economy, the slowdown of emerging markets, the euro crisis and geopolitical risks, it now seems as if extremely low oil prices and the slowdown of the US economy are simply two risks too much for the industry.
Watch German sentiment in the next few months -- mounting potential for feed-through from external-sector worries to household wariness.
7.53am GMT
In another alarming development, the yield (interest rate) on Japanese 10-year government bonds has turned negative for the first time.
That means investors are prepared to pay Tokyo for the privilege of lending to it for the next decade.
7.41am GMT
Japanese manufacturers were also hit hard today, as the yen strengthened against the US dollar (hurting exporters).
Car makers were singled out - with Honda falling by 6.4%, Nissan losing 6.8% and Toyota dropped 5.9%.
7.37am GMT
Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo, says there was a "panic situation" in Asian markets today.
Related: 'Panic situation': Asian stocks tumble amid fears of new global recession
7.28am GMT
Fears of a global recession have sparked a wild selloff in Japan today.
After plunging through the day, the benchmark Nikkei index has closed down 5.5% in a wave of panicky selling.
"Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating."
With China closed for New Year, global equity rout continues in Japan. Banks are clattered over credit concerns - ASX -2.73%, Nikkei -5.14%
There is huge demand for portfolio protection in all asset classes and it just doesn't feel like we are going to see a major turn anytime soon.
One can then do a sense check as to what will effectively turn this juggernaut of pain around and this is not a question that is readily answered.
no industry spared...Banks, Media stocks hurting most in Japan #Stocks trading pic.twitter.com/68MHyyEob7
7.13am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
No prizes for guessing what we'll be covering today.
Most European markets called to open down by between 0.2% and 0.4%. #FTSE100 expected to open at around 5675.
If investors were hoping for a quiet week away from concerns about China with Chinese markets closed for Chinese New Year, they got a very rude awakening yesterday as stock markets sold off hard, and there was no respite in Asia markets either despite a late rebound off the lows in the US and as such we could well see European markets open lower today.
The catalyst appeared to come from the European banking sector as screens flashed red across the board in scenes of total carnage, with equity markets selling off hard across the board over concerns about the future profitability of the whole sector, in an era where interest rates look set to go further into negative territory.
Tuesday's Guardian:
Warning of tax rises as market turmoil hits Osborne budget#tomorrowspaperstoday #bbcpapers pic.twitter.com/d1RxH2Ycly
