Markets cautious after tech sell-off and ahead of central bank meetings - as it happened

Investors nervous after Facebook and Twitter declines and await interest rate news this week from UK, US and Japan

2.58pm BST

Markets remain edgy after technology shares remain unloved in the wake of disappointing updates last week from Facebook and Twitter.

Investors are also cautious ahead of a raft of central bank meetings this week, including the Bank of Japan, the US Federal Reserve and the Bank of England.

2.40pm BST

Better than expected second quarter earnings from industrial giant Caterpillar have given some support to struggling US markets.

The heavy equipment maker raised its outlook for the full year, easing fears that the continuing trade dispute between the US and China would badly damage corporate profits.

1.40pm BST

Germany's inflation rate remained steady in July, above the European Central Bank's target of 2%.

Consumer prices rose 2.1% year on year, the same as the previous month, according to the Federal Statistics Office. That was the figure harmonised with the rest of the European Union - without that it was within the 2% target and down from 2.1% the previous month.

Based on the results of seven regional states, German headline inflation recorded another marginal drop and slowed down to 2.0% year on year in July, from 2.1.% YoY in June and 2.2% YoY in May. Measured by the harmonized European consumer price index, headline inflation remained unchanged at 2.1%, suggesting that headline inflation in the entire Eurozone (to be released tomorrow) could have hit the 2%-mark for the fourth time in the last five years.

Returning to Germany, headline inflation at around 2% YoY, however, is still less the result of the ECB's ultra-loose monetary policy but rather the result of higher energy prices. In fact, where available, regional core inflation measures remained broadly unchanged and only slightly above 1%, indicating that underlying inflationary pressures in the German economy remain low. Judging from the available components, German inflation data still tells a two-sided story: while prices for consumer goods have gradually accelerated in recent months, inflation on services has slowed down and has even been negative for a couple of months for communication. Also, whether it was the World Cup effect or just the ordinary sales season is hard to tell, but prices for clothing and shoes were the biggest drag on headline inflation.

12.17pm BST

Oil prices are moving higher, helped by last week's strong growth figures from the US.

The prospects of sanctions on Iran denting supply is also supporting the market, although the continuing trade tensions between the US and China are a dampening influence.

11.36am BST

Here's the Press Association on the UK lending figures:

The number of mortgage approvals made to home-buyers jumped to a five-month high in June, Bank of England figures show.

Some 65,619 mortgages got the green light for house purchase - the highest monthly total since January.

11.07am BST

The recent volatility in tech shares could herald a tricky summer for markets, says David Cheetham, chief market analyst at online trading platform XTB:

The summer months are often seen as doldrums as far as the markets are concerned with the perception dating back several centuries and characterised succinctly with the "sell-in-May" trading adage.

However, there have been some large moves in recent years and there are growing signs that we could be set for another turbulent August as we saw in 2011 and 2015. The root causes of those plunges were the Eurozone debt crisis and fears of a Chinese slowdown, and while the latter of the two could in particular resurface in the not too distant future the early signs this time around, should another plunge occur, seem to be in US tech stocks.

10.56am BST

Speaking of the Bank of England rate-setting meeting on Thursday, Stefan Koopman, market economist at Rabobank, says:

This meeting is Mark Carney's leap of faith. He has led the markets to expect a rate rise, so he now has little choice but to follow through or risk losing credibility.

The good news is that after disappointing economic data earlier in the year, we expect to see 0.4% GDP growth this quarter. With there being evidence to show that the Q1 dip was weather-related rather than a structural, the Bank appears to have the platform to push through a hike.

10.50am BST

The pound is having an uncertain time as investors try to decide whether or not an interest rate rise is coming this week.

Against the dollar it has edged up 0.15% to $1.3122 while against the euro it is down 0.18% at a1.1226.

10.43am BST

Ahead of the latest eurozone GDP figures due on Tuesday, ING economist Bert Colijn said:

We don't expect tomorrow's GDP data for Q2 to have improved from the disappointing Q1 and it does not look like Q3 has started on a stronger footing. Economic sentiment decreased slightly in July, adding to the view that the current pace of 0.4% GDP growth QoQ is more or less the cruising speed for 2018. The PMI and ESI sent differing signals about the performance of industry and services. The PMI saw a decline in the services index, while the ESI saw improvements and while the PMI indicated stable manufacturing conditions, the ESI industry indicator dropped. Overall, the picture was less positive from a business perspective for both surveys, while the ESI indicated stable consumer confidence.

While disappointment with current economic conditions seems to be par for the course at the moment, growth concerns seem to be overstating the current situation somewhat. The outlook for domestic demand remains quite bright with continued employment recovery and some improvements in wage growth. The outlook for the external environment remains uncertain thanks to trade war concerns, although recent developments have been more positive. Even though a trade war has far from been avoided, last week's meeting between US President Trump and European Commission President Juncker at least cleared the air for the moment and could be positive for Eurozone sentiment. The Eurozone economy has shifted into a lower gear for now, but the expansion does not seem to be at risk.

10.31am BST

Business confidence across Europe remained fairly stable in July with a particularly strong performance from the UK, according to the latest figures.

The EC's economic sentiment indicator for the eurozone was down just 0.2 points at 112.1 while for the wider European Union it edged up 0.1 points to 112.3. The commission said:

Broadly unchanged euro-area sentiment resulted from decreases in industry and retail trade confidence, which were offset by an increase in the services sector. Confidence in construction remained broadly stable while it stayed unchanged among consumers.

The marginally better outcome of the headline indicator for the EU (+0.1) was mainly due to the marked improvement of sentiment in the largest non-euro area EU economy, the UK (+1.6)

Welcome news as #European Commission survey shows #UK #economic sentiment index up to 5-month high of 108.5 in July from 106.9 in June & low of 105.3 in March. #Consumer confidence up & increases for #industrial & #services sectors' sentiment. But down for #retail & #construction

9.45am BST

More on the UK borrowing figures:

UK unsecured credit continues to soar and rose at an annual rate of 8.8% in June

9.34am BST

Signs of life in the UK housing market, as mortgage approvals picked up last month.

Bank of England figures showed approvals rising from 64,684 in May to 65,619, slightly better than expected and hitting a five month high. Net mortgage lending rose by 3.851bn while consumer lending increased by 1.567bn.

9.19am BST

Some bad news from Heineken, the world's second-largest beer maker. Reuters reports:

[The company] cut its full-year margin forecasts due to currency weakness in some more profitable markets and expansion in Brazil, knocking its shares on Monday.

The brewer of Heineken lager, Tiger, Sol and Strongbow cider reported first-half earnings below market expectations and said its operating margin would decline by 20 basis points in 2018, compared with a previous forecast of a 25 basis point increase, after it fell sharply in the first six months.

9.11am BST

The latest Twitter comments from the US president have moved away from trade disputes for the moments, which may give some relief to investors, says Paul Donovan, chief economist at UBS Global Wealth Management:

US President Trump has been active on Twitter. Most of the tweets are about media and the Mueller investigation, and do not matter to markets. However, there was also a threat of shutting down the US government if US President Trump's "big, beautiful wall" is not approved by Congress. There is a 30 September budget deadline.

8.45am BST

The downbeat mood continues although it is by no means a rout. Connor Campbell, financial analyst at Spreadex, said:

The markets got off to a negative start on what is going to be a crazy busy week, with investors caught between last Friday's US tech-sell-off and the Fed and Bank of England meetings on Wednesday and Thursday respectively.

The FTSE - which is not only facing the much-awaited BoE decision, but the latest PMIs AND updates from nearly a fifth of its constituents - fell 0.4% after the bell. That dragged the index back under 7700, a level it has struggled to substantially break beyond for most of July. Once again its commodity stocks proved to be an issue, especially its miners, led lower by a 1% drop from copper.

8.25am BST

GVC, the owner of bookmakers Ladbrokes and Coral, is topping the FTSE 100 risers after confirming a $200m deal with MGM Resorts, the world's biggest casino operator.

GVC is currently up more than 5%. Our full story on the deal is here:

Related: Ladbrokes owner agrees a $200m deal with MGM Resorts

8.16am BST

As expected, European markets have begun the week on a downbeat note, following the tech sell-off on Wall Street on Friady.

The FTSE 100 has fallen 25 points or 0.33%, Germany's Dax is down 0.27%, France's Cac has lost 0.4% and Italy's FTSE MIB is 0.42% lower.

8.05am BST

On the results front, London focused estate agency Foxtons has slumped into loss as the capital's property market continues to struggle.

It lost 2.5m in the first half compared to a 3.8m profit this time last year, and said the outlook was mixed with a subdued sales market. Neil Wilson, chief market analyst at Markets.com, said:

Sales are the real problem as the exodus of buyers in the wake of the Brexit vote continues, while higher stamp duty is biting. Sales revenues fell 23% to 17.2m. Chief executive Nic Budden finds comfort in London's 'strong fundamentals as a global hub'. So he won't be pleased to see Deutsche Bank moving half of its euro clearing out of the capital to Germany.

7.47am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Stock markets are expected to open lower after a tech sell-off on Wall Street at the end of last week. Investors are beginning to wonder if the relentless rise of the FAANG companies - Facebook, Amazon, Apple, Netflix and Google (now owned by Alphabet) - could be over.

European Opening Calls:#FTSE 7658 -0.57%#DAX 12794 -0.52%#CAC 5483 -0.52%#MIB 21806 -0.68%#IBEX 9795 -0.74%

The US session at the end of last week left traders digesting 4.1% yoy economic growth in the US in addition to another round of tech stocks reporting. After Facebook's disappointing update and record breaking sell off, Twitter quickly followed suit. A beat in revenue but a drop off in user activity sent the stock plunging 12% on fears that the platform's user growth could be limited.

Earnings season had set off to a good start, however tech stock headlines have quickly dominated, transforming perceptions and raising questions over valuations of FAANG stocks. With Netflix, Facebook and now Twitter disappointing with results, investors are seriously questioning these advertising revenues based or subscription-based models. On the other hand, Amazon beat earnings expectations comfortably, whilst Alphabet shrugged off a a5 billion fine. This original FAANG trade, which petty much guaranteed impressive returns across previous years, suddenly looks a lot more complicated. Whilst prior to the year these stocks could do no wrong, suddenly that is no longer the case.

It's the turn of the Bank of Japan, US Federal Reserve and the Bank of England to guide on monetary policy, and while no surprises are expected from the FOMC, we could get some policy tweaks from the Bank of Japan after last week's interventions in the JGB market. We could also get a rate rise from the Bank of England on Thursday when they meet to run the rule over the UK economy and the latest inflation report.