Pound hit by rising Brexit worries; tech slump drags Nasdaq into correction - as it happened

Graeme Wearden

from on 2020-09-08 16:29 (#57W1Q)

Rolling coverage of the latest economic and financial news, as no-deal fears hit sterling and tech stocks drop again

9.19pm BST

And finally (this time!), here's

Another rough day for US #stocks as the #tech selloff continues (NASDAQ is down some 10% in 3 sessions--2nd chart)
Per my @FT column of a week ago, because of the way some #investors are positioned, there's a notable risk here of the selloff feeding onto itself before it subsides pic.twitter.com/6hvAJA8ED3

Since start of Sept. 3, every Nasdaq 100 stock is lower, but $APPL $MSFT $AMZN $TSLA account for half of the near 11% loss. Still in 2020...

Apple +54%
Microsoft +29%
Amazon +70%
Tesla +295% pic.twitter.com/x7O1E2iurV

*TESLA SHARES END DOWN 21%, WORST ONE-DAY PCT DROP IN ITS HISTORYhttps://t.co/1IpiAjWf3k $TSLA $TSLAQ pic.twitter.com/HFpWpxp2ue

9.11pm BST

DING DING. Wall Street has closed for the night, with heavy losses as the tech selloff intensified.

The Nasdaq index ended the day down over 4%, which puts the tech index into an official correction -- down over 10% since its record peak just a week ago.

Dow drops another 630 points as tech stocks sell off, Nasdaq down 10% in 3 days https://t.co/0TOa2fagqQ pic.twitter.com/RrS4a7Bzc2

update: the Nasdaq in correction on a closing basis and intraday https://t.co/MRRnsuDV8T

Nasdaq in correction -10% in 3 days
Apple -14% in 3 days = $300b erased

US. stocks closed lower for a third straight session on Tuesday as heavyweight technology names extended their sell-off, while Tesla suffered its biggest daily percentage drop after the stock was passed over for inclusion in the S&P 500.

Each of the 11 major S&P sectors were lower, led by declines in technology and energy. Reports on Friday that SoftBank made significant option purchases during the run-up in U.S. stocks added to investor nervousness.

9.09pm BST

The pound continued to shed value after City traders went home today.

With the US dollar in demand by nervous investors, sterling has slipped below the $1.30 mark tonight, for the first time since early August. That's a loss of 1.8 cents today, a hefty decline.

8.06pm BST

With an hour to go, the Wall Street is sinking back to its earlier lows.

The Nasdaq Composite index is now down 3.8% or 434 points at 10,878, with Tesla down over 19%.

BREAKING:

*WALL STREET'S SELLOFF GAINS STEAM WITH THE NASDAQ PLUNGING 4% AS TECH SHARES EXTEND DROP$DIA $SPY $QQQ $IWM $VIX pic.twitter.com/zP8Ny0vtt4

7.58pm BST

Hello again. If you're looking for the latest on the stock market moves, here's our US business editor Dominic Rushe:

The US tech sell-off on Wall Street extended to a third day on Tuesday, with electric carmaker Tesla among the biggest fallers suffering its worst day in nearly six months.

The tech-heavy Nasdaq stock market dropped close to 3% in morning trading, following similar falls on Thursday and Friday. Wall Street was closed on Monday for the Labor Day holiday.

5.29pm BST

Time for a recap

Fresh fears of a no-deal Brexit have driven the pound down to its lowest level against the US dollar in almost a month.

FANG+ Constituents$AAPL 116.07 -4.03%$AMZN 3184.75 -3.31%$BABA 270.19 -3.94%$BIDU 118.57 -3.52%$FB 274.27 -3.01%$GOOG 1544.42 -2.97%$NFLX 511.08 -0.99%$NVDA 492.08 -2.55%$TSLA 350.75 -16.15%$TWTR 38.77 -2.81%

4.46pm BST

After a late pick-up, Britain's blue-chip stock index ended the day roughly where it began.

The FTSE 100 has closed 7 points lower at 5930, having been over 1% down this afternoon after Wall Street opened in the red.

The weakness that we saw in big US tech names last week, is still in play, and that is driving sentiment over here.

The FTSE 100 hasn't lost as much ground as the indices in mainland Europe thanks to the fall in the pound. Sterling is under pressure again over worries a trade agreement between the UK and the EU will not be agreed upon by mid-October, and that could pave the way for WTO trading rules come 2021. Sterling's fall has given a little help to the likes of Diageo, Imperial Brands and Ashtead as they all earn a large portion of their revenue outside of the UK, so a softer pound helps them.

4.37pm BST

The pound seems to have stabilised, for now at least, at $1.303 vs the US dollar.

That's a drop of around 1% today, down from $1.3166 last night. It's the pound's lowest level in about month

The government has admitted that its plan to reinterpret the special Brexit arrangements for Northern Ireland will break international law.

The Northern Ireland secretary, Brandon Lewis, astonished backbenchers when he told the House of Commons: Yes, this does break international law in a very specific and limited way. We're taking the powers to disapply the EU law concept of direct effect ... in a certain very tightly defined circumstance."

"Yes, this [new legislation] does break international law in a very specific and limited way," says Northern Ireland Secretary Brandon Lewis

On Wednesday, the government will publish new legislation on customs rules in Northern Irelandhttps://t.co/bvsv5puvij pic.twitter.com/O2j5w3fcdI

4.07pm BST

Today's drop in technology stocks follows intriguing reports that Japanese technology investor SoftBank has been making huge bets on US technology firms using options contracts.

The Financial Times said it was unmasking SoftBank as the Nasdaq Whale" last Friday, reporting that it had bought billions of dollars' worth of US equity derivatives.

3.47pm BST

Global oil prices have slumped below $40 a barrel for the first time in over ten weeks as the spread of the coronavirus raises fresh concerns over the world's oil demand forecasts.

The price of Brent crude has tumbled by more than 10% from five months highs of $46.50 a barrel at the end of August to $39.83/barrel on Tuesday afternoon, after five consecutive days of trading losses. It's now down 5.4% today alone.

Brent crude oil falls below $40 a barrel for the first time since June https://t.co/xjW40eruVi pic.twitter.com/h5fPMCqoTM

3.44pm BST

Every sector of the US stock market has dropped this morning.

Energy stocks are the worst performer, tracking the slump in oil. That's followed by financial stocks, miners, technology and consumer goods makers.

Tech Selloff - Day 3$MSFT $AAPL $GOOGL $FB $AMZN pic.twitter.com/fEqj1Qh9Rq

3.24pm BST

Electric truck maker Nikola is bucking today's selloff, with its shares surging 40% after it teamed up with General Motors.

The two firms have formed a strategic partnership, under which GM takes an 11% stake in Nikola, valued at $2bn.

"As we started to talk, we realized we shared a common vision of the world of creating an all-electric future," says $GM CEO Mary Barra on how the partnership with @nikolamotor to manufacture the Badger truck $NKLA pic.twitter.com/YhqbYoXuay

3.15pm BST

Tesla is on track for its worst day since March, during the global market slump, points out Investing.com.

*TESLA PLUNGES AS MUCH AS 19% IN WORST ONE-DAY LOSS SINCE MARCHhttps://t.co/KKPBsCqAI9 $TSLA $TSLAQ pic.twitter.com/694WYtfdF8

3.10pm BST

Tesla's share price has been on an extraordinary ride this year.

As you can see, it started the year with steady gains, only to slide in February as the Covid-19 pandemic send global markets tumbling.

3.02pm BST

CORRECTION: The Nasdaq is at its lowest level in three weeks, not months as I daftly wrote a few minutes ago.

Sorry for that typo (now fixed below, if you refresh).

2.52pm BST

Tesla's stock has slumped by 18% at the start of trading, adding to last week's slump.

Investors are unhappy that the self-driving electric carmaker has not been added to the S&P 500 (with Etsy, seller of homemade items and craft supplies favoured instead).

Also ..

@Tesla shares are down sharply in pre-market, the first day of trading after missing out on inclusion in the S&P 500 Index. Etsy, Teradyne and Catalent were all added.

2.43pm BST

America's Big Tech companies are caught up in the selloff.

Apple has dropped by 4.8% to $115 per share, some way below the $125 at which the stock split a week ago.

2.37pm BST

As feared, the US stock market has opened sharply lower.

The three main indices are all in the red in early trading, with tech stocks leading the selloff (extending the losses last week)

BREAKING: Nasdaq slides more than 3% at the open; big tech stocks plunge https://t.co/jupxROt5Za pic.twitter.com/rz2sg2aMT8

2.12pm BST

Missed this earlier, sorry. Europe's statistics body has revised its growth forecasts for the last quarter up a little.

It now says GDP across the eurozone shrank by 11.8%, up from the initial estimate of 12.1%. That's still the worst quarter on record.

Euro area #GDP -11.8% in Q2 2020, -14.7% compared with Q2 2019 https://t.co/YnyOr4qprv pic.twitter.com/XZtnAgSM2x

2.04pm BST

Foreign exchange trading firm BP Prime fears the pound could hit parity against the euro for the first time, if Britain doesn't agree a trade deal with the EU.

After Boris Johnson's words on Brexit Deal, the pound could fall further against the euro and the dollar over the next days. In case of hard Brexit, the parity against the euro is now a very likely scenario.@graemewearden

1.41pm BST

In another sign of market jitters, Wall Street's VIX volatility index (or fear index') has jumped this morning.

VIX had fallen steadily through July and August, before popping last Thursday when the technology sector tumbled.

The VIX volatility index" creeping back up to as Wall Street and Tech set for another weak opening pic.twitter.com/7rtVOX5B3i

1.34pm BST

US Opening Calls:#DOW 27903 -1.52%#SPX 3373 -1.84%#NASDAQ 11158 -2.88%#RUSSELL 1522 -1.66%#FANG 5023 -4.90%#IGOpeningCall

1.33pm BST

All Europe's stock markets are in the red today, hit by worries about Covid-19, Brexit, and the US election.

Sterling's weakness means London stocks are less affected.

As well as selling of US technology shares, oil prices, the pound and cryptos have also come under pressure. This morning saw European indices gave back some of the gains made yesterday in the absence of US markets. US index futures have declined ahead of the open following the long break, with tech stocks seen tumbling at the open. The risk-off tone has helped to push the dollar higher across the board, which has even weighed on gold.

The cagey sentiment is a reflection of rising new Covid-19 infection rates across Europe, renewed concerns over Brexit, valuation concerns and waning impact of past stimulus measures. Then there are many other concerns that include, for example, US-China tensions which notched up a gear after Donald Trump said he is going to end" US reliance on China, as well as political uncertainty ahead of the US presidential election.

1.19pm BST

A handy Tesla chart....

Tesla shares down at $363 in pre market, from Friday close of $418 - are we heading back towards trend line support from the March lows? $TSLA pic.twitter.com/utIPvCI1CA

1.18pm BST

Back in the markets, Wall Street is expected to open in the red after being closed for Labor Day on Monday.

Technology stocks are facing further losses, on top of last Thursday's rout.

The recovery late Friday may have been short-lived, with the sector coming under heavy pressure across Europe and the big US names that have propelled US indices back into record territory coming in for a difficult session.

Of course, put in perspective, most of these stocks haven't even hit one month lows yet so there's arguably plenty of room below.

1.07pm BST

Over in the House of Commons, Northern Ireland secretary Brandon Lewis has told MPs that the government is committed to implementing the Northern Ireland protocol.

But, Lewis also said the government is committed to allowing unfettered access for trade from Northern Ireland to Britain, and that it intends to legislate how the protocol will operate [through the upcoming internal market bill].

12.34pm BST

After a choppy morning, the pound has now hit its lowest level in nearly four weeks against the US dollar.

It's firmly lower against the euro too, with the resignation of the UK's top legal civil servant adding to market jitters about Brexit.

12.15pm BST

The sofa and home furnishings retailer ScS has reported strong sales, as Brits are sprucing up their homes in the wake of the Covid-19 pandemic.

12.08pm BST

Shares in UK companies who have suffered badly from the pandemic are among the fallers on the London stock market this morning, as traders fret about a recent pick-up in Covid-19 cases.

Jet engine maker Rolls-Royce, whose sales and servicing revenue has been hit by flight groundings, are down 4.2%.

11.33am BST

Sterling is suffering from a battering of negative press reports about the Brexit talks, writes Neil Wilson of Markets.com -- and we can probably expect more in the coming days.

He explains:

Entirely as we thought might happen this week, the pound has found itself at the mercy of negative reporting around Brexit. GBPUSD dropped sharply to hit its lowest since August 25th, extending losses after a weak open to test support under 1.3060 amid reports that the head of the UK government's legal department has quit over Boris Johnson's plans to rewrite the withdrawal agreement.

Whilst we should caution that this indicates disharmony, it is also possibly an overreaction by the market to a negative headline, and does not necessarily make a deal with the EU less likely than it was before.

11.20am BST

Saxo's John Hardy also sent this chart over, showing how the pound is currently still trading above its 200 day moving average' against the US dollar despite this week's losses.

It's the flattish light-blue line, at around $1.275, or four cents above today's price.

11.02am BST

Sterling is slowly waking up to the risk of another cycle of no deal" fears, says John Hardy of Saxo Bank, as it falls for the fifth day in a row.

He suspects that some investors are too complacent about the crunch negotiations because they suspect the two sides will compromise in the end.

Boris Johnson has taken a hyper-aggressive turn in drawing up possible plans to renege on the very terms that made the Brexit deal possible in the first place, and vowing that October 15 is a negotiation deadline.

But don't take my word for it - Bloomberg's normally very balanced John Authers calls Boris Johnson's moves crazy" and downright stupid".

10.50am BST

Update, the pound's now below $1.31 for the first time in a fortnight, having shed a whole cent today as it drops to $1.306.

The selloff picked up pace, after the Financial Times reported that the head of the UK's government legal department has quit, over suggestions that Boris Johnson is trying to row back on parts of last year's Brexit deal relating to Northern Ireland.

Two Whitehall officials with knowledge of the situation told the Financial Times that the Treasury solicitor and permanent secretary of the Government Legal Department was leaving his position due to a dispute with Downing Street over its plans to challenge parts of the Brexit withdrawal agreement.

Those close to Sir Jonathan Jones said he was very unhappy" about the decision to overwrite parts of the Northern Ireland protocol, part of the 2019 withdrawal agreement, with new powers in the UK internal market bill.

SCOOP from Team FT: Jonathan Jones, head of the Government Legal Department, is quitting after a major spat over suggestions Boris Johnson will challenge the Brexit Withdrawal Agreement.

He's the 6th senior Whitehall figure to resign this year. https://t.co/Ad8qOOrNG1

10.15am BST

Brexit jitters have just pushed the pound down to $1.31 for the first time since 25th August.

It's down half a cent against the US dollar today (and four cents in the last week), as penultimate round of Brexit negotiations start in London.

#GBPUSD testing 1.3100 zone, any break below this level the next downside to watch at 1.3080 and 1.3040. On the upper side, the immediate resistance at 1.3160/80. #forex #GBP #Brexit #fx #Boris #brexittalk #EURUSD #Dollar #trading #GBPJPY #eurgbp #GBPCAD #Pound pic.twitter.com/efZwAMy2qU

Fears over a no-deal Brexit are weighing hard on the pound this week, dragging Sterling lower against many major rivals.

Widely regarded as a Brexit bellwether, the pound will be hit by significant volatility fuelled by politics.

9.53am BST

The mixer maker Fever-Tree has also managed to ride out the Covid-19 storm pretty well.

9.49am BST

The car parts and bike chain Halfords has benefited from staycations and the bike boom since the Covid-19 crisis.

9.46am BST

JD Sports shares rose 7% this morning, even though the sports retailer warned that the boost in sales after shops reopened following the Covid-19 lockdown was short lived" and that attracting customers into major shopping malls remained a big challenge.

9.43am BST

In the City, the blue-chip FTSE 100 has dipped into the red this morning, despite the boost from the weaker pound.

Housebuilders are dragging the index down, with Persimmon shedding 4% and Barratt down 3.8%.

9.08am BST

Brexit worries are continuing to weigh on the pound this morning, as crunch UK-EU negotiations begin in London.

Sterling has dropped another 0.2% against the US dollar to $1.314, its lowest in two weeks. It's now fallen for five days in a row, amid growing fears of a no-deal Brexit.

8.30am BST

Meanwhile in the UK, budget airline easyJet is fuming, loudly, over the government's handling of the pandemic.

We know our customers are as frustrated as we are with the unpredictable travel and quarantine restrictions.

We called on the Government to opt for a targeted, regionalised and more predictable and structured system of quarantine many weeks ago so customers could make travel plans with confidence.

8.16am BST

The jump in German exports in July will sustain hopes of a V-shaped recovery, argues economist Carsten Brzeski of ING.

He writes that Germany's export sector is flourishing again' - despite weaker demand from major trading partners such as France and the UK.

Next to hotels, restaurants and culture, which are still suffering from the effects of social distancing, the export sector is probably the most exposed to the crisis, suffering from the domestic lockdown measures as much as from lockdowns across the world and supply chain disruptions. Moreover, the export sector is also subject to structural changes in the global economy, be it more protectionism, a transition away from traditional manufacturing toward services, high tech or electric vehicles.

The different degrees of lockdowns as well as the uneven recovery across eurozone countries are also reflected in German export data, with the share of exports to France, Italy, Spain and the UK having dropped significantly in the second quarter. Just as an illustration: Germany exported more to the Netherlands than to France, and more to China than to the US.

8.03am BST

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

The degree to which year-on-year exports were affected depended on the trading partner. Exports to the People's Republic of China decreased by just 0.1% to 8.7bn in July 2020 compared with July 2019. Exports to the United States, which have been hit particularly hard by the coronavirus pandemic, dropped by 17.0% to 9.3bn. Compared with the same month last year, exports to the United Kingdom showed a decrease of 12.6% to 5.5bn in July 2020.

In July 2020, most imports came to Germany from the People's Republic of China. Goods to the value of 10.3bn were imported from there, which was a 7.4% increase compared with July 2019. Imports from the United States fell by 14.8% to 5.2bn in July 2020. German imports from the United Kingdom were down 24.8% to 2.4bn.

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