Wall Street, FTSE 100 and European market fall amid inflation worries – as it happened

Graeme Wearden

from on 2021-05-11 20:36 (#5HPGD)

Rolling coverage of the latest economic and financial news

Latest: Dow closes 1.3% lower, biggest fall since February
Europe's Stoxx 600 fell 2% - biggest drop since December
UK's FTSE 100 fell almost 2.5% today, worst since February
Wall Street joins selloff
China factory gate prices jumps
Japan's Nikkei fell 3% today - worst day since February

9.33pm BST

And finally... after a rather volatile day's trading dominated by inflation worries, the US stock market has closed lower, despite a rebound in the tech sector.

The Dow Jones industrial average dropped by 473 points to end at 34,269 points, a drop of around 1.3% today.

Concerns about rising inflation intensifies, giving Dow its worst day since February https://t.co/igDeFqS80I via @WSJ pic.twitter.com/OX5pPR1tlc

U.S. stocks finished out a wild Tuesday session lower but investors bought into the drop, helping to pare the worst of the day's steep drop. Still, the Dow Jones Industrial Average booked its worst day since Feb. 26. https://t.co/GW9szpGCp2 pic.twitter.com/uSPTrO1WGV

It was one of the wildest days of the year for the U.S. stock market with technology shares as the battleground.
The Dow was down 1.36%.
The S&P 500 fell 0.87%.
The Nasdaq was down 0.09%. https://t.co/SZB0JDPdfk pic.twitter.com/rUYrGu3k5S

It was one of the wildest days of the year for the U.S. stock market with technology shares as the battleground. Big Tech took a big hit to start the day on concerns about rising inflation and high valuations. The selling eventually spread to the rest of the market as the day went on.

But in an odd twist, tech shares rebounded in the afternoon as investors went back into names like Amazon and Netflix and left the rest of the market in the red.

8.46pm BST

Here's our full story on the stock market selloff in Europe, and beyond, today:

8.45pm BST

Reuters have more details of James Bullard's comments on inflation:

Signs of rising inflation, far from being feared by the U.S. Federal Reserve, are instead an encouraging sign that the Fed's new approach to monetary policy is working, St. Louis Federal Reserve President James Bullard said on Tuesday.

We are going to see more inflation in 2021, maybe 2.5 to 3%. ... I expect some of that to hang on in 2022, maybe 2.5%," Bullard told CNBC at a time when markets show growing concerns about an inflation outbreak.

8.41pm BST

Another Federal Reserve policymaker, James Bullard of the St. Louis Fed, is on the wires - and pushing back against calls to change monetary policy yet.

Bullard also suggested that it's a little early to be seeing big growth in employment, speaking to CNBC....

Fed's Bullard:

- Before talk of tapering or other regulatory changes, we need to be solidly out of the pandemic

- Some people's motivation to return to work is influenced by benefits

Fed's Bullard:

- Some inflation, not all, is transitory

- I think inflation would be 2.5% to 3% in 2021, and 2.5% in 2022

- I think we are going to see higher inflation through 2021

7.37pm BST

Federal Reserve policymakers have been discussing the state of the US economy today.

San Francisco Federal Reserve Bank President Mary Daly has said she hopes he U.S. economy will be in a much stronger position next year, once transitory bottlenecks have been worked through.

My modal outlook is quite positive; I'm bullish about where the economy will be at the end of this year,"

I'm very hopeful that by next year we are going to feel like we are really starting to move ourselves out of the deep hole that COVID has caused."

Fed's Daly:

- Bottlenecks are transition dynamics of a normal economy
- Access to childcare, schools hindering worker return
- Job stability vs predictability hurting worker return
- Hopeful economy will climb out of virus hole by next year

We'll keep the federal funds rate very low and continue making more than $100 billion in monthly Treasury bond and mortgage-backed securities purchases.

While the economic situation is improving, recovery is still a work in progress, and there's no reason to withdraw support yet.

We can credit increased vaccinations, falling COVID-19 case rates, and a huge dose of fiscal stimulus for the reviving national economy.

We're digging out of a very deep hole - and we have a long way to go - but for now, I'm anticipating national GDP growth to come in around 7 percent for 2021, before moderating to 3 percent growth next year.

Speaking today at @CFAPHL, Philadelphia Fed President Patrick Harker credited increased vaccinations, falling #COVID19 cases, and fiscal stimulus for the reviving #economy, forecasting 7% national #GDP growth for 2021. Full speech: https://t.co/gZrgHC8pKk pic.twitter.com/MN0c4n6Y85

Fed's Harker:

- For the time being, Fed strategy would remain unchanged

- Increased inflation carries upside risks and the Fed will keep a close eye on it

- Fed's Harker (2023 voter) upgrades his 2021 GDP growth view to 7% from 5/6%, but sees 3% growth in 2022

- Says Fed policy is going to hold steady for now

Interesting he is getting more optimistic on the recovery. Could be laying the runway to 2023 hikes.

7.04pm BST

Back on Wall Street, technology stocks are reviving, helping the Nasdaq to recover from its earlier 2% slide.

It's now pretty much flat for the day.

Nasdaq trying to push higher here (it is essentially flat as of 1:38pm) but the Dow is still down 1.3% and the S&P is down nearly a percent.

Nasdaq goes green as tech stocks recover; Dow still down more than 440 points https://t.co/oN7KZvWlrT pic.twitter.com/7UaJPNziyU

6.50pm BST

Perhaps the most startling story of the day is that a senior manager at Goldman Sachs in London has quit the US investment bank after making millions from investing in Dogecoin.

My colleague Richard Partington has the details:

City sources said Aziz McMahon, a managing director and head of emerging market sales, had resigned from the bank after making money from investing in the digital currency based on the Doge internet meme...

Little is known about how much money McMahon made exactly from betting on Dogecoin, after his departure was first reported by the website efinancialcareers. The banker, who has worked for Goldman Sachs for 14 years, did not respond to requests for comment. However, sources said they believed it was a substantial sum and that he had since left Goldman Sachs.

6.35pm BST

AstraZeneca suffered a substantial shareholder rebellion today, over proposals to hand its its chief executive Pascal Soriot, bigger bonus awards for the second consecutive year.

Nearly 40%voted against the policy, which could hand him pay and perks of nearly 18m for 2021.

6.19pm BST

The number of job openings in the US has risen to a record high.

It suggests that a shortage of workers could be hampering job growth, amid increased demand for new staff as the economy reopens.

The Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday also showed layoffs dropping to record lows in March. The report could put pressure on the White House to review the government-funded unemployment benefits program, including a $300 weekly supplement, which pays more than most minimum-wage jobs.

The benefits were extended until early September as part of President Joe Biden's $1.9 trillion COVID-19 pandemic relief package approved in March. Alabama, Montana and South Carolina are ending government-funded pandemic unemployment benefits for residents next month.

Job openings rose to 8.1 million in March 2021, the highest on record and an 8% jump from Feb. The increase puts job openings 16% over pre-crisis levels and points to surging labor demand as the economy reopens.#JOLTS: https://t.co/QaBslh7EtP pic.twitter.com/NSxNPDQUDL

The number of unemployed per job opening has fallen dramatically since the crisis began, due to the rebound in job openings.

Excluding the temporarily laid off, the ratio of unemployed per job opening dropped to 0.95 in March, the first time below 1 since March 2020.#JOLTS 2/ pic.twitter.com/P5ZPvSnjfg

By industry, job openings are up vs pre-crisis levels in almost every industry, except information (includes media & tech) and finance.

Job openings are up notably in manufacturing, accommodation & food services, and retail#JOLTS 3/ pic.twitter.com/UEH13UEvl4

The jump in quits in accommodation & food services could be a reflection of the tightening labor market in food services. Workers may choose to jump to the restaurant down the street if they're offering bonuses/higher wages.#JOLTS 5/

NB: Rising quits, especially in accommodation & food services are less consistent with the hypothesis that UI is driving shortages, because workers who quit are ineligible for UI.

Doesn't rule out a UI effect, but the quits at least are less consistent with that.#JOLTS 6/

Monthly layoffs & discharges by industry also fell in March and remain well below pre-crisis levels as employers hold onto workers.#Manufacturing is an exception where supply shortages may be causing employers to furlough workers.#JOLTS 7/ pic.twitter.com/d3Ccm04xLD

The sharper decline in layoffs & discharges in March is also somewhat consistent with the recent drop in initial UI claims (excluding Ohio due to fraudulent claims).

Caveat: these two datasets are fairly different so relationship may not hold.#JOLTS 8/ pic.twitter.com/WWoXv0YJ2h

Overall, the March #JOLTS report shows a reopening economy driving a sharp surge in labor demand with job openings rising to a record high.

We can still see the pandemic in the data though with elevated quits and lower labor force participation reducing the # of ...

9/

unemployed per job opening.

A critical question in the recovery remains how we can safely & quickly pull workers back into the labor force.

10/10

6.00pm BST

Today's 6.7% drop in Renishaw's shares came after Bloomberg reported that the engineering firm was struggling to attract takeover interest, due to a hefty price tag and list of ownership demands".

Bloomberg says:

Rival engineering companies Hexagon AB, Schneider Electric SE and Siemens AG all decided against pursuing Renishaw, the people said, asking not to be identified discussing confidential information.

While several competitors viewed Renishaw and its technology as attractive, they were turned away by a high valuation that makes a deal prohibitively dilutive to earnings, the people said.

British engineering firm Renishaw is struggling to attract takeover interest because of a hefty price tag and list of ownership demands, sources say https://t.co/xA0iEqdNbl

5.46pm BST

All the major European stock indices fell today.

Germany's DAX and France's CAC both lost more than 1.8%, with the FTSE 100 down almost 2.5%.

Investors do appear to be freaking out a little bit over the recent sharp rise in commodity prices that we've seen in the past few weeks, and which has seen US 5-year inflation expectations push sharply higher. We've also seen similar moves in EU 5-year inflation expectations but we are only back at levels last seen at the end of 2018.

While this is a concern it also needs to be set in the context of where prices were 12 months ago, which saw oil prices hit some of their lowest levels in years and which saw prices collapse spectacularly as a result of the various lockdowns. There was always going to be a rebound in prices, and we are seeing that now, with the only concern now being over whether it will pass once these base effects wash out.

5.28pm BST

Europe's stock markets have posted their worst selloff of the year, as inflation worries hit shares across the region.

The Europe-wide Stoxx 600 index fell almost 2% by the close -- that's its worst session this year, since a tumble late last December.

Worst day of the year for the Stoxx 600 pic.twitter.com/1CqkLRzHOd

European technology shares fell 2% to their lowest in six weeks, while mining firms handed back some of the strong gains notched up in the previous session.

Travel and leisure stocks slumped 5.7% overall. Sweden's Evolution Gaming Group tumbled 13.8% after the bookrunner announced the pricing of block trades.

4.47pm BST

After a day of heavy selling, the FTSE 100 index of blue-chip shares has suffered its biggest one-day fall since February.

The FTSE 100 has closed 175.69 points lower at 6947.99, a fall of 2.47% today, with nearly every share sliding.

4.17pm BST

Richard Hunter, head of markets at interactive investor, points out that it's hardly surprising that inflation is rising, when compared to the economic turmoil of a year ago:

The FTSE100 has come under renewed pressure following a shaky start on the other side of the pond.

The spectre of inflation is the most central cause for concern at the moment, which in turn could lead to interest rate rises earlier than investors had been anticipating. Potential blockages in the supply chain and the release of pent-up consumer demand could both place further pressure on prices.

4.09pm BST

The London stock market continues to be pummeled.

With less than half an hour to go, the FTSE 100 index is down around 197 points, or 2.8%, at 6926 points, with every stock still down.

4.03pm BST

Today's global selloff should be a reality check for investors" says Nigel Green, chief executive and founder of deVere Group.

Green explains that the process of readjusting after the pandemic is bound to create supply shortages, and inflationary pressures, as families and firms emerge from the lockdown.

It is to be expected that there would be a jump in prices and supply shortages, in goods like chips and some commodities, as economies re-open and pent-up demand is unleashed by households, businesses and entire industries.

We're at a point of major readjustment following an unprecedented economic shock and this is fuelling concerns that rising inflation will trigger central banks to tighten monetary policy which will hit asset prices.

Savvy investors will be drawn to the massive growth that tech offers and this sell-off will used as a buying opportunity. Nobody seriously believes the future isn't online."

3.53pm BST

The selloff in New York is gathering pace.

The Dow Jones Industrial Average is currently down 602 points, or 1.7%, at 34,140 points.

Dow extends drop to more than 600 points or 1.7%https://t.co/oN7KZvWlrT pic.twitter.com/LO4BX8voEX

In short, it is worries over inflation which many believe would accelerate in the months ahead owing to the big gains for commodity prices this year and low interest rate, as well as pent up demand with many countries easing lockdown restrictions.

To control inflation, the Fed and other central banks may have to raise borrowing costs, which should mean higher bond yields and that in turn reduces the appeal of low-yielding expensive stocks - plenty of those on Wall Street, in particular the technology sector.

The Dow is down nearly 600 points, which would represent its steepest slide since Feb. 25 when it fell 1.8%.

Investors are betting that inflation is likely to climb steeply in coming months, driven by pent-up spending as well as supply bottlenecks.https://t.co/bZpDqp4Pca pic.twitter.com/2ck1XgaMPK

3.42pm BST

Even lumber prices are down, IG flags:

LUMBER LIMIT DOWN pic.twitter.com/03015qoWwl

3.27pm BST

Here's a handy chart showing that many tech stocks have fallen at least 10% from their highest levels of the 12 months (which will be record highs, in many cases)

More than half the NASDAQ 100 is 10% or more from its 52-wk high@CNBC pic.twitter.com/8ZHVQOni8T

3.15pm BST

Tesla's shares dropped over 4% at the open, but are now rebounding a little - down 2% at $616.

Tesla trades below $600 https://t.co/APLUiXPRyN pic.twitter.com/ZIHaPprQjx

China's Passenger Car Association said Tuesday that Tesla sold 25,845 locally made vehicles in April, a 27% drop from March.

Reuters reported separately that the Model 3 maker decided against acquiring more land next to its Shanghai plant, as U.S.-China trade tensions undercut plans to turn the site into an export hub.

Oof. Dogecoin tumbling over 30% today after rallying above $0.70 on Saturday ahead of Elon Musk's SNL appearance. Who could have predicted that? $DOGE pic.twitter.com/u8JAY4QFLr

2.55pm BST

The New York stock market has fallen around 1% in early trading, as inflationary worries continue to ripple.

All three main indices are in the red. Technology stocks are adding to yesterday's losses, and other stocks are down too.

U.S. stock benchmarks opened solidly lower Tuesday, with inflation worries seen keeping pressure on previously highflying tech stocks. https://t.co/TISywB1iN1 pic.twitter.com/8Ezsiz7Efj

2.43pm BST

Investing magnate Stanley Druckenmiller has hit out at the Federal Reserve, saying its stimulus programme is inappropriate, and endangering the dollar's status as a global reserve currency.

In an interview with CNBC, Druckenmiller criticised the Fed for pressing on with its $120bn/month bond-buying programme, even though markets are thriving and the economy is recovering.

I can't find any period in history where monetary and fiscal policy were this out of step with the economic circumstances, not one."

If they want to do all this and risk our reserve currency status, risk an asset bubble blowing up, so be it. But I think we ought to at least have a conversation about it."

If we're going to monetize our debt and we're going to enable more and more of this spending, that's why I'm worried now for the first time that within 15 years we lose reserve currency status and of course all the unbelievable benefits that have accrued with it.

I think I've made those numbers because of the Fed, not in spite of them....

A monkey could make money in this market.

Stanley Druckenmiller says the Fed is endangering the dollar's global reserve status https://t.co/cahohzMcWW

2.20pm BST

Volatility, as measured by the VIX index, has risen sharply in recent days:

The #VIX Index is up 35% in the last couple of days and back above 20! pic.twitter.com/XzkSSxpcQR

At 19.66, yesterday's $VIX close was the highest since 3/29. Futures indicate an open around 22 today. At this level the $VIX is implying intraday moves in the $SPX of about 48 points per day in either (or both) directions; 2 days ago this was 37 points. https://t.co/wyfH3UcCAS

2.13pm BST

Rising inflation expectations are bad news for technology stocks, because their high valuations are based on the prospect of higher profits in the future.

If interest rates go up, then those future earnings are less valuable today (under the Discounted Cash Flow model used by analysts).

A 2% fall in the UK stock market follows a 1% slide in the US last night - when it comes to stocks and shares, if the US sneezes the world catches a cold. But it should be no surprise that today's inflation driven market sell-off started across the pond.

All things being equal higher inflation implies higher interest rates, and higher interest rates are particularly toxic for companies that promise little in the way of profits today, but rapid growth in the years to come. That's a pretty accurate description of many tech stocks, and the US market is increasingly dominated by US tech names.

However, despite the market jitters investors shouldn't be abandoning the tech sector just yet. This time last year the oil price had just plummeted into negative territory for the first time ever, and that alone means costs are going to be higher now than they were a year ago, in turn driving goods prices higher.

A temporary boost in inflation was inevitable. What matters is whether inflationary pressure is sustained - there's no convincing evidence that's the case yet."

1.52pm BST

It's going to be a nervy Wall Street open....

*NASDAQ FUTURES PLUNGE 2% AS TECH SHARES EXTEND SELLOFF$QQQ pic.twitter.com/UMxdxqyMng

1.50pm BST

Every stock in the FTSE 100 is down, highlighting the spread of the selloff today.

Engineering firm Renishaw (-7.2%), tech-focused investor Scottish Mortgage Investment Trust (-6.6%) and airline group IAG (-6.1%) are the top fallers.

Europe's STOXX600 set for worst day since end October 2020, down 2.4%

1.40pm BST

The stock market selloff is accelerating in Europe, as traders brace for Wall Street to open in an hour's time.

The FTSE 100 is now down 188 points, or 2.65%, at 6935 points, as inflation worries continue to hit shares across Europe.

Nasdaq futures drop nearly 2% as tech sell-off continues, Tesla shares fallhttps://t.co/m33MzQU567

WOW $TSLA down almost 8% https://t.co/wKneOQH5wm pic.twitter.com/INE7zrUHA8

Investors are betting that inflation is likely to climb steeply in coming months, driven by pent-up spending as well as supply bottlenecks and a leap in commodity prices. A sharp and sustained jump in inflation would erode returns on fixed-income assets and stocks whose valuations rely on future earnings. Some money managers are concerned that it may also prompt the Federal Reserve to pare back its easy money policies sooner than anticipated.

Inflation is an issue that is on everyone's minds right now, and it is injecting a lot of uncertainty," said Peter Langas, chief portfolio strategist at Bessemer Trust. The question is, how does the Fed react to that?"

S&P 500 futures pointed to steepening losses after the opening bell, with technology stocks on track to be among the worst performers https://t.co/iXoGgTc4xi

1.17pm BST

Takeover news: Farrow & Ball, the upmarket UK seller of wackily-named paints, is being bought by the Danish coatings manufacturer Hempel.

The deal comes after a year in which protracted lockdowns and a shift to working from home have made some consumers more willing to spend on high-end interior design.

Anthony Davey, chief executive of Farrow & Ball, said revenues had risen more than 30 per cent in the year to March 2021. The home turned into a new frontier," he said.

New: Farrow & Ball, maker of eccentrically-named posh paints like broccoli brown" and dead salmon", is being sold to Danish company Hempel in a 500m deal that will likely lead to an international sales push. Story on @FT https://t.co/opPBdd9XCn

12.46pm BST

The pandemic has forced many retailers to find new ways of using their stores...and also made many couples delay their nuptials.

For engaged couples, a trip to Selfridges might be on the cards to buy the ring, dress or suit but now they can tie the knot there too after the landmark London department store obtained a wedding licence.

The restrictions and lockdowns of the past year have halted or postponed the plans of more than 150,000 couples who are all scrambling to make alternative arrangements, with many venues facing a logjam of bookings for several years.

12.38pm BST

UK savers deposited record sums at Post Office branches in April, taking the total to more than 1bn for the second month in a row.

The Post Office said it was the first time that personal deposits have topped 1bn for two successive months. A total of 1.07bn was paid in over its counters, following cash deposits of 1.12bn in March. Last September was the only other month when personal cash deposits exceeded 1bn.

12.20pm BST

The US five-year breakeven rate, which measures market inflation expectations, has also risen, to its highest level in around 15 years.

That indicates that investors are anticipating rising price pressures, which would put more pressure on central banks slow their stimulus package.

Inflation is creating a lot of fear among investors because of the possibility that the central banks are not ready to deal with it," said Aneeka Gupta, research director at WisdomTree, who added that she expected a lasting rise in prices as opposed to a transitory" increase.

The US five-year break-even rate, an important measure of market expectations for price growth, hit 2.733 per cent on Tuesday, which would be the highest level on a closing basis since 2006, Bloomberg data show.

(US inflation expectations) 5y breakeven rate rises to the highest level since 2006, chart @BloombergTV https://t.co/YOyJSve2UM pic.twitter.com/X8sGue0eDL

The US10Y Breakeven rate hit its highest level since 2013 overnight, stoking fresh talk of inflation risk in the market.

(The sell-off in tech is being attributed to higher inflation expectations - though with real yields little changed, perhaps this is a bit spurious?)#ausbiz pic.twitter.com/KQhsQI19dy

The @federalreserve might not taper, but bond vigilantes are watching.
- UST Treasuries fell amid the issuance of $18bn @amazon long-dated bonds
- The 5-year Breakeven rate rose to 2.8%, the highest level recorded since 2005
Everything points troubles ahead.@SaxoStrats pic.twitter.com/X253aaBx3Y

11.45am BST

Wall Street's so-called Fear Index', the CBOE volatity index (or VIX) has risen to its highest level since March 25th.

$VIX HITS HIGHEST SINCE MARCH 25, LAST UP 2.09 POINTS AT 21.75

Brace ... Brace ... https://t.co/VL7rovCfrl

11.24am BST

European stock markets are on track for their worst day of 2021, as the tech selloff and inflation worries hit shares.

The Stoxx 600 index is currently down 2% in late-morning trading, following the slide in technology shares in New York last night and the selloff in Asia-Pacific markets today.

Global equities have suffered an ugly shift in sentiment after US stocks declined sharply yesterday, led by the tech-heavy Nasdaq 100 index, which suffered one of its worst sessions this year and closed at is lowest in over a month.

The weak sentiment spilled over into Asia, with the Nikkei declining sharply towards major support.

Some days investors appear relaxed about inflation risks and the possibility of central banks having to lift rates and withdraw stimulus. Today is not one of those days as, after last night's big sell-off on Nasdaq, the FTSE 100 finds itself undoing much of its recent progress and trading below 7,000.

Surging commodity prices are acting as a canary in the coal mine for inflation - with the huge infrastructure and stimulus packages in the US a key contributing factor.

11.03am BST

The markets love an acronym - so hat-tip to Reuters for flagging that BATs and FANGs are both giving the markets a fright.

With talk of tighter regulation from Beijing, Chinese tech heavyweights Baidu, Alibaba and Tencent, collectively dubbed the BATs, all dropped more than 3%. Food delivery major Meituan tumbled as much as 9.8% too, leaving its value $30 billion lower in a week.

The underlying driver is that there is still a rotation out of duration (higher interest rate) sensitive parts of the market and this is why tech stocks are coming under pressure now,.

Given the rise in the earnings power of these firms different governments will also seek to raise more tax revenue from them in the coming years."

10.42am BST

Over in Germany, investor confidence has surged on hopes of an economic recovery from the Covid-19 pandemic.

ZEW, the Munich-based research institute, says its economic expectations index has jumped sharply this month, up to 84.4 from 70.7 in April.

ZEW EU sentiment highest since early 2000. pic.twitter.com/rELDI4Hysb

The braking of the third wave of Covid-19 has made financial market experts even more optimistic. In the May survey, ZEW economic expectations reach their highest level in more than 20 years.

The assessment of the economic situation is also improving noticeably. The experts expect a significant economic upturn in the next six months. The economic outlook for the euro area and for the United States is also improving considerably.

#GERMANY MAY ZEW CURRENT CONDITIONS INDEX RISES TO -40.1 (highest since Feb. 2020); EST. -41.6 - BBG
*GERMANY MAY ZEW INVESTOR EXPECTATIONS RISE TO 84.4 (highest since Feb. 2000); EST. 72.0 pic.twitter.com/XuqgQw1V0o

10.05am BST

US tech stocks could be heading for further falls today, with Nasdaq futures currently down over 1% in pre-market.

Risk off continues after Wall Street dropped last night. #Nasdaq futures are over 1.2% lower with European indices testing fresh session lows ^FR #stocks

The falls overnight on equity markets, notably technology, are likely to be just as much due to extended shorter-term valuations and nervous investors than to inflation prospects. Goldman Sachs may also be partially responsible, publishing a report on technology stocks highlighting that regulatory risks are the biggest threat to the big-tech story.

New for subscribers: Goldman says these are the biggest threats to the dominant 5 tech stocks. Check out @CNBCPro today. https://t.co/9pwt4ePUUT

9.22am BST

The selloff isn't abating. Instead, it's getting a bit worse.

After more than an hour's trading, the FTSE 100 index is down over 2.2% - shedding 160 points to trade around 6964.

NatWest fell over 3% to 190p after the government offloaded a 5% stake at this price. IAG fell close to 5% as investors showed more displeasure at the government's green list.

Scottish Mortgage dropped over 4% on its exposure to the US and other tech stocks.

If you are looking for inflation signals, China's factory gate prices are a pretty good leading indicator. So today's report showing that producer price inflation rose 6.8% from a year earlier in April, the fastest pace in more than three years, could be of concern. Tomorrow's US CPI numbers are going to be closely watched. On Friday we saw the market show that an easier-for-longer Fed ought to help risk assets. But whatever the Fed tries and sticks to in terms of its employment mandate, the bond market will move if inflation takes off.

The wage component of the jobs report was underappreciated. A lack of employees will drive up wages and end prices. Wage-push inflation is more dangerous' than cost-push. My worry is we have a perfect storm of wage-push, cost-push and demand-pull pressures that won't be as transitory as the Fed thinks (ignoring the fact that inflation is here already, has been for years in asset prices, just not in the narrow gauges used by central banks).

#FTSE 6967 -2.20%#DAX 15100.02 -1.95%#CAC 6268.33 -1.84%#AEX 695.61 -2.29%#MIB 24499.51 -1.22%#IBEX 9020.1 -1.36%#OMX 2210.115 -2.42%#STOXX 3948.09 -1.87%

9.09am BST

Supermarket chain Morrisons has seen a jump in fuel sales and takeaway food, as the easing of lockdown restrictions helped people return to more normal times.

My colleague Julia Kollewe explains:

Fuel sales at the supermarket group jumped 17.5% in the 14 weeks to 9 May, its first quarter, contributing to a 5.3% rise in total sales. Like-for-like sales were up 2.7% excluding fuel, and 4.7% higher including fuel.

The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape," said David Potts, the Morrisons chief executive.

That sense of optimism is percolating through the country and it will lead to people wanting to celebrate events.

We'll be doing everything we can to be part of that.

9.06am BST

UK FTSE 100 Index extends the decline to 2%.#UK #ftse100 #StockMarket pic.twitter.com/wyQEqU6Zfp

8.57am BST

Today's selloff comes after European stock markets, and America's Dow Jones Industrial Average, both hit record highs this month.

Naeem Aslam, analyst at Think Markets, say:

The big sell-off in the stock market, which traders have been waiting for some time, is here.

Yesterday, traders started to punish the Big Tech on Wall Street, and as a result of this, we saw the Nasdaq index coming off its highs. The sell-off was across all sectors, and we did see the S&P 500 and the Dow Jones indices moving away from their all-time highs.

When we look at the US stock market or the European market stock market, there is no doubt that they went too far and too fast, and a healthy retracement was long due. The keyword here is a healthy retracement, and this is what traders need to pay attention to the most. This is because if we look at the overall economic indicators over in Europe and in the US, there is no doubt that they are not only well off from their pandemic lows, but they are also indicating that a strong recovery is in place. In addition to this, we also have the massive coronavirus vaccine programme taking place in the US and in Europe, and the success of this programme has boosted morale among investors who know that things are on the right track.

Furthermore, we still have massive support from fiscal and monetary policies on both sides of the Atlantic.

8.55am BST

There are 600 European companies in the Stoxx 600 share index...and currently 585 of them are down, with just 13 risers defying the selloff and two stocks resolutely flat.

The deal, announced on Monday, values THG Ingenuity, which Moulding described as a social media influencer platform" used to promote products, at about the same amount that the whole company floated at last year.

Under the terms of the $1.6bn deal SB Management, a division of SoftBank, has bought an option to buy a 19.9% stake in THG Ingenuity that values the division at $6.3bn. SBM will also take a $730m stake in The Hut Group by taking part in a share placement.

8.42am BST

European markets also opened sharply lower, with the pan-European Stoxx 600 index dropping by 1.6%.

Both Germany's DAX and France's CAC shed 1.7% in a wide-spread selloff.

European tech shares tumbled 2.2% to their lowest level since late March, while miners handed back some of their strong gains in the previous session.

Travel and leisure stocks slumped 3.7% as Sweden's Evolution Gaming Group tumbled 9.6% after the bookrunner announced the pricing of block trades.

8.21am BST

The FTSE 100 is a classic sea of red', with every constituent dropping in early trading.

8.19am BST

The London stock market has opened sharply lower, following losses in Asia-Pacific markets overnight.

The blue-chip FTSE 100 has tumbled by 132 points, or 1.85%, down to 6991 points.

8.03am BST

China's factory gate inflation rose at its fastest rate in nearly four years last month, as manufacturers were hit by rising commodity prices.

China's producer price index (PPI), which measures the cost of goods sold by manufacturers, jumped by 6.8% year-on-year in April.

In April, domestic industrial production recovered steadily, the prices of international commodities such as iron ore... rose, and prices in the production sector continued to rise."

China Apr PPI inflation rose to +6.8%yoy, stronger than exp.
But CPI inflation was a bit less than expected at +0.9%yoy, with the rise from +0.4%yoy in Mar due to base effects as prices actually fell in April. Core CPI inflation rose to +0.7%yoy from +0.3%.
(Goldman Sachs chart) pic.twitter.com/OUItBmOV17

7.41am BST

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

Stocks are sliding today as rising inflation worries, and a fall in tech stocks, send investors running for cover.

Some equity markets in the Asia Pacific are a mess today pic.twitter.com/35b7UBld14

NKY closes sharply lower#NIKKEI 28608.59 -3.08% pic.twitter.com/F6kp9dJoFX

NASDAQ 100 DROPS 2.6% FOR WORST DAY SINCE MARCH https://t.co/cyCPX6gJz2 pic.twitter.com/0X5lKrcNEC

This underperformance in the Nasdaq once again started to act as a drag on wider market sentiment as another disappointing close served to undermine confidence more broadly, and pull all US indices lower, though not before the Dow posted yet another record high.

Once again it has been concern about inflation that appears to be weighing on broader market sentiment, with commodity prices once again the major culprit, ahead of US CPI [consumer price inflation] numbers that are due out later this week.

Chinese internet stocks traded in Hong Kong are down over 30% from the peak. pic.twitter.com/A4vYBewbA5

The move in commodities has been there for all to see, and reports that China is hoovering up everything in the bulks space has resonated, with copper also on a charge - this has led to ever-higher inflation expectations, and despite a fall in real Treasury yields, talk of inflation is deafening.

Indications of labour shortages have the inflationist talking up the prospect of rising wage pressures, and another feedback loop to higher inflation.

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