Lucy Harley-McKeown
European, FTSE 100 and US stocks drop as market selloff deepens
How major markets are performing on Monday
In this article:
The FTSE 100, European and US stocks followed the market mood music on Monday, dipping following a selloff in global stocks last week. Moves lower, including a 12.4% dip for the Nikkei, have been partially triggered by lacklustre employment numbers published in the US on Friday and falling confidence in how the Federal Reserve has managed interest rates.
The FTSE 100 (^FTSE) fell 2.4% by the closing bell. Germany's DAX (^GDAXI) was down 2.4% and the CAC (^FCHI) dropped 2% in Paris.
The pan-European STOXX 600 (^STOXX) was 2.6% in the red.
Over in the US, the S&P 500 (^GSPC) fell 2.5%, the DOW (^DJI) dipped 2.4% and the tech-heavy Nasdaq (^IXIC) declined 2.7%. Indexes recovered somewhat having lost as much as 5% of their value earlier in the session.
Wall Street's "fear gauge" — the CBOE Volatility Index (^VIX) — soared, reaching its highest level since the early days of the COVID-19 pandemic. US treasury yields plummeted, with the benchmark 10-year treasury yield (^TNX) sinking below 1.1%.
Two companies that were especially feeling the heat on Monday were Nvidia (NVDA) and Apple (AAPL). The Nasdaq's chip darling dropped 11% at the opening bell — later trading around 5.5% lower, while the iPhone maker was 3.4% lower after Berkshire Hathaway nearly halved its stake.
Employment figures published on Friday spooked US investors, pushing the three major indexes lower as market watchers speculated that the Federal Reserve has left it too late to cut its key interest rate. The Nasdaq is now in correction territory, more than 10% below its recent high in early July.
The data showed the US economy added 114,000 jobs in July, when economists had expected 175,000. The unemployment rate stands at 4.1%.
The Nikkei's dip was partly sparked by the Japanese central bank raising its key interest rate on Wednesday.
LIVE COVERAGE IS OVER14 updates
Next Bank of England cut in November?
Enrique Diaz-Alvarez, chief financial risk officer at global Ebury looks at the BoE's next moves and the pound:
"The Bank of England cut rates by 25 basis points last week, as we and most strategists expected, although the vote was a very balanced 5-4 in favour of an immediate cut.
"The move was seen as ‘hawkish cut’, however, as the MPC refused to commit further or provide any forward guidance, although it did warn that it would not cut rates too fast or too deep.
"We think that this is consistent with cuts at every other meeting, with the next one likely to follow in November.
“Sterling held up quite well amid market volatility and a generalised flight to safety, ending the week within 0.5% of where it began it against the dollar and down a bit more against the euro.
“No news of note will be released in the UK this week, but we continue to think that resilient demand, relatively high rates and the prospects for closer UK-EU relations bodes well for the pound.”