FTSE 100 rebounds but bitcoin slides amid Covid-19 worries – business live

The market angst is being driven by the spectre of stagflation, says Neil Wilson of Markets.com:

Simply put, growth is already decelerating and downside risks to the growth outlook are darkening due to rising cases, Delta and other emerging variants, as well as worries about potentially lower vaccine efficacy.

At the same time, inflation is shooting higher. Supply side constraints (supply chain tightness, availability of labour/parts) are a problem central bankers cannot solve.

European stock markets are all higher this morning.

The Stoxx 600 is up 0.7% following its biggest losses of the year yesterday when it fell 2.3%.

The UK’s FTSE 100 has dipped back a little, but still up around 0.7% this morning (again, after a 2.3% slide).

But worries about Covid-19 certainly haven’t lifted, as Marios Hadjikyriacos, senior investment analyst at XM, explains:

Worries that the rampaging Delta variant will hamstring the global recovery took a bite out of riskier assets on Monday. Markets seem to be coming to the realization that the vaccines won’t be enough to completely obliterate the virus, as the mutations keep getting more resilient.

Many governments are also struggling with vaccine hesitancy, which is blocking the path towards herd immunity. Meanwhile, developing nations simply don’t have enough vaccines to escape the lockdown spiral. Add everything up and it looks like the pandemic might stick around for a long time.

Today’s falls mean that bitcoin has lost almost all this year’s gains.

At around $29,700, the crypto asset is only up 2.5% since the start of 2021, and more than 50% below its record highs back in April.

Steen Jakobsen, chief investment officer at Saxo Bank, says:

Cryptocurrencies seem to show some degree of correlation with risk sentiment more broadly in global markets, as Bitcoin has dropped below 30,000 overnight for only the second time since January, but has not closed below that level since January 1.

Ethereum is likewise on the ropes and trading near the lows levels since March, the series of lows in the low 1,700s.

The prospect of a full-blown bidding war for UK supermarket Morrisons has receded.

The US private equity firm Apollo Global Management, which had been considering making an offer, is now in talks to join a consortium led by Fortress Investment Group that has agreed a £6.3bn takeover of the British supermarket group Morrisons.

Apollo, which confirmed it was considering a bid for Morrisons earlier this month, said it would no longer be making an offer for the supermarket.

Instead, bosses said they were in early discussions with the rival US private equity firm Fortress to become part of its consortium to buy the grocer.

Apollo’s decision reduces the chance of a takeover battle for Morrisons, given that it had said it was evaluating its own bid.

The offer from Fortress, along with Canada Pension Plan Investment Board and Koch Real Estate Investments, exceeded a £5.52bn unsolicited proposal from Clayton, Dubilier and Rice, which Morrisons rejected in June. Fortress is owned by SoftBank.

Apollo said the discussions:

“may result in funds managed or advised by Apollo forming part of the investment group led by Fortress for the purposes of the Fortress offer. As a consequence of these discussions, Apollo confirms that it does not intend to make an offer for Morrisons other than as part of the Fortress offer.”

Over in Shanghai, the copper price has dropped to its lowest in nearly a month, as a surge in coronavirus cases threatened the outlook for a global economic recovery.

The most-traded August copper contract on the Shanghai Futures Exchange fell as much as 2.3% to 67,400 yuan ($10,393.86) a tonne, its lowest since June 23, before edging up to close at 68,130 yuan a tonne, still down 1.2%.

A Singapore-based metals trader told Reuters:

“It’s risk-off from U.S. selling and equities melting down. Recovery is fragile as it’s now threatened by the Delta variant spreading across the world and now going mainstream in the United States.”

In the City, the blue-chip FTSE 100 index is rebounding from yesterday’s slump.

The FTSE 100 is up 1.2% at 6925, up 80 points in early trading.

Copper producer Antofagasta (+2.7%) and broadcaster ITV (+2.5%) are among the top risers, along with InterContinental Hotels (+2.5%), recovering some of Monday’s selloff.

On the FTSE 250, cinema chain Cineworld (+5%) and holiday firm TUI (+3%) are also recovering some ground.

Richard Hunter of Interactive Investors says traders may be snapping up bargains after the Footsie hit its lowest levels since April yesterday.

The opening of trade in the UK reflects something of a relief rally, with the possibility that investors are seeking buying opportunities given what may have been a slight overshoot of negative sentiment. Even so, it will be some weeks for the effects of the full easing of restrictions in the UK to become apparent.

As such, this may be a time to tread carefully until such time as the variant can be stopped in its tracks, thus allowing the full return to some kind of normality – and economic recovery – to resume.”

Bitcoin has fallen below the $30,000 mark for the first time in a month, as the crypto market is caught up in the selloff.

It’s currently down 6.5% over the last 24 hours at $29,793.

CNBC has the details:

• Bitcoin fell below $30,000 for the first time since Jun. 22 dragging other digital coins lower.
• About $98 billion was wiped off the entire cryptocurrency market in 24 hours as of 12:29 a.m. ET on Tuesday, according to CoinMarketCap data.
• Bitcoin was down more than 6% while ether fell nearly 9% and XRP tanked almost 11%, according to CoinDesk data.

“There’s been a broad sell-off in global markets, risk assets are down across the board,” Annabelle Huang, partner at cryptocurrency financial services firm Amber Group, said.

There are “concerns of the quality and strength of economic recovery” and “broader risk assets turned weaker including high yields,” Huang said. “Coupled with recent BTC (bitcoin) weakness, this just sent crypto market down further.”

More here: Nearly $100 billion wiped off crypto market as bitcoin drops below $30,000

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

Stock markets are on edge today as the surge in Covid-19 infections threatens to slow the global recovery and dash hopes of an end to restrictions soon.

Japan’s Nikkei has fallen to a six-month low today, dropping by almost 1% to its lowest since early January, as Asia-Pacific markets caught up with yesterday’s losses in the City and on Wall Street.

Hong Kong’s Hang Seng dropped 1%, while growth fears also knocked 0.5% off Australia’s S&P/ASX 200.

Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities, explains:

“Investors are increasingly concerned about a slowdown of economic recovery.

“Declines in U.S. equities hit investor appetite, which was already weak ahead of Japan’s four-day weekend and corporate earnings reports after that.”

Yesterday, £44bn was wiped off the UK’s FTSE 100, while in the US the Dow had its worst day in nine months – sliding by 726 points.

The global selloff saw investors ditch shares and pile into safe-haven US government bonds, on the prospect of weaker growth ahead thanks to the spread of the delta variant

Jim Reid of Deutsche Bank says investors fear that restrictions will be reimposed in the northern hemisphere this winter:

Unlike some previous Covid-related selloffs (or vaccine rallies indeed), there didn’t seem to be a single trigger point behind yesterday’s rout, which instead looked to be the culmination of rising fears that a return to “normality” could be quite a bit further out than many had hoped a few months back.

That’s partly because new variants mean that the vaccine rollout may not necessarily be enough to get everyday life back to its pre-Covid normal, but also a function of the fact that we’ll soon be heading back into the winter months in the northern hemisphere, in which respiratory viruses spread more easily. So investors are facing the very real prospect that limitations on daily life could be a factor affecting markets and corporates even into 2022, which is a far cry from the hopes many had at the start of this year when the vaccine rollout began.

European stock markets are rallying in early trading, though (more on this shortly) after their worst losses of 2021 so far, but it could still be an edgy day…

The agenda

• 10.45am BST: BEIS committee hearing on UK steel industry with business secretary Kwasi Kwarteng MP.
• 12.30pm BST: US building permits and housing starts