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  • FTSE 100 finishes lower
  • US stocks ahead
  • easyJet leads fallers as travel stocks retreat

5.05pm: FTSE closes at 7,022


FTSE 100 index closed 1% lower on Thursday but US stocks were positive as investors continue to fret about global economic growth and the pandemic.


Footsie closed down almost 73 points, or 1.03%, at 7,022, while the more UK-focused exchange, FTSE 250, lost nearly 49 points, or 0.21%, at 23,799.


“Over the past 24 hours we’ve seen China factory gate prices hit a 13 year high of 9.5% in August, while yesterday’s Fed Beige Book survey showed that US economic activity was decelerating, raising concerns that rising prices and slower growth, will coincide with a slowing of stimulus from global central banks. Energy prices across Europe have also been spiking adding to the uncertain mood,” noted Michael Hewson, chief market analyst at CMC Markets.


On Wall Street, the Dow Jones Industrial Average added 32 points at 35,063 and the S&P 500 was up three points at 4,517. The Nasdaq added 33 points at 15,319.


Elsewhere, there was a rate decision from the ECB, with Christine Lagarde leading a meeting that saw the committee opt to maintain rates and asset purchases.


There was a reduction though in the central bank’s EUR80 billion per month pandemic emergency purchase programme (PEPP).


“While some may be concerned that this is tapering under a different guise, it seems the markets are unconcerned given that the ongoing QE programme which will likely run for some time yet,” said Joshua Mahony, senior market analyst at IG.


4.05pm: FTSE 250 erases losses


While London’s blue chips remain the worst performing on this side of the Atlantic, European stocks are gently paring their losses, encouraged by the more bullish attitude across the Pond.


The FTSE is down 59 points or 0.8% at 7036, while the mid-caps of the FTSE 250 have almost completely erased earlier losses, now down 25 points or 0.1% at 23,823.78.


The blue chip index is not being helped by the pound being one of the best currency performers, noted market analyst Michael Hewson at CMC Markets, as the broader rebound in equity markets saw the US dollar slip back.


Supporting the pound were yesterday’s comments by Bank of England governor Andrew Bailey that at least four members of the monetary policy committee felt conditions had been met for a rate rise, although one wasn’t imminent yet.


“It certainly makes the next meeting of the central bank on 23rd September, that much more interesting,” says Hewson, adding the next meeting will also be the first meeting for new BoE chief economist Huw Pill and external MPC member Catherine Mann.


The euro initially edged higher after the ECB announced it was slowing the pace of its monthly PEPP bond buying program, over the next three months, which is currently at EUR80bn a month. There will be a wider discussion on its future in December, but it was made clear that the number could be moved in either direction if required, pulling it back lower again, and being the worst performer, against the greenback.


The ensuing press conference from ECB President Christine Lagarde didn’t really add much additional light with the ECB upgrading its inflation forecasts, and upgrading its GDP forecast for 2021, and downgrading it for 2022.


3pm: US stocks start a bit higher


The Footsie trimmed its losses around the US open but was still down 71 points to 7,023.


Having been expected to fall, US stocks surprisingly started the day in the green, just, as traders were cheered by the jobless claims data. The Dow Jones Industrial Average added around 41 at 35,072 shortly after the bell.


The S&P 500 gained around six points at 4,520. The tech titans of the Nasdaq added around 358 points at 15,324.


“US stocks pared losses after weekly jobless claims hit a fresh pandemic low and as the ECB turns optimistic enough to moderate their PEPP buying,” said market analyst Edward Moya at Oanda.


“The S&P 500 index won’t make a major move unless inflation heats up or if delta variant concerns ease further and the economy can resume reopening. The global economic recovery will be led by Europe in the third quarter and that should be very positive for European equities.”


Oil prices have been moved hither and thither after China’s state reserves administration noted a historic decision to release national crude reserves to the market for the first time, before later reports of a (new) stuck ship the Suez Canal.


Travel has been a theme of the day, with news from US airlines not very encouraging for the crude demand outlook, Moya said.


Southwest Airlines (NYSE:LUV) and American Airlines cut quarterly outlook again, citing elevated trip cancellations, while Delta was also downbeat.


“Leisure travel is easing and that will make it difficult to turn a profit this quarter,” Moya said. “The airlines did not give any reasons to be optimistic for a pickup in jet fuel demand as business travel remains depressed as companies delay or scale-down re-openings and as leisure travel declines.”


2.25pm: Disppointing jobs reports


Stock markets are mixed around the world today, with the FTSE 100 down 79 points or 1.1% at 7016, with the Asian session mixed earlier, with big falls for the Hang Seng, and Europe mixed too, with Spain’s IBEX in the red but Germany, France and Italy’s benchmarks on the front foot.


US futures are pointing towards a mixed open, with small falls seens for the Dow and S&P 500 but a moderate gain for the Nasdaq.


This week’s US initial jobless claims figures were in recently, falling to 310K from 345K, well below the consensus forecast of 335K.


“The consensus always looked too high, given the extremely favorable seasonals,” says economist Ian Shepherdson at Pantheon Macroeconomics, with 310K bottom of the range he expected.


“It’s also possible that some would-be claimants were unable to make claims because of the disruptions caused by Hurricane Ida, depressing the print still further.


“Either way, we expect a rebound in claims next week. But the underlying trend is still falling, despite the Delta wave, with employers preferring to cut back hiring rather than lay off staff, presumably because they fear it will be impossible to re-hire them later when demand improves, given the tightness of the labor market.


“Note that these data tell us nothing about September payrolls, because they have nothing to say about hiring activity. We expect another soft reading.”


Earlier, there were two UK labour market surveys, both of which pointed to difficulties for companies finding staff.


The ONS survey found 13% of businesses reported that it was tough to fill vacancies in the past month compared with normal expectations for this time of year, up from 9% a month ago.


As mentioned often in the news, transport firms cited a drop in EU applicants, which is hitting deliveries.


Elsewhere, the Recruitment and Employment Confederation (REC) and KPMG said companies are facing the most severe shortage of job candidates on record.


“Candidate shortages continue to plague businesses, who are all recruiting from the same pool of talent and struggling to fill gaps,” said Claire Warnes, head of education, skills and productivity at KPMG UK.


1.20pm: ECB ‘moderately’ tapers


London’s blue chip stocks have pared the worst of the day’s losses, down 70 points or almost 1% at 7026, despite the pound strengthening over the past couple of hours.


Sterling is up 0.55% against the dollar at 1.3842 and up 0.4% versus the euro at 1.1689 after the ECB decision, though Christine Lagarde’s press conference is coming up soon.


As expected, says market analyst Fawad Razaqzada at ThinkMarkets, the central bank kept its policy unchanged, but decided to “moderately” lower the pace of net asset purchases compared to the previous two quarters.


“This means that the difference is only going to be marginal and it something that is already priced in.


“The rest of the message from the policy statement was quite dovish, allowing the European indices to make further ground after they had already bounced off their lows prior to the release of the policy statement.”


He wondered if Lagarde will appear a little more hawkish in light of the taper and improvement in Eurozone data and pickup in inflation, “or try to convince the markets that reduced PEPP flows is nothing to worry about it and that it could be reversed”.


Economists at ING said the policy decision was “a small victory” for ECB hawks.


“It is not tapering but a very tentative sign that tapering could eventually come: the European Central Bank today decided to stop the front-loading of its asset purchases and to reduce the monthly amount without announcing any explicit unwinding of the purchases.”


12.25pm: FTSE off lows


The FTSE 100 is marginally off its lows, down 80 points at 7015, as investors begin to look across the Channel to the imminent European Cental Bank policy decision and across the Atlantic to the Wall Street open in a couple of hours.


US stocks are expected to fall again on Thursday ahead of the latest weekly US jobless claims data and a ECB council meeting outcome.


Futures for the blue-chip Dow Jones, broader S&P 500, and tech-dominated Nasdaq were all around 0.2% lower.


Investor sentiment has softened markedly this week following last week’s much weaker than expected jobs report and other signs that the pace of economic recovery weakened over the summer due to the impact of the coronavirus (COVID-19) Delta variant, as noted in the Beige Book citings earlier.


The latest US initial jobless claims numbers are due in around an hour’s time, with the Federal Reserve having said the labour market and inflation are two key factors it is monitoring to determine changes to monetary policy.


Question marks remain over when the Fed and the ECB will begin to taper their stimulus programs. The ECB will issue its latest policy statement in a few minutes’ time, with European policymakers offering their assessment of their economy and inflation.


On the US corporate front, shares GameStop are expected to open lower despite the retailer reporting a narrower loss and rising sales. Management did not take questions on the conference call overnight and failed to provide guidance for the coming quarters. The company also said it had provided the SEC with more documents as part of the regulator’s investigation into trading activity involving GME and other stocks, though management said this would not materially impact the business.


US-listed Chinese stocks are also likely to drop, including Tencent, after Beijing authorities summoned the companies and ordered them to follow new rules for the online-gaming industry.


US-traded shares of NetEase fell almost 6% pre-market, while video-platform operator Bilibili’s New York-listed shares dropped nearly 7%. Other US-traded Chinese stocks also suffered with Alibaba Group down 3%.


11.30: Nervous markets


The Footsie is still down over 80 points at 7112, while the FTSE 250 is around 120 points lower at 23,722, now down over 2% from the all-time highs notched at the start of the month.


“Pre-ECB nerves are firmly in evidence in European stock markets this morning, although it is the FTSE 100’s turn to be at the head of the declines after following in the wake of its continental brethren yesterday,” says market analyst Chris Beauchamp at IG.


“The ECB has form in fumbling the ball mid-crisis, and memories of Lagarde’s miscommunication early in her tenure haven’t altogether dimmed, so there is a clear sense that it doesn’t make sense to be too bullish going into today’s meeting.


“Should the central bank opt not to taper asset purchases, it could provide the respite risk assets are looking for, and would certainly help reverse the negative sentiment of the past few days; comments from Fed speakers such as Kaplan about continuing with a US taper despite last week’s poor NFP print have also set the cat among the pigeons, and while US futures are edging up the note of caution in early European trading is likely to carry across into the afternoon.”


10.10am: China cracks show in London


The FTSE 100’s only investment trust, Scottish Mortgage Investment Trust (LSE:SMT), is another of the big fallers this morning, as its recent tilt towards China causes further troubles for its share price as Beijing calls more big tech companies into the headmasters office for a ticking off.


Chinese media are reporting that the government has suspended approval for all new online games in the country, with regulators summoning gaming companies, industry well followed Tencent, to further find ways to restrict children from playing video games and streaming video.


Tencent shares closes down more than 6% in Asia, with Scottish Mortgage shares currently down 1.6%, while China specialist investment trusts are also beating a retreat, with Fidelity China Special Situations PLC down 1.9% and Baillie Gifford China Growth Trust PLC down 1.5%.


The Hang Seng earlier closed 2.3% lower but the Shanghai Composite finished higher despite troubled developer Evergrande falling over 9% to a six-year low.


“Another day, another intervention by the Chinese Government. I remain concerned that buying the dip in China equities is a dangerous business at the moment,” said market analyst Jeffrey Halley at Oanda.


The FTSE is down 85 points or 1.2% lower at 7010.


9.25am: Fed warning and easyJet cash call spark travel tumbles


The Footsie has dropped 1% in early trading to 7,024.66, around the index’s lowest levels in over a month.


Travel-related stocks are leading the blue chip decline sparked by a warning overnight from the Federal Reserve’s that the US economy “downshifted slightly” last month, with the new wave of coronavirus hitting the travel and leisure sector.


“The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions,” the Fed’s Beige Book round-up of domestic economic conditions said.


In the UK the travel sector worries have been further sparked by a 10% fall at easyJet (LSE:EZJ) after the budget airline announced a GBP1.2bn rights issue and revealed it had turned down an unsolicited takeover offer


“The fact that a leading and – going into the pandemic – well-capitalised airline is, some 18 months or so on from the start of the crisis, still needing to raise fresh capital is a sign of the ongoing trouble in the sector,” said market analyst Neil Wilson at Markets.com.


Demand remains the “central problem”, he adds, with easyJet’s expecting to fly just 57% of its 2019 capacity in the fourth quarter, rising only to 60% in the first quarter of 2022.


Elsewhere, Morrisons (LSE:MRW) shares are marginally positive despite interim results that some City watchers deemed “a bit disappointing” as the prospect of a takeover remains the main agenda.


On the ECB meeting later, Wilson says it is “unlikely to produce fireworks”.


“Hawks have been making noises since inflation rose to 3% but the central bank is firmly on the dovish side. It may adjust the pace of PEPP purchases but the real question for the bank is whether, once PEPP is wound down, it expands the regular APP programme. Any tweaks to PEPP would be more of an operational decision and not one that signals a change in policy.”


8.32am: FTSE loses confidence and ground


The mini-crisis of confidence continued in London with the performance of Asia’s main markets earlier adding to the gloom.


The impact of the Covid delta variant on economic growth, underlined by US Federal Reserve data, didn’t help the mood.


At the same time, equity markets are starting to brace for the staged withdrawal of asset purchases that have kept the markets buoyant.


International Consolidated Airlines Group (LSE:IAG) led the early retreat losing 3.7% of altitude as the prospects for global travel began to diminish with the continued spread of the virus.


Hoteliers Whitbread (LSE:WTB) and InterContinental (LSE:IHG) weren’t too far behind.


Rolls-Royce (LSE:RR.) and Melrose (LSE:MRO), whose prospects in the aviation sector are aligned to airlines, also figured among the fallers.


6.50 am: Collywobbles continue


The FTSE 100 is set to start Thursday lower as equity investors suffer a mini crisis of confidence.


CFD firm IG Markets sees London’s blue-chip benchmark falling more than 50 points, making the price 7,041 to 7,044 with just over an hour to go until the open.


Economic stats have been on the weaker side and Europe threatens to be the first domino to fall, to drop out of its COVID financial stimulus.


“It’s been notable that some of the bullishness of August is now giving way to speculation as to how much central banks can ease back on current levels of stimulus in an economic environment that is already starting to show signs of slowing,” said Michael Hewson, analyst at CMC Markets.


“Today’s European open looks set to be a negative one, on the back of yesterday’s weaker US close and weakness in Asia markets this morning. This leads us to today’s European Central Bank rate meeting amidst speculation that the bank will be the first of the major central banks to announce the start of tapering to its asset purchase program.”


It comes after a broadly but not dramatically weaker session in New York.


On Wall Street, the Dow Jones fell 68 points or 0.2% to 35,031 on Wednesday.


The S&P 500 similarly dropped slightly, down 0.13% to 4,514, and the Nasdaq shed 0.57% to 15,286.


New York’s small-cap focussed Russell 2,000 index was hit worst, as it fell 1.14% to 2,249.


Around the markets


The pound: US$1.3760, down 0.08%


Gold: US$1,787 per ounce, down 0.2%


Silver: US$23.88 per ounce, down 0.43%


Brent crude: US$72.65 per barrel, down 1.3%


WTI crude: US$69.32 per barrel, down 1.4%


Bitcoin: US$46,189, down 0.8%


Ethereum: US$3,505, up 2.1%


6.50am: Early Markets – Asia / Australia


Stocks in the Asia-Pacific region were mostly lower on Thursday as China Evergrande Group shares in Hong Kong plunged more than 9% on uncertainties surrounding the embattled property developer’s debt situation.


China’s Shanghai Composite fell 0.06% and Hong Kong’s Hang Seng index slumped 2.03%


In Japan, the Nikkei 225 dipped 0.72% while South Korea’s Kospi declined 1.41%.


Australia’s S&P/ASX200 fell 2.22% to 7,345 and is trading below its 20-day moving average.


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