Stock markets rebound after US tech selloff – business live | Business

There are some notable moves among European bank shares this morning after Bankia and Caixabank last night said they were considering a merger to create Spain’s biggest domestic lender.

The new bank would have more than €650bn (£580bn) in total assets. They are looking at an all-share merger.

Caixabank shares have gained 13% this morning, rival Banco Sabadell (the owner of the UK’s TSB Bank) is up 10%, and other banks make up a good number of the other big blue-chip movers this morning on the Euro Stoxx 600 index.

The UK’s NatWest Group (which changed its name from Royal Bank of Scotland after a host of scandals) is the biggest riser among the FTSE 100 banks, up 3.2%.

UK new car sales fell back by 5.8% year-on-year in August, after dealers enjoyed a bounce in July from pent-up demand when car showrooms fully reopened.

Just over 87,000 vehicles were registered, the Society of Motor Manufacturers and Traders (SMMT) said, but the lobby group noted that August is traditionally the quietest month of the year for new car sales.

The industry is now working through its key month, when new cars are given new numberplates, driving demand.

Registrations of battery electric cars increased by 77.6% in the month, accounting for 6.4% of all sales, but the SMMT noted that they still made up just 4.9% of registrations so far in 2020.

Mike Hawes, SMMT chief executive, said:

The decline is disappointing, following some brief optimism in July. However, given August is typically one the new car market’s quietest months, it’s important not to draw too many conclusions from these figures alone.

With the all-important plate change month just around the corner, September is likely to provide a better barometer. As the nation takes steps to return to normality, protecting consumer confidence will be critical to driving a recovery.

The FTSE 100 has now gained 0.6%, or 35 points, to reach 5,885 points – it looks like the steep early fall is firmly in the rearview mirror by now.

This morning’s dip below 5,800 points to 5,796 was the lowest level since mid-May, but trough-to-peak the market is now up by nearly 100 points.

In Germany the Dax index is back up by 0.2%, and France’s Cac 40 has now gained 0.5%.

The FTSE 100 has now barrelled into positive territory (up 0.2%), but it is being held back by the housebuilder contingent after the Competition and Markets Authority (CMA) said it was launching enforcement action over “possible breaches of consumer protection law in the residential leasehold sector”.

Barratt Developments, Persimmon, Taylor Wimpey and Countryside Properties are being targeted, after an investigation uncovered evidence that leasehold homeowners and prospective buyers were being misled and charged excessive fees. Shares in Barratt and Persimmon fell by 1.2% apiece.

The mis-selling allegations cover the developers’ explanations of ground rents, whether properties were available as freeholds (which offer owners more complete control than time-limited leaseholds), the cost of converting to freeholds, and high-pressure sales tactics.

Andrea Coscelli, chief executive at the CMA, said:

It is unacceptable for housing developers to mislead or take advantage of homebuyers. Everyone involved in selling leasehold homes should take note: if our investigation demonstrates that their has been mis-selling or unfair contract terms, these will not be tolerated.

It’s a bumpy start on the FTSE 100 this morning: after an early 0.8% fall it has recovered to 5,846 points – only down 0.04% for the day.

A notable mover this morning on the Irish stock exchange: Ryanair shares are up by 1.9% after a big fundraising.

The budget airline – Europe’s largest low-cost carrier – last night announced it was targeting a €400m (£357m) equity fundraise, and this morning said it had raised about that much after placing 35m shares at €11.35 each.

Ryanair said it was raising the funds to capitalise on “growth opportunities” created by the Covid-19 pandemic. The money would also help to preserve its debt rating and help it repay bond payments next year. Last night Ryanair said:

As we look beyond the next year, we expect that there will be significant growth opportunities for Ryanair’s low-cost model as competitors shrink, fail or are acquired by government bailed out carriers.

The placing will provide Ryanair with greater financial flexibility to capture these opportunities.

It’s a steep fall on the FTSE 100 this morning, following in the steps of Wall Street last night and Asian stock markets earlier: London’s blue chips have lost 0.8% at the opening bell.

France’s Cac 40 is down by 0.5%, Germany’s Dax is down by 1.1%, and Europe’s broader Stoxx 600 index has lost 0.3% in the opening trades.

Good morning, and welcome to our live coverage of business, economics and financial markets.

Is the US tech bubble bursting? Was it even a bubble in the first place? That is what appears to be on the minds of investors this morning, after a steep selloff among tech stocks last night on Wall Street triggered losses around the world this morning.

Australian shares led the declines, with the S&P/ASX 200 down by 3.1%. Hong Kong’s Hang Seng lost 1.5%, and the Shanghai/Shenzhen composite, the CSI 300, lost 1.1%. Japan’s Topix lost 0.9%. Futures indicate European stocks will open in the red as well.

As the Guardian’s Dominic Rushe and Graeme Wearden put it last night, the tech selloff was more a tamping down of some of the sector’s most spectacular gains from recent weeks, rather than a proper correction.

In New York, the Dow Jones Industrial Average fell 808 points, or 2.78%, after passing 29,000 for the first time since February on Wednesday. The S&P 500 was down 3.5% and the tech-heavy Nasdaq fell 4.9%.

Both the S&P 500 and the Nasdaq had set their latest record highs a day earlier, and the latter index is still up nearly 28% for the year.

The enormous size of the US tech giants – Apple alone had surpassed the market capitalisation of the entire FTSE 100 earlier this week – generates extraordinary numbers.

The next leg of a tech selloff (or, given recent experience, a dramatic rebound) could be prompted later today by US jobs numbers. As analysts at Deutsche Bank led by Jim Reid note, it is likely to take on added political significance, as the penultimate non-farm payrolls release before November’s presidential election.

It is also the first release since the enhanced unemployment benefits lapsed at the end of July, so it could be volatile.

Our US economists here at Deutsche Bank are looking for a +1.2m increase in non-farm payrolls, which should push the unemployment rate down to 9.7% (versus 10.2% at present). If realised, that would bring the total gains in nonfarm payrolls since April to +10.5m, but even then it would still mean that less than half of the -22m jobs lost in March and April had been recovered, so this is likely to be a long journey yet.

The agenda

• 8:30am BST: Eurozone construction purchasing managers’ index (PMI), August (previous: 48.9)
• 9am BST: UK new car sales, August (prev.: 11.3% year-on-year)
• 1:30pm BST: US non-farm payrolls, August (prev.: 1.8m; consensus: 1.4m)