Some investors and economists were taken aback on Thursday evening after tech stocks sold off heavily following a deep selloff that did not seem to have any particular trigger.

Those jitters appeared to have returned in early trading on Friday, despite relatively positive US jobs figures that showed that the recovery from the pandemic was continuing, albeit slower.

US stocks were on the down at the time of writing, with tech stocks down further than the rest of the market.

(That is Apple, Amazon, the US listings of Chinese tech companies Alibaba and Baidu, Facebook, Google owner Alphabet, Netflix, chipmaker Nvidia, Tesla and Twitter.)

Hinesh Patel, portfolio manager at Quilter Investors, said:

The employment numbers coming from the US may paint a picture of an economy in recovery but dig down and you see the fundamental situation remains an unhealthy one. The government was the major contributor to the addition of jobs, so this is something to watch out for going forward as it simply isn’t sustainable for the economy if private businesses are not hiring.

What the numbers do highlight, however, is that the easy gains have now been had and the hard work starts now. Participation rates and temporary leavers are down to a level where we can infer that the bulk of re-hiring has been done.

Here are some of the other important developments from today:

• Bank of England official Michael Saunders said the UK economy would probably need further stimulus to promote economic growth and inflation.
• New car sales in the UK fell back in August after a jump in July, although electric sales continued to rise.
• Virgin Atlantic said it will make another 1,150 redundancies after completing its recapitalisation plan in the courts.
• The competition watchdog is investigating four of the UK’s biggest housebuilders after uncovering evidence that buyers of leasehold properties were misled and charged excessive fees.

You can continue to follow our live coverage from around the world:

In the UK, No 10 fails to defend the prime minister’s presence at a Tory meeting where social distancing rules were ignored

In the US, Donald Trump disparaged captured or killed military officers many times, reports suggest

And in our global coverage, the World Health Organisation says there will be no widespread vaccination until mid-2021, and Silvio Berlusconi is hospitalised in Milan

Thank you for reading our live coverage of business, economics and financial markets, and please do join the inimitable Graeme Wearden next week for more. JJ

There is some volatility on global stock markets as Wall Street opens: the Nasdaq is now down by another 2%, having previously swung between positive and negative territory.

The S&P 500 is down by 0.6%.

The selling on US markets has spread to the UK, where the FTSE 100 is now up by only 0.3%. Germany’s Dax is down by 0.5%.

And just after posting that, the Nasdaq has turned positive for the day: it’s now up 0.5%.

The tech rout appears to be well and truly over.

It is, as predicted, a mixed bag on Wall Street to end the week, the day after a rout punctured the US tech bubble.

Here are the snaps from the opening trades:

• S&P 500 UP 4.87 POINTS, OR 0.14 PERCENT, AT 3,459.93
• NASDAQ DOWN 48.57 POINTS, OR 0.42 PERCENT, AT 11,409.53
  
• DOW JONES UP 171.37 POINTS, OR 0.61 PERCENT, AT 28,464.10

After an initial bout of volatility, it looks like markets have welcomed the US jobs figures: the FTSE 100 is now up 0.8% for today at 5,898 points.

The S&P 500 is set for a 0.2% gain when Wall Street opens in a few minutes, although the tech-focused Nasdaq is expected to continue yesterday’s selloff, with futures pointing to a 1% fall.

The US dollar has now gained 0.4%, and it’s up by 0.6% against the pound, which may also have been hit by tough talk on Brexit.

And we have reaction, as expected, from someone who is decidedly not an economist: the US president is claiming the improvement in the economy as a victory.

Remember, this is an important report for US election watchers, as there is now only September’s report before the poll.

A note on Donald Trump’s comment: it was indeed a “deeper” fall in unemployment than any of the economists surveyed by Thomson Reuters had anticipated. However, it was not “faster than thought possible”, as the average expectation was for unemployment of 9.8% this month.

Robert Alster, chief investment officer at Close Brothers Asset Management, said:

August’s figures are not quite reaching the historic highs of May and June, nor the better than expected increase in July. But an improvement is still an improvement. The US economy is demonstrating signs of recovery with a boom in house sales, record highs in the stock market, and industrial production on the up.

But while many businesses have re-opened and consumers are a little more willing to part with their cash, sectors such as travel and hospitality are still struggling to get back on their feet and look likely to struggle for years to come.

Some more detailed responses are coming through from economists on the US jobs numbers. One question: does hiring 230,000 workers for the census show there is a strong recovery underway?

Andrew Hunter, senior US economist at Capital Economics, said:

The 1,371,000 gain in non-farm payrolls in August was flattered by the hiring of 238,000 temporary field workers for the 2020 census . [...] Census hiring could rise further in September but, as in previous census years, those workers will be let go again over the following months.

Still, said Hunter, there is room for optimism:

The bigger story was the sharp drop in the unemployment rate to 8.4%, from 10.2%, which now appears to be falling more quickly than we had previously assumed.

Employment growth is still set to lag the recovery in broader economic activity over the coming months given its greater exposure to the services sectors worst affected by the pandemic. Nevertheless, the August data illustrate that, despite the earlier surge in virus cases and more recent fading of fiscal support, the recovery continues to plough on.

Canada usually releases its numbers at the same time as the US, just to keep North American economists on their toes. It’s a similar story north of the border, with unemployment falling but still at elevated levels.

The rate of unemployment hit 10.2%, down from 10.9% in July and slightly worse than the 10.1% expected by economists.

The pace of recovery in the US jobs market slowed again in August as the coronavirus’s impact on the economy appeared to be broadening.

Employers added 1.4m new jobs and the unemployment rate dropped to 8.4% last month, dropping below 10% for the first time since the pandemic took hold, the labor department announced on Friday.

The number of new jobs was markedly lower than in recent months. US employers added 1.8m jobs in July, 4.8m in June and 2.5m jobs in May. August’s figure was also boosted by the temporary hiring of 238,000 people to conduct the 2020 Census.

You can read the full report here, including much more on the political implications as the US approaches the presidential election:

The US dollar initially jumped when the jobs numbers came out - perhaps because of that eye-catching unemployment figure - but it has now fallen back.

The trade-weighted dollar basket is down by 0.05% at 92.787.

It’s a similar story with S&P futures, which pared some declines initially but then moved back down.

Some mixed reactions to the jobs report - reflecting the fact that it can be seen in different ways: an unemployment beat or a slowing recovery.

Another line I missed in the Virgin Atlantic release (apologies): confirmation that the airline is cutting another 1,150 jobs.

Virgin Atlantic said:

Today it is announcing further downsizing across the business, with a planned reduction of 1,150 jobs across all functions. Working closely with unions Unite and BALPA, a company-wide consultation period of 45 days begins today.

To mitigate as many cabin crew redundancies as possible, additionally, the airline is introducing a voluntary, Company-led and financed furlough scheme for an additional 600 crew when HM Government’s Coronavirus Job Retention Scheme ends at the end of October. Should HM Government extend its Scheme, the airline intends to continue to benefit from it.

And ouch, the FTSE 100 has dipped back into the red just ahead of the payrolls data.

London’s blue-chip stocks have been whipsawed today: they fell sharply on the opening bell, before recovering strongly. Now the index is edging around flat.

S&P 500 futures are now looking like a flat opening is coming up on Wall Street, but the prospects for the market are likely to be dominated by the US jobs figures, due out in just under half an hour.

The crucial non-farm payrolls data is expected to show that the US economy added 1.4m jobs in August.

That would be a historically huge move, but in these strange times it would be the weakest reading in four months after job creation surged back from the astonishing 20.1m lost in April.

Economists have had to adjust the scales on their graphing tools to cope with the pandemic’s extraordinary effect on the labour market.

Unemployment is pegged at 9.8% on average by economists - again this is an historically dreadful level, but particularly so in the penultimate jobs report before the US presidential election.

It looks like Virgin Atlantic is not the only one in the aviation industry calling for testing for travellers: Manchester Airports Group has also urged goevrnment to step up.

Charlie Cornish, the chief executive of Manchester Airports Group which owns Manchester, London Stansted and East Midlands airports, said the UK had “stood still” while other countries had introduced a mass testing regime for travellers, writes the Guardian’s Josh Halliday.

He said: “Ongoing uncertainty and confusion surrounding the restrictions British people will face when they travel abroad is like a millstone around the neck of one of our most important industries and is placing hundreds of thousands of jobs at risk.”

You can read the full report here:

Virgin Atlantic has officially completed its £1.2bn recapitalisation after receiving approval from UK and US courts.

The airline founded by the billionaire Sir Richard Branson had asked for a government bailout to help it through the coronavirus pandemic, but instead Branson and other investors were forced to stump up cash after the Treasury turned it down.

The company said:

Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel. However, the devastating impact of Covid-19 on global aviation continues unabated and the airline must take further steps to ensure survival.

Branson’s Virgin Group will put in £200m and the company will defer about £400m of shareholder payments such as brand fees and joint venture costs.

The airline also called for the UK and US to institute passenger testing for Covid-19 to allow it to operate flights across the Atlantic, its main route.

As the airline increases passenger operations, the opening of US borders and removal of quarantine is imperative to recovery. These travel restrictions impact on Virgin Atlantic disproportionally given its long-haul operations focussed on the transatlantic. The airline is calling for both UK and US governments to introduce robust passenger testing regimes to lift travel restrictions whilst protecting public health.

It’s not just the European markets that have bounced: US stock market futures suggest the selloff may have dissipated by the time Wall Street opens this afternoon.

Futures for the S&P 500 suggest the benchmark index will gain 0.3%, and Dow Jones industrial average futures also point to a 0.5% gain. However, the tech-focused Nasdaq, which was the centre of the selloff yesterday, is pegged at a 0.3% decline.

Peter Garnry, head of equity strategy at online trading platform Saxo Bank, said the Nasdaq selling was driven in part by market makers’ hedging activities, which exacerbated price drops.

Based on estimates of these dynamics we believe the technical drivers for the sell-off have exhausted themselves and that the market will stabilise here potentially bouncing back into the weekend. Longer term we still remain positive on equities as the rebound narrative is intact supported yesterday by better than expected initial jobless and continuing claims.

Here’s a sign of what Saunders was talking about: a widespread vaccine for Covid-19 is not expected until at least the middle of 2021.

Until effective vaccines are widely available it is likely that populations will have to endure a hokey-cokey of moves in and out of pandemic lockdown restrictions. That has obvious implications for the spending patterns that move financial markets (notionally, at least).

Reuters reported:

The World Health Organization does not expect widespread vaccinations against Covid-19 until the middle of next year, a spokeswoman said on Friday, stressing the importance of rigorous checks on their effectiveness and safety.

None of the candidate vaccines in advanced clinical trials so far has demonstrated a “clear signal” of efficacy at the level of at least 50% sought by the WHO, spokeswoman Margaret Harris said.

On Brexit, the Bank’s forecasts may be too optimistic, Saunders said.

That would certainly tally with the report today from columnist James Forsyth in the Times that Downing Street internally is saying there is “only a 30 to 40 per cent chance that there will be an agreement” between the UK and EU on future trade.

Without an agreement billions of pounds of exports would be hit by tariffs and new red tape overnight on 31 December, as trade defaults to World Trade Organization terms.

Saunders said:

Considerable uncertainties remain about the nature of the UK’s future trade relations with the EU, the timing with which they will take effect, and whether the adjustment will be smooth or disruptive. The DMP survey suggests that roughly half of firms expect that the UK will have a no-deal exit from the current trading arrangements at yearend or next year.

Relative to the MPR forecast, risks probably lie on the side of a thinner trade deal, a less-smooth transition, or more persistent Brexit-related uncertainty. More generally, global trade policy uncertainty remains high.

Brace yourself for a long haul, Saunders warned.

He said:

It is possible that, both in the UK and globally, we will be living with Covid for much if not all of the three year forecast period. [...] It is possible that there will not be effective vaccines in the next year or two, or that vaccines will only provide short-lived immunity.

And he doesn’t think much of the idea that the expanding availability of money in the economy will fuel inflation - not least because households will want to build up the deposits in their bank accounts to protect against future trouble.

Households and non-financial businesses are likely to want to hold higher levels of liquidity as a buffer against the very high levels of uncertainty over incomes, profits and the future availability of credit.

Some more highlights from Saunders’ speech, which is being given via an online webinar:

The growth rebound since the easing of lockdown has been faster than expected, but that reflects a “benign window” in which the government has been spending freely (most notably through the furlough scheme), infection rates have been relatively low, and lockdown restrictions have eased.

This window may now be closing.

Saunders noted that infection rates are rising again in the UK and Europe, consumer confidence is “levelling off”, and the furlough scheme is ending in October. There are signs of “very significant weakness in the labour market”.

Of those employees still on furlough, it is likely that a large number will be made redundant, he said, because companies with strong demand would have been quicker to bring them back by now.

Unless activity and hours worked quickly recover the lost ground, unemployment is likely to rise markedly.

There is “no automatic time limit” on how long the Bank can maintain its loose monetary policy stance, he said.

The Bank of England may have overestimated the strength of the UK’s recovery from the depths of the coronavirus pandemic recession, according to one of its rate-setting officials.

Michael Saunders, who sits on the nine-member monetary policy committee (MPC), said there was a risk that growth and inflation were weaker than the central scenario in the committee’s report (MPR), published last month.

In a speech just published, he said:

My hunch is that risks lie on the side of weaker growth and a longer period of excess supply than forecast in the August MPR, and hence of a more persistent inflation undershoot. Moreover, a downside scenario would be very costly. It would imply greater longterm scarring on potential growth through hysteresis effects.

More details to follow shortly.

It’s mostly relatively quiet on the busiest currency markets this morning. The pound has gained 0.2% against the US dollar to reach $1.3307, while against the euro it is up by 0.2% to €1.2222.

However, it’s worth looking at the Turkish lira, which this morning hit a fresh record low of 7.45 lira to the US dollar amid concerns that teh central bank will be unable to control inflation added to tensions between Turkey and Greece in the eastern Mediterranean.

The currency has been under pressure all year, never really recovering from the rush for dollars that nearly caused a financial crisis on top of the economic crisis when the pandemic started to hit the US and Europe.

Inflation data does not show any signs of slower price rises, and central bank efforts to tighten credit (without raising interest rates) have not stemmed the weakness, Reuterse reported.

There is also worrying sabre-rattling from Turkish president Recep Tayyip Erdogan:

Nottingham city council’s failed energy supplier, Robin Hood Energy, has agreed to sell thousands of customer accounts to British Gas, and will make hundreds of employees redundant before closing later this year.

The council-run energy company, one of the first in the UK, informed staff on Thursday that 250 people would lose their jobs following a deal to sell its customer base to the UK’s biggest energy supplier.

The deal will result in 112,000 households and 2,600 business customers being transferred to British Gas, five years after Robin Hood Energy was set up to challenge the dominance of the UK’s Big Six energy suppliers.

You can read more, including about the damning auditor report into the supplier, here:

The UK construction industry suffered a “setback to recovery” in August after the rapid expansion in July when lockdown eased, according to the latest purchasing managers’ index.

The UK construction PMI, a closely followed indicator, fell to 54.6 in August, according to data company IHS Markit and the Chartered Institute of Procurement and Supply.

That was well above the 50 mark which indicates expansion in the sector, but down from 58.1 in July and below the 58.5 reading expected on average by economists.

Looking forward, it was a dearth of new work that contributed to the sector weakening, which does note bode well for the coming months.

Tim Moore, economics director at IHS Markit, said:

The latest PMI data signalled a setback for the UK construction sector as the speed of recovery lost momentum for the first time since the reopening phase began in May.

House building remained the best-performing area of construction activity, with strong growth helping to offset some of the weakness seen in commercial work and civil engineering activity. The main reason for the slowdown in total construction output growth was a reduced degree of catch-up on delayed projects and subsequent shortages of new work to replace completed contracts in August.

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%.

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.

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.

Pret a Manger is to launch a monthly subscription service offering up to five drinks a day in a bid to get customers back to stores following a sales slump due to the pandemic.

The chain, which last week cut almost 2,900 employees as high streets remain mostly deserted, is launching the YourPret Barista service. It will allow customers to buy up to five drinks a day for a month on a £20 subscription.

The chain said the subscription, which will launch next Tuesday, will be free to subscribers for the first month.

You can read more details on what Pret will offer here: