White House adviser Larry Kudlow has suggested to reporters in Washington today that the selloff is partly due to fears the UK might ‘shut down’.

Responding to a question on stock market concerns, Kudlow said (via Reuters):

“I do think however there’s some worries that Britain might shut down. It’s coming out of London, I can’t verify, it’s not my job, but I read the reports like everybody else and I think that’s a great concern.”

“The USA is in much better position, thankfully. We’ve regained control of the virus, both the cases and the fatalities. But I think people are worried about Britain and maybe the rest of Europe as well.”

However: the US is about to record its 200,000th Covid-19 death, compared to nearly 42,000 in the UK - with both countries suffering very badly from the pandemic.

A group of UK publicans have written to Boris Johnson tonight, warning that a second lockdown would cause serious financial distress to the sector.

The group, called the Campaign for Pubs, says the government must understand the human impact of any decisions to close and restrict pubs:

“It is time that decision makers understood that pubs directly provide the livelihoods of thousands of families up and down the country and sustain the viability of thousands more businesses in their supply chains.

There seems to be no consideration of our families and our children and the families and children of our staff, some of whom are already facing hardship due to the fact restricted trade means we are struggling to make a profit or in many cases, are not making one at all.

So if pubs do close again, landlords would face the challenge of disposing of beer again, and then trying to restock before the next reopening.

These issues would need to be factored into a support package for pubs – and publicans and their families - in the event of any such closure, they insist.

Professor Costas Milas of Liverpool University says Britain could face a W-shaped recovery, if tough new lockdown measures are introduced.

And this chart shows why:

He tells us:

I have plotted together UK GDP (% change from pre-pandemic level; the latter proxied by the average GDP value in the last three months of 2019) and the UK stringency index. The latter captures the impact of lockdown measures (monitored by the Blavatnik School of Government, University of Oxford) on the UK economy.

As the (previous) lockdown came into force in late March and was fully implemented in April 2020, UK GDP plunged by a massive 25.5% also in April 2020. In July 2020, GDP stood at 11.6% below its pre-virus level. Notice also that UK stringency measures have been relaxed (slightly) since then. But not enough to guarantee a significant rebound in UK activity.

Bring back stringency to its April 2020 peak (a lockdown, that is) and it is almost certain we will end up with a W-shaped recovery . The (slight) hope is that output will not dive as badly as it did in April since we have (probably) learnt to live with the virus…

Analysts at Capital Economics have warned that new restrictions to curb Covid-19 would inevitably hit the recovery, telling clients:

A tightening in restrictions designed to quash the resurgence in new COVID-19 cases would set back the economic recovery.

We’ll be in a better position to quantify the impact once the government announces its plan tomorrow. But if the government resorted to a two-week national lockdown at some point, that could reduce the level of GDP by 5% and set back the economic recovery by a year.

There’s no respite on Wall Street, where the slump in oil companies and banks is keeping the Dow Jones industrial average down over 3%.

It’s currently off 839 points at 26,817 points, its lowest since early August.

But two giants are defying the slump - Apple (+0.1%) and Walmart (+0.5%). Tech companies and supermarkets are clearly expected to rise out another lockdown better than, say, travel companies, miners, industrial groups or banks.

There have been two important UK developments on Covid-19 this evening.

First, all people in Northern Ireland are to be banned from visiting each other’s homes, meaning another 1.8m people are under local lockdown restrictions.

Second, the UK’s Joint Biosecurity Centre has recommended the Covid-19 alert level for the UK be increased to Level 4, because transmission of the virus is “high or rising exponentially”.

They say:

The CMOs for England, Scotland, Wales and Northern Ireland have reviewed the evidence and recommend all four nations of the UK should move to Level 4.

After a period of lower Covid cases and deaths, the number of cases are now rising rapidly and probably exponentially in significant parts of all four nations.

Our UK coronavirus liveblog has more details:

My colleague Rob Davies has raised some important points about the likely crackdown on UK pubs, and how a 10pm curfew might not prevent Covid-19 infections.

Today has been a “brutal” session in the markets, says Markets.com analyst Neil Wilson, with investors losing their appetite for risk.

There is a clear connection between today’s selloff and the rise in cases and the expectation this will lead to further mass lockdowns as governments continue to seem willing to kneecap the economy. Selling pressure has been building for some time and the dam broke today. It has not been a surprise that stocks with the greatest exposure to prolonged restrictions on movement and more quarantine rules on foreign travel have been among the hardest hit. Rolls Royce sank 11% after it admitted its looking to raise £2.5bn in fresh equity and is considering issuing new debt.

Wilson adds that the diminishing hopes of another round of stimulus in the US is another weight on stocks, particularly for US equities.

The death of Ruth Bader Ginsburg may have struck a decisive blow against a bipartisan deal being achieved before the election as it materially magnifies the polarisation in Washington.

Meanwhile a heavy ramp up in August with far too much hot money chasing too few shares, stretched valuations, the lack of a vaccine coming soon and the rising risk of volatility around the US election seems to have caught up with the markets.

Commodity prices have also been hit by fears of a new economic downturn.

With traders turning to the safety of the US dollar, precious metals and oil prices are both down sharply today. Gold has lost over 2%, while oil prices are around 4% lower tonight.

European stock markets have also suffered their worst day in over three months.

Stocks slid across the region, hit by fears that new social distancing rules will be introduced to fight a second wave of Covid-19 cases.

The Stoxx 600, which tracks the latest companies in the region, has closed down 3.3% today. That’s the worst session since 11 June (and the second worst since the market mayhem of March).

Bank stocks slumped by 5.7%, rocked by the FinCEN files money-laundering expose into illicit money transfers

Some charts showing today’s market moves:

The Dow Jones industrial average continues to be thumped in New York - a reminder that today’s selloff is not confined to London.

The Dow is now down 900 points, or 3.2%, at 26,751, its lowest since early August.

The tech-focused Nasdaq, though, is currently only down 1.7%.

That shows that ‘old economy’ stocks, such as oil companies and banks, are being hit harder by growth fears. Plus, financial stocks are suffering from the FinCEN investigation, which showed $2trn of suspicious transactions flowed through the US system from 1999 to 2007.

Shares in US exercise company Peloton have jumped 5% today, to a record high.

That suggests investors are pricing in new lockdown restrictions, leading to more demand for Peloton’s internet-enabled bike and online streamed fitness classes.

Today has been one of the worst session for global stocks since the end of the Covid-19 crash in March.

It feels like investors have suddenly been jolted out of their complacency about the pandemic. Even though cases have been rising across the globe for months, the markets have suddenly realised the risks of fresh lockdowns and a spike in infections this autumn and winter.

Connor Campbell of SpreadEx sums up the day:

It was as if someone forgot to hit snooze on the covid-19 wakeup call.

Months of warning signs and buried fears struck at once on Monday, the market buckling under the threat of another round of national lockdowns.

Though most of the headlines have been focused on Europe, the United States is having its own nightmare. To say the country is heading into a difficult period is an understatement. There’s no bipartisan fiscal stimulus in sight, an already heated election just got all the more intense following the death of Ruth Bader Ginsburg, and covid-19-related deaths are fast approaching 200,000, while daily cases creep up towards 50k.

Germany’s DAX index has now slumped by 4.4% in late trading today, the worst performance across the main European markets.

The top faller is Deutsche Bank, down 8% after the FinCEN investigation shows that it was responsible for more than half of the $2trn of suspicious transactions that have been flagged to the U.S. government.

Building materials group HeidelbergCement (-7.2%) and chemicals group BASF (-6.7%) are also down heavily, on concerns that Covid-19 lockdowns will hurt global growth.

The oil price is also slumping today, a sign that investors are more pessimistic about the global economy.

Brent crude has slumped by over 4.2% to $41.30 per barrel, while US crude has fallen by 5% to $39.03 per barrel.

With an hour to go, the UK’s FTSE 100 index is on track for its lowest close since May.

The index is now hitting its lowest levels of the day, following the deepening losses on Wall Street. It’s now down 225 points, or 3.75%, at 5,783.

It’s not closed lower than that level since mid-May, four months ago.

That means that more than £50bn has been knocked off the value of the FTSE 100’s constituents.

The selloff is gathering pace on Wall Street, with the Dow Jones industrial average now down 803 points, or 2.9%, at 26,853.

That’s its lowest level since early August.

UK chancellor Rishi Sunak is preparing to extending the emergency Covid-19 loan scheme for businesses.

The move could help struggling companies get more help, as the country faces the prospect of new restrictions.

My colleague Richard Partington explains that an announcement could be made as early as Tuesday.

Almost £53bn of government-backed loans have been loaned to businesses since March. However, three of the programmes, which offer 80% Treasury backing on loans made by commercial banks, were to close to new applications at the end of this month, while the fourth, which gives banks 100% government backing, was due to expire at the start of November.

All four will be extended until the end of November, the sources said, while banks will be allowed to process loans until the end of the year.

With 90 minutes trading to go in London, the FTSE 100 is still on track for its worst session since June.

The blue-chip index is currently down 182 points or 3% at 5824. That’s a little higher than this morning’s lowest point, but that’s mainly because the pound has fallen further against the US dollar.

Sterling is now down a cent at $1.282, which would nudge up the value of multinational earnings overseas.

The more UK-focused FTSE 250 index is still sharply lower too, down 3.7% today.

Shares in electric truck maker Nikola have slumped by 17% today, after its founder and chairman resigned amid fraud allegations.

Trevor Milton quit as executive chairman overnight, days after short-seller Hindenburg Research claimed that Nikola had misrepresented its technology.

This included the revelation that a promotional video that claimed to show an electric truck in operation was actually just rolling down hill, propelled by gravity rather than hydrogen.

Hindenburg (which has bet against Nikola’s shares) also alleged that Nikola had actually bought technology from other suppliers rather than developing it in-house.

Milton insisted that Hindenburg’s claims were unfounded. But he’s now stepping aside, just a fortnight after securing a major partnership with General Motors.

Financial stocks are leading the selloff in New York, reflecting worries that the economic recovery could falter this autumn.

Credit card operator American Express has dropped by 4.3%, with JP Morgan (-3%) and Goldman Sachs (-2.7%) close behind.

Construction machinery maker Caterpillar (-2.6%), chemicals maker Dow (-2.6%) and industrial conglomerate 3M (-2.5%) are also among the fallers.

On the Nasdaq, Google’s parent company Alphabet has fallen by 1.4%, with Microsoft losing 1%. Apple’s a little higher, though.

Neil MacKinnon, global macro strategist at VTB Capital, explains why the prospect of new lockdown measures are hitting stocks today:

“Many economic commentators think that another lockdown would be disastrous for the major economies and undermine the nascent economic recovery which has been in place in the last few months.

A new lockdown would significantly increase both the unemployment rate and bankruptcy rates, especially for small businesses.”

After a sizzling August, stock markets have come down with a bump in September.

We just had the best August since 1986, with soaring tech stocks helping to push the MSCI’s All County World index of stocks up by 6% during the month.

But most of those gains have now been lost in September, with the EU-wide Stoxx 600 now at its lowest level since early August.

Dmitri Smolansky, Portfolio Manager at SECOR Asset management, explains:

By the end of August, equity markets have priced in a reasonably benign scenario for COVID 19 developments. The recent increase in the number of COVID 19 cases in Europe and expectations about the second wave in the US resulted in the increased uncertainty about the future pace of global economic recovery.

European companies tend to have significant exposure to global growth and, therefore, are suffering.”

Germany’s central bank warned this morning that the recovery in Europe’s largest economy is slowing.

In its latest monthly analysis, the Bundesbank predicted that the rebound would lose momentum.

It pointed out that the early jump in factory orders after lockdown eased has now faded.

“In the remainder of the year the recovery may continue but lose momentum.

Industrial companies look at the future with optimism ... but expectations about exports remain cautious and the order flow noticeably lost momentum recently,”.

Sterling has also suffered from Covid-19 angst, down half a cent against the US dollar at $1.2870.

Nervous investors are seeking the protection of the dollar, says Ed Moya of OANDA, on fears that the virus will pull the global economy down:

Surging coronavirus cases and doubts over the next over the next round of fiscal support is triggering a wide range risk averse tone that is sending the dollar higher and sinking gold. Exponential coronavirus growth is a big risk in Europe and that is sending the dollar sharply higher. Dollar strength can go a little further as emerging market currencies have room for bigger declines.

A deteriorating global economic recovery is growing as Europeans struggle to contain the latest wave of the virus, but that should only reinforce the stimulus trade going forward. The US economic outlook is starting to look a lot worse as the path for a fiscal agreement seems unlikely given the Republican and Democratic battle over who will be the next Supreme Court justice.

Just three FTSE 100 stocks are clinging onto gains after this morning’s wave of selling.

Supermarket chains Tesco (+1.3%) and Morrisons (+0.5%), and takeaway operator Just Eat (+1.2%) are alone in the FTSE risers box.

They should all see a surge in sales if the UK imposes new lockdown measures, with Morrisons bringing back door marshals to limit customer numbers.

The supermarkets played a crucial role keeping the UK fed during the last lockdown, but had to ration many products and prioritise home deliveries. They’re better prepared for a second one, my colleague Zoe Wood explains:

The pandemic forced to country’s food retailers to rethink their business models as demand for grocery home delivery doubled at the height of the crisis.

The major chains have all expanded their services with Tesco now offering 1.5m weekly delivery slots, compared with 600,000 in March. Sainsbury’s said its website could now serve twice as many people as six months ago.

The Covid-19 crisis has also forced the UK government to launch a new multi-billion pound rescue for the rail industry.

The move, announced this morning, means the end of the franchise system introduced when the railways were privatised in the 1990s.

My colleagues Julia Kollewe and Gwyn Topham explain:

The UK government has extended its multibillion rescue deal for train operators with “recovery contracts” that will keep the railway running while ending the franchise system, in what it called the biggest shake-up of the industry in 25 years.

Emergency funding for rail companies has been agreed for periods from six to 18 months to help them get through the Covid-19 crisis, as a first step towards an overhaul of the railway system.

The Department for Transport said the new contracts were a better deal for taxpayers, and heralded the end of franchising – but unions and Labour criticised the move as “papering over the cracks” and handing more money to private firms.

Fears over the Covid-19 pandemic are still hurting European stock markets badly too.

France’s CAC index has lost 3.1%, after it posted a record-breaking 13,500 new cases.

Germany’s DAX (-3.2%), Italy’s FTSE MIB (-3.3%) and Spain’s IBEX (-3.1%) are all suffering similar losses to the UK’s FTSE 100.

Wall Street is still firmly on track to join the rout when trading begins in two hours time, with US stocks indices down over 1% in pre-market trading.

Although the FTSE 100 is only at a two week low, it’s close to hitting its weakest level since May.

The blue-chip index of multinationals and major UK firms started the year at around 7,600 points, but is now 23% lower - a big blow to savers and pension-holders.

The market crash in February and March dragged it all the way down below 5,000 points briefly, before the promise of stimulus measures from governments and central bankers lifted shares.

But London’s market has lagged behind recently - partly because its banks, miners and oil companies have all been hurt by the slump in the global economy. Banking shares have more than halved this year, with bad debt rising and no dividends allowed.

Commercial property companies have been hammered too, by the move to home-working, while housebuilders lost sales during their lockdown.

Ad giant WPP, telecoms operators BT and Vodafone and luxury goods maker Burberry are all vulnerable to global economic woes too.

Transport has suffered the most, though, with IAG and Rolls-Royce both shedding 75% of their value. Travel restrictions mean much lower demand for holidays and business trips, with an obvious impact on sales of new jet engines or servicing contracts.

After warning that Covid-19 is a six-month problem, Chris Whitty says the UK must break ‘unnecessary links’ between households, because that is how the virus is transmitted.

That means limiting social interaction at work, and in social environments, Whitty explains, adding that many businesses have helped by letting employees work from home for months.

That is a strong signal that the UK hospitality industry could face new restrictions (or at least, that’s the way the advice is pointing...)

Chief medical advisor Chris Whitty explains that there are significant rate of transmission in many parts of the UK, with localised outbreaks in some places.

We have turned the corner, in a bad sense, he explains, warning that ‘the seasons are against us’

Whitty then sums up the challenge facing the UK.

If it does too little, the virus will get out of control and harm the nation’s health - through Covid-19 infections, the risk of overwhelming the NHS, and less treatment for other areas.

But if the UK does too much, the economy will suffer more damage - feeding through to unemployment, poverty and deprivation (which lead to bad health).

More here: UK coronavirus live news: Vallance says 6,000 new cases a day in UK, doubling every seven days

Sir Patrick Vallance then showed this chart, showing how the Covid-19 pandemic would accelerate if it moved into exponential growth.

If virus infections doubled every seven days (as could be happening now), then 5,000 cases per day would become 10,000 a week later, then 20,000.

By mid-October, if that continued, you would end up with something like 50,000 new cases per day, says chief scientific advisor Vallance.

That would lead to 200 deaths per day by mid-November, he adds.

That’s not a prediction, he explains, but an example of how quickly the pandemic can move.

Health secretary Matt Hancock gave a pretty clear signal this morning that UK pubs will face new restrictions, to combat the rise in Covid-19 cases.

Reuters has the details:

Changes will be brought in to COVID-related rules affecting pubs, Britain’s Health Secretary Matt Hancock said on Monday.

Asked whether pubs would open at the weekend, Hancock said: “We’ll be absolutely clear about changes that we need to make in the very, very near future.

“We’ve been working on this all weekend. We haven’t taken the final decision about what we need to do in response to the surge (in new cases) that we’ve seen.”

Here’s our latest news story on the Covid-19 crisis:

The UK could return to the levels of mass coronavirus deaths seen in the spring unless people abide by social distancing rules, Grant Shapps has warned ahead of an appeal to the public by the government’s most senior scientists.

Shapps, the transport secretary, said the country appeared to be on the same trajectory of new infections as countries such as Spain, and that without concerted action, could be faced with a significant increase in hospital admissions and then deaths.

“We’re seeing the hospital admissions creeping up, albeit the deaths haven’t followed as yet,” Shapps told Sky News. “What we do know, looking at places like Spain, is that will follow.”

The FTSE 250 index of smaller, UK-focused, companies has slumped by 3.3% today, on fears of economic

Top fallers include pub chain Mitchells & Butler, which has now tumbled by 13.5% today on the prospect of new curbs on eating and drinking out:

Virgin Money, the financial services group, is also down 13%.

Transport groups National Express (-13%) and FirstGroup (-9.7%) and ticket seller Trainline (-11.7%) are also among the big fallers, as their revenues will suffer the longer people work from home.

Retail group WH Smiths, which operates stores at airport and railway stations, has shed almost 10%.

UK retail group Next are also among the big fallers, down 6% today.

Last week, Next reported that trading had been better than expected over the summer, but warned that new Covid-19 restrictions could hurt the crucial pre-Christmas trading period.

The FTSE 100 just hit its lowest point of the session, down 193 points or 3.2% at 5813.

This comes as health secretary Matt Hancock warned that the UK is at a ‘tipping point’, but indicated that any new lockdown would be different than last time.

That could indicate that schools would keep running, while the leisure and hospitality sector would face curbs (something the market has been pricing in today).

The EU-wide Stoxx 600, which tracks Europe’s largest six hundred companies, is also on track for its worst day since late June. It’s currently down 2.5%.

All Europe’s major indices have been dragged down this morning, as anxiety over Covid-19 hits the markets again after a summer lull.

• German DAX: down 337 points or 2.5% at 12,788
• French CAC: down 115 points or 2.3% at 4,863
• Italian FTSE MIB: down 586 points or 3% at 18,940
• Spanish IBEX: down 205 points or 2.9% at 6,724.

Investors are looking nervously to Wall Street, where stocks are currently on track to tumble by 2% on fears that a new stimulus package won’t be agreed.

Connor Campbell of SpreadEx sums up the morning:

With cases sharply rising across Europe, including a fresh daily record of 13,500 new infections for France and numbers regularly around the 4000 mark in the UK, it seems like the continent is entering – or more likely has entered – its second wave. And with that comes the increased chance for another round of nationwide lockdowns.

The prospect of such, and the cost associated, has sent the markets into a spiral – even if there is no reason why the losses should be so pronounced today when compared to any point last week. It seems that headlines have simply reached a tipping point in the eyes of investors....

Every day that Congress fails to agree on a new fiscal stimulus plan, the US economic recovery is further endangered.

British Airways parent company, IAG, has now slumped by 12% this morning.

That take the stock down to 97p, which looks to be the lowest level since 2012.

If new restrictions are imposed in the coming weeks, it could scupper any hopes of a sales boost over the half-term holidays.

Neil Wilson of Markets.com says the rising infection rates across the world are a clear worry for investors.

Tighter rules are almost certain as the authorities flounder and seem unable to get any kind of consistently clear approach to the pandemic. Travel and leisure was hit hard as new lockdowns and travel restrictions are an almost given heading into half term.

Fresh lockdown restrictions would deal a crushing blow to hopes of a V-shaped economic rebound from the Covid-19 slump.

Instead, it would force politicians to consider fresh ways to protect the economy and save jobs, or suffer a new downturn.

We know that the UK economy grew in May, June and July after a record plunge in April, but GDP is still 11% smaller than in February, and a tough autumn is ahead.

That recovery could falter if, say, hospitality firms are forced to shut again. The end of the furlough scheme next month could also drive unemployment higher (the jobless rate is forecast to hit 7.5% by December, up from around 4% this summer).

Richard Hunter, Head of Markets at interactive investor, says hopes of a ‘sharp’ recovery have faded.

“With no confirmed vaccine for the coronavirus as autumn approaches, there is likely to be additional strain on government resources as they attempt to stave off a second wave, as the colder weather inevitably brings further cases to contend with.

Prospects for a sharp economic recovery have all but disappeared, as global growth receives the new threat of a resurgent pandemic. In addition, with talks for a further fiscal stimulus in the US seemingly in deadlock, investors have been choosing to vote with their feet over recent trading sessions given the deteriorating outlook.

Hunter adds that the pressure to agree a UK-EU free trade deal is also hitting stocks in London.

In the UK, the pandemic also continues to add to concerns for general economic health, including the hospitality sector where further lockdowns would pile on additional pressure. The end of the furlough scheme will likely lead to another spike in unemployment and Brexit negotiations are at a critical point. The FTSE100 is now down 22% in the year to date.

Banks are also among the top fallers in London this morning.

Barclays, Lloyds and NatWest have all shed more than 5%. A second national lockdown would hurt many of their business customers, leading to a jump in bad loans.

It could also spur the Bank of England into imposing negative interest rates, which would further erode their profitability.

Online grocer Ocado is bucking today’s selloff.

It has jumped by 2.5% to £28.86, a new record high, on the prospect of higher demand if Britain goes into lockdown again.

Ocado’s the best-performing member of the FTSE 100 this year, having more than doubled in value since January.

The selloff is accelerating, wiping 141 points or 2.3% off the blue-chip FTSE 100.

That takes the index down to a two-week low of 5864, with jet-engine maker Rolls Royce and airline group IAG both down over 10%.

This means the FTSE 100 has lost more than 22% of its value this year. It’s one of the worst hit markets, due to the dominance of oil companies, banks, miners, and travel firms (the Footsie is rather light on tech companies, unfortunately)

Fears of a new national lockdown have also hit UK pub companies this morning.

Mitchells & Butlers, whose chains include Harvester, Toby Carvery and All Bar One, are down over 8%.

JD Wetherpoons shares have dropped by 7% to 790p - the lowest since April.

UK pubs reopened at the start of July, after being shut for over three months. Industry figures have warned that around 900,000 staff are still on furlough, and those jobs would be threatened by new restrictions.