And finally, Wall Street has racked up one of its worst days of 2021, with the S&P 500 recording its biggest fall in around four months.

Despite a late, limited rebound off its lows, it’s been a rough day on the New York Stock Exchange.

Worries that China’s indebted property group Evergrande could default on a debt payment later this week hit stocks.... as did anxiety over the ongoing pandemic, and the possibility of the Federal Reserve tapering its bond-buying stimulus programme soon.

As the dust settles, the Dow Jones industrial average has ended the day down 614 points, or 1.78% at 33,970 points. That’s its biggest one-day fall in two months. Caterpillar ended as the top faller (-4.4%), followed by Goldman Sachs (-3.4%) and JP Morgan (-3%).

The S&P 500 index, which covers a broader range of stocks, has shed 1.7% or 75 points to finish at 4,357. That’s it’s biggest fall since May, and its lowest close since July.

And the tech-focused Nasdaq had a more bruising day, down 2.2% or 330 points at 14,714 points. That’s its lowest level in a month, with major tech names such as Microsoft, Alphabet, Amazon, Apple, Facebook and Tesla all falling.

CNBC has cited five reasons for the selloff:

• Investors fear a contagion sweeping financial markets from the troubled China property market. Hong Kong equities saw a big sell-off during the Asia trading session on Monday. The benchmark Hang Seng index plunged 4% with embattled developer China Evergrande Group on the brink of default.
• The Federal Reserve begins a two-day meeting Tuesday and investors are worried the central bank will signal it’s ready to start pulling away monetary stimulus amid surging inflation and improvement in the job market.
• Covid cases because of the delta variant remain at January levels as colder weather approaches in North America.
• September has the worst track record of any month, averaging a 0.4% decline, according to the Stock Trader’s Almanac. History shows the selling tends to pick up in the back half of the month.
• Investors are also concerned about brinkmanship in DC as the deadline to raise the debt ceiling approaches. Congress returned to Washington from recess rushing to pass funding bills to avoid a government shutdown.

Lots to ponder then.... And on that note, goodnight! GW

After a very volatile day in the markets, here are today’s main stories:

Warnings about the CO2 shortages escalated, with food producers warning that we could soon see shortages:

While in the energy sector.... worries about the crisis continued to mount as gas prices kept rising:

And in other news....

Ouch - with just over an hour to go, Wall Street is hitting new lows for the day.

The Dow has now shed around 900 points, a fall of 2.6%, taking the index back down to 33,683 points.

Ed Moya of OANDA says we’re seeing the first ‘meaningful’ pullback in months, due to a series of bearish events - including the Evergrande crisis.

US stocks are selling off sharply as seasonal factors have allowed the Evergrande story to help deliver the first meaningful pullback since February. It just seems all the headlines to start the trading week are bearish; Evergrande’s debt fears and contagion, Chip shortage issues persist, PM Johnson is going after Amazon’s taxes, lackluster IPO performance after another record year, and as some Fed officials have begun to sell their stock amid ethics concerns. (earlier this month Fed’s Kaplan and Rosengren said they will sell all their individual stock holdings by September 30th).

The Evergrande crisis and fears of a credit squeeze was enough to weigh on sentiment. Market contagion in Asia is happening as excessive risk taking in China has always been the story. Letting Evergrande fail would send the market the right signal that China is serious about controlling debt, but Beijing will likely support whatever is necessary to avoid sending shock waves through their financial system.

The democratic senator from West Virginia threw a curve ball for the Biden administration in thinking Congress should take a “strategic pause” until 2022 before delivering on the spending bill which could derail everything else. This might just be posturing but it does raise the risk that investors may have been a little too optimistic in expecting infrastructure and ~$2 trillion spending package.

Oof. The Dow Jones industrial average has now shipped over 800 points today.

The index has now slumped by 2.34% to 33,774 points, on track for its worst day since last October.

Each of the 30 stocks on the index are in the red, with Caterpillar still the worst performer (-5.1%) as worries over the global economy rise.

Back in New York, shares are falling deeper into the red.

The Dow Jones industrial average is now down 696 points, or 2%, at 33,888 points.

The S&P 500 index has also lost around 2%, while tech stock are being pummelled - the Nasdaq has lost over 2.5% today.

The unfolding Evergrande crisis is creating jitters on Wall Street, as the debt-laden Chinese property developer faces a debt repayment deadline later this week (reminder, its shares hit a decade low today).

Concerns that the Fed could announce a possible reining in of support later this week are also jolting markets.

Fiona Cincotta, Senior Financial Markets Analyst at City Index, explains:

The Fed rate announcement in due on Wednesday and expectations are growing the US central bank will start laying out the groundwork for a tapering of bond purchases, potentially tee-ing up for a November kick off. However, the preparation to withdraw support and taper bond purchases comes as concerns grow over the health of the global economic recovery.

Fears of contagion from the unfolding Evergrande crisis in China is hitting risk sentiment. Investors are taking risk off the table ahead of a likely default by China’s second largest real estate developers later in the week and what the wider implications for the financial market could be. Fears are being played out in the commodities market where iron ore futures extended losses as steel demand is expected to weaken.

European stock markets clawed back some of their losses by the close, helped by travel relief.

The pan-European Stoxx 600 finished 1.65% lower tonight, the worst fall in two months, with airlines helping to lift stock markets a little as the White House announced the end of the US travel ban.

Germany’s DAX had a rough day, losing over 2.3%, as shares in banks and carmakers fell (taking the shine off its expansion to 40 companies, from 30, today). Italy’s FTSE MIB fell 2.5%,, with France’s CAC down 1.7%

The gas crisis, and anxiety over China’s economy due to the instability of property conglomerate Evergrande, weighed on markets.

Concerns about central bank tightening also cast a shadow, with the US Federal Reserve meeting this week.

Danni Hewson AJ Bell financial analyst, says:

“It’s shaping up to be quite a week. If rising gas prices and fears that Evergrand will do more than dent the Chinese property market weren’t enough there’s the little issue of a Fed update to price in. The UK’s travel sector has tried to do its bit today but even the anticipation that transatlantic travel might be back on the cards by November wasn’t enough to stop the rout. Whilst British Airways owner IAG stormed up the FTSE 100 risers mining and banking shares were pulling in the other direction.

The potential default of the Chinese property developer could have far reaching and unexpected consequences. The obvious ones are already being weighed up by investors which is why metal prices have plummeted. House building requires materials and any shock to that system will cut back on demand at least in the short term.

“Then there’s the X-factor, the potential that ripples from one collapse could erode other sectors. If the Chinese economy is dented what happens to demand for those nice-to-haves, nice-to-haves like a shiny new Tesla. Shares in the car company have tumbled and the Nasdaq with them, in fact the tech heavy index makes for pretty grim viewing today. Wall Street as a whole looks rather battered although the S&P was cushioned a little by a surge in energy stocks and a nice bounce from airlines.

Britain’s FTSE 100 share index has ended the day down 0.86% at a two-month closing low, after a small rebound.

The blue-chip index has closed 60 points lower at 6904, its weakest close since 20th July, but above its earlier lows.

Life insurer Prudential was the top faller, sliding 8.3% amid anxiety over China’s economy, and after it announced plans to raise up to £2.1 billion in a public offer and share placing in Hong Kong.

Standard Chartered bank, which is also focused on Asia-Pacific markets, shed 7%.

Miners also had a rough day, with Anglo American (-4.6%) in the top fallers. Packaging firm DS Smith fell 5%, while banks Barclays and Lloyds lost 4% each.

But airline IAG ended 11% higher on relief that the US is easing its UK travel ban, with Rolls-Royce up 4.2%. Pharmaceuticals group AstraZeneca gained 6%, after reporting groundbreaking’ results in new breast cancer drug trial.

The London market was also propped up by a weaker pound, which has now dropped by almost one cent against the strengthening dollar, to $1.36.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, says:

‘’The lifting of travel restrictions for double jabbed visitors to the US provided the thrust needed to send the recovery in airline stocks full throttle. After months riding the stomach wrenching turbulence of rolling restrictions with red lights flashing on transatlantic travel, the industry is now set on a smoother ride to recovery ahead.

British Airways owner IAG was one of the biggest risers on the FTSE 100, climbing 11% as the prospects look brighter for a surge in bookings by UK and EU travellers. There was much needed respite for beleaguered Easyjet which rose 4% and tour operator TUI, up 2.2% with expectations that winter sun holidays to destinations like Florida will see a surge in demand.

Rolls Royce also caught a ride higher given that its core business of making and servicing engines for long-haul aircraft, is based on the number of hours its engines are in the air. The journey back to health has also taken a big step forwards for Ritazza and Upper Crust owner SSP in the FTSE 250 which rose 5.8%.

The company, which runs concessions across 180 airports, relies on the travelling public to pick up snacks and treats on journeys, and there are high hopes the hustle and bustle will return at its outlets dotted across the transport network now.

Energy companies willing to rescue the customers of rival suppliers that go bust amid the gas and electricity market crisis could get state-backed loans in a scheme under government consideration.

The Guardian understands that officials are looking at the emergency funding to help the UK’s large suppliers pick up potentially millions of unprofitable customers this winter as record prices threaten to decimate the energy market.

Five small suppliers have gone under in recent weeks, and another four are likely to collapse before the end of the month, but the number of company collapses is forecast to dramatically escalate as cold weather compounds the record wholesale price highs.

The business secretary, Kwasi Kwarteng, spent the weekend locked in talks with energy leaders and the regulator, Ofgem, to understand the scale of the crisis facing the industry.

The crisis talks continued on Monday to thrash out potential measures for the government to help protect households from the fallout of the market surge, which is expected to rip through the energy industry and take a toll on heavy industry and the food sector, too.

Kwarteng was expected to deliver a ministerial statement on the gas market crisis on Monday afternoon. He said on Twitter that his task was to “ensure that any energy supplier failures cause the least amount of disruption for consumers”.

Here’s the full story:

Back in Europe, airline stocks have surged on reports that the US could soon relax its travel restrictions on passengers from the UK and the European Union.

IAG, which owns British Airways, has jumped over 10% on optimism that the travel ban imposed early in the pandemic could finally be lifted, for vaccinated people.

Jet engine maker and servicer Rolls-Royce has jumped 5%, on hopes of a pick-up in travel.

According to the FT, vaccinated passengers will be able to travel to the US from the EU and UK from November onwards, the Biden administration will announce on Monday, in a major diplomatic victory for Brussels and London.

They say:

The White House will announce a new travel policy on Monday morning, marking the end of the 18-month blanket ban on travel imposed by Donald Trump, the former US president, at the beginning of the Covid-19 pandemic that was maintained by Joe Biden.

Three people with knowledge of the policy told the Financial Times that Monday’s announcement will mean that fully vaccinated passengers will be able to travel once the ban is lifted within weeks.

Those involved in clinical trials for vaccines that are not yet approved in the UK will also be allowed to enter the US, a policy which will apply to around 40,000 people.

Other airline also rallied, with easyJet and Wizz Air up 2.5%, along with travel stocks such as SSP (+5.8%) which runs the Upper Crust sandwich shops, and holiday firm TUI (+2%).

European travel stocks are rising too, pulling shares away from their earlier lows.

Neil Wilson of Markets.com says:

BA-owner IAG is a clear winner from this as its transatlantic business has been all but mothballed since the grounding of its jets due to the US policy.

IAG rallied over 10% on the announcement, whilst Air France KLM and Lufthansa added to earlier gains to trade around +6% higher.

Big read across for associated stocks – SSP rallied from negative territory for the day to trade up 4.5%, whilst WH Smith, which had also been trading lower, is now up 2%. And it’s more good news for Rolls-Royce, whilst TUI and Wizz Air are also having a good day.

The US stock market has joined the selloff, with shares dropping sharply at the start of trading in New York.

The Dow Jones industrial average has dropped by 508 points, or 1.47%, to 34,076 points.

The broader S&P 500 index has shed 65 points, or 1.5%, to 4,368 points.

And the tech-focused Nasdaq is also sharply lower, dropping almost 1.7% or 253 points to 14,790.

UK meat producers are warning that the shortage of carbon dioxide caused by the gas crisis could soon hit production, disrupting supply chains in the run-up to Christmas.

Cranswick, which makes fresh pork products and gourmet sausages, bacon, ham and and charcuterie, says a lack of CO2, and shortages of labour, will create “significant disruption to the entire food supply chain”.

Adam Couch, Cranswick CEO, is urging the government to act immediately to avert “a major crisis in the food industry”.

“I call upon the Government to act immediately to avert a major crisis in the food industry. The sector has been asking for support to ease the labour crisis, and now C02 shortages could effectively bring production to a halt throughout the supply chain.

Couch says there is a ‘real risk’ of shortages.

“The industry is already at tipping point ahead of the demanding Christmas period.

We have worked tirelessly throughout the pandemic to keep food on the shelves, but there is a real risk of product shortages across the country if the Government does not act immediately to address these issues.”

The UK faces a CO2 shortage because several fertiliser plants that also produce carbon dioxide have suspended work, due to high gas prices.

CO2 is used to stun animals before slaughter and prolong the shelf-life of food such as ready meals, and also adds fizz in beer, cider and soft drinks.

Separately, the head of the meat industry’s lobby group has warned that some processors will run out of carbon dioxide within five days, forcing them to halt production.

“My members are saying anything between five, 10 and 15 days supply,” Nick Allen of the British Meat Processors Association told Sky News.

With no CO2 a meat processor cannot operate, he said.

“The animals have to stay on farm, they’ll cause farmers on the farm huge animal welfare problems and British pork and British poultry will disappear off the shelves.”

European stock markets are currently on track for their worst day this year, as anxiety over the fate of China’s heavily indebted property developer Evergrande rise.

The Stoxx 600 index has now fallen by 2.4% to 450.7 points, which would be the biggest daily drop since last October (beating a 2.3% fall on July 19th).

Chief among investor worries has been Evergrande’s debt woes and its potential spillover on other property developers, lenders and other sectors – not only in China, but elsewhere too, says Fawad Razaqzada, market analyst with ThinkMarkets.

The London FTSE 100 is also suffering deeper losses, now down 127 points or 1.82% at 6837, its worst one-day drop since July.

Mining companies continue to be buffeted, on concerns that problems in China’s economy will mean less demand for commodities.

Razaqzada explains:

Investors are not sure whether Chinese authorities will be able to contain the fallout from a possible disorderly collapse of the heavily indebted company. The situation is made worse by the fact China will be closed in observance of the Mid-Autumn Festival until Wednesday.

But Evergrande’s Hong Kong listed shared fell a further 13% as its market cap dropped to its lower ever level as a potential bankruptcy looms large. The company was due to pay interest on bank loans on Monday and some $83.5 million in interest on Thursday for its offshore March 2022 bond. Failure to make these payments will mean default, which appears likely as Chinese authorities have apparently already told major lenders not to expect repayment.

If the problems ended with Evergrande then there wouldn’t be too much of an issue as far the wider financial markets are concerned. But this could have repercussions on many other companies. So, the contagion risks may be much wider than the markets currently expect. Equally, a lot depends on how China’s authorities will respond to this crisis. Will they bail the company out, or let it collapse and make an example of it?

China is also cracking down heavily on other key sectors in the economy, providing additional uncertainty hanging over the Chinese markets and economy.

The energy crisis is also hitting market confidence, as it fuels concerns about rising inflation and slowing growth.

Inflationary pressures have risen sharply due to supply bottlenecks and rapidly rising oil, gas and electricity prices. The intense heatwave in parts of southern and eastern Europe saw demand for air condition and refrigeration rise sharply, just as lockdown measures were lifted in many parts of the region.

Calmer weather meant the amount of renewable energy from wind was not sufficient. So, demand for gas has risen significantly to fuel power stations, causing gas stockpiles to fall sharply.

Business secretary Kwasi Kwarteng has tweeted following his emergency meeting with energy companies.

He says he’ll update MPs on the global gas price situation this afternoon, and that the government is looking at options to protect customers.

In any scenario, Kwarteng says, the government will ensure UK consumers have continuity of supply if their supplier fails, through a “Supplier of Last Resort” or a special administrator if needed.

And he states that the energy price cap will remain in place.

Norway will allow state-controlled Equinor and its partners to increase gas exports from two offshore fields for the next 12 months amid concerns over a shortage of European gas supplies that have sent prices soaring.

Reuters has the story:

Equinor, Europe’s second-largest gas supplier after Russia’s Gazprom, said on Monday the government was allowing a combined 2 billion cubic metres (bcm) increase in exports for the gas year starting Oct. 1 from the Troll and Oseberg fields.

The increase corresponds to nearly 2% of Norway’s annual pipeline gas exports, according to Reuters calculations.

The front-month gas price at the Dutch TTF hub, a European benchmark, has more than tripled this year to record levels, driving up power prices as the winter heating season approaches with below-average levels of gas in storage.

The situation is prompting Britain to consider state-backed loans to energy firms and big suppliers to ask for government support to cover the cost of taking on customers from companies that have gone bust.

“We believe that this is very timely as Europe is facing an unusually tight market for natural gas,” said Equinor. “We are working on measures to increase exports from our fields on the Norwegian continental shelf.”

More here: Norway to raise gas exports to Europe as prices soar

BP’s joint solar venture, Lightsource BP, will more than double its global expansion by 2025 after clinching a financing deal worth $1.8bn (£1.3bn) to develop enough solar farms to power the equivalent of 8.4m homes.

The fast-growing operation had initially set a target to develop arrays of panels with a total capacity of 10 gigawatts by 2023, enough for almost 3.4m homes, but the fresh funds will be used to turbocharge its ambition to 25GW by 2025.

It also plans to build an extra 9GW of solar farms exclusively for the oil corporation as part of BP’s plan to grow its renewable energy capacity 20 fold by the end of the decade.

BP has set one of the most ambitious renewable energy goals for a major oil company as governments prepare to ramp up climate action. The current global gas market crunch has further strengthened the political resolve to reduce the reliance on gas.

Here’s the full story:

Nick Boyle, the founder and chief executive of Lightsource BP, has told the Guardian how Lightsource will help power one of the biggest corporate transformations ever attempted - as BP aims for its 2030 renewable energy target.

As well as Lightsource’s facilities, BP also plans to finance its own solar farms which the solar venture will develop and run as a “gun for hire”.

“We already have momentum,” Boyle says.

“The fact that we are able to deliver with confidence allows BP to believe that their early 2025 [interim target] is actually doable predominantly through solar, and that’s important to them.”

This confidence is also important to BP’s shareholders, many of whom remain sceptical that the financial returns from renewable energy can compete with the cash generated from barrels of crude.

“This is always an amusing one for me,” Boyle says.

“People who compare the returns on solar with oil and gas miss the fact that they’re comparing an apple to a fish.”

Boyle was drawn to the solar industry from a background in retail financial services, “selling a little bit to a lot of people”, because he recognised solar power’s long-term predictable returns as the “Holy Grail of small volume investments”.

“We know that the sun will come up and the sun will go down so we’re essentially creating an annuity of very predictable generation multiplied by a fixed price that has already been agreed with some of the largest companies in the world.”

More here:

The gas price surge has helped to drive up prices at German factory gates at the fastest pace since the oil crisis of the 1970s.

German industrial producer prices surged by 12% in August compared with a year ago, the biggest annual jump since December 1974, as global supply chain problems also hit factories.

Energy prices were primarily to blame. They have risen by 24% compared to August 2020, and rose by 3.3% last month alone.

Statistics body Destatis says:

Mainly responsible for the high rise of energy prices were the strong increase regarding natural gas (distribution).

Prices of intermediate goods (used in other products) have jumped by 17.1% compared with August 2020, Destatis said.

Sawn timber (+124%), metallic secondary raw materials (+104%), wooden packaging materials (+89.4%) and reinforcing steel in bars (+87.2%) all surged over the last year.

Metal prices were up 34.9% compared to August 2020, while German food prices have risen 2.6% over the last year -- with crude vegetable oils up 38.3%, and butter prices rising by 16.4%.

It highlights the cost pressures from rising demand as economies have reopened after pandemic lockdowns. It could drive up inflation, if retailers pass these higher prices onto consumers.

“Monday’s figures suggest that the German industrial sector is continuing to feel the rippling effects of the global supply chain crisis,” said Thomas Rinn, Accenture’s global industrial lead (via Marketwatch).

UK food supplies will be under threat long before Christmas, and could start affecting stocks within days, if carbon dioxide shortages continue, the boss of the Iceland supermarket chain has warned.

While concerns have been raised about how CO₂ shortages might harm Christmas food supplies as grocers start stocking up for the holidays, Iceland’s managing director, Richard Walker, said the problem – which has been compounded by the shortage of HGV drivers – could affect UK supermarket shelves much sooner.

“This is no longer about whether or not Christmas will be okay, it’s about keeping the wheels turning and the lights on so we can actually get to Christmas,” Walker told BBC Radio 4’s Today programme.

“This could become a problem over the coming days and weeks, so this is this is not an issue that’s months away.”

The shortage has been sparked by record energy prices, which forced two US-owned fertiliser plants in the north of England that produce 60% of the UK’s carbon dioxide (CO₂) supplies to shut down last week.

CO₂ is widely used in fizzy drinks and beer as well as in the meat industry to stun animals before slaughter. It is also used to create dry ice, which keeps food fresh for storage and transport.

Walker said Iceland was already building up its stocks on key items such as frozen meat, “just to make sure we can deal with any unforeseen issues”. He added:

“At the moment, we’re fully stocked because suppliers are OK but we do need this sorted as quickly as possible.”

Here’s the full story:

Wall Street is on track for losses today, as investors worry about the fallout from China’s property sector crisis.

The Dow Jones industrial average, S&P 500 and the tech-focused Nasdaq are all down at least 1% in the futures market, as markets also fret the looming prospect of central banks tapering (slowing) their stimulus:

Neil Wilson of Markets.com says “contagion risks from the Evergrande meltdown” are driving the selloff:

Spiking natural gas prices and a European energy crisis, talk of produce shortages and surging inflation don’t provide an encouraging backdrop. Meanwhile a Federal Reserve meeting this week and Sunday’s German election both offer macro uncertainty.

Contagion risks from the Evergrande meltdown are the prime cause of today’s sell-off. You’ve got all kinds of banks and insurers caught in the net but ultimately, I don’t see this as a Lehman’s moment right now. But combined with the tech crackdown it’s probably another reason why investors will be seeking to avoid China in the near-term. What we are seeing today is how risks get priced gradually then suddenly.

It is definitely though a major cause for investor concern right now and it is possible we see further losses before the dip finally gets bought. A market so well-conditioned to buying the dip will find it hard to resist. But the Fed meeting this week will be of particularly importance – does a Chinese property collapse and energy crisis collide with expectations for a Fed rate hike next year and biting inflationary pressures?

That would be a pretty nasty cocktail for risk appetite and I think these are the risks being priced into today’s (and possible further) selling.

The spectre of soaring inflation is hovering over London’s financial markets, pushing the FTSE 100 to a two-month low.

So says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown:

Soaring gas prices are threatening to ignite fresh failures in the energy sector and worsen the supply chain crisis.

Worries have pushed the FTSE 100 even further away from the psychologically important 7,000 mark. A winter of discontent could be looming, as the shortage of labour across the UK intensifies, while the country also grapples with rising covid infection rates.

With recovery stuttering, while prices rise, it’s feared the lethargy of stagflation could emerge upon an unstable economic footing.

Plus, there’s anxiety over China, she adds:

China’s strong arm approach to business, now being flexed over the mining industry is also creating nervousness, after Beijing said it might use tools to stabilise red hot commodity prices. Anglo American, Rio Tinto, Antofagasta and Glencore were among the biggest FTSE 100 fallers in early trade.

There are also lingering worries about Evergrande the Chinese property conglomerate given the continued freefall in its shares, and concerns are mounting that it could collapse, which would reverberate right across the industry.

Sterling has hit a four-week low against the US dollar, as nervous investors scamper for safer assets.

The pound has lost three-quarters of a cent, to $1.367, its lowest since 23 August.

That’s helping to cushion the FTSE 100’s fall, as a weaker pound is a boost for exporters (such as Unilever and Reckitt Benckiser, whose shares are a little higher despite the wider sell-off).

The selloff is gathering pace in London, as investors worry about the escalating crisis at Chinese property developer Evergrande.

The FTSE 100 index of top UK-listed shares dropped by as much as 1.5%, or 104 points, to a fresh two-month low.

Markets look decidedly jittery today, as anxiety over the fate of Evergrande, the world’s most indebted property developer, rises. It owes more than $300bn to creditors and other businesses, and faces a crucial interest payment deadline on its offshore bonds on Thursday.

Jim Reid, Deutsche Bank’s chief strategist, says anxiety over China is hitting the markets:

Sentiment is being marred this morning by a Reuters report suggesting that China will target big property developers next in its crackdown over monopolistic behaviours. Interesting timing given the concerns over Evergrande.

A combination of this and the escalating Evergrande crisis has sent the Hang Seng Properties Index down as much as -6.64% overnight and to a level which if sustained would be its lowest close since June 2012.

Investors are worrying about the domino effect of Evergrande’s massive plunge on the Chinese property market, agrees Naeem Islam of Avatrade:

Evergrande’s shares plunged over 17% today and it made the Hang Seng index sink by over 4%. In addition to this, investors are picking up the momentum where they left off last week [when equities fell].

The dip is due to a variety of causes, including fading earnings estimates, uncertainty related to shifting monetary policy, and instability in the world’s second largest economy as a result of escalating crackdowns.

Political reaction to the energy crisis is rolling in.

Foreign Office minister James Cleverly has said the Government wanted energy firms to “stay afloat organically”.

Speaking to BBC Breakfast, he said:

“Ultimately, what we want to do is to ensure that they stay afloat organically.

“Businesses should stay afloat through their own efforts, ideally. What we want to make sure is that we protect the integrity of our supply, we protect consumers, both commercial and residential, and we will discuss with the industry the best way of doing that.

“We want to see a diversity in the market, of course we do, we also want to protect, as I say, consumers. Exactly how we do this, this is up for discussion, and I’m not going to speculate on the programme exactly how that might happen.”

Conservative MP John Redwood has tweeted that taxpayers will have to step in to support energy firms:

But Labour MP Jon Trickett wants any financial help to come with strings attached:

European stock markets have all dropped sharply at the open too.

The Europe-wide Stoxx 600 is down 1.3%, with chunk losses in Germany (-1.8%), France (-1.5%) and Italy (-1.9%).

Michael Hewson of CMC Markets says rising prices (such as energy costs) have pushed stagflation concerns onto the radar.

It is quite clear there is a growing sense of unease about the economic outlook as a growing number of companies look ahead to the prospect of rising costs, and the possible effects on their profit margins, at a time when central banks are coming under pressure to pull back on the generosity of their current stimulus measures.

Fears of rising inflation could hit spending, and are hurting consumer confidence. There are also concerns about how economies will cope with the delta variant of Covid-19 as the weather gets colder, he explains.

These stagflation concerns are now starting to be voiced in ever increasing frequency, with both the Federal Reserve and the Bank of England likely to have to form a view on them when they meet later this week.

In the City, the blue-chip FTSE 100 has fallen to a two-month low in early trading.

The FTSE 100 has fallen by 67 points, or almost 1%, to 6897 points, the lowest since 21st July (having hit its highest level since the pandemic last month).

Mining companies are among the major fallers, with Anglo American (-5.4%), Glencore (-3.6%), Antofagasta (-3.2%) and Rio Tinto (-3%) all hit by growth worries.

Asia-Pacific focused life insurer Prudential (-5%) are down, having announcing a $2.9bn share placing in Hong Kong. Specialist chemicals firm Johnson Matthey (-3.5%) are also in the top fallers, with 88 of the 100 companies on the index in the red.

Richard Hunter, Head of Markets at interactive investor, says investors are rattled by a series of worries, including costs.

The persistence of the Delta variant, elevated inflation, supply chain blockages and raw material price increases are combing to form a toxic cocktail which is seeing optimism evaporate. At the same time, slowing growth generally has been highlighted by the current weakness in China, while in the US concerns around corporate tax hikes are weighing on the prospects for future profitability.

With the third quarter reporting season edging ever closer, it seems increasingly unlikely that companies will able to match the strength displayed in the previous quarter.

The other major business news of the morning is the deepening crisis at China’s property giant Evergrande.

Shares in Evergrande have plunged 17% as investors weigh up whether the group’s massive debt problems could trigger a broader sell off across all financial markets.

Evergrande hit its lowest market value ever in Hong Kong on Monday, dragging the Hang Seng index down to its lowest point for nearly a year (down 3.5% today).

Other large Hong Kong property stocks such as New World Development and Henderson Land were also seeing double-figure drops in their prices on Monday amid widespread expectation that Evergrande, which has a debt mountain of $300bn, will default on some of its repayments this week.

It is feared such a move could cause a possibly chaotic knock-on effect through the Chinese economy and beyond....

Australia’s market has also taken a hit, with the S&P/ASX 200 index down 2.1%.

Kyle Rodda of IG says the markets appear nervous...amid fears over the pandemic, growth, stagflation and the Evergrande crisis.

Delta and growth concerns are the perennial favourites, compounded by uncertainty about the path for US Federal Reserve tapering. The Evergrande crisis is also earning a greater mention as being a source of volatility in global markets, as fears of a debt crisis and contagion risk in China and global markets build.

Stagflation remains a word fairly liberally thrown in markets too right now, especially as speculation about US Federal Reserve tapering [slowing its stimulus programme] remains rife .

The UK’s sixth largest energy company, Bulb, is seeking a bailout to stay afloat amid surging wholesale gas prices.

The company, with 1.7m customers, is working with the investment bank Lazard to try to shore up its balance sheet.

The BBC has more details:

It is the latest energy company battling to avoid going bust, with at least four smaller UK firms expected to go out of business next week.

A bailout for Bulb could come as part of a joint venture or merger with another company, with a further option being a cash injection from investors, according to the Financial Times, who first reported the story.

In a statement, Bulb told the BBC: “From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2.

“Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.”

Prime Minister Boris Johnson has blamed the energy price crisis on the surge in global demand as the pandemic eases.

On a trip to the US, Johnson also pledged to do “everything we can” to prevent energy companies collapsing, and insisted that the situation will improve.

Speaking to broadcasters on the tarmac of New York’s JFK airport, Mr Johnson said:

“I think people should be reassured in the sense that yes there are a lot of short-term problems not just in our country, the UK, but around the world caused by gas supplies and shortages of all kinds.

“This is really a function of the world economy waking up after Covid.

We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.

But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.”

The UK’s energy crisis features heavily on today’s front pages.

The Financial Times leads on the UK’s largest energy suppliers call for help, saying:

The UK’s largest energy suppliers are requesting a multibillion-pound emergency support package from the government to help them survive the crisis sparked by high gas prices, including the creation of a “bad bank” to absorb potentially unprofitable customers from failing rivals.

Today’s Guardian also focuses on Kwasi Kwarteng’s emergency summit with the industry (see intro).

The Times look at the hit to taxpayers:

Taxpayers face a multibillion-pound bill to help energy companies cope with the fallout from rising gas prices under plans being considered by ministers.

The government is in talks with the industry over how to deal with the predicted collapse of dozens of small suppliers as wholesale gas and electricity prices soar.

Consumers could end up subsidising the supply of energy to millions whose providers are likely to go bust in coming months. Two senior industry sources predicted that the bill could run to several billion pounds if, as feared, dozens of suppliers collapse.

The i says the UK’s energy price cap could be at risk:

Household bills could soar even higher than feared as energy giants call for the price cap to be lifted amid a crisis which has left smaller firms supplying up to one million homes at risk of going out of business.

i understands some of the big six energy companies currently locked in negotiations with the Government are pushing for the energy price cap to be scrapped as they’re urged to step in to supply customers left without providers.

Cabinet minister Alok Sharma said the price cap would remain in place “this winter” but warned the Government couldn’t rule out removing it in future.

The Daily Telegraph says the government is considering several options, including government loans to cover the costs of taking on a large number of customers, or the creation of a state-backed body that would manage providers that collapse in the short term,

Multiple options are believed to be on the table. Industry sources also suggested that VAT or green levies on energy bills could be frozen or reformed to ease the burden on prices. It may be difficult to suspend green levies as the revenue raised is used to support vulnerable and low income households.

Mr Kwarteng is understood to have received the proposals and will examine a range of ideas.

Four small energy suppliers have ceased to trade in recent weeks due to the sudden increase in global gas prices.

Another four smaller firms are now on the brink of collapse, sparking fears that up to a million households will face higher bills when their custom is transferred to other companies.

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

Britain’s energy price crunch is turning into a full-blown crisis, as the government holds emergency talks amid fears more small suppliers could soon collapse.

Kwasi Kwarteng, the business secretary, will conduct a summit with gas industry chiefs today, as soaring market prices threaten consumers, business, and suppliers.

As we write this morning:

Mid-level suppliers will be placed into administration if they fall into trouble this winter in an attempt to protect consumers from costlier bills, he revealed on Sunday, after spending a frantic weekend thrashing out contingencies for Britain’s looming gas crisis.

Kwarteng said small firms would be allowed to go bankrupt, with their customers auctioned off to the company prepared to offer them the cheapest rate.

It is hoped the meeting will contain the fallout caused by the rise in market prices, which led to a frantic weekend of meetings and phone calls, culminating in the government drawing up plans to deal with future insolvencies among the 60-plus gas suppliers.

But the big suppliers are reportedly pushing for a major Government support package to help them through the crisis,

The Financial Times reports today the industry wants the creation of a so-called “bad bank” to absorb unprofitable customers from firms that fail -- a model used in the financial crisis over a decade ago.

They say:

Talks with the government had focused on three different approaches, four people familiar with the situation confirmed, while stressing that ministers were “keen not to reward failure”.

One suggestion is for the formation of a “bad bank” which would take on unprofitable customers from failed suppliers — a move reminiscent of measures taken at the peak of the financial crisis in 2008 and one designed to avoid weakening otherwise strong companies.

“This could get the industry through the current period of crisis,” one person familiar with the talks said.

“By parking the problem in a bad bank, it would make it easier to sort out the immediate crisis and then take stock longer term. It would allow the government to handle several suppliers going bust at the same time.”

Other options could include the government underwriting debt for the larger suppliers, or for regulator Ofgem to step in and run failed companies, effectively putting them into nationalisation.

Several small suppliers have already collapsed in recent weeks as wholesale price soar, and concern is growing that more could soon go out of business.

As my colleague Jillian Ambrose writes, the majority of the UK’s small energy suppliers could be left to collapse this winter....

The Guardian understands the government would rather put in place arrangements to protect the millions of homes that may be left without a supplier this winter than prop up poorly financed companies that are likely to fail.

One senior industry source said the government was “not interested in bailing out badly run companies” and may leave the sector to experience a “natural response” to the unfolding crisis.

Those firms’ customers would be transferred to another supplier. But they aren’t keen to pick up these customers, as they may be on unprofitable contracts given the current jump in wholesale costs.

The energy crisis forced several UK fertiliser companies to suspend work last week. That has disrupted carbon dioxide supplies (CO2 being a byproduct of the fertiliser process), which is now threatening the UK food supply chain, as CO2 is used to stun animals at abattoirs, and also in packaged food, fizzy drinks and ready meals.

If the crisis deepens, UK farmers could be forced to cull pigs:

The surge of energy prices is also one factor weighing on global markets, where share prices have fallen back in recent weeks.

Higher energy costs will drive up costs, eat into profitability, knock growth and fuel inflation. An unattractive combination. Shares have dropped in Asia-Pacific markets, and we’re looking at losses in Europe and Wall Street.

We’ll be tracking all the action through the day....

The agenda

• 7am BST: German producer prices for August
• 3pm BST: NAHB Housing Market Index of US housebuilders
• 3.15pm BST: Treasury Committee hearing on jobs, growth, and productivity