DING DING. Wall Street has closed for the night, with heavy losses as the tech selloff intensified.

The Nasdaq index ended the day down over 4%, which puts the tech index into an official correction -- down over 10% since its record peak just a week ago.

Tesla ended the day down more than a fifth (21%) today, extending its recent slump down to $330 per shares. A heavy blow to any investors who bought in after its stock split, to $500 each, barely a week ago.

Here’s Reuters’ take:

US. stocks closed lower for a third straight session on Tuesday as heavyweight technology names extended their sell-off, while Tesla suffered its biggest daily percentage drop after the stock was passed over for inclusion in the S&P 500.

Each of the 11 major S&P sectors were lower, led by declines in technology and energy. Reports on Friday that SoftBank made significant option purchases during the run-up in U.S. stocks added to investor nervousness.

Technology once again dragged indexes lower with a drop of more than 3%, the third straight decline and worst three-day performance for the sector since mid-March. Even with the recent drop, the sector remains the best performer on the year.

“Things got expensive, they ran up, they got very concentrated and people got really giddy,” said Willie Delwiche, investment strategist at Baird in Milwaukee. “Everyone is all loaded up on one side, it doesn’t take much of a ripple to knock some apples off the cart.”

Unofficially the Dow Jones Industrial Average fell 631.89 points, or 2.25%, to 27,501.42, the S&P 500 lost 95.11 points, or 2.78%, to 3,331.85 and the Nasdaq Composite dropped 465.44 points, or 4.11%, to 10,847.69.

With an hour to go, the Wall Street is sinking back to its earlier lows.

The Nasdaq Composite index is now down 3.8% or 434 points at 10,878, with Tesla down over 19%.

This means the tech-focused index has lost nearly 10% of its value since its record peak just last week, which was followed by the slump on Thursday.

https://twitter.com/LaMonicaBuzz/status/1303394491324420102

Time for a recap

Fresh fears of a no-deal Brexit have driven the pound down to its lowest level against the US dollar in almost a month.

Sterling has dropped by over a cent today, to $1.304. It’s also lost 0.8 of a eurocent against the euro to €1.105, the lowest in over two weeks.

The pound slid after the government told parliament that its plans to override parts of the Northern Ireland protocol would breach international law ‘in a very specific and limited way”.

The latest tensions come as negotiations between the UK and EU over a trade deal resume. Saxo Bank warned that the markets are still too complacent about the risks that a deal won’t happen.

Technology shares have fallen again on Wall Street, causing wobbles on other markets too.

The world’s largest company, Apple, is down another 4% today while Amazon is currently 3% lower.

Tesla has has suffered the most, currently down 15% amid disappointment that it’s not one of the companies joining the S&P 500 this time.

Fellow electric vehicle-maker Nikola, though, has surged 40% after forming a partnership with General Motors to get its Badger trucks to market.

This has knocked almost 3% off the Nasdaq so far today, while the Dow Jones industrial average is currently down 460 points or 1.6% and the broader S&P 500 is 2% lower.

That still leaves the Nasdaq up 22% for this year, with the S&P 500 3% higher despite the Covid-109 crisis.

Fears over the health of the global economy have also hit the oil price today, with Brent crude dropping back to $40 per barrel for the first time since June.

European markets have fallen too, with the Stoxx 600 index of top companies in the region dropping by 1.1% today. The UK’s FTSE 100 only lost 0.1%, though, with the weak pound helping multinationals.

Here’s some more of today’s stories:

That’s probably all for today. We’ll be back tomorrow... GW

After a late pick-up, Britain’s blue-chip stock index ended the day roughly where it began.

The FTSE 100 has closed 7 points lower at 5930, having been over 1% down this afternoon after Wall Street opened in the red.

But there are some notable moves. Some multinational companies rallied, as the weaker pound makes overseas earnings more valuable. Drinks firm Diageo, for example, rose by 4%.

Fashion chain JD Sports jumped by almost 10%, after reporting stronger-than-expected sales thanks to rising demand from young people since the lockdown lifted.

But oil companies were hit by the sharp fall in crude prices this afternoon, with Royal Dutch Shell and BP both losing 3%.

European markets also ended in the red, with France’s CAC down 1.6%. Germany’s DAX lost 0.9%, as investors digested the news that exports jumped by 4.5% in July.

David Madden, analyst at CMC Markets says the falls on Wall Street and rising tensions between the Trump administration and China has hurt confidence.

The weakness that we saw in big US tech names last week, is still in play, and that is driving sentiment over here.

The FTSE 100 hasn’t lost as much ground as the indices in mainland Europe thanks to the fall in the pound. Sterling is under pressure again over worries a trade agreement between the UK and the EU will not be agreed upon by mid-October, and that could pave the way for WTO trading rules come 2021. Sterling’s fall has given a little help to the likes of Diageo, Imperial Brands and Ashtead as they all earn a large portion of their revenue outside of the UK, so a softer pound helps them.

President Trump has suggested ‘decoupling’ from China as a way of reducing the US’s dependency on the country. It wasn’t a full-on attack on the nation, but it adds to the frosty relations that have been brewing in recent months, which is a factor in the wider bearish sentiment seen today.

The pound seems to have stabilised, for now at least, at $1.303 vs the US dollar.

That’s a drop of around 1% today, down from $1.3166 last night. It’s the pound’s lowest level in about month

Sterling remained at these lows after Northern Ireland Secretary Brandon Lewis told MPs that the government’s new customs rules for Northern Ireland do breach parts of the Brexit withdrawal agreement.

My colleague Lisa O’Carroll explains:

The government has admitted that its plan to reinterpret the special Brexit arrangements for Northern Ireland will break international law.

The Northern Ireland secretary, Brandon Lewis, astonished backbenchers when he told the House of Commons: “Yes, this does break international law in a very specific and limited way. We’re taking the powers to disapply the EU law concept of direct effect … in a certain very tightly defined circumstance.”

Global oil prices have slumped below $40 a barrel for the first time in over ten weeks as the spread of the coronavirus raises fresh concerns over the world’s oil demand forecasts.

The price of Brent crude has tumbled by more than 10% from five months highs of $46.50 a barrel at the end of August to $39.83/barrel on Tuesday afternoon, after five consecutive days of trading losses. It’s now down 5.4% today alone.

The rising number of Covid-19 cases around the world, and particularly in the US and India, has reignited concerns among oil traders over whether the gradual recovery in oil demand will stall as major economies are forced to reinforce lockdown measures to tackle the spread of the virus.

Paola Rodriguez-Masiu, a senior oil markets analyst at Rystad Energy, said the end of the summer driving season in the US, and further deterioration of relations between Washington DC and Beijing, has brought “additional chills to the market”.

Tesla’s stock has slumped by 18% at the start of trading, adding to last week’s slump.

Investors are unhappy that the self-driving electric carmaker has not been added to the S&P 500 (with Etsy, seller of homemade items and craft supplies favoured instead).

Had Tesla been included, then index trackers would have had to buy its shares (this is said to be one of the factors behind its recent huge gains).

Tesla is trading at $341.72 per share today, down from $418 on Friday night. That’s a staggering 30% below their record high (it hit $500 a week ago, just after its 5-1 stock split).

Shares in Elon Musk’s company had been rising like one of his rockets this year, amid the surge into technology stocks. Even after today’s fall, it’s still up 300% this year.

Tesla’s shares could also be under pressure because it has just raised $5bn through an offering of new stock.

America’s Big Tech companies are caught up in the selloff.

Apple has dropped by 4.8% to $115 per share, some way below the $125 at which the stock split a week ago.

Amazon has lost 3.6%, Microsoft has shed 3.3%, Facebook is down 3.1% and Alphabet (Google) is off 2.8%.

These companies had all surged this year, leading some analysts to predict a correction.

Today’s selloff has pulled the Nasdaq down to a three-week low [corrected], but it’s still up over 20% this year.

As feared, the US stock market has opened sharply lower.

The three main indices are all in the red in early trading, with tech stocks leading the selloff (extending the losses last week)

• Dow Jones industrial average: down 464 points or 1.65% at 27,668
• S&P 500: down 67 points or 2% at 3,359
• Nasdaq Composite: down 364 points or 3.2% at 10,948

All Europe’s stock markets are in the red today, hit by worries about Covid-19, Brexit, and the US election.

Sterling’s weakness means London stocks are less affected.

The FTSE 100 is only down 0.75% at present, while Paris’s CAC has lost 1.8% amid rising cases in France.

Investors are getting more risk-averse, meaning they’re selling shares, and moving into safe assets like bonds and the US dollar (helping to weaken the pound).

The oil price has also fallen sharply, with Brent crude down 3.4% at $40.60 per barrel - the lowest since the end of June.

Fawad Razaqzada, market analyst with ThinkMarkets, explains:

As well as selling of US technology shares, oil prices, the pound and cryptos have also come under pressure. This morning saw European indices gave back some of the gains made yesterday in the absence of US markets. US index futures have declined ahead of the open following the long break, with tech stocks seen tumbling at the open. The risk-off tone has helped to push the dollar higher across the board, which has even weighed on gold.

The cagey sentiment is a reflection of rising new Covid-19 infection rates across Europe, renewed concerns over Brexit, valuation concerns and waning impact of past stimulus measures. Then there are many other concerns that include, for example, US-China tensions which notched up a gear after Donald Trump said he is going to “end” US reliance on China, as well as political uncertainty ahead of the US presidential election.

Shares in UK companies who have suffered badly from the pandemic are among the fallers on the London stock market this morning, as traders fret about a recent pick-up in Covid-19 cases.

Jet engine maker Rolls-Royce, whose sales and servicing revenue has been hit by flight groundings, are down 4.2%.

Gambling firm GVC Holdings, which owns Ladbrokes Coral, are down 4.3%. Its betting takings fell during the lockdown, so will be hoping for an uninterrupted football and racing season.

Whitbread has dropped by 4%. Its Premier Inns hotels saw a drop in revenues as tourism and business meetings dried up this year.

Saxo’s John Hardy also sent this chart over, showing how the pound is currently still trading above its ‘200 day moving average’ against the US dollar despite this week’s losses.

It’s the flattish light-blue line, at around $1.275, or four cents above today’s price.

Hardy reckons sterling could drop back to that level, “if the market finally starts to price in proper no-deal risk from these negotiations rather than complacently assuming that Boris Johnson is merely posturing here”.

Update, the pound’s now below $1.31 for the first time in a fortnight, having shed a whole cent today as it drops to $1.306.

The selloff picked up pace, after the Financial Times reported that the head of the UK’s government legal department has quit, over suggestions that Boris Johnson is trying to row back on parts of last year’s Brexit deal relating to Northern Ireland.

The FT says:

Two Whitehall officials with knowledge of the situation told the Financial Times that the Treasury solicitor and permanent secretary of the Government Legal Department was leaving his position due to a dispute with Downing Street over its plans to challenge parts of the Brexit withdrawal agreement.

Those close to Sir Jonathan Jones said he was “very unhappy” about the decision to overwrite parts of the Northern Ireland protocol, part of the 2019 withdrawal agreement, with new powers in the UK internal market bill.

JD Sports shares rose 7% this morning, even though the sports retailer warned that the boost in sales after shops reopened following the Covid-19 lockdown was “short lived” and that attracting customers into major shopping malls remained a big challenge.

Sales since reopening are up 20% on last year, as JD’s teenage and twenty-something customers were keen to get back to the high street or shop online.

Profits before tax fell to £41.5m in the first half from £129.9m, partly due to costs related to making its shops safe. For the full year, JD expects to make a profit of “at least” £265m.

In the City, the blue-chip FTSE 100 has dipped into the red this morning, despite the boost from the weaker pound.

Housebuilders are dragging the index down, with Persimmon shedding 4% and Barratt down 3.8%.

Building merchant operator Travis Perkins may be to blame. It reported that revenues fell 20% in the first half of this year, pushing it into a loss of £113m (from a £12m profit a year ago).

Travis Perkins, which sells paint, pipes, bricks and cement to builders, has already closed 165 stores, with the loss of 2,500 staff, or 9% of the workforce.

Today, though, it has announced that the demerger of its Wickes DIY chain is on hold “until markets become more stable and predictable”. Travis Perkins shares, which are on the FTSE 250 index, are down 6.5%.

Brexit worries are continuing to weigh on the pound this morning, as crunch UK-EU negotiations begin in London.

Sterling has dropped another 0.2% against the US dollar to $1.314, its lowest in two weeks. It’s now fallen for five days in a row, amid growing fears of a no-deal Brexit.

The pound’s also dropped against the euro, to €1.111.

Overnight, leaked diplomatic cables seen by the Guardian show that Brussels’ trust in Boris Johnson has fallen sharply; EU official suspect the UK is resisting reaching a compromise on key issue - fisheries, state aid and dispute resolution - until the last moment in order to achieve a last-minute “trade off”.

Meanwhile in the UK, budget airline easyJet is fuming, loudly, over the government’s handling of the pandemic.

Easyjet told shareholders this morning that the UK’s “constantly evolving” travel restrictions were having a negative impact on consumer confidence.

It is now scrapping some of its planned flights, in response to seven Greek islands being removed from the ‘safe list’ last night. The airline will now operate “slightly less” than the 40% capacity it had been aiming for.

CEO Johan Lundgren didn’t hold back in his criticism of ministers, saying the airline industry needs a broad package of support:

“We know our customers are as frustrated as we are with the unpredictable travel and quarantine restrictions.

“We called on the Government to opt for a targeted, regionalised and more predictable and structured system of quarantine many weeks ago so customers could make travel plans with confidence.

Shares in easyJet have slumped 5% in early trading, near the bottom of the FTSE 250 leader board. More here:

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

German exports have jumped, in the latest sign that the eurozone economy is emerging from its worst slump on record.

But with trade still far below pre-Covid levels, the road back to normality looks long and bumpy.

New figures released this morning show that sales of German-made goods jumped by 4.7% in July compared to June. That pick-up in global demand echoes the strong exports reported by China on Monday.

It’s a decent sign that Germany’s economy has returned to growth, after shrinking by around 10% in April-June.

However, better isn’t the same as good. Crucially, imports and exports at Europe’s manufacturing powerhouse are still 11% lower than a year ago, highlighting the subdued demand as the pandemic continues.

It’s also notable that imports only rose by 1.1% - meaning Germany’s trade surplus has swelled:

Here’s the details:

German exports, July 2020

• €102.3bn
• +4.7% on the previous month (calendar and seasonally adjusted)
• -11.0% on the same month a year earlier

German imports, July 2020

• €83.1bn
• +1.1% on the previous month (calendar and seasonally adjusted)
• -11.3% on the same month a year earlier

Interestingly, the report also shows that Germany’s trade with China has rebounded - while imports from the UK have slumped by a quarter (!) year-on-year in July due to the impact of Covid-19.

Germany’s statistics body, Destatis, explains:

The degree to which year-on-year exports were affected depended on the trading partner. Exports to the People’s Republic of China decreased by just 0.1% to €8.7bn in July 2020 compared with July 2019. Exports to the United States, which have been hit particularly hard by the coronavirus pandemic, dropped by 17.0% to €9.3bn. Compared with the same month last year, exports to the United Kingdom showed a decrease of 12.6% to €5.5bn in July 2020.

In July 2020, most imports came to Germany from the People’s Republic of China. Goods to the value of €10.3bn were imported from there, which was a 7.4% increase compared with July 2019. Imports from the United States fell by 14.8% to €5.2bn in July 2020. German imports from the United Kingdom were down 24.8% to €2.4bn.

Reaction to follow....

The agenda

• 9am BST: Italian retail sales for July
• 10am BST: Updated eurozone GDP report for Q2 2020
• 10.30am BST: South African GDP for Q2 2020