Rolling coverage of the latest economic and financial news
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- Factory constraints, transport disruption and staff shortages cited
- European markets fall as amid slowdown worries
- Amazon UK arm pays £3.8m more corporation tax despite £1.9bn sales rise
- Dismayed business groups warn tax rises will harm recovery
The selloff is gathering speed – the FTSE 100 index is now down 82 points, or 1.15%, at 7067, with most stocks lower.
Richard Hunter, head of markets at interactive investor, says fears of faltering growth in the world’s largest economy (the US) are weighing on markets.
Expectations are being revised to incorporate the effect that the Delta variant may be having on the performance of corporates in the current third quarter.
European stock markets have fallen 1% in early trading, on concerns that the rise in cases of the Delta variant are hitting the global recovery.
In London, the FTSE 100 index has dropped by 63 points to 7085, while Germany’s DAX has shed 1.2%, with similar losses in France, Italy and Spain.
The possibility of economic growth slowing down, as hinted by a lower labor market report and rising coronavirus cases, amid tapering discussions among central bank officials, is having a major toll on investor confidence. Moreover, isolated hindrances in combatting the spread of the delta variant may likely dampen hopes of a strong global economic rebound and contribute to higher volatility in stock markets.
Having said that, equity indices are still near all-time highs and, thanks to effective management by the Biden administration and the Federal Reserve, the repercussions of the pandemic have broadly been contained.
Historically speaking, investors usually witness weaker stock market performance in September. Stock markets have been consistently strong and posting gains, with the S&P 500 up nearly 20% in 2021 without even a 5% retracement. Furthermore, there is a lot of uncertainty related to the expected economic recovery and the expected change in Fed policies. This means that investors should brace themselves for some volatility as markets go through a correction phase.