Stock markets and bitcoin fall amid Ukraine worries and US interest rate rise fears – business live

• 5.50pm GMT17:50 FTSE 100 loses £53bn
• 5.04pm GMT17:04 FTSE 100 closes at one-month low
• 2.56pm GMT14:56 US private sector growth slumped to 18-month low
• 2.41pm GMT14:41 Wall Street drops at the open
• 1.10pm GMT13:10 Gas prices jump
• 12.24pm GMT12:24 European selloff gathers speed as Ukraine worries rise
• 11.41am GMT11:41 Bitcoin hits six-month low amid crypto turmoil

Today’s selloff has wiped £53bn off the value of the FTSE 100 index.

Wall Street is sliding deeper into the red.

The Dow Jones industrial average has now lost 930 points, or 2.7%, to 33,335, while the Nasdaq Composite has fallen 4%.

After a rough day’s trading, the UK’s blue-chip stock index has closed at its lowest level in a month.

The FTSE 100 index ended the day down 197 points, or 2.6% at 7297. That’s its worst fall since 26th November, when the Omicron variant sent markets reeling.

Educational publisher Pearson led the fallers, down 9.1%, followed by housebuilder Barratt Development (-8.9%), tech-focused investor Scottish Mortgage Investment Trust (-8.5%), and Russian steel maker Evraz (-8%).

The smaller FTSE 250 index of medium-sized firms had its worst day since September 2020, tumbling 3.6% to its lowest level since March 2021.

Bloomberg’s Tim Stenovec has more details of the US stock market selloff:

Today has brought another woeful start to trading on Monday, as heightened geopolitical risk compounds investor anxiety and drags on risk assets.

So says Craig Erlam, senior market analyst at OANDA, who explains this could be a pivotal week for markets:

It could be a make or break week for the markets, with the Fed meeting on Wednesday, big tech earnings, and ongoing tensions on the Ukraine/Russia border. That may sound a bit over the top given how deep a correction we’ve already seen, particularly in the Nasdaq, but it could get much worse before it gets better.

Wednesday is going to be massive. The Fed needs to strike the right balance between taking inflation seriously and not wanting to cause further unnecessary turmoil in the markets. Not an easy balancing act when four hikes are already priced in, alongside balance sheet reduction, and some are arguing it’s not enough.

That’s a lot of pressure for a meeting that’s not really live but investors will be hanging on every single word. It won’t take much for the Fed to add to the anxiety but if they manage to strike the right chord, it could help settle the markets and draw investors back in.

And then there’s earnings. Netflix got things off to a rotten start for big tech but there’ll be plenty of opportunities to turn that around this week. The Nasdaq has fallen more than 16% from its highs and sits very close to bear market territory. Will investors be tempted back in at these levels if the other big tech names deliver?

Whatever happens, it promises to be a really interesting week in the markets and one that could go terribly wrong or be the turning point. Perhaps that’s oversimplifying things but when fear is in control as it seems to be now, it creates these kinds of extremes.

The Russian rouble has weakened to its lowest level in over a year, as soaring tensions between Moscow and the West over Ukraine hits Russian assets.

The rouble has dropped by 2% today to around 79 to the US dollar, the lowest since November 2020.

The pressure on the rouble led the Bank of Russia to halt purchases of hard currencies (Bloomberg has more details).

Shares tumbled in Moscow today too. The MOEX index of Russian companies fell almost 6%, hitting its lowest level over a year. It’s fallen by 15% since the start of 2022.

Russian government debt also fell, pushing up Russia’s 10-year bond yields hit 9.76%, their highest since early 2016, Reuters reports (yields move inversely to prices).

Stocks in the US have fallen further, with the S&P 500 dropping over 2%.

That put the broad index of US stocks into correction territory (more than 10% off its record high, set at the start of January).

The Nasdaq also fell further, and was down 3%.

Growth across the US private sector has slowed sharply to its lowest rate since July 2020, in a sign that the Omicron variant has weakened America’s recovery.

US output growth slowed to an 18-month low in January as the Omicron wave exacerbates supply delays and labor shortages, data firm IHS Markit reports.

Its flash US Composite Output Index has dropped to 50.8, a sharp tumble on December’s 57.0, close to the 50-point mark showing stagnation.

The slowdown in output growth was broad-based, with both manufacturing and service sector firms reporting that output nearly stalled this month.

Covid-19 cases in the US hit record levels at over one million a day earlier this month, leading to labour shortages and supply chain disruption.

Chris Williamson, chief business economist at IHS Markit, said:

“Soaring virus cases have brought the US economy to a near standstill at the start of the year, with businesses disrupted by worsening supply chain delays and staff shortages, with new restrictions to control the spread of Omicron adding to firms’ headwinds.

“However, output has been affected by Omicron much more than demand, with robust growth of new business inflows hinting that growth will pick up again once restrictions are relaxed. Furthermore, although supply chain delays continued to prove a persistent drag on the pace of economic growth, linked to port congestion and shipping shortages, the overall rate of supply chain deterioration has eased compared to that seen throughout much of the second half of last year.

US stock indexes have dropped at the start of trading, as soaring tensions between Russia and the West over Ukraine worry investors.

Shares are under pressure, ahead of the key Federal Reserve policy meeting on Wednesday that could cement expectations of a March interest rate rise.

The Dow Jones Industrial Average of 30 large US companies is down 386 points, or 1.1%, at 33,878 points. Boeing (-3.5%), Disney (-2.9%), Goldman Sachs (-2.7%) and Visa (-2.3%) are leading the fallers.

The S&P 500 is down 1.5%, as is the tech-focused Nasdaq Composite.

The UK’s smaller stock index, the FTSE 250, is having a torrid day.

The index of mid-size companies has tumbled by 3.25% today, down 723 points at 21540 points.

That’s its lowest level since the end of March 2021, and on track for its worst day in over a year (although it could yet recover some ground).

Cinema chain Cineworld (-13%) and cyber security firm Darktrace (-12.3%) are the top fallers.

Wall Street is set for a sharper drop at the open, with the Dow Jones industrial average down 1% in the futures market:

Bitcoin’s moving lower too, down over 7% in the last 24 hours at around $33,200 - still a six-month low.

The Stoxx 600 index of European company shares has now dropped by 2.8%, to its lowest level since November 30th.

The FTSE 100 index has now lost all its gains so far this year.

It’s down 123 points, or 1.65%, at 7370 points, still on track for its worst day in eight weeks.

Russian steelmaker Evraz is now among the big fallers, down 7.1%, just behind tech-focused investment trust Scottish Mortgage (-7.5%) which continues to be pummelled by the correction in technology stocks.

Basic materials producers are weaker too, including copper producer Antofagasta (-5.8%) and Glencore (-5.3%). Educational publisher Pearson (-6.5%), gambling group Entain (-6.3%) and airline group IAG (-5.6%) are also high in the fallers.

The US stock market is on track to open lower, led by further losses on the tech-focused Nasdaq:

Gas prices have jumped sharply today, on concerns that Russian supplies to Europe could be disrupted.

The wholesale day-ahead contract for UK gas has risen 14% to 217p per therm, adding to gains on Thursday and Friday.

That’s more than triple the price a year ago, but still below its record highs last autumn:

The UK wholesale weekend gas price has risen 9.7%, while the winter 2022 gas contract is 21% higher.

European benchmark gas prices have also jumped today, with the February and March contracts both up over 6%.

1.20pm GMT update: the Dutch wholesale gas contract for February is now up 18.5% today.

Russian energy supplies are in the spotlight as the United States and Europe both promised to impose new, much harsher sanctions on Moscow should it invade Ukraine.

But the Kremlin has insisted that it is reliable energy supplier, as Reuters reports:

Russia has been a reliable energy supplier to Europe even at difficult times in relations, Kremlin spokesman Dmitry Peskov said on Monday, calling reports in British media that Moscow may cut supplies in case of sanctions “fake hysteria”.

Europe relies on Russia for around 35% of its gas and is also a major consumer of Russian oil coming both via pipelines and sea ports

“In the most uneasy times in our relations, Russia was a reliable guarantor of Europe’s energy security, faultlessly fulfilling its contractual obligations,” Peskov told a conference call on Monday.

Today’s losses follow the worst week for global equity markets since October 2020.

The MSCI’s index of world markets dropped by 4.25% last week, with volatility rising amid a growing sense of investor unease.

Worries about tighter US Federal Reserve policy, the tensions between Russia and Ukraine, and disappointing earnings calls from some high-profile companies are all factors, says Mark Haefele, chief investment officer at UBS Global Wealth Management:

“With a number of critical market factors still in flux, the short-term market direction can remain volatile.

But for longer-term investors, we don’t think it is a bad thing if market volatility takes some of the air out of the more speculative corners of the market—Bitcoin is down 23.8% year-to-date. Nor is it a bad thing if current volatility means that some secular growth names are being offered at their best prices in months.

Meanwhile, it’s important to remember we remain in a very strong economic growth environment, which should stay supportive of cyclical and value sectors in the short term.”

The selloff in Europe’s stock markets is gathering pace, as tensions over Ukraine rise.

The UK’s FTSE 100 index of blue-chip shares has now dropped by 93 points, or 1.25%, to 7400 points.

That’s its lowest level since the start of January, as a risk-off mood sweeps markets after Nato said it is reinforcing its eastern borders with land, sea and air forces.

European markets have fallen deeper into the red, with Germany’s DAX and France’s CAC both down 1.9% today.

It puts European stocks on track for their worst day in two months (since the discovery of Omicron sparked a selloff in November).

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

“The threat of conflict breaking out on the doorstep is hanging over European indices, as hopes begin to fade that there will be fresh meaningful moves from diplomats.

The tech sector jitters are continuing, unsurprising given the seemingly unstoppable slide of the Nasdaq composite and the march downwards of the S&P 500 on Friday.”

Investors are also worried that the US Federal Reserve could tighten monetary policy sharply this year, after America’s inflation rate hit a 40-year high.

The Fed meets this week, and could signal that it will lift interest rates in March. Some are wondering if the Fed could hike rates by 50-basis points [0.5%] in March, rather than the 0.25bp rise expected.

Raffi Boyadjian, lead investment analyst at XM, warns there could be more jitters ahead:

Wall Street just had its most bruising week since the onset of the pandemic in March 2020 and it could get even rockier for stocks in the coming days. The Federal Reserve is poised to give a formal nod to liftoff on Wednesday and the earnings season is about to heat up with a host of major names set to report this week.

Meanwhile, tensions between the West and Russia over Ukraine show no sign of easing, adding to the market angst as a conflict could potentially deepen the global energy crisis.

Housebuilders are among the top fallers in London, such as Barratt Development (-6.6%) and Persimmon (-5.8%). Analysts at Jefferies cut their rating on some building firms this morning, as the government demands the sector foots the bill for removing dangerous cladding.

Technology-focused investment trust Scottish Mortgage has dropped 5.8% today, as tech stocks continue to come under pressure (the Nasdaq fell into a correction last week).

Bitcoin has tumbled to its lowest level since last July, as traders ditch risky assets such as crypto currencies.

Bitcoin has fallen to around $33,800, down over 5% in the last 24 hours.

It’s now shed more than half its value since hitting record highs around $69,000 in November.

Victoria Scholar, head of investment at interactive investor, says thecrypto market is “in turmoil”, and there could be further falls ahead.

It looks as though the [Bitcoin] downtrend remains intact with the potential for further downside towards $30,000 as the next major round number support level, which coincides with the summer trough.

Similarly, ether has shed around 50% with $2000 as the next key level to watch. It looks like the bubble has burst as panic selling grips the market.

What this episode has taught us is that this is still a very nascent asset class with a high level of correlation between individual crypto assets, particularly on the way down. It has also taught us that for those willing to enjoy the ride higher, traders need to be able to stomach the sharp volatility and steep declines as well. Brave traders might use this major repricing as an opportunity to buy the dip.”

The tumble in crypto prices in recent weeks as wiped $1trn off the combined value of the sector since November’s peak.

Anxiety that US interest rates could be hiked several times this year is one factor hurting speculative assets. The Ukraine crisis is another.

Chris Weston of brokeragePepperstone says macro forces, such as “higher US real rates, lower inflation expectations and a focus on reduced liquidity from the Fed” are hitting the crypto sector.