And finally, European stock markets have begun the new week with chunky falls, although nothing as dramatic as bitcoin!
In London, the FTSE 100 has closed 74 points lower at 6798 points, a drop of 1.1% today.
That still leaves the Footsie up over 5% this year, after last week’s roaring start.
Covid-19 fears hit stocks, with catering firm Compass down 4.3%, property firm Land Securities off 3.6% and drinks producer Diageo dropping 2.6%. They all suffer from the pandemic lockdowns, and their impact on hospitality, pubs and restaurants, and offices.
JD Sports ended the day up 3.8%, having hit record highs today after predicting profits would beat expectations.
Germany’s DAX and France’s CAC dropped by 0.8%, while Spain’s IBEX lost 0.6% and Italy’s FTSE MIB dipped by 0.3%.
David Madden, analyst at CMC Markets UK, says health concerns have encouraged dealers to book profits today.
Last week, stock markets enjoyed very bullish moves on the back of the belief that Joe Biden’s administration will reveal new stimulus. The FTSE 100 was sent to a 10 month high while the DAX registered a new record high.
Relatively mild worries about Covid-19 cases are weighing on the mood today. The scale of the losses in stocks suggests that traders would prefer to take some money out of the markets as opposed to panic selling.
On the FTSE 100, mining stocks like Rio Tinto, BHP Group and Anglo American are some of the largest fallers in terms of index points. Housebuilders, oil, hospitality, travel and transport stocks are in the red too.
Bitcoin, meanwhile, has now rebounded to $32,200 — a drop of nearly $8,000, or 20%, compared with Friday night.
That’s all for today. Here’s our updated news story on the FGA’s crypto warning, and bitcoin’s tumble:
Some late news: British retailer Marks & Spencer is buying the Jaeger fashion brand from the administrators of Jaeger Retail Limited.
M&S said it is in the final stages of agreeing the purchase of product and supporting marketing assets from the administrators and expected to fully complete the deal later this month. No purchase figures were disclosed.
Before going into administration Jaeger was part of Philip Day’s stricken Edinburgh Woollen Mill Group.
Earlier today, a key Bank of England policymaker argued that cutting the UK’s official interest rate below zero would be good for growth and could be done without crippling commercial banks,
Silvana Tenreyro, one of the nine members of Threadneedle Street’s monetary policy committee, said negative rates had worked in other countries and would assist the UK’s recovery from its Covid-19 slump.
“My overall assessment is that, while we can never have complete certainty, negative interest rates should with high likelihood boost UK growth and inflation.
Cutting bank rate to its record low of 0.1% has helped loosen lending conditions relative to the counterfactual (of no policy change), and I believe further cuts would continue to provide stimulus.”
Our economics editor Larry Elliott has the full story here:
Over in parliament, chancellor Rishi Sunak has warned that the UK economy will get worse before it gets better, and that the “road ahead will be tough.”
Sunak told MPs:
“While the vaccine provides hope, the economy is going to get worse before it gets better. Many people are losing their jobs, businesses are struggling, our public finances have been badly damaged and will need repair.”
However, Sunak didn’t have any fresh measures to combat the slump, having announced a £4.6bn relief package for UK retail and hospitality sectors just last week.
Our Politics Liveblog has more:
Bitcoin just took another lurch lower, as today’s violent selloff shows little sign of abating.
The cryptocurrency has fallen through the $31,00 mark, trading as low as $30,200 a few minutes ago, before recovering a little.
At those levels, bitcoin has lost over $10,000, or more than 25% of its value, since Sunday morning UK time, when it was trading at around $41,000.
It’s still only a one-week low, though, and this selloff doesn’t seem to be causing wider ructions in the markets….
Time for a quick recap.
In a timely warning, the FCA said:
Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.
As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.
Bitcoin has plunged from its record highs, tumbling around 20% today to around $32,000, having risen over $40k on Friday night.
Stock markets have also dropped back, having rallied sharply last week, amid concerns over the spread of Covid-19. The FTSE 100 is currently down 1% in late trading.
Shares in Twitter dropped sharply after it permanently suspended Donald Trump, following the attack on the US Capitol last week.
The US dollar has strengthened, though, as traders ponder whether plans for huge new stimulus packages could lift inflation and employment, meaning monetary policy could be tightened faster than expected.
Heathrow has suffered its quietest year in decades, due to the pandemic.
Transport correspondent Gwyn Topham explains:
The number of passengers at Britain’s biggest airport slumped by 73% in 2020 to the smallest annual total since 1975 due to the travel restrictions caused by the Covid-19 pandemic.
Just 22.1 million travellers passed through Heathrow last year, 59 million fewer than in 2019. December figures were higher than November, rising to 1.1 million as Britain came briefly out of lockdown, but finished 83% below the previous December as the new variant of Covid-19 led to more border closures and halted many flights.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, reckons the FCA is concerned that the crypto market is running dangerously out of control:
‘’Bitcoin’s rapid ascent and descent in just a few days underlines just how volatile the cryptocurrency is. It lost as much as 20% of its value over the last 24 hours, before regaining ground slightly, amid reminders from the UK’s financial watchdog about the risks of investing in firms offering investments in cryptoassets which promise high returns.
There is much speculation that Bitcoin will become more mainstream, especially with more institutional investors becoming involved, but the future of cryptocurrencies remains highly uncertain. Bitcoin’s price is being driven primarily by future price speculation rather than an underlying use-case. The Financial Conduct Authority clearly believes the crypto Wild West could be running out of control, and is warning that consumers risk losing all their money if they succumb to promises of fast and high returns.
As Bitcoin fluctuates, so too does investor interest in firms which provide the technical platforms to mine cryptocurrencies, such as Argo Blockchain. It has been one of the most viewed shares on the HL platform since the start of the year but today saw its share price mirror Bitcoin’s fall. Given the volatile nature of cryptocurrencies, investing in in crypto-miners should still be considered high risk and only undertaken with a well-diversified portfolio.’’
Anatoly Crachilov, CEO of digital asset manager Nickel Digital, argues that today’s bitcoin tumble is the kind of behaviour you expect in an “evolving asset class” – and one best left to the professional investors.
Bitcoin often exhibits large upside swings that tend to be followed by corrections. This is a normal behaviour for a new technology in the early stage of its adoption curve. The price action for such assets is never meant to be a straight line. Only professional investors with a long-term view on the underlying technology should have exposure to this asset class. They also need high-risk tolerance levels and, importantly, never lose sight of the forest for the trees.
Given the immutable monitory policy of Bitcoin protocol, its powerful store-of-value function, and increasing acceptance by the institutional investors, this market is positioned for a fundamental expansion cycle as bitcoin increasingly becomes part of institutional portfolio allocations. Today’s correction, however deep, is just an interim datapoint in the structural multiyear growth of this asset class.”
Shares in Twitter have tumbled by 7% in early trading, as investors react to its decision to permanently suspend Donald Trump’s account.
Twitter banished @realDonaldTrump from its network after the outgoing president’s supporters violently stormed the US Capitol last week, citing the risk of “further incitement of violence”.
That move was welcomed by Democrats and civil rights groups who had longed pushed for tougher action, but enraged Trump’s supporters and conservatives – so the ban could hit Twitter’s active user base.
Given last week’s shocking events, social media companies are facing the prospect of tighter regulation, given the way that extremists groups have used the internet to spread disinformation and conspiracy theories.
Trump has often threatened to overhaul the Section 230 regulations that grant web giants protection from liability for their users’ content, and it’s possible that Democrats could try to make Big Tech more responsible for their users’ actions.
Stocks have opened lower in New York, dragging the US stock market down from Friday’s record highs.
The Dow Jones industrial average has dropped by 161 points, or 0.5%, to 30,936 in early trading.
The broader S&P 500 has dropped by 26 points, or 0.7%, to 3,798 points, while the tech-focused Nasdaq has fallen 154 points, or 1.1%, to 13,047.
European stock markets are solidly red today, as the risk-off mood wipes out some of last week’s gains:
Oof! Bitcoin has now lurched below the $32,000 mark, as today’s selloff gathers pace.
That means the world’s most famous cryptocurrency has tumbled by over 20% since Friday night (when it came close to hitting $42,000).
It’s still only the lowest level since last Tuesday, but the speed of this reversal highlights why the FCA is so concerned that investors could incur big losses through ill-advised punts on the crypto market.
As Neil MacKinnon, Global Macro Strategist at VTB Capital, put it:
“Bank of America has described last week’s surge in Bitcoin as “the mother of all bubbles” and the price chart looks like a classic “Eiffel Tower” formation.”
You don’t see many Dr Martens boots on the trading floors (even before the lockdown left many deserted!).
But the Northampton-shire footwear brand is still heading for the City – through a stock market float.
Kalyeena Makortoff explains:
Best known for its 1460 boot featuring its trademark yellow stitching and chunky soles, the company expected to float at least 25% of the business. If the listing is approved, it will be one of first major initial public offerings (IPO) on the UK market this year.
It comes nearly seven years after Dr Martens was bought for £300m by the private equity group Permira. Sales under its ownership have surged, rising from £160m in 2013 to £672m in the year to March 2020.