Stock markets and bitcoin fall amid Ukraine worries and US interest rate rise fears – as it happened

After that astonishing turnaround on the New York stock market, it’s time to wrap up. Goodnight! GW

The Dow Jones industrial average also rebounded strongly. Having been down over 1,000 points at one stage, it finished 99 points, or 0.3% higher.

Ding ding! The Wall Street closing bell has rung.... and stocks have clambered off the mat to stage a remarkable recovery.

Having tumbled into correction territory earlier, the S&P 500 index rebounded from its steep selloff to close 0.3% higher.

Bloomberg calls it a ‘breathtaking’ recovery:

A stock selloff that at one point rivaled any of the last two years was all but wiped out as dip buyers emerged by Monday’s close, the latest breathtaking reversal in markets rattled by geopolitical tensions and the Federal Reserve’s campaign against inflation.

Retail, industrial and energy companies led a rebound in the S&P 500 into the close after the gauge tumbled as much as 4% earlier in the day. The dollar gained, while 10-year Treasuries were little changed.

The Nasdaq 100 technology index has closed 0.5% higher, having been down more than 4% at one stage of today’s nervy session.

Reuters reckons that bargain hunters pushed the indexes into positive territory, adding:

“I would not be surprised if today is the low point for the major averages,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

Still, Stovall added that January is often a barometer for the rest of the year.

“As goes January, so goes the year,” Stovall added. “A negative January in 2022 along with a negative first five days of the year would not bode well for the entire year’s performance.”

Here’s some reaction:

After posting steep losses earlier, the US stock market is staging a late recovery!

The Dow Jones industrial average is now down just 168 points, or 0.5%, in late trading while the tech-focused Nasdaq is almost flat for the day....

The Nasdaq 100 index of tech stocks is on track for its worst January performance ever, surpassing even the 2008 losses, says Bloomberg.

Here’s their take on this month’s market selloff:

Nasdaq 100 Index’s worst start ever to new year, S&P 500 Index losing 10% and Russell 2000 approaching bear market -- the global stock selloff is gathering pace and the market value losses on Monday alone are now ballooning to almost $3 trillion.

24 Jan 202214.40 EST

Food and drink shortages possible as UK support for CO2 industry ends

Sarah Butler

British producers have raised fears of beer and burger shortages and higher prices for shoppers after the government said it would stop propping up the CO₂ industry.

A three-month deal to support the UK’s main producer of the gas, brought in as an emergency measure after a crisis in the autumn, ends next week and it is understood it will not be renewed.

The government provided a temporary bailout to CF Fertilisers, which accounts for 60% of the UK’s CO₂ supplies, to counter the threat of chaos in supply chains, after its US owner shut its factories amid the soaring cost of natural gas.

Any holdup in supplies would affect soft drinks and bakery producers as well as meat processors and brewers, who all use CO₂ in making and packaging their goods.

Our energy correspondent Jillian Ambrose has analysed the impact that rising tensions between Russia and Ukraine could have on the UK’s gas supplies, and those of continental Europe:

How vulnerable are the UK’s gas supplies?

The good news is that the UK imports barely any gas from Russia. It meets about half of its gas requirements from the North Sea, while another third is sourced from Norway. The rest is imported by pipelines connecting the UK to Europe, or in the form of liquified natural gas (LNG), which is transported by tankers typically from Qatar or the US.

The bad news? The UK’s gas sources could all becoming eye-wateringly expensive if markets in Europe soar. The UK’s market is closely connected to markets in Europe, so a price rise in Germany or the Netherlands would lead to higher prices in Britain.

There is no end in sight to Europe’s gas market woes. The US investment bank Goldman Sachs said on Monday:

“The high energy prices seen in recent months are not necessarily a one-off.”

Gas prices are likely to stay twice as high as normal until 2025, it said, and if Europe faces colder than average temperatures in March and February, blackouts could be likely.

How vulnerable are Europe’s gas supplies?

Very. Russia typically supplies about a third of Europe’s gas via a complex network of pipelines that run through Ukraine, Belarus and Poland to Germany. From Germany, pipelines carry gas to the rest of western Europe and through to the UK.

A major gas supply disruption to Ukraine, last seen in 2008, could cause severe market volatility and a shutdown of factories to help conserve gas. Market experts at S&P Global warned that “any conflict impacting gas supplies into Europe could have knock-on impacts on power, carbon and coal prices”.

At the same time, Europe may become more dependent on gas to run its gas power plants after EDF warned that it would reduce the electricity it generates from nuclear power by 10% this year because of technical problems at a handful of its reactors.

24 Jan 202214.04 EST

Kalyeena Makortoff

Aviva Investors, an important UK asset manager, has put the directors of 1,500 companies on notice that it is willing to seek their removal if they fail to show enough urgency in tackling issues including the climate crisis and human rights.

The firm said the way it votes on the re-election of company board members in the upcoming AGM season would be heavily influenced by its four key stewardship priorities for the year, which also include biodiversity and executive pay.

In its annual letter to 1,500 companies in 30 countries including the UK, Aviva Investors urged companies to develop their own biodiversity action plans, publicly state their commitment to human rights, with appropriate due diligence, and ensure that executive pay plans – particularly bonuses – are linked to its four stewardship priorities.

More here:

Stock markets across Europe have racked up heavy losses today, ending at the lowest level since October.

Fears of conflict in Ukraine unnerved investors, adding to their concerns about looming US interest rate rises.

The pan-European Stoxx 600 index has closed 3.8% lower, its biggest one-day fall since June 2020.

Germany’s DAX fell by 3.8%, while France’s CAC index lost 4%.

David Madden, market analyst at Equiti Capital, says:

Traders continue to be in selling mode as fears mount surrounding the Russia-Ukraine situation. Also playing into the mix are the concerns the Federal Reserve will issue a hawkish update on Wednesday.

The growing Russian military presence on the Ukrainian border is adding to the speculation there will be an invasion, and those fears have been fuelled by the news that UK and US embassy staff in Ukraine have been instructed to leave the country. Dealers are worried about the prospect of a war in Eastern Europe as the human and economic cost would be huge.

Some central European economies like Germany are heavily dependent on energy from Russia, and should a war break out, it’s a possibility those energy supply lines would be cut, which would cripple economic output in the EU.

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.