FirstFT: Global stocks drop | Financial Times

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Stock markets dropped on Thursday on rising concerns about prospects for the global economy, following days of sharp moves in government bonds that hinted at slower growth and inflation than previously expected.

Equities fell first in Asia before the negative mood spread into Europe and then to Wall Street — a move analysts blamed on expectations that US economic growth is about to peak at the same time as signs emerge of a slowdown in China.

Across Wall Street, investors are suddenly being forced to think how to reposition against the backdrop of what Jim Caron, a portfolio manager at Morgan Stanley Investment Management, has described as a “peak in growth, a peak in inflation and a peak in policy stimulus”.

The US S&P 500 index closed lower by 0.9 per cent, while the technology-focused Nasdaq Composite slipped 0.7 per cent. Both indices had set records in recent days. In Europe, the continent-wide Stoxx Europe 600 lost 2 per cent after Hong Kong’s Hang Seng index ended its session 2.9 per cent lower. Spain’s Ibex closed down 2.3 per cent and Italy’s FTSE MIB lost 2.6 per cent. The FTSE 100 in the UK was down 1.7 per cent.

Amid choppy moves in government bond markets on Thursday, Robert Armstrong asks in our Unhedged newsletter: what took so long for US treasury yields to crash? Sign up here to receive the newsletter in your inbox every weekday.

Five more stories in the news

1. Senators call for investigation into Didi IPO Senators Bill Hagerty and Chris Van Hollen called on the Securities and Exchange Commission to investigate whether Didi Chuxing misled American investors ahead of its initial public offering. They have asked regulators determine whether Didi was forthcoming enough about its contact with Chinese regulators prior to the listing of its shares.

  • China’s crackdown on Didi reverberates: Keep, China’s most popular fitness app, pulled out of plans to file for an initial public offering in the US last week as Chinese regulators announced an investigation into data security concerns at Didi.

2. Biden defends US withdrawal from Afghanistan Joe Biden said Thursday that the US military mission in Afghanistan will end on August 31, defending his decision to withdraw American troops after more than 20 years of fighting despite the threat of a resurgent Taliban. Many Afghanistan’s professionals are fleeing the country before the US withdrawal. (FT, WSJ)

3. ECB changes inflation target The European Central Bank has set a new 2 per cent inflation target and said it could tolerate temporary moves beyond that point, in a shift that gives policymakers flexibility to keep interest rates at historic lows for longer.

4. Malaysian coalition partner calls on PM to step down Ahmad Zahid Hamidi, president of Umno, the party that has dominated Malaysian politics for decades, withdrew support from the ruling coalition, saying that Muhyiddin Yassin, the prime minister, had “failed” to address an economic slowdown or fight the pandemic.

5. India’s Zomato launches $1.25bn IPO The food delivery group announced it would launch its $1.25bn initial public offering next week as it seeks to capitalise on the surge in order demand as consumers migrated online during the pandemic. Zomato is set to lead a wave of tech IPOs in the country this year.

Coronavirus digest

  • The Tokyo Olympics will be held largely without spectators after the Japanese government declared a Covid-19 state of emergency in the capital.

  • The World Health Organization director-general said the number of global Covid-19 deaths, which has passed 4m “likely underestimates the overall toll”.

  • In our new series, First Person, florists, fishmongers, writers, oil towns and car insurers show how they have coped with the effects of the pandemic.

  • Rising infection rates, driven by the Delta variant, have forced Israel to reintroduce restrictions for the first time since January.

Line chart of Yield (%) showing 10-year US Treasury yield slides to lowest level since February

Follow our live coronavirus blog and sign up for our Coronavirus Business Update newsletter for more Covid-19 news.

The days ahead

G20 meeting Finance ministers will kick off their two-day meeting in Venice today. The main agenda item will be the proposed global minimum corporate tax, following the deal that 130 nations agreed at the OECD last week. Amid the talks, Ireland is worried about losing its “sacrosanct” low-tax regime.

China inflation data Figures out today are poised to show a continuing rise in the country’s factory gate prices, which have surged this year on a global commodity rally.

Euro 2020 final: England vs Italy England on Sunday will play in their first final of a major football tournament in 55 years after beating Denmark 2-1. Scientists have warned that England’s exploits could be fuelling a surge in coronavirus cases.

Fans in London celebrate during the semi-final match between England and Denmark. © Leon Neal/Getty
Fans in London celebrate during the semi-final match between England and Denmark. © Leon Neal/Getty

Keep up with the important business, economic and political stories in the coming days with the FT’s revamped Week Ahead newsletter. Subscribe here. And don’t miss our FT News Briefing audio show — a short daily rundown of the top global stories.

What else we’re reading

Hong Kong’s legal system bears the scars of security law After Beijing imposed its national security law in Hong Kong last year, many businesspeople believed the changes would spare the territory’s courts, which are modelled on the UK’s common law legal system. But one year on, analysts said the law was rapidly undermining legal norms in the city.

China’s rival to Boeing and Airbus set to join battle for the skies The launch of China’s first passenger jet, the single-aisle C919, will see an industry dominated by Europe’s Airbus and its US rival Boeing face a new, deep-pocketed and politically connected competitor: state-backed aerospace champion Comac.

America’s history wars, race and the flag Should history make you proud or ashamed? Unapologetically nationalist or penitentially iconoclastic, asks Simon Schama. History is neither in the business of self-congratulation nor self-flagellation. It is in the truth business. America’s founding myths did not begin with “woke” activists, but were there from the start, he writes.

Tell me lies, tell me sweet little VIEs Back in the halcyon days of October 2019, Alphaville performed a thought experiment: given the legal grey area that variable interest entities (the structure that allows Chinese businesses to list on US exchanges) operate in, what would happen if China decided to just ban them outright? It was a bit of a mad idea — until this week, writes Jamie Powell.

How to prepare for life after an intense career Assumptions about the traditional career path, and its duration, have been overthrown. Nearing retirement presents an opportunity to develop skills. Here’s a guide on how to prepare for “the third age”.

Beauty

Luxury brands are increasingly moving from couture to cosmetics to attract new, often younger, consumers who cannot necessarily afford a €3,000 handbag. But the roots for this diversification stretch back a century to the launch of Coco Chanel’s N°5 perfume.

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