Good morning. We start the week with updates on the fresh wave of far-right violence that broke out in England yesterday and the escalating Middle East crisis. But first, we turn to the markets, where Japanese stocks plunged earlier today and as global markets shuddered at the prospect of a US recession.
Japan’s Topix was down as much as 7.3 per cent, virtually wiping out its gains for the year, while the Nikkei 225, which on Friday suffered its biggest one-day fall since the 1987 crash, was down 5.9 per cent.
Traders in Tokyo said the sell-off in Japan, which produced declines in other Asian markets, was likely to continue into Europe and the US. Investors are prepared for renewed volatility on fears that the Federal Reserve has been too slow to respond to signs the US economy is cooling and may be forced to cut interest rates.
Elsewhere in markets:
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FT View: Investors are learning that revenue gains from artificial intelligence will take time after a rollercoaster earnings season for tech stocks, our editorial board writes.
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Berkshire Hathaway: Warren Buffett’s company has halved its stake in Apple as part of a selling spree in which the billionaire investor dumped $76bn of stocks.
And here’s what I’m keeping tabs on today:
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Economic data: Services purchasing managers’ indices are due for the EU, UK, US, France, Germany and Italy. The Bank of England provides an update on international reserves while Turkey reports its inflation rate.
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Rachel Reeves: The UK chancellor begins a three-day visit to New York and Toronto in a bid to sell Britain as “a stable place to do business”.
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Companies: Results are expected from Clarksons and Infineon Technologies. Lloyds Banking Group has poached Amazon Web Services executive Rohit Dhawan as its new AI chief.
Five more top stories
1. Far-right violence in the UK escalated yesterday as a fresh outburst of violent disorder broke out in several English towns and cities, injuring police officers and leaving residents “terrified”. Prime Minister Sir Keir Starmer has condemned the “violent thuggery” and said rioters would face the “full force of the law”. Here are the latest updates.
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Explainer: A horrific knife attack, disinformation and extremists whipping up anger have all played a role in triggering the shocking outburst of violence.
2. EU member states will probably back proposed tariffs on Chinese electric vehicles in November, according to the bloc’s trade chief. Valdis Dombrovskis said the 27 countries — which are often divided on China-related matters — would endorse measures to help the domestic automotive industry compete with imports that he said received big subsidies from Beijing.
3. Top asset managers are struggling with investor reluctance to embrace risk and put money into markets. Investors have been stubbornly sitting on cash, forgoing gains on more than $1.5tn during a record bull run that until recently pushed markets to all-time highs. Here’s what’s driving the caution.
4. Western governments have stepped up calls for their citizens to leave Lebanon while commercial flights are still available, as an anxious region braced for the possibility of a full-blown regional war after twin assassinations in Beirut and Tehran raised tensions between Israel, Iran and the Hizbollah militant group. Read the full story.
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Boycotts: Consumers in Muslim countries are shunning western food and drinks brands over their perceived support for Israel, hitting revenues.
5. US Democrats’ strategy of describing Donald Trump as “weird” is rattling Republicans, who have failed to find an effective response. Kamala Harris’s new campaign move has been turbocharged by Trump running mate JD Vance’s hardline views on abortion and disparaging comments about women. Here’s why the change in approach has worked.
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‘Freedom’: The vice-president’s campaign buzzword is a smart messaging shift that reflects the importance of choosing words with common appeal, writes Rana Foroohar.
The Big Read
Delaware, the legal home to two-thirds of S&P 500 companies, has been in the spotlight due to Elon Musk’s $56bn pay award. But the public fight between the billionaire and judge Kathaleen McCormick was only the prologue to a messier struggle that has exposed a fundamental divide in an otherwise tight-knit legal community that many fear could undermine the US state’s position as the preferred destination for incorporation for American companies.
We’re also reading . . .
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Olympics: The unique chance to watch star players such as Stephen Curry, LeBron James and Kevin Durant play together have made basketball the Games’ hottest ticket.
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Chinese migration: The number of Chinese citizens living in Malaysia has almost doubled over the past three years, driven by a jump in students and investors.
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Pension funds: Despite shrill appeals from policy reformers bemoaning under-investment in UK companies, pension schemes should not be patriots. Patrick Jenkins explains why
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Accounting: International rules for the sector are holding back investment just as it needs to meet growth and net zero requirements, writes Andy Haldane.
Chart of the day
Top private capital groups have deployed more than $160bn in the latest quarter in anticipation of an increase in buyout and merger activity, as the US Federal Reserve edges closer to cutting interest rates.
Take a break from the news
In a forgotten picture from August 26 1944, the day after the liberation of Paris from the Nazis, General Charles de Gaulle walks down the Champs-Élysées amid scenes of excitable tumult. But who is the man with his arm in a sling, and how does his apparent “photobombing” rewrite second world war history?
Additional contributions from Sophie Spiegelberger
