The FTSE 100 tumbled below the 7000 level today after tech stocks fell following a slump in Bitcoin.
The cryptocurrency lost ground over the weekend and into Monday, hitting sentiment in technology shares in the US last night.
Traders said that would take some of the momentum out of the markets in Europe, where improving sentiment around the Covid vaccines had pushed the FTSE 100 above 7000.
Today, however, the index fell 41.44 points to 6958.64 as bearish sentiment swept through the markets. The fall was greater than expected and was led by big tumbles from tobacco stocks.
British American Tobacco and Imperial Brands fell 6% and 5% respectively after the Wall Street Journal reported the US administration was considering capping the amount of nicotine in cigarettes.
UK payrolls also fell, dampening sentiment, although the unemployment rate dropped to 4.9%, which was deemed positive.
Reactions to data are increasingly hard to second guess in the through-the-looking glass world of zero interest rates and pandemic disruption to market norms.
US government bonds bizarrely rallied last week after surging economic data, defying the conventional flight from safe haven assets into riskier waters where returns are higher.
Expectations of “reflation” - where prices begin rising due to the improving economy - have increased apace since the start of the year. That has triggered an increase in bond yields and a fall in the price, reflecting expectations of higher interest rates. Yet now, that traditional cause-and-effect dynamic seems to have decoupled, baffling investors.
That said, the biggest talking point in dealing rooms is likely to be football, not fixed income yields. Traders are hanging on every detail of the row over plans for a breakaway European Super League.
Few proposals can have met with more universal opposition than the idea of Britain’s biggest clubs skipping off for the big bucks of a new closed-shop tournament. Yet, for now at least, shares in Manchester United and Juventus have been racing away.
Some pundits expect those gains to peter out as the opposition din grows louder, making the league likely to fall away like similar proposals have done in the past. Even Prime Minister Boris Johnson has rallied to the cause of the antis.
Juventus shares fell 9% in early trading, giving back much of yesterday’s surge.
Still, even the dimmest of prospects of a reported e200 million to e300 million signing on bonus for clubs who join the new league could keep shares buoyant for a few days yet.
JPMorgan has committed to underwriting a e3.25 billion “infrastructure grant” to be shared among the clubs as part of a debt financing deal amortised over 23 years and secured against future broadcasting rights.
There are doubts among pundits, however, that audiences will pay enough to see endless clashes between the same teams, with no prospect of relegation or promotion.