The FTSE 100 (^FTSE) slipped below the flatline and European stocks tumbled on Wednesday as the global sell-off in stocks continued. Analysts believe some investors are taking profits, especially in AI-related stocks, after US stock indices hit record highs last week.

The bosses of Goldman Sachs (GS) and Morgan Stanley have suggested a correction was imminent over the next one or two years. Meanwhile, it emerged that Michael Burry, the investor depicted in The Big Short and who bet against the housing market before the global financial crisis, had taken heavy positions against Palantir (PLTR) and Nvidia (NVDA).

Jim Reid, an analyst at Deutsche Bank, said: “Whilst the moves were only one day’s sell-off, the market narrative saw a discernible shift, with a growing chorus discussing whether we might be on the verge of an equity correction.

“That speculation has gathered pace over the last month in particular, mainly because the Magnificent 7 has diverged from the rest of the S&P 500, which has revived questions about how concentrated this equity market now is.”

The so-called Magnificent 7 group of stocks, which includes the likes of Nvidia (NVDA), Microsoft (MSFT) and Tesla (TSLA), has climbed around 45% in the last year alone, thanks to the excitement around AI.

In contrast, the S&P 500 (^GSPC) has risen just 5% over the same period, when stocks on the index are equally weighted.

  • London’s benchmark index (^FTSE) was only just below the flatline in early trade thanks to its low exposure to tech stocks

  • Germany’s DAX (^GDAXI) dipped 0.7% and the CAC (^FCHI) in Paris headed 0.5% into the red

  • The pan-European STOXX 600 (^STOXX) lost 0.6%

  • Wall Street is set for a negative start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all lower.

  • The pound was around 0.1% up against the US dollar (GBPUSD=X) at 1.3034

Follow along for live updates throughout the day:

LIVE 6 updates

  • Bank of England braced for tough call on interest rates

    The Bank of England (BoE) faces one of its most finely balanced policy decisions in months this week, as signs of easing inflation and a cooling labour market fuel debate over whether to lower interest rates again.

    Traders expect the Monetary Policy Committee (MPC) to hold interest rates at 4% on Thursday, according to market pricing, which implies a less than one-in-three chance of a quarter-point cut. The BoE has already reduced rates five times since last August as it seeks to bring inflation back to its 2% target while supporting faltering growth.

    Some analysts, however, believe divisions among policymakers could produce another split vote, as unemployment edges higher and GDP growth remains sluggish. The prospect of a tightening fiscal stance in November’s budget has further strengthened arguments for a softer monetary policy stance.

    “The Bank looks likely to keep rates on hold on 6 November, despite better inflation and wage news,” said James Smith, developed markets economist, UK at ING. “The committee is deeply divided, and we don’t expect clear signals on the Bank’s next steps. But assuming the autumn budget goes as expected, a December rate cut now looks more likely than not.”

    The BoE’s most recent quarter-point reduction, in August, passed only after two rounds of voting and a narrow 5-4 split. A similar outcome could hinge on whether BoE governor Andrew Bailey decides to back another cut rather than steady policy.

    Read more here

  • Bitcoin slumps after $45bn exodus

    Bitcoin (BTC-USD) dipped below $100,000 overnight, for the first time since June, as a $45bn (£34.5bn) exodus from the world’s largest cryptocurrency continued.

    It comes amid investor concerns over the US government shutdown and slowing economic growth. The digital token recovered slightly this morning to just over $101,000 but it remains down around 20% from its record high above $126,000 last month.

    Markus Thielen, head of 10x Research, said long-time holders of Bitcoin had offloaded around $45bn worth of the coin over the last month.

    Meanwhile, Sean Farrell, head of digital assets at Fundstrat pointed out that “whale selling,” done by investors with large holdings, had risen recently, paving the way for weakness in the market.

    “Whales — they continue to hammer price,” Farrell said on Monday evening, noting billions in bitcoin have recently been moved from private wallets to exchanges, presumably to be sold.

    CoinGlass said around $2bn in crypto positions were liquidated over the past 24 hours.

  • M&S profits halve after cyber-attack

    Profits at Marks & Spencer (MKS.L) halved after it was hit by a cyber-attack earlier this year which left shoppers unable to buy online.

    The high street retailer said its online home and fashion sales plunged more than 40% when it was forced to halt website orders. As well as disrupting its online business, the hack affected the company in-store, leaving some shelves bare in the weeks after it was targeted.

    The retail giant reported its underlying pre-tax profits tumbled 55.4% to £184.1m in the six months to 27 September. On a reported basis, profits were almost wiped out, plunging to £3.4m from £391.9m a year ago.

    M&S said the cost of the attack is set to total around £136m, including about another £34m in the final six months of its financial year, but it was able to recover £100m in its first half through an insurance payout for the hack.

    The total impact is lower than than the £300m cost estimate given by M&S in May.

    The group said sales in its fashion arm dropped by 16.4% as the cyber attack wrought havoc, with sales online down 42.9% and 3.4% lower across its stores.

    Stuart Machin, chief executive of M&S, said:

  • US government shutdown now the longest on record

    The ongoing US government shutdown is now the longest on record at 36 days on Wednesday. This surpasses the most recent 35-day shutdown in 2018-19.

    It comes after mounting speculation about a potential deal between Republicans and Democrats, with hopes that a compromise will become more likely with yesterday’s elections out of the way.

    The Polymarket odds of the shutdown continuing past 16 November has fallen from around 40% to 27%.

    We also heard from president Donald Trump, who said that SNAP benefits (the Supplemental Nutrition Assistance Program) would only be given when the government was open. He added in another post that the Senate filibuster should be terminated so Republicans could reopen the government themselves.

  • Asia and US overnight

    Shares in energy and tech giant SoftBank Group sank 9.8pc on jitters over its investments in artificial intelligence. Computer chip maker Tokyo Electron dropped 4.1pc, while stock in Advantest, a maker of semiconductor testing equipment, lost 7.2pc.

    Stocks in Asia mostly tumbled overnight, with the Nikkei (^N225) down 2.5% on the day in Japan, after a retreat on Wall Street spurred by selling of Big Tech shares. The Hang Seng (^HSI) fell 0.1% in Hong Kong and the Shanghai Composite (000001.SS) was 0.2% up by the end of the session, recovering from modest earlier losses.

    In South Korea, the Kospi (^KS11) lost 2.9% on the day as Samsung Electronics (005930.KS) shed 4.9%. SK Hynix (000660.KS), which had logged major gains thanks to plans to develop artificial intelligence with chip maker Nvidia (NVDA), lost 1.2%.

    Across the pond, US stocks slumped over fears of an artificial intelligence bubble. The S&P 500 (^GSPC) ended 1.2% lower, and the tech-heavy Nasdaq (^IXIC) was down 2%. The Dow Jones (^DJI) lost 0.5%.

    Cryptocurrencies, which typically move in lockstep with tech stocks also plunged, with the price of Bitcoin (BTC-USD) falling below $100,000 for the first time since June. It is down more than 20% since its record peak in October.

    Weaknesses in the stock market drove investors to buy government bonds. Treasury yields dipped by a few basis points. The rate on 10-year Treasuries was 4.08%.

    Meanwhile, higher demand for US debt pushed up the value of the dollar to its strongest level since May.

  • Coming up

    Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what’s moving markets and happening across the global economy.

    To the day ahead we have data releases from the US including the ISM services index and the ADP’s report of private payrolls for October. Otherwise, we’ll get the final services and composite PMIs from the US and Europe, German factory orders for September.

    Central bank speakers include the ECB’s Villeroy, Nagel and Kocher, along with the BoE’s Breeden. Earnings releases include McDonald’s and Qualcomm.

    Here’s a snapshot of what’s on the agenda:

    • 7am: Trading updates: CRH, Marks and Spencer, Weir Group, Barratt Redrow, Metro Bank, Trainline, JD Wetherspoon, Vanquis Banking Group, RS Group, Wizz Air, Hikma Pharmaceutical and Watches of Switzerland

    • 8.15am-8.55am: Spain, Italy, France, Germany PMI final surveys for October

    • 9am: UK New car sales for October

    • 9am: Bank of England Khan speech

    • 9.30am: UK Services and composite PMIs final for October

    • 10am: Eurozone producer prices for September

    • 1.15pm: US ADP Employment for October

    • 3pm: US ISM Services PMI for October

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