It comes as Asian stocks rose as investors returned to tech stocks, gold and selling dollars after a surprising jump in US inflation boosted sentiment. Asia’s stock markets followed Wall Street higher after steady virus figures also boosted sentiment. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.2%, and gains in semiconductor makers drove Japan’s Nikkei .N225 1.9% higher to a six-month peak.
This comes as the number of daily new COVID-19 infections in the United States seems to be stabilising. S&P 500 futures ESc1 traded flat.
The bond market was steady after a huge auction and the generally upbeat mood drove selling overnight, with benchmark 10-year US debt yielding 0.6622%.
A softer dollars helped gold rise steadily, adding 1% to $ 1,937 an ounce after whipsawing around $ 1,900 overnight.
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1.10pm update: German yields go into neutral as supply-induced selloff wanes
German yields have stabilised after traders began to feel they may have overreacted at a Bund selloff, which they feared could mirror the rise in US yields on the back of the largest-ever 10-year US Treasury auction.
Lyn Graham-Taylor, fixed income strategist at Rabobank said: ”Yesterday’s move was quite big but wasn’t really based on anything.
“It doesn’t completely surprise me that on opening this morning, it would marginally be the other way.”
He added bond markets were likely to stabilise from here and stall because “the bottom of the economy is as low as people thought, but everyone thinks the recovery is going to be slower than they thought”.
12.45pm update: The FTSE-100 index is down 64.19 at 6215.93
12.10pm update: UK negotiator David Frost confident trade deal with EU can be reached next month
Mr Frost said on Twitter: “Our assessment is that agreement can be reached in September and we will work to achieve this if we can.
“As we keep saying, we are not looking for a special or unique agreement. We want a deal with, at its core, an FTA like those the EU has agreed with other friendly countries, like Canada.
“The UK’s sovereignty, over our laws, our courts, or our fishing waters, is of course not up for discussion and we will not accept anything which compromises it – just as we aren’t looking for anything which threatens the integrity of the EU’s single market.”
11.45am update: The FTSE-100 index is down 56.30 at 6223.82
FTSE 100 LIVE: Asian stocks ground higher as investors returned to tech stocks and selling dollars
11.30am: Pound rises against dollar
Sterling is rising against the dollar, driven by dollar weakness as traders shrugged off yesterdsay’s dismal GDP data.
Britain’s economy shrank by a record 20.4% in the second quarter – a substantially bigger slump than in the euro zone (12.1%) or United States (9.5%), data on Wednesday showed.
But the pound did not decline significantly on the news, which was outweighed by dollar weakness by the end of the session, which pushed cable up.
“In reality, most market participants had been pencilling in a decline in Q2 GDP of ‘around’ 20% for some time now so yesterday’s release from the ONS didn’t come as too much of a surprise even if the magnitude of the contraction dwarfs anything any of us have experienced before,” RBC strategists wrote to clients.
Sterling was at $ 1.3077 at 0744 GMT, up 0.4% since New York’s close versus a weaker dollar. So far in August, it has been broadly in line with its pre-pandemic levels.
Versus the euro it was little changed, at 90.46 pence per euro.
10.45am update: The FTSE-100 index is down 60.14 at 6219.98
10.30am update: Rough start for EU markets
Like FTSE, EU markets have also struggled this morning.
As of 10.30am BST, Euronext 100, CAC 40, DAX and Swiss Market Index are all struggling.
Euronext is down 0.18%, CAC is down 0.06%, DAX is down 0.02% and Swiss Market is around even on the day.
9.30am update: FTSE continues early morning slump
After a bleak start on open, FTSE has continued to fall this morning.
FTSE plummeted from 6,280 to 6,220 on open this morning – a huge loss.
It has since continued its downward trend, now sitting at 6,204.
8am update: FTSE plummets
FTSE has plummeted on open, a day after it was revealed the UK has officially entered recession.
The UK closed at 6,280 after a positive day, rising from 6,154.
However, this morning the index has already dropped to 6,220.
More to follow…