European stocks fall on mounting global economic gloom – business live

Vernon Hill, the chairman and founder of Britain’s troubled Metro Bank, will also step down, by the end of the year. Metro Bank has yet to find a successor.

The lender has seen its shares plummet around 90% this year after disclosing an accounting error, and amid concerns that its branch-reliant business model could prove outdated in an industry that is going digital.

Michael Snyder, an independent director at Metro Bank, says:

The board shares Vernon’s view that Metro Bank has now reached a point where an independent chairperson is appropriate to oversee the next stage of our journey.

Metro Bank opened in London in 2010 – the first new bank to open on Britain’s high streets for more than a century. It hoped to lure customers with a flexible and efficient service – and by being dog-friendly.

In the gambling world, the owners of Paddy Power Betfair and Poker Stars are merging to create one of the world’s biggest online betting and gambling companies.

Shares in Flutter Entertainment jumped 15% after the firm, formerly known as Paddy Power Betfair, said it would combine with Stars Group, the Nasdaq- and Toronto-listed owner of Poker Stars in an all-share deal. Combined annual revenues are about £3.8bn and the new company will have around 4 million active customers.

It will be a global leader in sports betting in gaming, just as the huge US market opens up.

Following the merger, shareholders of Flutter will have 54.64% of the new company, while Stars Group investors will own the rest. It will be headquartered in Dublin.

Let’s take a look at the corporate news.

Tesco’s boss Dave Lewis has announced his surprise departure after five years in charge of the UK’s biggest retailer. He will be replaced next summer by Ken Murphy, formerly chief commercial officer at American retail giant Walgreens Boots Alliance.

Lewis said:

My decision to step down as group chief executive is a personal one. I believe that the tenure of the chief executive should be a finite one and that now is the right time to pass the baton.

The leadership team is very strong, our strategy is clear and it is delivering. I have no doubt that Tesco will kick on again under new leadership next year.

The FTSE 100 index in London has lost 48 points at the open, falling 0.65% to 7312.22.

The UK bluechip index is the worst faller among the main stock markets in Europe, amid Brexit worries.

• Germany’s Dax down 0.3%
• France’s CAC down 0.2%
• Spain’s Ibex down 0.2%
• Italy’s FTSE MiB down 0.25%

Paul Donovan, an economist at UBS Global Wealth Management, is back after being suspended in June for making controversial comments about swine fever in China.

His thoughts on manufacturing are:

Globally, the gap between sentiment and reality is the widest since 2012. Trade taxes worry manufacturers. When asked, manufacturers say they are less than happy about life, but their actions are more positive. Investors should worry about trade taxes. They should not panic about sentiment.

He also notes:

• Global bond yields rose yesterday. Some yield curves steepened. Do steeper yield curves predict an economic boom? They do not, any more than inversions predict a recession. Weaker bond markets reflected a poor Japanese auction. This reflected fewer “captive” investors (who buy for non-economic reasons). Such investors distort bond markets and bond market signals.

• In the interminably tedious EU-UK divorce process, UK Prime Minister Johnson speaks at the Conservative Party conference. Exit proposals to the EU are expected. There is no certainty among investors about the proposals, if the EU will agree a deal, if the British Parliament will pass a deal, or if Johnson will remain as prime minister.

Iaroslav Shelepko and Akash Utsav, economists at Barclays, have sent us their thoughts.

The US ISM extended its decline, plunging from multi-year highs (above 60.0) to lows (below 48.0) in just 13 months, with the global trade slowdown largely spurring the sentiment decline. The spillovers of external demand slowdown and an associated decline in business investment are particularly evident in Europe.

With manufacturing PMIs at post-GFC [global financial crisis] lows in Germany, European sentiment deteriorated further in September, touching a six-year low. We still expect domestic demand resilience to prevail over industrial recession; however, the risk that European activity could lose its remaining steam ahead of a possible no-deal Brexit in early 2020 (our baseline) looms large.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Stock markets around the globe have sold off, after US manufacturing activity fell to the lowest in more than a decade – sparking fears that the US-China trade war is affecting the US economy, just as Europe teeters on the brink of recession.

The UK and European manufacturing PMIs spread further gloom, while the Chinese factory report earlier in the week also remained in contraction territory.

MSCI’s gauge of stocks across the globe fell 0.9%. Australian and south Korean shares have lost 1.5% and Japan’s Nikkei is down 0.4%. Hong Kong’s Hang Seng slipped 0.26%, after Hong Kong police shot a teenage protester. Chinese markets are closed for a one-week holiday.

On Wall Street, the Dow Jones fell 1.28% and the S&P 500 lost 1.2% to hit four-week lows. Selling was triggered after the Institute for Supply Management’s index of factory activity, a closely-watched survey, dropped 1.3 points to 47.8, the lowest level since June 2009. A reading below 50 indicates contraction in the manufacturing sector.

The German and the UK factory readings were 41.7 and 48.3 respectively, also indicating further contraction. The French manufacturing sector barely expanded, with a reading of 50.1.

David Madden, market analyst at CMC Markets UK, says:

Looking at the broader picture, it is fair to say that the worldwide manufacturing sector is in trouble. The US-China trade spat is having a knock-on effect around the globe, hence why we saw a sharp move lower in stocks yesterday. Trade talks between the US and China will continue next week, so traders will be paying close attention to any developments. The best dealers can hope for is a de-escalation in trade tensions, but it is obvious that the damage has been done.

In the UK, prime minister Boris Johnson is expected to set out his plans for the UK’s departure from the EU, with the Irish border in focus. Traders are likely to be nervous as there is chatter it could be make or break for the negotiations, Madden says.

The agenda

9.30am BST: UK construction PMI (September)