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Stock markets are braced for further losses today after yesterday’s meltdown – with sharp falls in Asia overnight 8.44am: Things are clearly taking a turn for the worse again. Germany’s Dax has hit its lowest level since February 2010, falling 2.2%, while the Cac in Paris is down 2.5%. The euro has fallen 1% against the Swiss franc to 1.1259 francs. 8.40am: The FTSE has dropped below the 5,000 mark. It’s now 114 points lower at 4978, a fall of 2.2%. There are only two risers now: Autonomy and ARM, which makes chips for iPhones. Shares in Spain, Italy and Portugal are now down between 2.4% and 3%. 8.30am: The picture isn’t quite as bleak as yesterday, when there wasn’t a single riser on the FTSE for most of the day. Eight stocks are currently up, led by Autonomy, which soared 76% to 2514p after Hewlett-Packard pounced on it with an $11bn (£6.7bn) bid . However, UK banks including Lloyds Banking Group, Royal Bank of Scotland and Barclays are among the biggest fallers again, as are energy stocks – as crude oil prices slipped on expectations of weaker demand. Lloyds is down 7.6% while RBS lost 4.7% and Barclays 5%. Lothar Mentel, chief investment officer at Octopus Investments, told Reuters: The market is discounting a recession, but I would say they’re wrong. Some stocks have been driven down to ridiculous levels. There has been a panic about European banks. European governments are guaranteeing European banks, but if the governments are not stable themselves, that means the banks aren’t stable. 8.17am: Before heading off on a well-deserved break (“Of all the regulation that has been introduced over the last few years my favourite is that which states that market participants must take a minimum of 10 consecutive days away from the office every year”), Gary Jenkins, head of fixed income at Evolution Securities, opines: At one stage yesterday I couldn’t stop myself singing The Wanted’s debut single. 10 year Bunds and Treasuries, Canadian 10 year and gilt yields all hit an all time low. It has been a heck of a week and yesterday’s risk-off trades could be attributed to any one of a number of different concerns. Economic data and the European sovereign / banking crisis will probably continue to dominate market action. This week has seen a continuation of the trend of weaker than expected data and political reaction to the European problems which pretty much amounts to “let’s have a get together a couple of times a year”. To be fair Mr Sarkozy did mention common European bond issuance as a last resort which is in line with our view that such action would only be taken over a weekend when the market was about to collapse. The one bit of good news through all this volatility is that Italian 10 year bond yields have been stable throughout the last couple of weeks. As there still seems to be disagreements about the second Greek bail out package the resolve of the ECB and then EFSF to stabilise Italian and Spanish bond yields could be tested quite soon. If we do see a significant move higher in yield from these two sovereigns then we will soon be in last resort territory. Meanwhile in the UK the executive director for financial stability, Andrew Haldane, has suggested that bank regulation regarding capital requirements should be softened in order to encourage the banks to lend. Whilst this might be a very good idea in the short term I guess his idea might not find favour in a world where regulators are generally looking for higher levels of capital and the leading politicians in France and Germany are asking for a financial transactions tax. Incidentally was that not the most amazing part of the Sarkozy / Merkel meeting. That at a time when one of the leading French banks was experiencing significant pressure in the equity market, with all kinds of rumour and speculation, that they should revisit an idea which would put more pressure on the banking sector. SocGen’s shares closed yesterday at €21.60, a level they last hit in 1998 around the time of the Russian crisis. Meanwhile in the US the economic data of late might ordinarily have led to speculation regarding QE3, although the data has been so bad that I am surprised they don’t just move straight to QE4…. 8.10am: Good morning. It looks like another tumultuous day on financial markets. The FTSE has opened nearly 60 points lower at 5033, down 1.15%. Germany’s Dax and France’s Cac are both down 0.4%. Spain’s Ibex has dropped 0.5% while Italy’s FTSE MIB is 0.3% lower. Gold scaled a new high this morning – it went through $1,853 an ounce – while US crude oil futures dropped $2 to $80.38 a barrel. Financial markets went into meltdown yesterday amid fears that the world economy is sliding back into recession. Growing disarray in the eurozone over the Greek bailout, poor US manufacturing figures and a warning from Wall Street bank Morgan Stanley that the US and Europe are “hovering dangerously close to recession” triggered sell-offs on both sides of the Atlantic. Austria, the Netherlands, Slovenia and Slovakia joined Finland in demanding that Greece puts up assets as security before they sign off on the €109bn (£95bn) emergency package agreed in July. And the US authorities are becoming increasingly alarmed that the eurozone debt crisis could spill over into America and trigger another global credit squeeze: it emerged yesterday that US regulators are examining whether the US arms of European banks have enough funding in place. To recap: • The FTSE 100 closed down 239 points, or 4.5%, at 5092 yesterday, wiping more than £62bn off the value of Britain’s bluechip companies • In the US, the Dow Jones closed 419 points, or 3.7%, lower at 10,991. • The yield on 10-year US Treasury bonds slipped below 2% as investors piled into safe haven investments • The yield on 10-year UK government bonds, or gilts, plunged to their lowest since the 1890s Markets are braced for further losses today, with Asia bathed in red overnight. Japan’s Nikkei closed down 2.5% while Hong Kong’s Hang Seng fell 2.8% and the Seoul Composite lost 6.2%. Market turmoil Financial crisis Stock markets Global recession Global economy Julia Kollewe guardian.co.uk