Lessons from the market collapse

Today’s top stories

• Ukrainian drones struck a military airfield in Russia’s Lipetsk region, while Moscow declared a state of emergency in two regions as Kyiv continued its largest attack yet on Russian soil.

• By filing a complaint with the World Trade Organization, Beijing hit back against planned EU tariffs on Chinese exporters of electric vehicles, thereby escalating the trade dispute with Brussels.

• Hargreaves Lansdown, the UK investment platform that first pioneered the direct sale of shares and funds to retail investors, has agreed to a £5.4 billion takeover by a group of private equity firms.

Current news can be found on our Live blog

Good evening.

The stock market crash may be over, but the tumult that began and ended with conflicting jobs data taught investors around the world a lot and put the state of the U.S. economy in the spotlight ahead of the presidential election in November.

Global equity markets have now largely recovered losses from Monday’s chaos, which was triggered by a disappointing US jobs report last Friday. More encouraging unemployment figures yesterday seem to have calmed investors’ worries, but the market remains fragile and could remain vulnerable to negative news.

Postmortems are everywhere. Lessons from a crazy Monday are that you shouldn’t trust funds that are supposed to protect against volatility, and that experienced traders shouldn’t all take summer holidays at the same time. Skin in the Game columnist Stuart Kirk has more to say about what regular investors can learn from this week’s events, while real market nerds should check out this assessment from FT Alphaville.

The forecast for the US economy is also at the forefront in the race for the White House.

As FT commentator Chris Giles noted, Democratic presidential candidate Kamala Harris should be careful about touting her party’s governing record during the election campaign. While the headlines are encouraging, much is coloured by a sense of nuance and ambiguity that is ill-suited to a brutal political campaign, Giles argues.

There is much warning in US corporate earnings reports that consumers will cut spending. And when it comes to jobs, there is ample evidence that the gains are not being evenly distributed for low-income earners, as columnist Soumaya Keynes notes in her analysis of McDonald’s kitchen staff wages.

And as Washington bureau chief James Politi noted today, voter discontent over the cost of living could put an end to the “sugar rush” of optimism Harris has enjoyed since entering the presidential race.

Harris is focused on protecting the “middle class” from rising costs and strengthening the social safety net, while criticizing her opponent Donald Trump’s plans for new tax cuts for big corporations and wealthy households. She has received support from economists who have warned that Trump’s plans would drive up inflation.

The role of the Federal Reserve is also an issue in the election campaign. Some Democrats criticize the Fed for waiting too long to cut interest rates. Trump, on the other hand, said in his press conference last night that the Fed had “made many mistakes” and that US presidents should have more influence on monetary policy.

With his characteristic modesty, Trump said he had “better instincts than, in many cases, the people who would sit at the Federal Reserve or chair it.”

Join Unhedged’s Robert Armstrong and other FT experts to discuss this week’s trading turmoil in a subscriber-only webinar next Wednesday 14 August at (12:00 BST/07:00 EST). Register for your subscriber pass here at ft.com/marketswebinar and ask your questions to our panel now.

Interesting facts: Economy in Great Britain and Europe

As the recent Unrest in Great Britain start going to prison, an academic analysis shows how public opinion on immigration is at odds with reality: it grows the economy and has little to no impact on jobs and wages. A separate FT analysis shows how the unrest was concentrated in hotspots of disadvantage.

The EU and Serbia have agreed on a critical raw materials partnership to support battery and electric vehicle manufacturing. Serbia has one of the largest lithium reserves in Europe, estimated to be enough to produce one million electric vehicle batteries per year.

Interesting facts: World economy

China’Consumer prices rose faster than expected in July, easing concerns about persistent deflation in the world’s second-largest economy. The country’s policymakers are grappling with one of their most difficult economic problems: how to get households to spend more.

Venezuela’s President Nicolas Maduroangry at challenges to his election victory last month, has unleashed a wave of repression against his opponents, including encouraging residents to denounce their neighbours.

Here is our profile of Muhammad Yunusthe microcredit pioneer and Nobel Prize winner who has a “hell of a job”: the task of restoring peace in Bangladesh.

Things to know: Business

Barclays was the first UK bank to tell staff it would lift the EU bonus cap after Britain voted to lift the cap last year following Brexit. JPMorgan and Goldman Sachs have already told regulators they plan to increase bonuses.

The FT revealed that Google And Meta made a secret deal to target Instagram ads on YouTube to teenagers, thereby circumventing the search engine’s own rules for dealing with minors online.

A new Big Read tells the inside story of how Microsoft has reconsidered its AI strategy after OpenAI, the start-up in which it invested billions, unsuccessfully tried to oust its boss Sam Altman last year.

British Airways is the latest international airline to cut its flights to China due to signs of slowing demand and the high cost of diversions necessary to avoid flying over Russian airspace. Flights from London Heathrow to Beijing will be ‘paused’ for at least a year from October 26.

Is that Music streaming Era over? Music companies seem to be pinning their hopes on superfans buying vinyl albums after a significant decline in sales growth.

Scientific overview

NASA is considering asking SpaceX to rescue two astronauts stranded on the International Space Station after problems with the Boeing CST-100 Starliner spacecraft that flew them there.

The first brain implant made of graphene, The material was hailed as a “miracle material” after its discovery at the University of Manchester 20 years ago and is soon set to enter clinical trials in the city. Researchers hope it will lead to interfaces between the human brain and external computers that are more sensitive than today’s devices.

Pharmaceutical companies are looking for radioactive substances for radiopharmaceutical oncology drugs. Radiopharmaceuticals, or radioligands, work by combining a radioactive isotope with a cocktail of antibodies, delivering a stronger toxic dose directly to cancer cells and shrinking tumors more effectively.

Cancer Infection rates are rising among young people, requiring a search for environmental causes, including factors such as microplastics, writes commentator Anjana Ahuja.

Finally, there are new tools that could prevent next-generation digital attacks Quantum computersThere are growing concerns that quantum machines will one day be able to crack codes protecting confidential data that have proven unbreakable for decades.

Some good news

In the British town of Lewes, local dogs are being asked to “act like wolves” to help re-seed native wildflowers in a local nature reserve. Before wolves were extinct in the country, they roamed large areas, carrying wildflower and grass seeds in their fur and spreading them across the country. The new initiative involves leaky “doggy bags” strapped to the backs of their modern counterparts as they traverse the reserve, sowing the seeds as they go.