Five minutes to go until the Wall Street opening bell, and futures are showing that it will be a steep selloff - although not quite as dramatic as earlier moves suggested.

The S&P 500 is expected to drop by 1.4%, while the Dow Jones industrial average and the Nasdaq are both pegged for a 1% decline.

Some more detail on the £23m Evans sale: hundreds of jobs are at risk across the country in its various outlets, writes the Guardian’s Sarah Butler:

Buyer City Chic Collective plans to operate Evans, which made sales of £26m online and via wholesale last year, as an online-only brand. That will mean the closure of more than 100 Evans concessions and outlets within other Arcadia stores as well as its five standalone shops. The concessions and other outlets will not close immediately but hundreds of jobs are at risk at those outlets.

Arcadia, which employs 13,000 people at about 500 outlets, collapsed into administration last month as high street lockdowns prompted by the coronavirus pandemic piled on pressure after years of flagging sales amid heavy competition from rivals such as Boohoo and Primark.

A note for central bank/regulation watchers: the former chief executive of Barclays is among three banking insiders appointed to the Bank of England’s prudential regulation committee by chancellor Rishi Sunak.

Antony Jenkins, John Taylor, and Tanya Castell will join the committee, replacing Sandra Boss, Mark Yallop and David Belshamat various points next year.

Jenkins was forced out as Barclays boss in 2015. Since then he started a banking technology startup, 10x, and joined the board of Fannie Mae, the US government mortgage securitisation company.

Taylor previously held senior roles at Standard Life and Lloyds Banking Group, while Castell has served in senior roles at Handelsbanken, Lloyds Banking Group and UBS.

The prime minister’s spokesman has repeated requests from the food industry for people to refrain from panic buying. The UK has resilient supply chains and people should shop normally, the spokesman said.

The government is in close contact with France to get freight traffic moving again, the spokesman said.

However, on Brexit talks the spokesman said there are significant gaps remaining, and confirmed that the transition will end on 1 January come what may. (An extension of the transition would be difficult because it would require the UK and EU to actively support it.)

The FTSE 100 has lost more ground once more: the index is down by 2.6%. It’s also notable that the mid-cap FTSE 250 index has lost 2.9%.

Across Europe the Stoxx 600 index has lost 2.7%.

The pound is hovering near the $1.33 mark against the US dollar, a decline of 1.7% for the day.

An hour before Wall Street opens futures for the S&P 500 have lost 2%.

Today is something of a red-letter day for Tesla, the US electric car pioneer, as it belatedly joins the S&P 500 index.

It is not quite panning out as planned, with shares down by about 4% in pre-market trading ahead of its big entrance, but with the stock closing on Friday at a record high of $695, the company’s backers and chief executive Elon Musk won’t mind a small pullback.

The reshuffle will mean a host of index-tracking funds around the world - including those held by a large proportion of pensions - will have to buy the stock (and sell Aimco, the Apartment Investment and Management Company). Usually this is just a matter of course, but Tesla’s extraordinary stock price boom will mean that there is an unusually high volume of movement to adjust for what is now one of the world’s most valuable companies - even though it makes a fraction of the cars made by rivals such as Volkswagen or Toyota.

Tesla, which faced questions over whether it could avoid a cash crunch only 18 months ago, will account for 1.69% of the S&P 500, at a valuation of more than $650bn on Friday. For every $11.11 Tesla’s share price moves, the S&P 500 will change by a point.

The selloff in the UK has abated somewhat, after the French government indicated that it was looking at ways to restart the movement of hauliers across the Channel.

The FTSE 100 is now down by 2.1% - although that it still a hefty 135-point drop - at 6,393 points.

The pound is down against the US dollar by 1.8%, at $1.3280. Against the euro the pound has lost 0.7%, at €1.2168.

Crude oil prices have also come back a bit, after earlier dropping by as much as 5%. Brent crude futures are down by 3.7% at $50.37.

Stena Line Group, one of the ferry companies that transports freight across the Irish Sea, is moving one of its ships that regularly serves Belfast port to a French-Irish route instead.

The new route from Rosslare in the south of the Republic of Ireland to Cherbourg in northern France will allow some freight to avoid the UK, amid significant uncertainty over what the rules governing trade and customs will be on 1 January - not to mention the new restrictions on travel between the UK and many other nations.

It looks like investors looking at the US are gearing up to sell the fact of the stimulus package being agreed, after buying the rumour. In layman’s terms that means that US stock markets are on course for a heavy drop when they open in a few hours.

Stock market futures for the S&P 500 suggest the US benchmark will lose 2.2%. The Dow Jones industrial average is pegged down by 1.9%, while the Nasdaq (whose tech stocks provide a fairly good hedge against further coronavirus restrictions) is looking like a 1.4% decline is likely.

Here is an interesting perspective on where we are from a market volatility point of view. The Vix, known by journalist and commentator types as Wall Street’s fear gauge, has risen sharply. The Vix measures investors’ bets on stock market volatility.

Plus-size brand Evans has been rescued from administration in a £23m deal but will close all five standalone stores with the loss of 25 jobs.

The brand is the first part of Sir Philip Green’s Arcadia Group to be sold off, marking the beginning of the break up of his fashion empire which also includes Topshop, Dorothy Perkins, Burton and Miss Selfridge.

Australia’s City Chic Collective, said it had bought Evans to expand its portfolio of plus brands, which include City Chic, Avenue, and Hips & Curves, into Europe. It currently operates in Australia, New Zealand and the US.

UK retailers reported stable sales in the run-up to Christmas, but they anticipated a bleak January even before large parts of the country were effectively put back into lockdown, according to the closely followed distributive trades survey from the Confederation of British Industry (CBI).

Retail sales volumes recovered after two months of sharp declines to stand broadly flat for the year to December, with a balance of only 3% of respondents saying that orders were down. However, 33% expected sales to fall in January.

The survey ran from 23 November to 14 December, meaning retailers did not have a chance to take into account the cancelled Christmas bubble plan, or the prospect of longer lockdown periods for London and the south east of England.

There was strong growth for grocers, furniture vendors and retailers of ‘other normal goods’ (cards, flowers and jewellery, etc.), but clothing, footwear and department stores reported lower volumes than last year, the CBI said.

Stable sales had been seen as a fairly good result, said Ben Jones, principal economist at the CBI, but that has now changed:

The new year looks set for an unpromising start, with retailers anticipating a sharp fall in sales in January. An expected deterioration in the labour market will likely weigh on household spending, even assuming the roll-out of Covid-19 vaccines paves the way for a gradual lifting of restrictions as the year progresses.

Government support measures, such as business rates relief and the extended furlough scheme, have been immensely helpful for retailers. To assist with planning, a priority now should be to avoid any sudden cliff-edges as schemes are wound down.

Deutsche Post DHL, the German delivery company, has said it will halt deliveries of parcels to Britain and Ireland for business and private customers because of new transport restrictions.

Sterling is down by 2.2% this morning - or about $3 - at $1.3212.

It briefly dipped below the $1.32 mark, last hit 10 days ago, a few minutes before. That represented 2.5% decline, and the biggest one-day drop since March, when there was a global rush for dollars.

Less than a week ago the pound had hit its strongest level since spring 2018, but the combination of further difficulties in the Brexit talks, coupled with the prospect of supply chain chaos, has put paid to any optimism for now.

Here is the performance of the FTSE 100 this morning. You can just about see the steep drop at the opening bell on the left-hand side, but in recent minutes there has been another rapid selloff:

It may be tied to statements on the wires from the Irish foreign minister over fishing in the Brexit talks - a key issue despite its minnow status in the economies of both sides. Reuters reports that Irish foreign minister Simon Coveney said:

• Fisheries are the last remaining Brexit issue
• There needs to be a middle ground found on fishing
• It is very unlikely that the EU states will support a further offer on fishing beyond what was offered at the weekend
  

The transport workers’ union has called for emergency help for the workers and companies affected by the blockage at UK ports, after all accompanied travel between the UK and France was banned.

RMT (the National Union of Rail, Maritime and Transport Workers) said it was seeking urgent talks with the government over the crisis.

Getlink, the company that runs the Channel Tunnel, was a heavy faller on stock markets on Monday morning, with shares down by 5.3%. Shares in Danish shipping company DFDS were down by 2.2%.

RMT gen‎eral secretary Mick Cash said:

Thousands of workers on Eurostar, on the ferries and at our ports have been caught in the crossfire of the border crisis that has developed overnight and escalated this morning.

RMT is calling for an urgent package of government support and protection for the staff and services impacted by the decision to suspend operations.

We will be looking for emergency tripartite talks with the employers and government ‎to ensure that the practical and financial underpinning required is made available without delay.

And sticking to that theme for a second: oil prices have also taken a hit thanks to the uncertainty around the new coronavirus strain in the UK.

The price of Brent crude oil futures, the North Sea benchmark, fell by 4.8% on Monday morning, back to $49.82 per barrel, undoing the gains of the last week. That represented a $2.40 drop.

Futures prices had hit their highest level since early March on Friday, before the UK government revealed its concerns. Here is the chart showing the last year for the oil price, including plummeting in March when the extent of the coronavirus pandemic became clear, and the slow increase since then as demand recovered.

The North American benchmark, West Texas Intermediate futures, also fell in value by 4% on Monday morning to $47.04, a two-dollar decline.

It looks like the FTSE 100 selloff is settling somewhat, after a frenetic first hour of trading.

London’s blue-chips have now only lost 1.1% today, a 75-point decline - albeit still a steep slump for the Monday before Christmas.

Sterling is still down by 2% against the US dollar, however.

In case you were in any doubt as to the unusual situation, here’s another sign: the UK’s two-year government debt has just hit a record low yield, deeper than ever before into negative territory.

The yield decline was driven by investors snapping up government debt as a safe haven to protect against declines suffered in riskier assets - which this morning includes UK equities. Bond yields move inversely to price, so falling yields mean higher demand.

The lowest point reached by the two-year gilt yield was -0.161%. And remember, a negative rate means investors are effectively paying the UK government for the pleasure of borrowing - quite handy when you likely have more emergency measures to fund.

Here is the longish view of the two-year yield: note the massive slump in 2008 when the Bank of England started buying assets in earnest as part of its quantitative easing programme, and then the smaller but still significant slump into negative territory during 2020.

The yield on 10-year gilts fell more than six basis points to as low as 0.171%, its lowest since 11 December, Reuters reported. Comparable German government bonds fell by less.

Prime Minister Boris Johnson is due to chair a meeting of Cobra, the emergency committee, this morning, to discuss the ports disruption.

In the meantime, police have closed four junctions of the M20 in Kent to queue up lorries that have tried to go to Dover under Operation Stack. The Brexit contingency lorry park is not ready yet, so all of that traffic that might have expected to cross the Channel will have to park on the side of the motorway.

Let’s get some reaction from economists and traders as to what the new strain of the virus means for the economy.

Lee Hardman, a London-based currency analyst at MUFG Bank, said the increased ease with which the new strain is transmitted “poses a serious challenge to government’s costly strategy to contain the spread of Covid.” He said:

It will increase pressure on the government to roll out vaccines to the old and vulnerable more quickly in a race against time. The new tougher restrictions will likely have to remain place until there has been greater vaccine rollout which could take months. At the current juncture, we are working on the assumption that vaccines will still prove effective against the new strain but it is not yet clear. As a result, the economic slowdown willprove deeper and extend further into nextyear. It will dampen optimism over a stronger economic recovery in 2021.

Negative interest rates could be tested by the Bank of England as it scrambles to find more ways of stimulating the economy, Hardman added.

Richard Hunter, head of markets at interactive investor, said the UK’s break from Europe is becoming “increasingly physical as well as conceptual”. The next few days - usually very thin in terms of trading activity - could be bumpy on financial markets, he said:

With some cases also being reported outside of the UK and with several countries suffering fresh spikes in cases and resorting to further lockdowns, the stark reminder is that until the vaccine rollout reaches a sufficient level, little can be done to defeat the virus.

Against this backdrop, investors are far less likely to commit fresh capital to the market, especially in the last few trading days of the year.

However, here is a dose of (very tempered) optimism from Paul Donovan, chief economist at UBS Global Wealth Management that it won’t be too much worse. He said:

Much of Europe has become cut off from the UK, following details of a new strain of the virus. The near-term economic effects of this are, perhaps, limited - inventories tend to be high at this time of the year, and the UK has imposed more restrictions on activity. However, this does signal a relatively high degree of fear, and it is fear of the virus that does the most economic damage.

Bucking the trend on London’s stock market this morning is Metro Bank, which gained as much as 22% (before moderating to a 7.8% gain) after investors priced in Friday’s announcement of a £3bn mortgage book sale to NatWest Group, the old RBS.

Also on the up are gold miners - a safe haven in times of trouble - such as Fresnillo, up 5% this morning. The yellow metal itself has gained 0.9% today to about $1,896 per troy ounce.

In Europe it’s travel and transport stocks that are also bearing the brunt of losses.

In Germany the Dax has lost 1.9%, while France’s Cac 40 is down 2.4% and Spain’s Ibex has lost 2.8%.

Airbus, the planemaker, has lost 4.8%, and Accor Hotels and French airports compayn ADP were also among the early losers.

Back on the London Stock Exchange Tui shares are down 6.6% while Carnival, the cruise ship company, has lost 9%.

It is looking like a pretty brutal selloff for the travel industry this morning, after a stream of nations banned people from the UK.

British Airways owner International Airlines Group is the biggest faller on the FTSE 100, down 16%, while jet engine manufacturer and maintainer Rolls-Royce is down 9%.

Banks, which are heavily exposed to the UK economy, are also big losers. Lloyds Banking Group, the largest high street lender, is down by 6%, and Barclays has lost 4.7%.