FTSE 100 posts best quarter since 2010 amid Covid-19 recovery hopes - as it happened

Graeme Wearden

from on 2020-06-30 18:10 (#556E2)

Rolling coverage of the latest economic and financial news, as global markets recover some of their huge losses in Q1

Latest: FTSE 100 has jumped 9% this quarter...
...Germany did better....
Andy Haldane sees V-shaped recovery...

Earlier:

7.10pm BST

Time for a recap.

World stock markets have recorded their strongest quarter since the financial crisis, despite worrying signs that the Covid-19 pandemic is not under control in the US.

6.37pm BST

Airbus's CEO, Guillaume Faury, added that his company is facing the gravest crisis" in the industry's history.

Explaining why 15,000 jobs are being cut worldwide, Faury says:

The measures we have taken so far have enabled us to absorb the initial shock of this global pandemic. Now, we must ensure that we can sustain our enterprise and emerge from the crisis as a healthy, global aerospace leader, adjusting to the overwhelming challenges of our customers. To confront that reality, we must now adopt more far-reaching measures.

Our management team and our Board of Directors are fully committed to limiting the social impact of this adaptation. We thank our governmental partners as they help us preserve our expertise and know-how as much as possible and have played an important role in limiting the social impact of this crisis in our industry.

6.35pm BST

A late newsflash: Aerospace firm Airbus has announced it is cutting 15,000 jobs worldwide, including 1,700 in the UK.

Airbus says the cuts are necessary to address the Covid-19 pandemic, which has hammered demand for new jets by around 40%.

The commercial aircraft business activity has dropped by close to 40% in recent months as the industry faces an unprecedented crisis. Commercial aircraft production rates have been adapted accordingly. Airbus is grateful for the government support that has enabled the Company to limit these necessary adaptation measures.

However with air traffic not expected to recover to pre-COVID levels before 2023 and potentially as late as 2025, Airbus now needs to take additional measures to reflect the post COVID-19 industry outlook.

Core Airbus cuts of 14,000 broken down as follows: 5,000 in France, 5,100 in Germany, 900 in Spain, 1,700 in UK and 1,300 elsewhere

6.28pm BST

Here's our news story on the looming job cuts at easyJet, which threaten thousands of jobs across Europe.

6.13pm BST

Over in New York, shares in aircraft maker Boeing have slumped by 6% after Norwegian Air Shuttle canceled orders for 92 737 Max jets, and five 787s.

That's a blow for Boeing, which has just begun 737 Max recertification flights so that the troubled model can return to the air.

5.47pm BST

For much of this year, the markets have been as volatile, dramatic and occasionally scary as many of us can remember.

The financial cost is insignificant compared to the human toll of Covid-19, but it's cler that a lot of money was wiped off pensions plans and ISAs in Q1, and quite a bit was wiped back on in Q2.

June has seen a renewed wave of the virus in some US states and it is starting to weigh on economic activity. The US is in the midst of two crises, a health crisis and a political crisis. The intense polarisation of US political life and the outbreak of racial strife is making the implementation of a consistent and comprehensive health care policy difficult. We believe that it will take relatively longer for the US to fight its way through the health crisis than it will for Europe.

In the coming months political developments will also return to the fore. EU leaders will shortly meet once again to discuss proposals for a recovery fund featuring joint debt issuance. We believe that the EU has always emerged strengthened from its various crises, be they foreign exchange or debt based. Each crisis has led to institutional improvement and the current one will extend this trend. The Recovery Program of the EU Commission, to be financed by borrowing in global markets, and serviced by funds raised through centralised taxation is a historic step forward. A step that will strengthen the EU and help it meet future challenges.

Meanwhile for the rest of the year, trade negotiations between the EU and the UK continue in earnest, ahead of a year-end deadline when the transition period concludes. And in November, the US presidential and congressional elections could lead to sizeable shifts in both economic and foreign policy, as former Vice President Biden seeks to win the White House from President Trump.

5.33pm BST

The US dollar is coming under some pressure today, helping to push the pound up by three-quarters of a cent to $1.236.

Ranko Berich, head of market analysis at Monex Europe, blames America's failure to get to grips with Covid-19.

In weeks and months gone past the US dollar's exorbitant privilege" as the global reserve currency and premier safe haven has meant markets have been willing to overlook the painful reality that is the relative mismanagement of the pandemic in the US.

However, with peer economies in Europe, Asia, and elsewhere re-opening without major virus spikes, the contrast to the ongoing crisis in the US is all the sharper and it looks like markets are finally willing to punish the dollar at the margin."

4.52pm BST

Newsflash: Britain's stock market has just recorded its best quarterly gains in a decade.

The FTSE 100 has rallied by 9% since the start of April, bringing some relief to investors after the crash which began in late February, and ran until mid March.

4.43pm BST

Newsflash: European equities have posted their best quarter since 2015.

The Stoxx 600, which contains Europe's biggest 600 listed companies, has just closed 0.3% higher tonight, the last day of June. That means it has surged by 12.64% during the last quarter.

4.36pm BST

Gold has hit its highest level in almost eight years.

The spot price of bullion hit $1,785 per ounce this afternoon , a level not seen since October 2012.

Gold up today and is about to break the big psychological level of $1,800 per ounce. If it gets through that next stop is the all time high of $1,889. pic.twitter.com/XMswA4BLpI

BREAKING: #Gold futures prices push above $1,800, hit 8.5-year high, as bulls hit the accelerator. August gold was last up $15.70 at $1,797.00. #gold #prices pic.twitter.com/cY1FtiNASF

4.16pm BST

Bank of England deputy governor Sir Jon Cunliffe has warned that more companies will enter financial distress, as the coronavirus hits the economy.

Reuters has the details:

I would imagine that we are going to see a number of credit events and defaults in this crisis," Cunliffe said in an online discussion hosted by the Institute of International Finance.

Cunliffe also said the BoE should not be dogmatic over the possibility of negative interest rates and policymakers had yet to come to a conclusion about their viability in Britain.

4.05pm BST

Here's our news story on Andy Haldane's cautious optimism for the UK's economic recovery:

The Bank of England's chief economist has said the UK economy is on track for a V-shaped recovery from the Covid-19 crisis, but warned that a surge in unemployment could nudge the country off course.

Andy Haldane said economic activity had steadily recovered since hitting a trough in April, when the UK was a month into strict lockdown measures that forced mostbusinesses to close.

3.40pm BST

Over in the US, consumer confidence has jumped - despite rising Covid-19 infections in several states.

The Conference Board's monthly gauge of consumer morale jumped to 98.1 for June, from 85.9 in May. That's more than expected.

The @Conferenceboard consumer confidence index rose 12.2pt to 98.1 in June

Present Situation Index +17.8pt to 86.2
Expectations Index improved +8.4pt to 97.6

"Consumers are less pessimistic about short-term outlook but do not foresee a significant pickup in economic activity" pic.twitter.com/MrbVRkfyKu

Wear. A. Mask. pic.twitter.com/cruhuzNjVI

3.26pm BST

More jobs gloom. UK pilots union BALPA has revealed that easyJet is proposing to cut one in three pilots.

Balpa was told today by easyjet that 727 of their pilots are at risk of redundancy, or almost a third of the roster. The budget airline is also proposing to completely close its bases at Stansted, Southend and Newcastle airports, Balpa adds.

We know that aviation is in the midst of the COVID crisis and we had been expecting easyJet to make an announcement of temporary measures to help the airline through to recovery.

But this seems an excessive over-reaction and easyJet won't find a supply of pilots waiting to come back when the recovery takes place over the next two years. easyJet paid 174m out to shareholders, got agreements to furlough staff to protect cash, got 600m from the Government, has boasted of having 2.4bn in liquidity, and ticket sales are going through the roof so fast they cannot get pilots back off furlough quickly enough - so why the panic? It doesn't add up. We are meeting easyJet today and we will be fighting to save every single job.

We are shocked at the size of potential pilot job losses in easyJet which equate to nearly 1-in-3 of easyJet pilots in the UK: 727 pilots. (1/4)https://t.co/liYocTBrKy

Amazing that only 6 months ago the Govt was doing all it can to prop up regional airlines to maintain routes and airports in the name of levelling up.

As EasyJet announces plans to close bases at Stansted, Southend and Newcastle, many are asking, where is the support now? https://t.co/eVYDuPhlfP

Pilots' union BALPA: This is more evidence that aviation in the UK is caught in a death spiral of despair and individual airlines are flailing around without direction. BALPA repeats its call for Govt to step in, provide a strategy and back a moratorium on job losses."

3.19pm BST

There's some scepticism in the economics community about Andy Haldane's claim that a V-shaped recovery is on the cards.

Geriant Johnes, professor of economics at Lancaster University, points out that a surge in Covid-19 cases, either nationally or at local hot spots, could derail growth.

'So far, so V.' Andy Haldane makes a good case for cautious optimism - https://t.co/YLR9JHl5xU - but, but, but...

...a second spike, or a plethora of local spikes (especially at key points of supply chains) would make this look very, very fragile.

Seems like a really good idea for the chief economist at the BOE to stop guessing and wildly making stuff up

2.46pm BST

Wall Street has made an underwhelming start to the final trading day of the quarter (and what a quarter it was!).

The Dow Jones industrial average has dipped by 69 points, or 0.27%, in early trading to 25,526, while the broader S&P 500 index is 0.2% higher.

2.37pm BST

The coronavirus pandemic has already had a very severe impact on workers around the globe - with women worst affected.

That's according to the UN's labor agency, the International Labour Organisation. It had found that total hours worked has slumped by 14% this year due to lay-offs, reduced hours, and furloughing schemes.

The report said women were being especially hard hit by the crisis because they were over-represented in some of the economic sectors worst affected by the crisis, such as accommodation, food, sales and manufacturing. Globally, almost 510 million or 40% of all employed women work in the four most affected sectors, compared with 36.6% of men.

The ILO added that women were also more likely to be employed in the domestic work and health and social care work sectors, where there was a greater risk of job losses and infection. The pre-pandemic unequal distribution of unpaid care work had also worsened during the crisis, exacerbated by the closure of schools and care services.

2.32pm BST

The Harveys furniture chain has gone into administration, the latest in a series of UK retail casualties.

Some 240 jobs have definitely been lost, and another 1,300 are at risk if administrators can't find a buyer for the company.

All its stores will continue to trade for now, but industry watchers believe a buyer is unlikely to be found. The retailer has been struggling for years and is also heavily reliant on sister chain Bensons for Beds with which it shares several sites.

Bensons was also put into administration on Tuesday, but has been bought out in a pre-arranged deal by its private equity owner Alteri Investors, with the aim of saving between 150 and 175 of the chain's 242 stores, its Huntingdon manufacturing operation and nearly 1,900 jobs.

2.06pm BST

The Canadian economy has suffered its biggest ever monthly contraction.

Canadian GDP shrank by 11.6% in April alone, the most on record, as the Covid-19 lockdown had an all-too predictable impact on the economy.

CM on Cdn GDP: "We're disappointed in Statistics Canada's flash estimate for May which projects only a 3% rebound" pic.twitter.com/ZLUtOlflhE

1.51pm BST

Andy Haldane's claim that the UK economy is recovering faster than expected hasn't cheered the City much.

The FTSE 100 index of blue-chip shares has sunk by nearly 1%, or 55 points, back down to 6169 - wiping out much of Monday's rally.

S&P futures sliding back towards session lows, down 0.4% with just under an hour until the cash open

1.33pm BST

In a blow to film fans, the UK's largest chain of cinemas has pushed back its scheduled reopening date by three weeks.

Cineworld is delaying its reopening until the end of July, rather than the 10th, due to delays in getting hold of new titles.

Both AMC and Cineworld have outlined plans for new safety, hygiene and cleaning protocols on their premises. A backlash to the news that patrons would not be required nor encouraged to wear face coverings prompted U-turns from both companies, with all AMC venues and Regal cinemas now making masks mandatory.

However, no such requirement is currently in place at any UK cinema. The Cineworld Action Group, which represents staff at the chain, recently launched a petition in which they called for such a measure to be introduced.

1.03pm BST

Andy Haldane's comments are timely - a few minutes ago, Boris Johnson announced plans to boost infrastructure spending to help level up" the UK and limit the damage caused by the recession.

An upbeat-sounding Johnson pledged 5bn for infrastructure spending, plus reforms to the planning rules to speed up home-building an extensions, and to help builders convert commercial properties to homes.

We must work fast, because we've already seen the vertiginous drop in GDP, and we know that people are worried about their jobs and their businesses.

And we're waiting as if between the flash of lightning and the thunderclap, with our hearts in our mouths, for the full economic reverberations to appear."

We would not expect these comments to amount to much from a market standpoint.

Whilst encouraging that we are not going back to the austerity approach that has been the hallmark of the last 10 years, the amounts being talked about are really not of a scale that the economy needs to get it moving and avoid an unemployment cliff as furloughing comes to an end.

Boris Johnson's 5bn "New Deal" represents just *0.2%* of UK GDP; F.D. Roosevelt's accounted for 40% of US GDP. My piece on why it's absurd for the PM to compare the two. https://t.co/ZGDR3DC7fp

12.47pm BST

Andy Haldane has also warned that the Covid-19 pandemic could drive up Britain's natural rate of unemployment'.

Reuters has the details:

The depth of the recession was likely to exacerbate any long-term damage to the labour market which could push up Britain's natural rate of unemployment (NAIRU), Haldane said.

A higher NAIRU means an economy is more likely to overheat and generate inflation as the labour market strengthens.

12.44pm BST

CNBC's Sam Meredith has been number-crunching, and found that more than a dozen major stock markets are still down over 10% this year, despite the surge in stocks since the end of March.

Greece, Spain and Russia are deepest into correction territory, while the UK market is still down almost a fifth (despite clawing back 10% in the last quarter).

Greece's ATHEX composite index has tumbled 33% since climbing to a closing intraday high on January 24. The southern European country, which has a relatively low number of coronavirus cases, is taking steps to lure visitors back to vacation hotspots in an effort to stimulate an economic recovery.

Greece's tourism industry makes up roughly one-fifth of its economy, according to Reuters, and some economists are concerned that the economic impact of the pandemic could unravel progress made since the euro zone crisis a decade ago.

These major international stock markets are on track to end the first half of 2020 in correction territory - or worse.

-33%
-28%
-25%
-23%
-20%
-19%
-19%
-19%
-18%
-17%
-16%
-14%
-11%
-11%https://t.co/4CkuaDsCLf

12.26pm BST

You can read Andy Haldane's speech yourself, here. Haldane-watchers will be disappointed that there are no references to cricket, or dogs chasing frisbees.

Here's some early reaction, first from economist John Hawksworth:

Good summary of the current economic situation from Andy Haldane. Agree that GDP now set to fall significantly less in Q2 than MPC projected in May. But not clear that future risks are less skewed to the downside than MPC judged in May given concerns about a second wave and jobs. https://t.co/10JrKnMT97

Interesting to see CHAPS payments data, which only the BoE sees, in Haldane's speech. Households' spending has continued to recover steadily in June, though it's still c.10% below pre-Covid levels right now. I wouldn't look at this chart and think, yup, no more stimulus required. pic.twitter.com/mJ12fvb87Q

Unlike a lot of economists right now, Haldane has some faith in the PMIs.

He thinks surveys like this suggest the recovery has arrived "sooner and faster than any other mainstream macroeconomic forecaster" predicted.

Mmm. pic.twitter.com/e7BIBnO3yc

The government is relying on the Bank of England lending it giant sums to a far greater degree than it has ever before - including during World War II, as this chart from BoE chief economist Andy Haldane shows: pic.twitter.com/NfrSIVCPLj

12.21pm BST

Haldane's webinar also shows how the Bank of England has dramatically expanded its balance sheet, to pump money into the UK economy and cushion the recession.

He reminds us that the Bank's monetary policy committee boosted its stock of asset purchases by 200bn in March, when it also cut interest rates from 0.75% to 0.1%. It added another 100bn of bond-buying this month (which Haldane opposed).

These balance sheet actions by central banks globally have had their intended effect, improving financial and credit conditions to support households and businesses .

12.08pm BST

Andy Haldane has also revealed that the Bank of England's policymakers haven't discussed the idea that it might start unwinding its asset-purchase scheme before raising interest rates.

Last week, BoE governor Andrew Bailey suggested that it made sense to sell some of the government bonds bought under the QE scheme, before hiking borrowing costs. That would be a reversal of his predecessor, Mark Carney's view.

11.42am BST

The Bank of England's chief economist has warned that Britain must avoid a return to the mass unemployment that scarred the country during the Thatcher government.

In a webinar this morning, Andy Haldane argues that the UK economy is now recovering from the deep economic shock caused by Covid-19.

Both the UK and the global economies are already well into the second quarter" - the recovery phase. The UK's recovery is more than two months old, while the global economy is perhaps three months into its recovery, in both cases from an exceptionally low starting point.

There is a debate about which letter of the alphabet will best describe the path of the economy, with some scepticism about the V-shaped scenario path in the Bank's May Monetary Policy Report (MPR). It is early days, but my reading of the evidence is so far, so V.

Looking ahead, risks to the economy remain considerable and two-sided. Although these risks are in my view slightly more evenly balanced than in May, they remain skewed to the downside. Of these risks, the most important to avoid is a repeat of the high and long-duration unemployment rates of the 1980s, especially among young people.

Like the rest of the MPC, I stand ready to adjust monetary policy, at speed, if needed to support the economy and return inflation to its target on a sustainable basis.

Taken together, this means that perhaps as much as half the UK workforce is currently either unemployed or underemployed. This, too, has no historical precedent.

Andy Haldane uses a range of economic indicators to consider the impact of Covid-19, and argues that the UK appears on track for a V-shaped" recovery. https://t.co/gd80bbzkp5 pic.twitter.com/vhkSHWHsw1

10.59am BST

The trio of government-backed loan schemes led by commercial banks - covering bounce back loans, CBILS and the scheme for larger businesses known as CLBILS - hit a milestone, with over 1 million firms granted emergency funding so far.

Government data released this morning showed that banks had approved over 1 million loans worth 42.9bn as of 28 June. Over 1.3 million businesses have applied. More details here.

10.58am BST

The recovery in the stock market is partly thanks to stimulus measures such as the UK government's Job Retention Scheme - without which many firms would have slashed their workforces.

New figures show that this scheme is now supporting 9.3m workers, who are currently furloughed on 80% of their wages (up to 2,500 per month). That's an increase of around 100,000 in the last week, suggesting that some firms are still struggling even as the economy reopens.

The Job Retention Scheme launched on 20 April.

By midnight on 28 June there were a total of:

9.3m jobs furloughed *
1.1m employers furloughing **
Total claimed 25.5bn

Apply for a grant to cover the wages of your furloughed staff now: https://t.co/txF4TJcCLZ pic.twitter.com/8eTqvdZh6R

10.40am BST

Air cargo demand remained extremely weak in May, according to the latest data from industry body IATA.

IATA reports that cargo tonne-kilometres (a measures of how much stuff was flown around the world) slumped by 20.3% last month compared to the previous year.

#Aircargo continues to feel the effect of #COVID19

Global demand fell 20% & available capacity 35% in May compared to the previous year. The capacity crunch continues: https://t.co/WxkibQzGSl pic.twitter.com/RhxPAhq4Bp

10.17am BST

The last six months have been pretty grim for savers.

The emergency cut in UK interest rates, to just 0.1%, has prompted banks and building societies to slash their own rates - meaning income on savings is extremely thin.

These rate cuts should be more than enough reason to give savers a push to switch their deal if they are getting a poor return on their hard-earned cash. Indeed, on an easy access account, savers could be earning as little as 0.01%, such as with NatWest, but the best rate on the market pays 1.15% from National Savings and Investments (NS&I) - on a 20,000 deposit, that is a difference in interest over 12 months of 228. If savers were looking to lock their cash away over the next 18 months, then the best deal comes from Bank of London and The Middle East (BLME), paying 1.15% as an expected profit rate, which is 0.44% more than the average rate today.

If savers are looking for a decent return but do not wish to lock their money away for a year or more, then a notice account could be a good bridge between fixed and easy access accounts. One example of a deal with a short notice term is ICICI Bank UK's 45-day notice account, which pays 1.24% gross monthly and is available through Raisin UK.

10.14am BST

Just in: the eurozone has crept away from deflation, as consumers are hit by rising food prices.

Prices across the single currency region rose by 0.3% per year in June, up from just 0.1% y/y in the previous month. Food, drink and alcohol price continued to rise steeply, while energy prices remained much lower than a year ago.

In June 2020, a month in which many COVID-19 containment measures have been gradually lifted, Euro area annual inflation is expected to be 0.3%, up from 0.1% in May

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in June (3.1%, compared with 3.4% in May), followed by services (1.2%, compared with 1.3% in May), non-energy industrial goods (0.2%, stable compared with May) and energy (-9.4%, compared with -11.9% in May).

#Eurozone inflation unexpectedly rises to +0.3% YoY from previous +0.1%, more than expedcted +0.1%, with core inflation rising +0.8% (first reading). This should make #ECB 's monetary policy more hawkish over the next months.@graemewearden

9.36am BST

UK housebuilder Redrow has sent a shiver through the property sector this morning, as it warned that profits will be badly hit by the coronavirus outbreak.

Redrow told shareholders that it is scaling back its operations in London. Following the lockdown, there is more demand for houses with space to work inside, and nice places to visit nearby.

Recent studies have highlighted that the Covid-19 pandemic has shifted home movers' priorities. In particular, there is a desire for more inside and outside space, wanting to live closer to green spaces and having better home workspace. Redrow's reputation for placemaking and its award winning Heritage product ideally position the business to meet these changing customer priorities.

Following a review of our divisional businesses, we have decided to scale-back our operations in London to focus on the Colindale Gardens development [in North West London] and continue to target the Group's future growth on the higher returning regional businesses and the Heritage product.

Redrow has issued a profit warning and announced plan to scale back housebuilding in London to focus on regions
-Says it will return furlough money given group's resilient cashflow
-Annual home sales and turnover down 37% and 36%
-Urges gov to extend current Help to Buy scheme

This will create panic at the Bank of England https://t.co/pgbFgNYJVK

9.25am BST

Here's our economics editor Larry Elliott on today's UK GDP figures:

Britain's economy contracted by 2.2% in the first three months of 2020 - its sharpest decline in more than 40 years - as the immediate impact from the Covid-19 pandemic provided an even more severe hit to output than first thought.

Fresh data from the Office for National Statistics showed that gross domestic product fell by 6.9% in March, even though the government-imposed lockdown only came into force with nine days left of the month.

9.14am BST

The coronavirus slump has forced energy giant Royal Dutch Shell to slash up to $22bn off the value of its assets.

Shell told the City this morning that it has lowered its long-term outlook on oil and gas prices. As a result it will record a post-tax, non-cash impairment charges of between $15bn to $22bn in the second quarter.

Given the impact of COVID-19 and the ongoing challenging commodity price environment, Shell continues to adapt to ensure the business remains resilient.

9.00am BST

The astonishing 18% surge in global stock prices since March may show that investors have got ahead of themselves.

Many companies have scrapped their earnings guidance, as they simply don't know how many goods or services they'll sell this year. It all depends on the progress in combating Covid-19, which is still accelerating worldwide.

Valuations still look too high and based on a far-too-optimistic view of an earnings rebound in 2021 and does not account for permanent productivity and demand destruction. Of course stimulus is making a big difference here, but risk assets are exposed if we see the pandemic get worse from here. World Health Organisation boss Tedros said the worst is yet to come. Cases across states like Arizona, Texas and Florida continue to surge and look to be completely out of control. A short, sharp pullback is a very real possibility.

Nevertheless, it's been a solid month and an exceptionally strong quarter. US equities have enjoyed their best quarter in 20 years, whilst stocks in Europe have fared pretty well too as investors participated in the rebound off the March lows. It's mirrored elsewhere in risk assets - copper is up a fifth, but is slightly weaker for the year. For instance, the S&P 500 is up 18% QTD, but down 5% YTD. The FTSE 100 is up almost 10% QTD, but down over 17% YTD.

a game of two halves #DAX pic.twitter.com/LZ8NyjJMaZ

similar story for SPX pic.twitter.com/khtDHgrC0I

8.34am BST

Britain's FTSE 100 has dipped by 30 points, or 0.5%, at the start of trading - but is still on track for its best quarter since the financial crisis.

8.28am BST

UK household spending slumped at a record pace in January-March, the ONS adds:

Households' consumption spending decreased by 9.5 billion (negative 2.7%) in Quarter 1 2020, the largest quarterly fall in nominal household spending of this type ever recorded; there were large falls in expenditure on motor vehicles, restaurants and hotels, and clothing and footwear.

8.27am BST

Britain's economy suffered an even more bruising blow from Covid-19 than previously thought.

UK GDP shrank by 2.2% in the first quarter of 2020, according to updated figures from The Office for National Statistics. That's down from a previous estimate of a 2% decline -- and is the joint-worst quarter since Margaret Thatcher was settling into Downing Street.

$GBPUSD continuing to slide after UK Q1 #GDP dropped the most since 1979

The British economy shrinking 2.2% vs market expectations of a 2% contraction in the first quarter of 2020 #UK pic.twitter.com/g32chD4giQ

8.16am BST

Global stock markets have enjoyed a sizzling quarter, even as the death toll from Covid-19 has marched higher and economies have fallen deep into recession.

World equities have surged by 18% between the start of April and the end of June, according to MSCI's All Country World Index. That's its biggest advance in 11 years, and the second best quarter in at least two decades.

Investors are weighing better economic figures against a continued increase in virus cases. Following a stronger-than-forecast U.S. pending home sales figures Monday, China Tuesday reported improving purchasing-manager indexes for both manufacturing and services.

The MSCI All Country World Index is up about 18% this quarter, the biggest advance in 11 years -- on the heels of the worst quarter since 2008. The rebound comes even as deaths from the virus surpass 500,000 and confirmed cases exceed 10 million, with the World Health Organization warning the worst is yet to come.

8.09am BST

Economists and traders are cheered by the news that China's factories posted growth this month, despite the ongoing pandemic.

Iris Pang of ING says today's manufacturing and non-manufacturing PMIs both send a positive signal for the economy. Can it be sustained?

Demand for materials and products for the development of advanced technology, the real estate market and infrastructure projects support growing manufacturing activity.

The foreign orders PMI at 42.6 in June confirms that external demand remains weak. We believe that the ongoing Covid-19 situation in the US and Europe will keep the pressure on export orders in the coming months. External demand weakness is putting pressure on some manufacturers, especially small factories, of which the sub-index PMI fell to 48.9 in June from 50.8 a month ago. This confirms our view that small manufacturers continue to struggle to get export orders.

The better-than-expected China PMI lends further weight to the argument that a global cyclical recovery is well underway.

Encouragingly, there was a broad improvement in the details for the manufacturing PMI with output, new orders and new export orders all rising from last month.

China factory outlook is brighter in June as recovery continues: PMI index rose to 50.9 from 50.6 a month earlier. The non-manufacturing PMI rose to 54.4; readings above 50 indicate improving conditions from prev. month, chart @BloombergQuint https://t.co/Q0aCzWMslz pic.twitter.com/1uiB0JmFSS

7.47am BST

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

China PMI comes in at 50.9 in June.

That's a positive reading, but only just.

Based on the PMI's, China's recovery is steady but unspectacular. pic.twitter.com/tGU4t8PQfV

The latest survey data suggest that economic growth accelerated in June thanks to a faster recovery in manufacturing and services, alongside continued strength in construction activity,

The recovery should remain robust in the coming months as strong infrastructure spending offsets external weakness."

ICYMI: There were further modest signs of recovery in China this month, with the official NBS non-manufacturing PMI rising to a 7-month high of 54.4 in June, while the manufacturing PMI edged higher to 50.9 pic.twitter.com/MZoBNNUd3Q

European Opening Calls:#FTSE 6235 +0.15%#DAX 12271 +0.32%#CAC 4959 +0.26%#AEX 562 +0.38%#MIB 19477 +0.15%#IBEX 7288 +0.13%#OMX 1676 +0.27%#STOXX 3238 +0.19%#IGOpeningCall

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