US economy returns to growth; oil keeps sliding - as it happened

Graeme Wearden

from on 2020-10-29 18:00 (#59NR9)

Rolling coverage of the latest economic and financial news, as the US economy returns to growth

Latest: US annualised GDP surged 33.1% in Q3
Economy grew 7.4% on quarter/quarter basis
Unemployment claims fall, but still over 750k
ECB hints at more stimulus
Oil falls 5% to four-month low

5.17pm GMT

Time for a recap

America's economy has burst back to growth, on a day dominated by worries that rising Covid-19 cases could trigger a new global downturn.

GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record setting tax increase, would kill it all. So glad this great GDP number came out before November 3rd.

Success in a Biden-Harris Administration will not be measured just by the stock market or GDP growth, but by the extent to which growth is raising the pay, dignity, and economic security of our working families-especially those who have been left behind. https://t.co/HQZ8UbUb3f

We all acknowledge the role and the importance as a driving force of the pandemic and the increase of contagion, as well as the impact that containment measures will have on the economy.

It is with that recognition and acknowledgement that we agreed, all of us, that it was necessary to take action and therefore to recalibrate our instruments at our next Governing Council meeting."

My main message today is that continued policy support is essential to address the pandemic and to sustain and invigorate a recovery,".

We welcome that the authorities have committed to deliver it as long as necessary to boost expectations and confidence. The policy space exists to do this."

5.11pm GMT

More jobs gloom. Exxon, the energy giant, is cutting as much as 15% of its global workforce by the end of 2022, or around 14,000 jobs.

This will include 1,900 jobs in the US, following the slump in the oil price this year amid weaker demand for crude.

Exxon was once the largest US publicly traded company, but has been slashing costs due to a collapse in oil demand and ill-timed bets on new oilfields and expansions. It has promised to shed more than $10 billion this year in project spending and cut operating expenses 15%.

An estimated 14,000 employees globally, or 15%, could lose jobs, including contractors, spokesman Casey Norton said. The cuts would include everything from layoffs to retirements or performance-based exits.

Exxon to cut 1,900 U.S. jobs as pandemic hurts demand https://t.co/rFxVb0X1N4 pic.twitter.com/mYTbjXIg1s

4.49pm GMT

After yesterday's dramatic falls, European stock markets have just ended a much quieter day.

London's FTSE 100 index finished roughly where it began, just 1 point lower at 5,581 (a new six-month closing low!).

4.38pm GMT

Sky News is reporting that Pizza Express plans to cut around 1,300 jobs across the UK - on top of 1,100 already announced this summer.

The restaurant chain said recent trading had worsened in the face of tightened COVID-19 restrictions.

Our aim throughout these extremely challenging times has been to keep our team members and customers safe, and to retain jobs for as long as possible.

As a leading employer in our sector, we see every day how this pandemic is having a profound impact on our industry, our business and on people's lives.

Coronavirus: Pizza Express says it will cut around 1,300 jobs in UK https://t.co/EveHGUgmH3

4.17pm GMT

Here's presidential candidate Joe Biden's take on the US GDP figures:

GDP rose last quarter, but visits to food banks haven't slowed, and poverty has grown. We're on track for the worst economic downturn in over 70 years, and Donald Trump is on track to be the first president since Herbert Hoover to leave office with less jobs than when he came in.

4.02pm GMT

IMF staff's preliminary annual review of the #UK economy recognizes the government's enormous efforts to contain #COVID19's impact. We recommend sustaining fiscal policy support for people & firms, supporting the recovery w public investment, and accommodative monetary policy. pic.twitter.com/psKW4qlz5T

3.38pm GMT

Here's our news story on the IMF's review of the UK economy:

Britain should boost spending to tackle the second wave of the Covid-19 pandemic without worrying about its growing debt levels, the International Monetary Fund has said.

In its six-monthly health check of the UK economy, the Washington-based organisation warned on Thursday that the UK faced a difficult winter that was likely to depress economic growth and increase the number of jobs lost, especially among those with few skills.

3.28pm GMT

The euro has sunk to a one-month low against the US dollar, after the European Central Bank dropped some loud hints that it will ease monetary policy in December.

The single currency has dropped by 0.7% to $1.166, after the ECB announced it would recalibrate its instruments', and president Christine Lagarde warned that growth will be weak in November.

The full Governing Council was in total agreement to analyse the current economic situation and to recognise and acknowledge the fact that risks are clearly, clearly tilted to the downside.

We all acknowledge the role and the importance as a driving force of the pandemic and the increase of contagion, as well as the impact that containment measures will have on the economy.

#Euro falls to 1mth low on dovish comments from #ECB's Lagarde. pic.twitter.com/JhdGdrwNAi

3.13pm GMT

Our US business editor, Dominic Rushe, points out that the US economy is much less rosy than the 33.1% annualised jump in GDP suggests:

Much of the bounce has been fueled by consumer spending from those lucky enough to have been able to ride out the pandemic working from home and by the huge government stimulus package agreed in the early days of the pandemic.

That recovery came as states opened up for business again. But now Covid infections are hitting new daily highs, it is uncertain how long that can last. El Paso has already brought in new lockdowns, Chicago is moving in that direction, Wisconsin is in crisis.

3.11pm GMT

President Donald Trump has tweeted about the US GDP report....

3.08pm GMT

The International Monetary Fund are in town in London, and urging the government to keep spending heavily to protect the economy from the Covid-19 pandemic.

IMF chief Kristalina Georgieva argued that the UK has the firepower to maintain its stimulus efforts, following a regular review of Britain's economy.

My main message today is that continued policy support is essential to address the pandemic and to sustain and invigorate a recovery,".

We welcome that the authorities have committed to deliver it as long as necessary to boost expectations and confidence. The policy space exists to do this,".

IMF cuts UK economic forecast from last month for this year and next
2020 - -10.4%
2021 +5.7%
But praises aggressive policy response - one of the best examples of coordinated action globally" on the economy...

IMF: Room to loosen monetary policy in the near term"

Backs additional fiscal push"... there is a case to spend more" than current plans to lift investment...

UK economy now faces headwinds from a second Covid-19 wave, Brexit related uncertainty, rising unemployment.."

IMF CHief @Kgeorgieva: Pandemic has already taken an enormous human toll and caused unprecedented economic disruption, including in the UK, and unfortunately, we are seeing a second wave take hold in Europe."

... IMF chief: UK econ response: one of the best examples of coordinated action that we have seen globally. We welcome the continuing efforts the government has made to refine its support measures, including adaptations to the Jobs Support Scheme announced last week."

IMF's Georgieva says continued policy support is essential to address pandemic".. policy space exists...

- keep special job and company support programs in place
- support additional fiscal push" on public investment
- BoE scaling up bond purchases. negative rates an option

Georgieva also praises UK leadership in Globe, including on vaccines and on debt relief for low income countries...

2.34pm GMT

US and European stock markets are a rather mixed picture right now.

In New York, the Dow has pulled back its earlier losses. That's thanks a 2.3% jump in Apple's share prices while Microsoft are up 1%, as investors pile into technology stocks again.

2.14pm GMT

European Central Bank president Christine Lagarde has warned that the eurozone economic outlook has deteriorated.

Lagarde told the ECB's press conference that November will clearly be a tough month, given the new restrictions being imposed in many European countries.

Rising COVID-19 cases and containment curbs have led to a clear deterioration" in the euro zone's near-term outlook, but it is too early to say if the economy will shrink in the fourth quarter, ECB President Christine Lagarde said on Thursday.

Third-quarter economic growth data might be better than expected but the fourth quarter is almost certain to be below forecasts, with November very negative," she told the European Central Bank's post-meeting news conference.

#ECB's Lagarde: Expect November economic output to be "very negative." Don't know if GDP will contract in 4Q. Q3 GDP release Friday may surprise on upside. pic.twitter.com/AqGsxmhj4O

1.50pm GMT

Oil is continuing to be dragged down by fears that the global economic recovery will stumble in the coming months.

US crude is down 5.5% at $35.28 per barrel (a four-month low) while Brent crude is down 5.6% at $36.81 (a five-month low).

Oil is getting hammered, and it is shaping up to be a bit of a perfect storm for oil, as increasing supply from Libya coincides with the second wave of Covid in Europe. Worrisome for the oil complex as a whole is many of the fundamentals from when oil went negative earlier in the year remain in play. It will be crucial to keep your eyes on the shape of the futures curve, which will be the Signpost of the extent of any supply glut.

Earlier this week, Imperial College dismissed the herd immunity theory and will challenge one of the most popular market narratives. There is an assumption in markets of a vaccine being a binary event - the world before a vaccine as it is now, and the world after spelling an instant return to normality.

And Today, Dr. Fauci said even if a vaccine emerges in the next few months, it will take time to vaccinate people, and it is unlikely the US will return to semblances of normality" until late 2021 or into 2022. It certainly walks back the growing assumption of a by George, we did it moment from the pharma industry, and a few weeks later, the whole planet will have been vaccinated and back to normal.

#Brent is down over 5% at the front of the curve while timespreads are widening significantly with soaring coronavirus cases dinting fuel demand hopes

$LCOZ0 - $LCOG1 spread is over $1/bbl this morning, widening about $0.30/bbl since Monday #oott #brent #crude #oil #spreads pic.twitter.com/QMQLc5cnHP

Brent crude dropped to its lowest level since May, deepening Wednesday's slump as lockdown restrictions grow in Europe https://t.co/D3Tx8UFjcb via @alexlongley1 #OOTT #COVID19 pic.twitter.com/DucnZcruYl

1.39pm GMT

America's strongest ever quarter of growth has been greeted by a shrug by Wall Street.

The Dow Jones industrial average has dropped by 142 points, or 0.5%, to 26,377 points, adding to the 950 points lost yesterday. It's being dragged down by energy companies, following today's slump in crude prices.

1.26pm GMT

Meanwhile in Europe.... the European Central Bank has left interest rates, and its various stimulus packages, on hold.

But with lockdowns threatening to push economies into contraction again, the ECB has also signalled that it could act.

In the current environment of risks clearly tilted to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate.

The new round of Eurosystem staff macroeconomic projections in December will allow a thorough reassessment of the economic outlook and the balance of risks. On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path.

MOAR #stimulus! #ECB signals more stimulus likely in December to combat renewed #lockdowns. pic.twitter.com/pq35AbSkf4

1.15pm GMT

Here's our full story on the US GDP report:

The US economy bounced sharply back from the record-setting slump at the start of the coronavirus pandemic, according to government figures released on Thursday, handing Donald Trump a key talking point days before the election.

According to the Bureau of Economic Analysis gross domestic product (GDP) rose at an annualized rate of 33.1% between July and September and was up 7.4% compared to the previous quarter. The previous record was a 3.9% quarterly increase in 1950.

Tim Swartz in Mesa, Arizona, stopped receiving unemployment benefits on 5 September after the unemployment office flagged an issue with his payments. When the pandemic hit he had to stop working as an Uber and delivery driver to care for his five children, including one with special needs. His wife works full-time as a medicine technician at a facility for Alzheimer's patients.

I cannot get any answers from anyone on the phone or through emails. I'm behind on rent and utilities," Swartz said. He has now received an eviction notice. I'm not sure how we will pay the outstanding balances for rent and utilities," he said.

1.13pm GMT

Economists are welcoming the news that America's economy recovered faster than expected in the last quarter - but they also see tougher times ahead.

Paul Ashworth of Capital Economics predicts growth will slow this quarter.

Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated. But, with coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower.

Today's U.S. GDP data shows that the economic recovery has progressed faster than anticipated, but activity has some way to go before returning to its pre-COVID peak.

The final quarter of the year has seen economic momentum slowing from its summer highs. Investors likely will shift their focus to third-quarter earnings for clues about future market direction. S&P 500 earnings growth is picking up and forward estimate continue to improve, as profits move off their crisis lows amid companies benefiting from pent-up demand.

Don't forget these are annualised rates". In real money this is a 7.4 percent quarterly GDP rise over Q2, to leave US GDP 3.5 percent below Q4 2019 level. A much less severe economic hit than UK and other European countries have experienced. https://t.co/7YXrzlLRoH

This is going to be seized upon by both ends of the political spectrum as either evidence of the strength of the post lockdown economic rebound or a cursory warning that the gains evidenced by it could be short lived. The reality is that the GDP numbers demonstrate that the US economy did indeed rebound strongly as lockdown measures were lifted.

But given that boost is behind us, Covid infections are surging again and Congress cannot agree on another stimulus package, such good numbers are not going to last. Whoever wins the election is going to have to break the deadlock in Congress very quickly and get additional stimulus in place. The prevarication on additional stimulus is like letting a wound fester while you agonize endlessly about what medication to use. You reach a point where some treatment is better than arguing about which option is optimal."

1.09pm GMT

Separately, the number of Americans filing new unemployment claims has fallen - but is still extremely high by historic standards.

The weekly initial claims total fell to 751,000 for last week, down from 791,000 a week earlier.

Thursday's report from the Labor Department said the number of people who are continuing to receive unemployment benefits fell more than 700,000 to 7.76 million.

The decline shows that some of the unemployed are being recalled to their old jobs or are finding new ones. But it also indicates that many jobless Americans have used up their state unemployment aid - which typically expires after six months - and have transitioned to a federal extended benefits program that lasts an additional 13 weeks.

Weekly Initial Unemployment Claims decrease to 751,000 https://t.co/ECxkl5Vbwj pic.twitter.com/HyiqrAtUZR

12.58pm GMT

Economist Betsey Stevenson has a handy explanation of why America's economy is still smaller than before the pandemic, and why annualised GDP is an awkward measure.

Let's discuss GDP numbers. First, there's the tricky thing about percentage changes is that percentage changes on the way down are always smaller than on the way up because on the way up you have a smaller base. [1/x]

(For those who need the math. I had two cookies and my kid took one so my cookies shrunk by 50%. He gave me half back so my cookies increased by 50%. I still had 25% fewer cookies.) [2/x]

Second, annualized rates make sense when we are on a trend that is more or less likely to continue. When we are growing at an annualized rate of 2% it means that if things continue as they are going then GDP will be 2% bigger a year later.

GDP from Q2 to Q3 grew by 7.4%. If it keeps growing at that rate for three more quarters than GDP will be 33.1% higher. But we all know that it won't. It can't. So that number is useless.

12.55pm GMT

Important note: the US economy grew by 7.4% on a quarter-on-quarter basis.

That's the measure typically used in Europe (where people may be baffled to hear an economy grew by a third in just three months).

US GDP grew 7.4% q/q in Q3 (no, not +33.1%) after -9% q/q in Q2. GDP still 3.5% below the level in Q4 2019. pic.twitter.com/thssg5evRk

12.48pm GMT

US consumer spending drove the recovery in the third quarter of 2020.

Today's GDP report shows that:

The increase in real GDP reflected increases in personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending.

12.41pm GMT

The chart of US GDP is quite remarkable - the biggest ever slump, followed by the biggest ever recovery:

The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19.

The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.

12.34pm GMT

Newsflash: America's economy grew at an annualised rate of 33.1% in the last quarter as the economy recovered from the pandemic shutdown this spring.

That's the strongest quarterly growth on record, confirming that economic activity picked up as shops and offices reopened.

The first (Advance) look at Q3 GDP showed growth of +33.1%; above the +32% estimate. With -31.4% q/o/q in Q2, we needed +45.8% in Q3 to get back to even; thus the economy is still -8.7% over the past 2 quarters. https://t.co/wyfH3UcCAS pic.twitter.com/Qjsj2t8YeS

12.16pm GMT

It's nearly time to learn how fast America's economy bounced back over the summer.

Economists expect a very strong number - perhaps an annualised growth rate of 31% for July-September.

Even a gain as big as 35 percent on an annualized basis in the third-quarter GDP growth - while an all-time high - would not get the U.S. economy back to where it was at the end of the first quarter. And it would take a far bigger jump to get the economy back to where it would have been had Covid-19 not slammed the country at all.

Economists and Wall Street analysts now expect much slower growth in the fourth quarter and early next year than they previously expected, given that the roughly $4 trillion in federal stimulus spending that propped up consumers and businesses through the end of the summer has largely faded.

The context you need from @morningmoneyben before third-quarter GDP data comes out this morning:

"Even a gain as big as 35 percent ... while an all-time high - would not get the U.S. economy back to where it was at the end of the first quarter." https://t.co/QhOPggvHze

12.00pm GMT

Oh dear, Europe's rally couldn't even last until lunchtime.

Worries about Covid-19 lockdowns and the US election have pushed stocks into the red, as investors anticipate a choppy Wall Street open in 90 minutes.

11.53am GMT

Stocks are slipping in Europe now, as the futures market signals that Wall Street may not rally as hoped.

The Dow is currently on track to open a little lower, having tumbled almost 3.5% yesterday.

DOW FUTURES NEGATIVE, S&P 500E-MINI FUTURES AND NASDAQ FUTURES PARE GAINS pic.twitter.com/rE6jlwenN6

11.26am GMT

Crude oil prices are sinking deeper into the red, as the prospect of winter lockdowns looms over the energy sector.

Brent crude has now lost 3.5%, dipping to $37.77 per barrel for the first time since June.

Brent crude declined 5.1% yesterday and is further down this morning at USD 39/bl. There is no sign that OPEC+ is willing to cut deeper. At most, it seems they are willing to extend current cuts to Q1 2020 rather than to increase by 1.9 m bl/day.

Libya's oil production has risen towards 1 m bl/day within a few weeks, and a Joe Biden win next week will likely lead to a revival of Iranian supplies in 2022.

11.04am GMT

Three hours into today's session, and European markets are just about holding their nerves.

But it's hardly a strong recovery, with the main indices barely higher than last night's five or six-month lows.

The instigation of second national lockdowns in Germany and France rattled markets. Election nerves may also be present, particularly as the path to a stimulus package in the US will not become clear until after the results are known. We know that governments are supportive of business, but we also know it was a long slog out of lockdown last time and won't be easy this time. Markets had become a little complacent about the recovery and secondary lockdowns tell a different story - it will be rocky and uneven.....

With lockdowns in focus, today's European Central Bank meeting will be of particular importance for European markets. Many market participants are increasingly betting on the ECB carrying out further easing in a bid to boost faltering economic growth and stagnant prices. The Eurozone slid into its second straight month of deflation in September and with further lockdowns being imposed across the bloc, the risks to the economic outlook have clearly deteriorated since the last meeting and the assumptions for growth contained in the ECB's September look out of step with reality. Weakness in Friday's PMIs highlight the concern among businesses, particularly in services. The threat of a double dip recession is real - Christine Lagarde recently commented that the resurgence of the virus is a clear risk to the economy - and that was long before the imposition of national lockdowns in Germany and France.

10.37am GMT

Back in the City, BT is still topping the risers on the FTSE 100 and helping prevent another market tumble.

Shares in BT rose more than 6% in early trading despite profits plunging a fifth in the first half as sport disappeared from TV, as investors welcomed the return of the dividend and a boost in earnings guidance this year.

The telecoms group's pre-tax profits fell by 20% to 1bn in the six months to the end of September, as revenues declined 8% to 10.6bn. BT blamed the fall on factors including its BT Sport pay-TV business being hit hard as live sport, including the Premier League, was suspended during the pandemic lockdown.

10.17am GMT

Here's some early reaction to the jump in UK mortgage approvals to a 13-year high last month, and the slump in consumer credit:

Thomas Pugh of Capital Economics:

September's money and credit data showed that the mini-boom in the housing market continued but a fall in consumer credit suggests that consumer spending was already faltering before the latest rounds of restrictions were imposed.

The temporary stamp duty cut continued to fuel the mini-boom in the housing market in September. Indeed, mortgage approvals rose from 85,530 in August to 91,454, roughly 24% above their February level. However, after borrowing 0.3bn in August consumers paid back 0.6bn (consensus +0.75bn) of credit in September, providing further evidence that the recovery was already faltering at the end of Q3, even before the latest round of restrictions were imposed.

Whilst #Lloyds are saying things aren't as bad as they thought, UK #mortgage lenders do seem to be making the most of the pandemic, as #mortgageapprovals reach a 13-year high, mortgage rates are also on an upward trajectory, lucky for the lenders less so the borrowers pic.twitter.com/mBO29euN47

Graphic evidence of ongoing strong pick-up in #UK #housing market activity since May as #mortgage approvals for #house purchases reached 13-year high in September; #BOE also reported renewed net repayment in unsecured #consumer credit https://t.co/mp7GV8UvLx

9.49am GMT

But.... UK households have also cut back on credit, making a net repayment of 600m to lenders last month.

The Bank of England reports that consumer lending over the last year has fallen at the fastest rate since at least 1994, as the pandemic gripped the economy.

Consumer credit weakened in September with net repayments of 0.6 billion, following some additional net borrowing in July (1.1 billion) and August (0.3 billion).

Although the repayment in September was small in comparison to the 3.9 billion monthly average seen between March and June, this contrasts with an average of 1.1 billion of additional borrowing per month in the 18 months to February 2020. The weakness in consumer credit net flows pushed the annual growth rate down further in September to -4.6%, a new series low since it began in 1994.

9.42am GMT

Newflash: the number of new mortgages approved in the UK has hit a 13-year high.

New Bank of England figures show that 91,500 loans for house purchases were approved in September, the highest since September 2007.

The number of mortgage approvals for house purchase continued increasing sharply in September, to 91,500 from 85,500 in August. This was the highest number of approvals since September 2007, and is 24% higher than approvals in February 2020.

Approvals in September were around 10 times higher than the trough of 9,300 approvals in May.

UK Mortgage Approvals (Sep) act: 91.5k, exp: 76.1k, prev: 84.7k,

Another bumper number

9.21am GMT

There's good news for Royal Dutch Shell shareholders too.

Shell has reaffirmed its decades-long commitment to increasing shareholder payouts, only months after cutting the dividend for the first time since the second world war.

9.10am GMT

Good news: Unemployment in Germany fell much more than expected in October.

The German labour office has just reported that the number of people out of work fell by 35,000 this month to 2.863 million (on a seasonally adjusted basis).

German Unemployment Change (000's) Oct: -35.0K (est -5.0K; prevR -10.0K; prev -8.0K)
German Unemployment Claims Rate SA Oct: 6.2% (est 6.3%; prev 6.3%)

Some great Unemployment data coming out from our German Friends just then.

German Unemployment Change Actual -35k (Forecast -5k) pic.twitter.com/1gGytruDEj

The number of people on short-time work schemes, which have shielded the labour market from the brunt of the pandemic, dropped sharply to 2.58 million in August.

This compared to more than 4 million in the previous month and a peak of nearly 6 million reached in April at the height of the pandemic.

9.00am GMT

European stock markets are clinging onto this morning's very small gains, with the Stoxx 600 (which tracks equities across the region) up 0.3%.

With Shell beating profit forecasts and BT raising its guidance, City investors are a little less panicky this morning.

8.49am GMT

Lloyds bank are also nudging the FTSE 100 higher, after beating profit forecasts thanks to a surge in demand for home loans.

My colleague Kalyeena Makortoff explains:

The UK bank, which owns Halifax, said mortgage lending increased by 3.5bn over the three months to September, as it processed the highest number of applications since 2008.

The housing market has boomed since a temporary stamp-duty holiday and a so-called race for space, whereby many people have been reconsidering their lifestyles during the Covid-19 pandemic.

8.48am GMT

Concerns that London may need to follow Paris and Frankfurt's lead, and impose new restrictions, are also weighing on the pound, reports Lee Hardman of Mitsubishi UFG.

Sterling dropped below $1.30 to a one-week low against the US dollar yesterday, and hasn't managed any recovery yet today, despite encouraging noises from the Brexit trade talks.

Prime Minister Boris Johnson is also coming under increasing pressure to consider reintroducing lockdown measures in the UK.

The latest report from Imperial College London and Ipsos Mori estimated that infections are doubling every nine days. It strongly suggests" that current policies put in place have not been sufficient to date to achieve control of the COVID-19.

8.44am GMT

Fears of tighter Covid-19 restrictions are hitting UK travel and hospitality firms again today.

IAG, which owns British Airways, has lost 2% this morning, while holiday firm TUI is down 3.7%. Conference organiser Informa has dropped by 2.5%.

8.25am GMT

France's stock market has also opened higher, hours after president Emmanuel Macron announced a new national lockdown.

Macron said the aim of the new restrictions was to reduce new infections from the current 40-50,000 a day to a treatable 5,000 a day.

The new lockdown will see the return of sworn declarations needed to leave home, but schools will remain open. Universities will give courses online. All non-essential businesses, including bars and restaurants, will be closed from midnight on Thursday.

8.20am GMT

Germany's stock market is attempting a rally, as investors digest its new Covid-19 restrictions.

8.11am GMT

Ding ding! The London stock market has opened a little higher, as traders try to recover from Wednesday's rout.

The FTSE 100 has gained 9 points in early trading, up nearly 0.2% to 5592. That's a very small recovery on yesterday's 146-point tumble.

8.00am GMT

Oil is coming under more pressure this morning, with Brent crude currently down 0.5% at $38.93 per barrel.

It started 2020 at over $65 per barrel, before the pandemic hurt demand for air travel and fuel.

7.53am GMT

Asia-Pacific markets have had a jittery day.

Australia's S&P/ASX 200 tumbled by 1.6%, as the surge in Covid-19 cases worldwide fuelled fear over the global recovery.

7.40am GMT

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

After a brutal day's trading yesterday, global stock markets are on edge as the escalating Covid-19 pandemic fuels fears of a double-dip downturn.

Wall Street closes down more than 3% as COVID-19 cases continue to surge https://t.co/WVkXJiNnfv pic.twitter.com/8w1Sa7Esv7

European equities headed South and Wall Street was all too happy to join in with Covid-19 cases ramping up in the US and any hope of a US stimulus package in November (it was previously pre-election), left blowing in the wind.

The belated realisation that the US Senate race is the real election race next week is likely to dampen any comeback enthusiasm, with nine states too close to call and the Supreme Court waiting to adjudicate results.

Markets delivering the maximum amount of punishment to the most investors. Worst performing sectors yesterday... Probably not where you would expect the pain to be on 'lockdown' news.

Europe: Utilities -3.5%
US: Tech -4.33% pic.twitter.com/doGMUdoZel

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