Business groups are giving a cautious thumbs-ups to Theresa May’s suggestion of forging a new Brexit consensus in parliament.

Edwin Morgan, interim Director General of the Institute of Directors, warns it won’t be easy:

“The Prime Minister’s statement was a welcome step towards compromise, but there are still many obstacles on the path ahead. There was a clear indication of how the Government sees the next steps unfolding but time is of the essence and the outcome of all this is still far from clear.

“The brinkmanship has gone on for far too long and business leaders want our politicians to put an end to this miserable uncertainty. We urge the Leader of the Opposition to work with the Prime Minister to find a solution. Both sides must play ball.”

Ian Wright CBE, CEO of the Food and Drink Federation, says any new delay mustn’t be frittered away:

“Livelihoods are at stake, jobs are on the line. Food and drink manufacturers are spending money, time and effort trying to plan under a cloud of perpetual uncertainty. A further extension to article 50 must be sufficient to allow for a new plan to emerge.

Unless the Prime Minister can secure the speedy support of the leader of the opposition, another short extension would only prolong the misery for businesses and the country.”

However, as Scottish Nationalist Party leader Nicola Sturgeon points out, Britain could still face a cliff-edge Brexit in a couple of months (even if not in a couple of weeks).

A late newsflash: The pound has shaken off its earlier losses, after Theresa May announced a potentially significant twist in her Brexit strategy.

After hours of talks with the cabinet, the prime minister announced she is seeking to break the logjam in parliament. She’ll reach out to Jeremy Corbyn, to find a new approach for Britain’s future relationship with the European Union.

If the two leaders can’t agree a unified approach, May is prepared to put a set of arrangements to the House for MPs to vote on -- and pledging to abide by their choice (as long as Labour does too).

The PM is also going to seek a further short extension to Article 50, to avoid Britain crashing out without a deal on 12 April.

This has lifted sterling back to $1.313, recovering all its losses last night when MPs failed to back any softer Brexit (or no Brexit options).

It feels like this could be a significant moment in the Brexit saga - the PM finally reaching out across the House of Commons in search of a consensus with the opposition. But perhaps too late?

Newsflash: Britain’s leading stock index has just closed at a six-month high.

The FTSE 100 has ended the day 73 points higher at 7391, a gain of 1%. That means it has recovered pretty much all the losses suffered during last autumn’s slump.

Financial stocks led the rally, with healthcare, consumer goods makers and technology firms also having a good day.

NMC Healthcare was the top rise, up 4.1%, followed by financial services group Hargreaves Lansdown (up 4%) and Asia-focused bank Standard Chartered (up 3.5%).

Stocks got a lift from the weaker pound, which has been pushed down by Brexit worries today. Hopes that the world economy will pick up later this year also helped stocks.

Fiona Cincotta of City Index says:

The FTSE surged higher on Tuesday, lifted by indications that the global slowdown could be starting to ease. Financials led the charge, whilst the Brexit weakened pound also offered support to the UK index, ensuring that it rallied ahead of its European counterparts. The FTSE was trading over 1% higher heading towards the close despite a softer open on Wall Street.

Stronger Chinese and US manufacturing figures in the previous session helped restore confidence in the global economy. Fears of a slowdown have lingered over the markets for months. A doubling down on dovish rhetoric by the Fed and other central banks across the globe intensified these fears. However, factory activity picking up by more than expected in the world’s two largest economies dulled those concerns at least for the European session.

Many other Europe markets posted solid gains too, with the German DAX gaining 0.6% and the French CAC up 0.3%.

Newsflash: The entire board of fashion chain SuperDry have resigned, just a few hours after founder (and biggest shareholder) Julian Dunkerton won his bid for a board seat today.

The chairman, the CEO, the CFO and the head of the remuneration committee are all quitting with immediate effect; four other board members have given three months’ notice.

Dunkerton has been rewarded with the title of interim CEO, while his ally Peter Williams (who also narrowly won a board position today) will slip into the chairman’s seat.

Quite a win for Dunkerton -- although SuperDry’s share price has plunged by 9% today.

Here’s the full damage:

• Peter Bamford, Chairman of the Board, Euan Sutherland, Chief Executive Officer, Ed Barker, Chief Financial Officer, and Penny Hughes, Chairman of the Remuneration Committee, have resigned from the Board and will stand down with immediate effect;
• Dennis Millard, Minnow Powell, Sarah Wood and John Smith have given three-months’ notice under their contracts and will stand down as directors with effect from 1 July 2019;
• Julian Dunkerton and Peter Williams have been appointed to the Board:
• Peter Williams has been appointed as Chairman of the Board;
• Julian Dunkerton has been appointed Interim Chief Executive Officer.

Newsflash: The head of the International Monetary Fund has warned that momentum in the global economy has slowed in recent months.

Speaking in Washington, Christine Lagarde says the world economy is unsettled, and reveals that the Fund will downgrade its growth forecasts next week.

She says:

A year ago, I said, “the sun is shining—fix the roof.” Six months ago, I pointed to clouds of risk on the horizon. Today, the weather is increasingly “unsettled”. What do I mean by that?

In January, the IMF projected global growth for 2019 and 2020 at around 3 ½ percent—less than in the recent past, but still reasonable. It has since lost further momentum, as you will see from our updated forecast next week.

Only two years ago, 75 percent of the global economy experienced an upswing. For this year, we expect 70 percent of the global economy to experience a slowdown in growth.

Lagarde blames rising trade tensions, and financial tightening (higher US interest rates) for the slowdown. The Fund hopes growth will pick up later this year, but also warns that Brexit is a leading downside risk.

Emiel van den Heiligenberg, the head of asset allocation at Legal & General Investment Management, has an interesting theory -- markets could poised for a ‘melt-up’.

That means a sharp surge higher in stock prices, adding tens of billions of pounds, dollars, euros and yen onto market values (the opposite of a meltdown).

Van den Heiligenberg argues that there are several reasons why shares could rally sharply in the medium term -- including signs that central bankers are becoming more dovish, and the rise of revolutionary technologies such as AI.

Here’s the list.

• The December correction reversed very quickly, giving investors confidence that there are buyers on market dips. This usually draws investors into markets due to ‘fear of missing out’, or FOMO
• Equity markets typically anticipate recession six to nine months ahead, but our roadmap suggests that the risk of recession has moved further into the future, possibly now coming in 2021 or 2022. This gives enough space for markets to go back to more mid-cycle dynamics, where investors tend to buy equities on the dip instead of selling the rallies
• If the framework of the Federal Reserve is changing towards average inflation targeting, i.e. a structurally more dovish stance, this implies in my view the Fed will be less sensitive to asset bubbles, which could be very bullish for equities
• So-called ‘modern monetary theory’ supports the case for the Fed’s framework to be changing, as it’s a justification for central banks to consider even more unconventional policy measures
• Technology investment stories such as artificial intelligence remain very appealing, despite fears of techlash
• Retail investors are now getting more involved in equities, both in US equities (which are seeing their first net inflows in years), but also particularly in Chinese equities
• Like generals fighting the last war, investors seem very focused on what will trigger the next financial crisis, while melt-up scenarios are generally dismissed as pipedreams

Van den Heiligenberg has also created an eponymous chart, which seems to back the theory up: (based on a mixture of official survey data and fluffier anecdotal input such as dinner party chatter).

Boom! World stock markets have just hit a six-month high.

Shares have continued to rally today, despite anxiety over Brexit, the US-China trade war and the health of the global economy.

The MSCI All-Country World Index has risen 1.1% to 514 points, its highest level since October 2018. This follows gains in Europe and Asia today, and a strong showing on Wall Street overnight.

In London, the FTSE 100 hit its own six-month high, up 62 points today to 7,379.

That’s partly due to the pound’s weakness today.

But, stocks are also benefitting from signs that central banks will keep monetary policy loose for longer than previously thought. America’s interest rate may have hit their peak in this cycle, while the European Central Bank is unlikely to lift borrowing costs from current record lows soon.

Stronger-than-expected Chinese factory data released yesterday has also boosted the markets, as it may suggest global growth is picking up.

Fawad Razaqzada, market analyst at Forex.com, says:

Despite the uncertainty, the FTSE 100 is still up a good 9% year-to-date, thanks to a weak pound and outlook for global interest rates to remain low for longer.

The FTSE is showing a similar performance to the mainland European indices, so Brexit uncertainty is not just holding back UK stocks, but Europe as a whole. Indeed, because of Brexit and anaemic growth, European markets are underperforming their US peers.

Newsflash: Julian Dunkerton, the founder of fashion chain SuperDry, appears to have won his battle for a seat on the company’s board again.

Dunkerton triumphed, narrowly, at an extraordinary general meeting taking place in London today.

The company says that 50.75% of proxy votes cast were in favour of Dunkerton’s return (he holds an 18% stake), a year after he resigned in a bust-up over strategy.

Dunkerton’s return is a blow to chief executive, Euan Sutherland -- the two man have blamed each other for SuperDry’s recent deterioration (shares have fallen from £20 to below £6 in the last 15 months).

The meeting is turning rather lively....

With Parliament still deadlocked over Brexit, the Bank of England has decided to extend its support net for the financial sector.

The BoE says it will continue operating weekly Repo auctions, which give banks ready access to cash in return for handing over assets to the central bank, until the end of June.

These auctions began in March, and were due to run until the end of April. They are designed to prevent a liquidity squeeze hurting the City (if UK asset prices were suddenly to plunge).

Now, with Britain possibly staying in the EU until late May, or perhaps longer, the Bank is keen to protect the UK for as long as necessary.

Newsflash: Britain’s construction sector suffered a small contraction in March, for the second month running.

Data firm Markit reports that commercial construction was hit by Brexit uncertainty, with clients unwilling to commit to new buildings in the current climate.

Civil engineering also declined, while housebuilding picked up.

This left Markit’s construction PMI at 49.7, below the 50-point mark separating expansion from contraction. That’s slightly better than February’s 49.5.

Makit says this is the first back-to-back fall in output levels since August 2016, immediately after the Brexit referendum.

Commercial construction was the worst performing area during the latest survey period, with business activity dropping to the greatest extent since March 2018.

There were widespread reports that Brexit uncertainty and concerns about the domestic economic outlook had led to risk aversion among clients. Civil engineering activity also fell in March, although the rate of decline eased since February.

Reaction to follow....

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

Anxiety over Brexit is mounting in the City today, and across UK businesses, after parliament again failed to find a way out of the morass.

The pound took a dive last night, when investors heard that MPs had rejected several softer Brexit options, including a customs union and a confirmatory second referendum.

Sterling swiftly shed almost a cent, on fears that Britain could yet crash out of the EU without a deal in 10 days’ time.

It’s currently bobbing around the $1.304 mark, still above last Friday’s two-week low, but likely to remain volatile today.

With Theresa May’s deal still struggling for support, and the threat of an election looming, investors are understandably wary of sterling.

The City will be watching Westminster closely again today, as ministers gather for a bumper-size cabinet meeting to plot the way ahead.

Adam Cole of Royal Bank of Canada says investors should prepare for a fourth vote on May’s withdrawal agreement (although there’s little sign that many MPs have changed their minds).

He writes:

In last night’s second round of indicative votes, the Commons again rejected the four proposals that were put to it, though generally by smaller margins (customs union by three votes compared to eight and second referendum by 12 votes compared to 27, but with only 15 Tory supporters).

Tory Boles (sponsor of the CM2.0 proposal) resigned from the party after the vote. Where now? Reports suggest May has scheduled five to six hours of cabinet meetings for today to discuss all options, including ending the deadlock with a general election. There is a still a widespread expectation she will make a final attempt to get her deal through with small amendments and we may get some clarification of the timing of that today. Parliament is scheduled to devote time to discussing the alternatives again tomorrow.

Also coming up today

Data firm Markit will release its latest survey of UK construction today. It’s expected to show that building activity shrank a little in March.

Davi Madden of CMC Markets says the construction PMI will probably fall below the 50-point mark showing stagnation.

The UK construction PMI report will be announced at 9.30am (UK time) and dealers are anticipating a reading of 49.8, and that would be a slight improvement on the 49.5 reading in February.

Yesterday we learned that factories were busy stockpiling for Brexit (so surely they’ll need some new warehouses to put the stuff?).

Christine Lagarde, the head of the International Monetary Fund, is giving a speech on the global economy. It’s titled “Three Priority Areas for Action”.

The agenda

• 9.30am BST: UK construction PMI report for March
• 1.30pm BST: US durable goods orders for February
• 2.30pm BST: IMF chief Christine Lagarde speaks in Washington