Here’s some reaction to the Federal Reserve’s interest rate decision, and Jay Powell’s press conference.

Seema Shah, Chief Strategist at Principal Global Investors, said:

Powell acknowledged that the economic devastation has been a deliberate policy choice, and therefore the central bank must do whatever it takes to reduce the economic pain.

“Certainly, Powell made a convincing attempt to reassure financial markets that the Fed will not look to tighten financial conditions prematurely just because equities are rallying....

“Powell’s own statement provided a very sobering assessment of the economic impact, acknowledging that this will not just be a short, sharp shock but a more prolonged event that will continue to weigh heavily on the global economy over the medium term.

Ronald Temple, Head of US equity, Lazard Asset Management:

“Today the Fed acknowledged that the devil is in the details when it comes to injecting massive liquidity into the corporate sector. In the three weeks since announcing $2.3 trillion of liquidity through seven facilities, the Fed has only lent $8 billion through one of them, the Paycheck Protection Program Liquidity Facility.

Anna Stupnytska, head of global macro at Fidelity International:

“The Fed’s messaging makes it clear that while the Committee considers its current policy stance including the numerous lending programmes sufficient for now, they are ready to intervene further if needed. Given the extreme uncertainty about the outlook which largely depends on the virus trajectory with many moving parts - including any breakthroughs on therapeutic treatments, vaccines, testing and tracing technologies- it is hard to predict if or when the Fed will have to expand the scope of some of its programmes in the future.

“But with the recovery likely to be sluggish and patchy, with social distancing measures potentially remaining in place for another 12-18 months, we think there will be a need for further action over the next few weeks - this would include increasing the size of some facilities, changing their terms as well as possibly creating new ones to provide assistance to specific sectors such as housing.”

Fed chair Jerome Powell has brushed aside concerns that the US budget deficit is going to soar due to the cost of fighting the coronavirus pandemic.

Powell stirringly insists that the priority is to use the “great fiscal power of the United States” to support the economy through the crisis.

Then in time, perhaps “reasonably soon”, policymakers can think about a long-term way to get America’s fiscal house in order, he tells reporters.

Powell is now taking questions from America’s economics reporters, on a video conference call.

Q: What more can the Federal Reserve to support the economy?

Powell says the Fed will act “forcefully, proactively, and aggressively”, and then declares that even more measures may be needed - on top of its new lending programmes, credit facilities and asset purchase schemes.

It may well be the case that the economy will need more support from all of us, if the recovery is to be a robust one.

Federal Reserve chair Jerome Powell is holding a press conference now, to explain why the Fed left interest rates on hold.

He begins by focusing on the Covid-19 crisis and the “tragic loss and tremendous hardship” being suffered by victims of the virus in America and across the globe.

Powell expresses the Federal Reserve’s “sincere gratitude to those who put themselves at risk to help others”.

Turning to economics, he warns that the impact of the crisis is ‘severe’ - and not yet visible in the data.

Next week’s US labor market report will show that the jobless rate has jumped to double-digits, he predicts, up from 50 year lows two months ago.

Newsflash: America’s central bank has voted to leave interest rates at their current record lows, and dropped a clear hint that they’re not moving soon.

The Federal Reserve left its headline Fed Funds rate at 0%-0.25% -- maintaining its emergency rate cut of Sunday 15th March.

The Fed’s FOMC committee says that rates will stay there until the economy has weathered recent events, and is on track to hit its employment and inflation goals.

The FOMC also warns that America’s public health crisis is weighing heavily on the economy, and poses a “significant risk” to the outlook in the medium term.

It warns:

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health are inducing sharp declines in economic activity and a surge in job losses.

Weaker demand and significantly lower oil prices are holding down consumer price inflation. The disruptions to economic activity here and abroad have significantly affected financial conditions and have impaired the flow of credit to U.S. households and businesses.

Today’s rally means the FTSE 100 has surged by over 20% since March 23, when it closed at just 4993 points.

That means the blue-chip index is back in Bull Market territory (defined as a fifth above a recent low).

That’s a relief to large and small investors alike (anyone saving for a pension has been hit by this year’s slump). But the FTSE 100 is still down 18% so far this year, so maybe hold back on the bunting....

Newsflash: Britain’s FTSE 100 has closed at a new seven-week high, lifted by optimism that the worst of the coronavirus crisis could be behind us soon.

The blue-chip index has ended the day up 156 points, or 2.6%, at 6115 points.

That’s its highest level since Tuesday 10th March (the day after Crash Monday), and the biggest one-day rise since 17th April.

Many recently-unloved stocks had a very strong day, with cruise operator Carnival jumping 16%, energy supplier Centrica gaining 15%, and budget airline easyJet up 12%.

European markets also rallied hard, with Germany’s DAX up almost 3%.

David Madden of CMC Markets says Gilead’s encouraging news about remdesivir’s effects on Covid-19 patients helped drive the rally.

European stock markets higher as traders are optimistic that lockdowns could be loosened. Some countries have reopened small parts of their respective economies, and there is a general feeling in the markets that we are likely to see more of this in the months ahead. Traders are also bullish on stocks due to a report that showed some progress had been made in relation to a possible treatment for Covid-19.

It is understood that Gilead Science’s antiviral drug, Remdesivir, showed ‘positive data’ in a trail. There has been some back and forth in relation to the drug in question, but for now the sentiment seems to be positive. The FTSE 100 and the DAX 30 both hit levels last seen in early March.

Back in the UK, Royal Bank of Scotland is holding its AGM - virtually.

Speaking by video call, CEO Alison Rose flagged up the impact of the coronavirus on the bank, and the economy:

“We will shortly release our Results for Q1, so you will understand that I am restricted in how much I can say about our financial performance so far this year. It’s widely expected that the coronavirus pandemic will continue to have a serious impact on the economy, and consequently impact our performance, especially over the short-to-medium term.

Along with the Board, my executive team and I are actively managing against that disruption, ensuring we offer the support our customers need while maintaining a prudent approach to risk.”

Chairman Sir Howard Davies took a similar line, warning that Covid-19 will have a “stark and long-lasting” impact.

Virtual AGMs aren’t quite the same as the real thing -- no chance to grab the board for a chat, and no nibbles either! But on the upside, we get a glimpse at their impressive bookshelves:

Stocks have jumped at the start of trading in New York.

Investors are focusing on the positive trial news about remdesivir’s effects on Covid-19 patients, rather than the dire US GDP figures.

The Dow Jones industrial average has gained 401 points, or 1.6%, to 24,503 points, with the S&P 500 up 1.9%.

Markets are shrugging off the looming US recession, and grasping onto hopes of a medical breakthrough for Covid-19 treatments.

US biopharmaceutical company Gilead has excited investors by announcing positive results from a trial of its antiviral drug remdesivir, to test if it could help severely ill COVID-19 patients.

In a statement, Gilead said remdesivir had shown positive results when given to patients for either a five-day or 10-day course of treatment.

Preliminary results showed that more than half of patients in both groups improved, and had been discharged from hospital by the 14th day after starting the treatment.

Merdad Parsey, chief medical officer at Gilead Sciences, says there were similar results between those on the five and 10-day trial:

These study results complement data from the placebo-controlled study of remdesivir conducted by the National Institute for Allergy and Infectious Diseases and help to determine the optimal duration of treatment with remdesivir.

The study demonstrates the potential for some patients to be treated with a 5-day regimen, which could significantly expand the number of patients who could be treated with our current supply of remdesivir.

This is particularly important in the setting of a pandemic, to help hospitals and healthcare workers treat more patients in urgent need of care.”

Gilead also reports that patients who received remdesivir earlier were more likely to be released from hospital faster:

In an exploratory analysis, patients in the study who received remdesivir within 10 days of symptom onset had improved outcomes compared with those treated after more than 10 days of symptoms.

Pooling data across treatment arms, by Day 14, 62 percent of patients treated early were able to be discharged from the hospital, compared with 49 percent of patients who were treated late.

Investors have been watching Gilead’s progress closely, on hopes that remdesivir could treat the symptoms of the coronavirus - which can caused organs to shut down in severe cases, as well as attacking the lungs.

Markets had fallen back last week after reports that Remdesivir had failed a trial, so this feels like an encouraging development.

Stocks are moving higher in London, with the FTSE 100 up 2% or 124 points at 6082.

Here’s our US business editor Dominic Rushe on today’s US GDP report:

The longest economic expansion in US history officially came to an end on Wednesday when the commerce department announced the economy shrank 4.8% in the first three months of the year.

The economic slump, the steepest since the last recession in 2008, is just an early indicator of how severely the coronavirus pandemic has mauled the US economy.

Much of the US economy shut down in March in an effort to contain the virus, which triggered 26 million people to file for unemployment benefits and wiped out a decade of jobs gains, at the end of the first quarter. The next set of figures from the commerce department will more accurately reflect the true scale of its impact.

He also points out that the current slump could rival the economic collapse of the Great Depression.

“The US economy is in recession right now,” said Gus Faucher, chief economist at PNC. “We just don’t know how deep.”

More here:

Robert Alster, Head of Investment Services at wealth manager Close Brothers Asset Management, says the White House will not like today’s GDP figures.

“The US economy was performing well at the start of the year, but the coronavirus crisis derailed it in spectacular fashion. While the impact will be better seen in the Q2 data, Q1 figures act as a useful outrider, helping us understand the magnitude of the challenge ahead. In the past few weeks, more than 26 million Americans have applied for unemployment relief, and even White House advisers are admitting that the jobless total could reach 16% in the coming weeks.

This is not the economic record on which President Trump hoped to campaign for re-election.

“Like other governments across the world, the US is eager to ensure that the economy is ready to rebound at speed once the crisis passes. But securing that desired ‘v-shaped’ recovery relies on businesses receiving the necessary support to remain in hibernation as well as vastly improved consumer confidence. The White House will hope that the bombast of President Trump can help the latter, but the reality is that the longer the US economy is starved of oxygen, the longer it will take to get back to full strength.”

The instant reaction to today’s growth report is that America’s economy is suffering, and it’s about to get a lot worse.

Wall Street financier Steven Rattner fears that the slump will accelerate alarmingly in the current quarter, so that the economy shrinks at an annualised rate of 40%.

Dan Primark, business editor of Axios, agrees that things are going to get worse:

Investment strategist Callie Cox points out that US consumer spending plummeted (as people obeyed orders to stay home, and shops and restaurants closed)

NEWSFLASH: America’s economy is contracting at the fastest rate since the financial crisis a decade ago, as the coronavirus lockdown hits activity

US GDP shrank at an annualised rate of -4.8% in January-March, new figures from the Bureau of Economic Analysis. That’s worse than the 4.0% annualised contraction expected by economists.

(That means GDP contracted by roughly 1.2% on a quarter-on-quarter basis).

The BEA explains:

The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued “stay-at-home” orders in March.

This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending.

More details to follow....

Just in: Boeing has warned its staff that it plans to cut its headcount by 10%.

In an email to staff, CEO Dave Calhoun said the Covid-19 crisis is having a serious impact on demand for its planes. It will use natural wastage, voluntary redundancies, and compulsory layoffs where necessary.

With demand for commercial airline travel down very sharply, airlines are delaying purchases for new jets (a message also spelled out by Airbus this morning).

Boeing also reported its second quarterly loss in a row, losing $641m in January-March due to the coronavirus pandemic and the ongoing 737 Max grounding.

AstraZeneca, Britain’s biggest drugmaker, is involved in a number of initiatives to find a treatment for Covid-19.

It is testing its diabetes drug Farxiga to treat hospitalised covid-19 patients at risk of serious complications to try and prevent heart or kidney failure.

The firm has started enrolling 900 people in the UK, the rest of Europe and the US for a late-stage clinical trial and expects to have the first results in a couple of months. The firm also has two out of six medicines in the government’s Accord programme to fast-track covid-19 treatments, and expects to dose the first patients in the next few days.

One is the blood cancer drug Calquence, which is being tested to see if it can suppress the cytokine storm that inflames the lungs and other organs of some Covid-19 patients. It has already been given to some Covid-19 patients with advanced lung disease in the US, where researchers at the NIH’s National Cancer Institute observed “some clinical benefit”.

AstraZeneca has teamed up with fellow pharma giant GlaxoSmithKline and the University of Cambridge to set up a new coronavirus testing lab in Cambridge that should able to carry out 30,000 tests a day by early May. AstraZeneca has also donated nearly nine million face masks to healthcare workers around the world, including half a million in the UK.

The drugmaker has benefited from clients stockpiling respiratory drugs such as Symbicort, which boosted sales by 16% to $6.4bn in the first three months of the year, but its chief executive Pascal Soriot said the overall impact of the Covid-19 crisis on AZ would be negative, as fewer people are going to the doctors and using medicines. He expects the crisis to last between three and six months.

Shares in UK electricals chain Dixon Carphone have surged 20% this morning, after it showed it was getting to grips with the pandemic.

Dixons reported that its online sales have grown by 166% in the last five weeks, under the lockdown, as customers flock to buy home computers, gaming consoles and kitchen gadgets.

In April we have seen strong demand for home office equipment including computers and home networking as people work and communicate remotely.

Gaming and TV sales have also been strong. In kitchen products, refrigeration and food preparation including bread makers have sold particularly well.

This means Dixons has recovered around two-thirds of the £400m sales lost because its UK and Ireland shops are closed.

It also reported strong trading at its Nordic stores (which are still open), where it has been learning how to operate under physical distancing rules.

Shares have jumped to 81p, a one-month high.

The days of cramming thousands of bankers into skyscrapers may be numbered, due to Covid-19.

The City of London and Canary Wharf are both pretty deserted right now, with financial services companies telling staff to work remotely where possible - either at remote sites, or from home.

Barclays has a large tower block at the Wharf, but CEO Jes Staley is pondering whether it needs to pack its staff into one place.

He told reporters that the Canary Wharf offices will open gradually, with just two people allowed in an elevator at once.

And in the long term.....

“I think the notion of putting 7,000 people in a building may be a thing of the past. And we will find ways to operate with more distancing over a much longer period of time.

Keeping staff two metres apart is pretty much impossible on a busy trading floor, unless you sharply reduce the number of people in the office at once. Bosses will also be very nervous about future disruption -- one Covid-19 case could force everyone to go home.

Another factor: the City seems to have coped well with remote working.

Staley says it is “absolutely remarkable” that technology has allowed 70,000 staff to keep Barclays’ operations running properly “from their kitchens.”

But, there will be a knock-on impact if City workers stay home, as Neil Wilson of Markets.com explains:

Working from home is clearly working rather well. Also, banks are no doubt looking at this and thinking they can cut costs by closing offices, call centres and branches.

Nevertheless, it highlights how bosses and government have a very hard task in exiting lockdown. Moreover, what about the Pret or the pub that depends on lunch trade from the City workers filling up these offices every day? The impact on the economy will be permanent.

Boom! Britain’s FTSE 100 index has just pushed over the 6,000 points mark for the first time since 11 March.

That means it has clawed back all the losses since the stomach-churning crash on 12 March (the worst day since 1987).

Here are the top risers, and fallers, as investors continue to grasp hopes that Covid-19 lockdowns will end soon, helping the world economy to rebound.

UK clothing and homeware group Next has reported that sales plunged over 40% in the last quarter, due to the lockdown.

Next told the City that the drop in sales has been “faster and steeper” than anticipated in its March stress test.

It now expects lower sales for both the first and second half of the year.

It told shareholders this morning that customers had already voted with their feet before the lockdown:

We believe that the threat of a pandemic did not significantly affect retail sales until the beginning of March, we saw a material impact in the second week of March and declines accelerated as each day went by.

In the three days before stores closed on Monday 23^rd March, Retail sales were down -86%. In reality, the majority of our customers had decided to stop shopping in retail stores before the order came to close them.

Although Next’s stores are still closed, it began partially reopening its internet shopping offering two weeks ago. It says 70% of ranges are now available, with operations rejigged to comply with physical distancing rules.

It is also limiting daily orders, and will shut down until the next morning when this is hit.

The rising economic cost of Covid-19 has hit profits at UK bank Barclays.

Barclays is setting aside £2.1bn to cover a surge in bad debts, anticipating that its business and consumer customers will struggle to repay their loans.

This dragged profits for the first quarter of 2020 down to £923m, some 38% less than a year ago, and lower than hoped.

CEO Jes Staley pinned the blame firmly on the coronavirus:

The impact of COVID-19 came late in what was until that point a good quarter. Statutory profit before tax was £0.9bn and profit before tax excluding credit impairment charges was £3.0bn. We have taken a £2.1bn credit impairment charge which reflects our initial estimates of the impact of the COVID-19 pandemic.

Staley also warned of tough times ahead:

“Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging,”

Shares in Barclays are up 5% this morning, though - as its Investment Bank reported a “particularly strong Markets performance”.

IAG are the top faller in London, down almost 6%, after its British Airways division announced it would eliminate one in four jobs.

Job cuts often go down well in the City (they’re a pragmatic lot). Not today, though.

Traders are alarmed that IAG also announced that it made a loss of €535m in the last quarter, with revenues down 13%, with worse to come.

CEO Alex Cruz told staff he was acting “decisively”to ensure that British Airways has a strong future. Unions, though, are furious that IAG is slashing staff rather than seeking government help.

Michael Hewson of CMC Markets comments:

One thing seems certain, while last night’s actions by IAG have attracted some significant criticism in terms of their timing, they also point to the challenges facing the travel sector in the weeks and months ahead.

Will demand have picked up again, and if not, will airlines have to reconfigure cabins so that passengers aren’t crammed in on top of each other. Will air fares become more expensive, as a result of lower capacity, and will package holidays be less popular as a result.

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

Today we learn how badly America’s economic growth was hit by the first phase of the Covid-19 crisis, and what its central bank will do to fight it.

GDP figures for the first quarter of 2020 are expected to show that the US economy shrank in January-March, at an annualised rate of around 4%. That would reflect the early impact of the global pandemic, as lockdowns spread from Asia to Europe and then America.

The threat of a deep recession has already spurred America’s Federal Reserve into a series of massive stimulus programmes. The Fed holds a policy meeting today, but isn’t expected to change monetary policy -- having already slashed borrowing costs to nearly zero.

Instead, investors will be looking for signals that the Fed will continue to generously support the economy -- and thus asset prices -- until the Covid-19 pandemic is over. It has already pledged more than $2 trillion of loan guarantees and other financial help.

Optimism that policymakers will keep doing Whatever It Takes have lifted the markets to their highest levels in seven weeks. Britain’s FTSE 100 is only a whisker below the 6,000 point mark, having fallen through 5,000 points last month.

Stocks have rallied in Asia too, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.7% to its highest since 12 March.

Australia’s S&P/ASX 200 index rose by 1.5%, while China’s CSI 300 inched up by 0.3%.

The FTSE 100 index has gained 5% in April, cutting its losses during 2020 to a mere 21%.

That reflects a lot of optimism that coronavirus lockdowns will ease, economies will return to something like normality, and a deep depression will be avoided.

But given so many companies are reporting falling sales and profits, and suspending their dividends, does this rally have firm foundations?

Last night, British Airways laid out plans to cut 12,000 jobs -- as it responds to the collapse in the travel business.

The big fear is that Covid-19 infections spike again once governments start to reopen offices, factories and schools.

Fiona Cincotta of City Index explains:

There are still many unknowns, perhaps too many to justify the return to a bull markets for many bourses across the globe. The true scale of the economic impact of the coronavirus is still unknown. Whilst people returning to work and economies reopening is a good thing, there is a good chance that the rally will start to stall over the coming weeks, as investors are faced with the stark reality of the hard data whilst also waiting to see if the gradual reopening are working.

Investors face the same conundrum as governments; will the reopening prove successful or lead back to a second wave of infections?

The agenda

• 10am BST: Eurozone consumer and economic confidence data
• 1.30pm BST: US GDP for Q1 2020- expected to fall by an annnualised rate of 4%
• 7pm BST: US Federal Reserve interest rate decision
• 7.30pm BST: Fed chair Jerome Powell’s press conference