That late selloff came after China threatened to hit back against America if it imposes sanctions over the coronavirus pandemic.

The spokesman for the country’s parliament, Zhang Yesui, told reporters that Beijing would retaliate if the US introduced legislation last week to give Donald Trump the power to sanction China.

Zhang indicated that Trump was trying to cover up his own mistake over the pandemic saying:

“We firmly oppose these Bills, and will make a firm response and take countermeasures based on the deliberation of these Bills.

“It is neither responsible nor moral to cover up one’s own problems by blaming others. We will never accept any unwarranted lawsuits and demands for compensation.

More details here.

After a late stumble, Europe’s stock markets have ended the day lower than they started it.

• FTSE 100: down 51 points or 0.9% at 6,015
• Germany’s DAX: down 157 points or 1.4% at 11,065
• French CAC: down 51 points or 1.1% at 4,445
• Italian FTSE MIB: down 126 points or 0.75% at 17,087

Back in the UK, shoe retailer Clarks has joined the ranks of firms cutting jobs due to the pandemic.

More than 900 head office staff will go, as the Covid-19 lockdown hits sales hard, on top of the problems on the high street.

Our US business editor Dominic Rushe reports that some Americans have been struggling to sign on for unemployment benefit, due to huge demand:

Aya Rabbaa, 19, lost her job at an iHop restaurant in Madison, Wisconsin, eight weeks ago and only received her benefits three days ago. “I would call and hang on hold for hours or they would hang up,” she said.

The college student relied on her wages to pay her expenses and said it had been a real struggle while she waited on the money. “They need to do something,” she said. “People are hungry, people are stressed. Do we live in a third world country or what?”

Now Wisconsin is open for business again after its supreme court struck down the state’s stay-at-home order. Rabbaa said she was worried about going back to work if and when the restaurant opens for business. “I’d go back but I am scared,” she said. “It’s still not safe. If I get it then the customers will get it and if they have it, I will get it.”

After that positive start, the US stock market is turning south.

The Dow has now dipped by 193 points, or 0.8%, to 24,381. Oil has shed its early gains too, and European markets are in the red too as the closing bell approaches....

Bonds are strengthening, though, pushing the yield on British five-year debt below zero!

Our economics editor Larry Elliott says today’s PMI reports show we face a long trudge back to recovery, writing:

Well, do you want the good news or the bad news?

The goods news – both for the UK and for the rest of Europe – is that the worst is over. April marked the bottom of the slump triggered by the response to the Covid-19 pandemic. Provided there is no second wave of infection (a pretty hefty qualification, admittedly) last month was as bad as it gets.

The bad news is that a return to pre-crisis levels of activity is a long way off and, as things stand, will be measured in years not months. There is more chance of spotting a yeti in the Himalayas than there is of a sighting of the equally elusive V-shaped recovery....

More here:

The initial claims figures, although bad, don’t capture the full extent of the jobs lost in the crisis.

Another 2.2 million new claims were filed through the federal government’s temporary Pandemic Unemployment Assistance program. It’s designed to help gig economy workers, independent contractors and other self-employed workers, who might not be able file traditional jobless claims.

Wall Street is unperturbed by today’s US jobless numbers.

The Dow has gained 57 points or 0.2% in early trading to 24,633 points, despite traders learning that another 2.4m Americans are now on the dole.

The S&P 500 is also slightly higher, having recovered a large chunk of its hefty fall in March.

In London, the FTSE 100 has shaken off its earlier losses and is up 17 points at 6084. Top risers include Rolls-Royce (+6%) after announcing 9,000 job losses yesterday, and AstraZeneca, which says it can manufacture 1bn doses of the University of Oxford’s potential Covid-19 vaccine.

Back in the UK, workers at Royal Bank of Scotland are preparing to work from home for a while yet.

RBS told staff today that more than 50,00 of them (out of 65,000) won’t return to the office until at least the end of September.

However, about 400 workers whose jobs include handling sensitive data have been asked to return to offices and call centres next month.

More here:

Several economists are concerned that America’s jobless claims haven’t levelled out faster:

America has just passed a grim milestone in its unemployment crisis.

Glassdoor senior economist Daniel Zhao has spotted that more jobs have been lost in the last nine weeks than during the last recession a decade ago:

“Today’s sky-high unemployment insurance claims report brings the total UI claims to 38.6 million and surpasses yet another historical benchmark. In only nine weeks, unemployment claims made during the coronavirus crisis have already exceeded the 37 million claims made over the entire 18 months of the Great Recession.

The coronavirus crisis continues to inflict swift and deep impacts on the labor market at a near unprecedented clip.

Before Covid-19, the idea of more than two million Americans losing their jobs in a single week would be unimaginable, let alone 38 million joining the unemployment ranks in two months.

As this tweet shows, the job losses since March absolutely dwarf the impact of the financial crisis - wiping out all the gains since then.

Oof! US department store Macy’s has warned that its sales have fallen by around 45% in the last quarter, as the coronavirus shutdown drove it into the red.

Preliminary results show that sales at Macy’s in February-April fell to between $3,000m and $3,030m, down from $5,504. It made an operating loss of around $1.1bn, down from an operating profit of $203m a year earlier.

The company shut all its stores - including department chain Bloomingdale’s and beauty chain Bluemercury - on 18 March, leading to a slump in takings.

“This is a challenging time for the country, for retail and for Macy’s, Inc. COVID-19 has impacted the lives of many of our colleagues and customers, and health and safety remain our top priority. We closed all of our stores - Macy’s, Bloomingdale’s and Bluemercury - on March 18, which had a significant impact on our first quarter results,” said

Jeff Gennette, chairman and chief executive officer, said it is a challenging time for the country, for retail and for Macy’s itself.

“Looking back, our performance in February was solid and in line with our expectations, but we saw a precipitous decline in sales with the stores closure in March. As a developed omnichannel retailer, we experienced a steady uptick in our digital business in April, which was encouraging, but only partially offset the loss of sales from the stores.

The digital performance was driven by strong execution and enhanced fulfillment options, including curbside pickup where allowed.”

This morning’s PMI reports from the UK and the eurozone haven’t lifted spirits in the markets.

The FTSE 100 is still down 0.8% at 6018 points, a loss of 48 points so far, after the City heard that UK manufacturers and services companies were having such a rough time.

Wall Street is expected to open lower, with the Dow down 145 points (roughly 0.6%) in pre-market trading and traders nudging the safe-haven dollar a little higher.

Here’s our news story on today’s UK PMI report:

Duncan Brock, Group Director at CIPS, fears that a second wave of Covid-19 infections could undermine hopes of a recovery (sending the PMI skittering back down to April’s record lows).

The minor easing in the downturn compared to last month’s figures only serves to highlight the depth of the fall in April’s output and does not signal that the pathway is clear for an improvement in the manufacturing and services sectors.

“This month saw another steep fall in overall business activity, surpassing for the third time the rates of decline seen during the global financial crisis in 2009. No new orders, premises shut down and furloughed staff unable to return to work were at the heart of the desolation as business struggled to continue with two hands tied behind their back.

Even some heavy discounting by companies did little to offset their losses which are likely to be just the tip of the iceberg with businesses failing in increasing numbers. “As the sectors prepare for a further easing in restrictions and becoming covid-ready for staff to return, the danger on the horizon is a second wave of infections threatening the health of the nation and dampening consumer confidence still further.

In addition, if this intensity of job cuts continues, purse strings will be drawn tightly shut and spending severely curtailed, putting further pressure on the UK economy and ensuring any recovery is many years into the future.”

Here’s Andrew Wishart of Capital Economics on today’s UK purchasing managers survey:

Taken literally the fact the flash composite PMI remained well below the no-change level of 50 in May suggests that activity fell further as it should compare activity to the previous month. But many respondents appear to be answering the alternate question of “how is activity compared to normal?”. So instead it appears to be suggesting that the low point for activity was reached in April, but that it is still well below normal in May.

The recovery in the manufacturing PMI from 32.6 to 40.6 is probably a sign that some industrial plants have reopened on government advice. And the services index recovered from 13.4 to 27.8, in line with anecdotal evidence that firms have restarted limited operations, such as take-out options from restaurants.

Although a PMI of 30.5 is better than one of 13.6, it’s still extremely weak - showing a profound economic downturn this month.

Chris Williamson, chief business economist at IHS Markit, reckons today’s PMI surveys show that the downturn is bottoming out:

“The eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April.

Second quarter GDP is still likely to fall at an unprecedented rate, down by around 10% compared to the first quarter, but the rise in the PMI adds to expectations that the downturn should continue to moderate as lockdown restrictions are further lifted heading into the summer.

All eurozone countries eased their COVID-19 containment measures to some extent in May, helping to moderate the overall rate of economic decline.

However, while a further loosening of restrictions is anticipated in coming months, some measures to contain the virus are likely to remain in place until an effective treatment or vaccine is found.

Japan has suffered its worst drop in exports since the financial crisis over a decade ago , denting hopes that the world economy could be turning the corner.

Japanese exports slumped by almost 22% year-on-year in April, led by tumbling demand for cars and industrial goods.

Exports to the US were down 37.8%, with auto exports down by two-thirds.

Shares in budget airline easyJet have jumped 5% in early trading, after it announced it will resume some flights from mid-June.

Face masks will be compulsory, as the airline tries to operate while obeying physical distancing rules.

My colleague Jo Partridge explains:

The airline initially will restart domestic routes in the UK and France where it believes “there is sufficient customer demand to support profitable flying”. The carrier will add further routes in the following weeks, as and when passenger demand rises and lockdown measures ease further across Europe.

The company will introduce enhanced cleaning and disinfection of its aircraft, will make disinfectant wipes and hand sanitiser available on board, and will require all passengers and cabin crew, as well as ground crew, to wear masks. There will be no food service onboard, initially.

Anxiety over US-China relations is weighing on the London stock market.

The FTSE 100 index has dropped by 50 points, or 0.85%, in early trading to 6,016. France and Germany are both down over 1%.

Consumer-focused companies, technology firms, and financial groups are among the fallers -- reflecting worries over the global economic outlook.

Overnight, the US intensified its criticism of China by issuing a new report which criticises Beijing activities.

Associated Press has the details:

Beyond its hard-hitting rhetoric against China over its handling of the coronavirus, the White House has issued a broad-scale attack on Beijing’s predatory economic policies, military buildup, disinformation campaigns and human rights violations.

The 20-page report does not signal a shift in U.S. policy, according to a senior administration official, who was not authorized to publicly discuss the report and spoke only on condition of anonymity, but it expands on Trump’s get-tough rhetoric that he hopes will resonate with voters angry about China’s handling of the disease outbreak that has left tens of millions of Americans out of work.

US secretary of state Mike Pompeo has also launched a stinging attack on China’s government, calling it a “brutal, authoritarian regime” that is “ideologically and politically hostile to free nations”: