More bad news: America’s General Electric is cutting as many as 13,000 jobs in its jet engine business.

GE has announced it is accelerating its cost-cutting programme, and permanently reducing the Aviation division’s global workforce by as much as 25% this year. The plan will include voluntary redundancies and compulsory layoffs, as the company reels from the shock of Covid-19.

GE blamed the “unprecedented” and “deep contraction” of the commercial aviation business, with GE Aviation CEO David Joyce telling staff that:

“[The] deep contraction of commercial aviation is unprecedented, affecting every customer worldwide. Global traffic is expected to be down approximately 80% in the second quarter.”

Although Britain’s FTSE 100 only dropped 0.15% today, there are some chunky risers and fallers out there.

The losers column is dominated by travel companies - with British Airways parent company IAG down 5% and easyJet losing 7.2%. Betting firm Flutter fell 4.9%, amid signs that UK sporting events will remain disrupted for some time.

Top risers included pharmaceuticals firms Hikma (+5.8%) and GSK (+3.2%), and online grocer Ocado (+4.45% to a new closing high).

Good news for those nursing a sweet tooth through the lockdown -- high-end confectionery chain Hotel Chocolat is planning to reopen a few stores next week.

My colleague Sarah Butler explains:

Hotel Chocolat is to reopen up to five stores next week – for takeaways only – after restarting production at its UK factory to help top up dwindling supplies.

The specialist retailer and cafe operator said it will reopen first in Borough Market in London, serving hot chocolates, ice-creams and coffees, as it tests out new ways of working while protecting staff and customers from the spread of the coronavirus.

The UK government has just reported that 6.3 million workers have been furloughed since the coronavirus crisis began.

That’s nearly a fifth of Britain’s total workforce, I estimate (the employment total hit 33.07m in February).

German car market are also feeling extremely worried about the future, due to the Covid-19 lockdown.

A survey of the business climate in Germany’s auto sector suffered its biggest slump in April, dropping from -13.2 to -85.4 -- the worst since the survey began in 1991.

“We have never seen such bad figures for this key sector,” said Klaus Wohlrabe, head of forecasting at Ifo, which produced the report.

Bosses at German carmakers reported that orders, production expectations and export hopes all tumbled.

More reaction to the tumble in demand for US factory goods:

Here’s Reuters take:

New orders for U.S.-made goods fell more than expected in March and could sink further as disruptions from the novel coronavirus fracture supply chains and depress exports.

The Commerce Department said on Monday factory orders dropped 10.3%. Data for February was revised down to show orders dipping 0.1% instead of being unchanged as previously reported. Economists polled by Reuters had forecast factory orders tumbling 9.7% in March.

As feared, airline stocks are falling sharply after Warren Buffett revealed he’d sold his stakes in the industry.

American Airlines and SouthWest are down 6%, United has dropped 7% and Delta has lost 8%.

Boeing is suffering too, down 4% as traders anticipate that demand for new planes will be weak for some time.

A stock market wobble is usually a busy time for Warren Buffett - the man who became super rich by being greedy when others are fearful (and vice versa).

But not this time. Buffett told shareholders at his Berkshire Hathaway annual meeting that deal opportunities melted away after the US Federal Reserve announced its rescue packages last month.

Buffett explained that the Fed’s offers of huge, low-priced loans to help firms through the crisis meant his own chequebook wasn’t needed.

“There was a period right before the Fed acted, we were starting to get calls. They weren’t attractive calls, but we were getting calls.

And the companies we were getting calls from, after the Fed acted, a number of them were able to get money in the public market frankly at terms we wouldn’t have given.”

This means Buffett is still sitting on a huge pile of cash - especially now he’s sold his airlines shares. He reckons current valuations aren’t attractive -- perhaps a sign that the market is going to head lower?...

The covid-19 pandemic has pushed fashion chain J Crew to seek bankruptcy protection.

Known for its ‘preppy’ range of mens and womenswear, J Crew has become the first major US retailer to be brought down by the virus.

Demand for its sweaters, t-shirts, trousers and pencil skirts has slumped since shops were forced to close - and millions of Americans lost their jobs.

Feeling worried about life? You’re not alone.

More than 25 million people reported high levels of anxiety in late March as the decision to put the UK into lockdown triggered fears about health, job security and making ends meet among half the country’s adult population.

The Office for National Statistics (ONS) said its regular update on wellbeing showed a more than doubling since late 2019 in the number of people over 16 reporting deep levels of concern and stress.

More here:

Shares in America’s airlines are down over 10% in pre-market trading, after billionaire Warren Buffett revealed he’d sold his stakes in the industry.

On Saturday, Buffett said he’d ditched his shares in Delta, American Airlines, Southwest and United following the Covid-19 pandemic.

Buffett explained:

“We made that decision in terms of the airline business. We took money out of the business basically even at a substantial loss. We will not fund a company … where we think that it is going to chew up money in the future.”

Former American Airlines CEO Robert Crandall thinks Buffett is right. He told CNBC that the airline industry isn’t ‘investable’ right now, and that it should be “sheltered” so that it is there in future when people want to fly again.

Norwegian Air’s future is looking more secure this morning after investors backed an emergency rescue package.

My colleague Julia Kollewe explains:

The embattled carrier Norwegian Air will push ahead with its rescue plan and unlock government aid after winning support from shareholders, bondholders and aircraft lessors for a 10bn kroner (£770m) debt-for-equity swap.

After a weekend of frantic talks, the airline’s shareholders gathered at an emergency meeting in Oslo on Monday morning and voted 95% in favour of all proposals, including a 400m kroner share issue.

The plan will hand majority ownership to the airline’s creditors – bondholders and lessors – and leave shareholders with 5.2% of the company but there was no alternative, Norwegian’s chief executive, Jacob Schram, said.

Hong Kong’s lurch deeper into recession hasn’t brightened the mood in the markets.

The main European indices are all sharply lower still, as investors worry about the escalating tensions between the US and China - and the threat of a new trade war.

Britain’s FTSE 100 has recovered some ground, but that’s partly because the pound has dropped against the US dollar (down almost one cent to $1.242). That boosts multinationals.

The FTSE 250, which is more focused on the UK, is down 1.3%.

[Reminder: European markets missed out on Friday’s sell-off because they were closed for May Day].

Back in the UK, sugar and starch producer Tate & Lyle has reported that sales were affected by the Covid-19 lock down.

Sales of Tate & Lyle’s bulk sweeteners slumped by 26% in April, due to bars, cinemas, restaurants and sporting venues all shutting down.

Volumes of the rather-unappetising sounding “industrial starch” fell 9% -- due to “reduced demand for paper and packaging following the closure of schools, offices and a general decline in economic activity”.

But sales of ‘food and beverage’ products to consumers jumped 18% as people stocked up on staples (such as golden syrup and granulated sugar).

Tate & Lyle says:

Earlier in the month, demand was strong for ingredients used in packaged and shelf-stable foods as consumers in North America and Europe filled their pantries for consumption at home.

ING analyst Iris Pang fears that Hong Kong’s recession will last longer than the Covid-19 pandemic.

She suspects that the pro-democracy protests that gripped Hong Kong last year -- and badly damaged its tourism and retail sectors -- will return as the lockdown measures are eased.

Last Friday, riot police clashed with demonstrators for the first time in several months - using pepper spray to disperse them from a shopping mall.

Pang writes that such scenes could become more common again this year:

Consumption contracted 10.3% YoY as opportunities for shopping and travel were severely curtailed during the Covid-19 outbreak. Investment contracted even more, by 13.9% YoY, as construction projects were delayed because outdoor work was prohibited.

Even though the government spent money and imports dropped in 1Q20, this has not stopped the economy from contracting for three quarters in a row.

Unlike other economies which may return to normal after Covid-19 subsides, Hong Kong has more challenges ahead. Pro-democracy protesters have returned to the streets and will affect shopping and catering businesses, as they did in the second half of 2019. It is expected that protests will become more violent and will increasingly hurt the retail sector. Unemployment has already gone up in retail and catering, and the protests mean that it will take longer for the unemployed to find another job in the same industry. This will lengthen the job search time and will therefore increase the unemployment rate.

This chart shows that Hong Kong’s economy has shrunk faster than in the global financial crisis of 2008, or after the Asia financial crisis a decade earlier:

Hong Kong appears to have suffered its worst economic slump on record:

Italy’s factory sector also had a torrid April:

Ouch. Spain’s factory sector has suffered an ‘unprecedented’ slump last month.

Output, new orders and purchasing activity all fell at a record pace last month, according the latest Spanish manufacturing PMI survey.

Companies badly affected by the Covid-19 pandemic are leading the fallers on the London stock market today.

Travel firms are having a bad morning, with Intercontinental Hotels are down 6.5%, cruise operator Carnival down 65% and budget airline easyJet down 5%.

Jet engine maker Rolls-Royce are down 6.6%. That reflects rising concerns over the airline industry, after billionaire investor Warren Buffett revealed he’s sold all his share in America’s four largest US airlines.

Top risers this morning include online grocer Ocado (+3.6%) and takeaway chain Just Eat (+2.1%), who are both in demand during the lockdown.

China’s Global Times, the state-controlled tabloid, has hit back at Washington’s claims in an editorial today.

It accuses US Secretary of State Mike Pompeo of “bluffing” and trying to “fool” the American public, by claiming that COVID-19 originated in a laboratory in Wuhan. More here.

The Covid-19 pandemic has had a devastating impact on factory output across Asia, new data shows.

Data firm Markit has reported that manufacturing activity in India, Taiwan and South Korea slumped alarmingly last month, as the world economy lurched into recession:

Worries about the global economy are weighing on the oil price this morning.

US crude has dropped by 6% to $18.60 per barrel, while Brent crude is 1% lower at $26.19.

The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China, according to Reuters this morning.

They cite “officials familiar with U.S. planning”, who say Washington wants US companies to move their supply chains away from China.

Here’s a flavour:

“We’ve been working on [reducing the reliance of our supply chains in China] over the last few years but we are now turbo-charging that initiative,” Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the U.S. State Department told Reuters.

“I think it is essential to understand where the critical areas are and where critical bottlenecks exist,” Krach said, adding that the matter was key to U.S. security and one the government could announce new action on soon.

The threat of a new US-China trade war has knocked Asia-Pacific markets.

Hong Kong’s Hang Seng index slumped by almost 4%, after Donald Trump declared that new tariffs would be the ‘ultimate punishment’ for China.

South Korea’s Kospi 200 shed 3% and India’s Sensex is down 5% (mainland China and Japan are both closed).

Jim Reid of Deutsche Bank says the Covid-19 ‘blame game’ is worrying the markets:

Given it’s a US election year this issue isn’t likely to go away, especially as Joe Biden has suggested that Mr Trump is weak on China. However, on Thursday night and Friday it became a more immediate topic as the Washington Post reported that the US had held preliminary discussions to punish China for its role in the virus outbreak that included the possibility of the US cancelling its debt obligations with China.

There was an immediate denial from Larry Kudlow who confirmed that the full faith and credit of US debt obligations is ‘sacrosanct’. Nevertheless, the risk of a cold war between the two nations seems to be building.