European stock markets have closed higher tonight.

Germany’s DAX gained 2.5%, with the Europe-wide Stoxx 600 index rising 2.1%.

In London, the FTSE 100 finished 95 points higher at 5,849.

Investors are taking their cue from Wall Street, where the Dow is up nearly 400 points at 24,143.00.

David Madden of CMC Markets says traders are hopeful the lockdown restrictions will be eased, leading to a pick-up in economic activity.

The mood on Wall Street is optimistic as a large portion of US states have loosened lockdown restrictions. The gradual reopening of the US economy is acting as a greenlight to the bulls.

Andrew Cuomo, the governor of New York, said the state is now on ‘the other side of the mountain’ in relation to the Covid-19 crisis, the new infection rate and the fatality rate are still in decline. There is a feeling the US is slowly on the up, so traders are buying into stocks.

Missed this earlier. The latest survey of US services companies shows a big fall in activity last month - but not quite as bad as feared.

The ISM manufacturing PMI tumbled to 41.8 for April - showing a sharp contraction, but better than the 37.9 reading expected (and above the record low set in 2008).

Companies reported that new orders and employment levels slumped, while the prices jumped amid supply chain disruption.

Airline passengers could be asked to wear face masks to prevent the spread of Covid-19 on a flight, according to the industry’s trade body.

Reuters has the story:

The body representing global airlines came out in favour of passengers wearing masks onboard on Tuesday, as debate intensifies over how to get airlines flying while respecting social-distancing rules following the coronavirus crisis.

The International Air Transport Association (IATA) told reporters that wearing masks would help protect passenger health but came out against leaving middle seats empty on aircraft, a measure it had previously said was likely.

European flights have all but come to a standstill during the coronavirus pandemic. While there is no visibility on when travel restrictions will ease, airlines are considering how to safely restart services and give passengers confidence to fly.

Yesterday, photos of an Aer Lingus flight from Belfast to Heathrow showed passengers seated close together with no social distancing rules:

Ouch. The collapse in international travel has pushed America’s trade deficit up by 12%.

The US trade gap widened to $44.4bn in March, from $39.8bn in April.

Exports plunged -- due partly to a collapse in international travel and tourism (overseas visitors to America count as an export).

Bloomberg explains:

Declines in international travel and tourism made up a large portion of the decreases in exports and imports, representing almost the entire drop in all services trade.

Travel exports declined 45% from February, while imports slumped 64%.

Travel and transport exports dropped $10.2 billion, while imports fell $10.6 billion.

With widespread factory closures and stay-at-home orders in place by the start of April, trade flows are likely to have fallen even further last month, predicts Capital Economics.

Virgin’s job cuts come just as investors are a little more optimistic that Covid-19 lockdowns will ease soon.

The US stock market has jumped nearly 1.5% in early trading, with the Dow Jones industrial average up 318 points to 24,067. Delta Airlines, which owns 49% of Virgin Atlantic, is up 1.2%.

There’s optimism that America’s economy may start to revive soon, with Starbucks announcing that 90% of its US outlets should be reopened by June.

Oil prices are nudging higher too, with US crude up nearly $4 to $24 per barrel -- pleasing the president, as he lobbies for states to reopen.

But...a rise in Covid-19 cases could puncture this optimism. Lifting the lockdown too early could be very dangerous, and physical distancing rules mean we won’t be ‘back to normal’ for a while.

Virgin’s decision to move flights from Gatwick to Heathrow is a heavy blow for London’s second-largest airport.

Gatwick has already temporarily closed its North Terminal, and is only handling a few flights per day at present. It predicted two weeks ago that traffic probably won’t recover for four years.

BA warned last week that it might not reopen its operations at Gatwick, even after the lockdown eases.

In these circumstances, the case for a third runway at Heathrow to handle more flights looks less compelling. There’s clearly going to be less demand, and more spare capacity, for some time....

Jim McMahon MP, Labour’s Shadow Transport Secretary, has called on the government to provide a rescue package for the airline industry before more jobs are lost:

“This terrible news is heartbreaking for Virgin Atlantic staff and their families, and another major blow for the aviation industry.

“The Government is failing workers by not stepping in and protecting these jobs.

“Labour has consistently argued for a sector specific deal for aviation, and the Government must do more to ensure airlines and airports can operate safely when the time is right to transition out of the lockdown.”

Here’s our news story on Virgin’s hefty job cuts.

Virgin is scaling back its operations so sharply because it believes the industry might not recover from the coronavirus pandemic until 2023.

It says:

Following the pattern of previous crises including 9/11 and the Global Financial Crisis, capacity across the aviation industry will significantly reduce, with recovery to pre-crisis levels expected to take up to three years.

Uncertainty around when flying will resume, coupled with unprecedented market conditions brought on by the pandemic, has severely reduced revenues for the global aviation industry and Virgin Atlantic.

Virgin says it is now consulting with unions about its planned job cuts:

Even in the toughest times, the people of Virgin Atlantic are what sets it apart and decisions taken have been aimed at preserving as many jobs as possible.

In order for the airline to emerge from the crisis, regrettably it must reduce the number of people employed and today the company is announcing a planned reduction of 3,150 jobs across all functions. Working closely with unions BALPA and Unite, a company-wide consultation period of 45 days begins today.

More reaction to the German constitutional court ruling:

On Wall Street, shares in pharmaceutical firm Pfizer have jumped 2% in pre-market trading after it began human trials of a Covid-19 vaccine.

Pfizer has teamed up with German pharmaceutical company BioNTech to test the potential vaccine on a group of US citizens. testing began in Germany last week.

If the tests are successful, they hope to have millions of vaccine doses available in 2020, increasing to hundreds of millions in 2021.

Britons haven’t been buying cars, but they have been buying an awful lot of food - online - and probably won’t break the habit.

The latest data suggests that online grocery sales will surge by more than a quarter this year as the coronavirus lockdown prompts more families to shop from home.

With major supermarkets expanding their delivery networks to cope, these new customers are likely to stick with online orders rather than brave the shops as often again.

Italian government bonds have also been hit by the German constitutional court’s ultimatum to the European Central Bank to justify its QE stimulus programme.

The gap between the interest rate on Italian debt, and safe-haven German bunds, has widened - a sign that investors are a little more edgy.

Rightly so -- the ruling could undermine the ECB’s pledge to do ‘whatever it takes’ to hold the euro together. On the other hand, the ECB simply has to prove that buying up several trillion euros of sovereign debt was a proportionate response to the eurozone crisis....

The recovery in the oil price is helping to lift Britain’s stock market.

Shares in BP and Royal Dutch Shell are up around 5%, pushing the FTSE 100 index up by 1.2% or 72 points to 5826.

Craig Erlam of trading firm OANDA explains:

Production cuts combined with reopening measures across the US and Europe seem to be behind the rally in oil prices, although we’re still at extremely low levels and capacity is still fast running out.

But some UK-focused firms are under pressure today, with high street chain Next down 2.7%, and online estate agent Rightmove losing 1.5%.

The oil price is rallying today, on hopes that demand will rise as countries start to ease their lockdowns.

US crude oil has jumped by 10%, or nearly $2 per barrel, to $22.33. Still low by historic standards, but a sign that traders are less worried about the crude glut.

Brent crude has jumped 7% to $29.40 per barrel.

Last night, California announced that some businesses can restart operations on Friday, with restrictions to protect customers. Italy has begun to partially lift some of its restrictions, and Turkey is planning to allow more movement and shop openings too.

Analyst Vandana Hari suggests the oil price has ‘turned a corner’ as economies emerge from their deep freeze. However, there’s a risk of a second spike in infections which could force new lockdown measures, hurting economies again.....

Here’s our news story on the slump in UK car sales:

Back in the UK, fast food chain McDonalds is taking its first step towards reopening from the lockdown, by naming the 15 restaurants that will start offering deliveries next week.

They all appear to be in the South, with two in Chelmsford, while Luton-based burger and nugget lovers are spoiled with three stores.

Legal experts and investors are still digesting the German constitutional court’s ruling -- but ING analyst Carsten Brzeski reckons it’s a “big bang”.

Brzeski says the most relevant part of today’s ruling is the part prohibiting the Bundesbank to participate in QE unless the ECB proves that the programme is truly proportional (ie, that buying government bonds is justified by the economic and financial problems in the euro area).

An optimistic interpretation could be this is lots of barking without biting and that everything is fine as long as the ECB demonstrates that it has thought through the economic consequences of its decisions but a pessimistic interpretation could be no amount of additional ECB analysis will convince German judges and could, therefore spell the end of QE.

Some early reaction:

Mike Hawes, SMMT chief executive, warns that the slump in car sales is bad news for Britain’s auto manufacturing industry:

“With the UK’s showrooms closed for the whole of April, the market’s worst performance in living memory is hardly surprising. These figures, however, still make for exceptionally grim reading, not least for the hundreds of thousands of people whose livelihoods depend on the sector. A strong new car market supports a healthy economy and as Britain starts to plan for recovery, we need car retail to be in the vanguard.

Safely restarting this most critical sector and revitalising what will, inevitably, be subdued demand will be key to unlocking manufacturing and accelerating the UK’s economic regeneration.”

Thanks to Tesla, sales of battery-powered electric cars in Britain only fell 9.7% last month. Everything else plummeted drastically:

Tesla’s new Model 3 was the biggest-selling model last month -- as Elon Musk’s electric car company continued to deliver to customers despite the lockdown.

Some 658 Model 3s were registered -- 15% of all car sales in April, but almost three-quarters of those bought by private buyers.

Ian Plummer, commercial director at Auto Trader, says few car retailers were able to adapt to the UK’s lockdown:

“With retailers forced to close the doors to their physical forecourts, it’ll come as no surprise to anyone to see just how dramatic an impact it’s had on the new car market,” he wrote.

“Some brands have been able to sell remotely, but uncertainty in the government’s guidelines or a lack of the required infrastructure to operate home delivery in a safe way, has limited it to all but a handful of retailers.

“Whilst the market is down significantly, our data does point to a market that has been paused, rather than stopped, and ready to return to health quickly once the restrictions have been lifted.

Sky News have more details.

Seán Kemple, Director of Sales at Close Brothers Motor Finance, predicts the ‘drastic’ slump in car sales in April might rebound once the economy is unlocked - but 2020 will still be tough for manufacturers.

“When the lockdown does begin to lift, we should see pent-up demand released, triggering a sharp rise in sales of the cars sitting in showrooms; we’ve already seen this in the European used car market as dealers review and reprice their stock after lockdown. But after an inevitable uplift, the future is less certain.

We might start to see supply issues, held up by restrictions on manufacturing and the stalling of overseas shipment. In the longer-term, demand trends may change. We know that in times of economic hardship, buyers often shift from new to used cars in order to get their hands on a more affordable vehicle.

Conversely, some people might be too nervous to use public transport for fear of catching Covid-19, and drive to work instead, he adds.

European stock markets have bounced back in early trading, on hopes that Covid-19 restrictions will ease soon.

In London, the FTSE 100 index has jumped by 92 points or 1.6%, back to 5846 points.

Mining companies are leading the rally, along with oil giants... and cruise operator Carnival (+4.5%) which is restarting some sailings (from Florida and Texas) in August.

The Europe-wide Stoxx 600 has risen by 1.6%, clawing back a chunk of yesterday’s losses (when it fell 2.7%).

Connor Campbell of SpreadEx says:

With Boris Johnson likely to unveil some form of lockdown plan this week, Italy and Spain easing restrictions, and California to follow suit on Friday, investors decided to turn away from the US-China tensions to focus on the idea that the worst part of the pandemic may be approaching its end.

As well as weak sales, the car industry is also suffering from supply chain disruption due to Covid-19.

Stefan Sommer, Volkswagen’s board member for procurement, has told the Financial Times that the cost of crucial car components has risen sharply because of the coronavirus outbreak. Part makers have hiked their prices, he says, because their own output has fallen.

Sommer predicted that the cost of sourcing parts would “rise in the classic value chain”.

“Now there are depreciations, while the overhead costs remain and they can’t be reduced overnight.”

Obviously no-one expected car registrations to go up last month, but a 97% plunge in sales is quite startling - and means 2020 will be a grim year for the industry.