And finally... Britain’s FTSE 100 has ended the day down 1.5% or 96 points at 6189 points.

Hotels group Whitbread led the fallers, down 5.5% after it warned of subdued demand at City locations (although regional sites are more popular).

Packaging firm Smurfit Kappa (-4.1%), conference organiser Informa (-4%) and property company Land Securities (-3.7%) were also among the fallers, as investors worried that hopes of a V-shaped recovery from the pandemic were too bullish.

With Europe facing a deeper recession than feared, and UK house prices dipping again, there’s plenty of reasons to fret. But the surge in China’s stock market in recent days, to five-year highs, could suggest that markets have further to climb.....

On that note, goodnight! GW

Shares in fast fashion brand Boohoo have sunk for the second day, as several customers dropped its clothes over conditions at its Leicester suppliers.

Boohoo shares closed nearly 12% lower tonight, knocking around £440m off its value - on top of the £1.1b shed on Monday.

Asos, Next, very.co.uk and Zalando have all distanced themselves,after claims that people making Boohoo clothes weren’t protected from Covid-19, and were paid less than the minimum wage.

My colleague Archie Bland explains:

Next said its approach was “based on trust” but that the allegations could not be ignored, and had launched its own investigation. It said it was “not pre-judging the outcome of this process and no final decision has been made” but that the items would be suspended in the meantime.

Zalando, a Berlin-based online retailer which had €6.4bn sales in 2019, joined Next and Asos in dropping Boohoo, and all references to the company had been removed from their websites.

More here:

Investors are also keeping an eye on Brazil, where president Jair Bolsonaro was tested for coronavirus and had his lungs scanned, after reportedly showing symptoms associated with Covid-19.

French news magazine Valeurs Actuelles reported this afternoon that Bolsonaro has tested positive - and that’s just been confirmed by the man himself.

European stock markets remain solidly in the red, with around 45 minutes trading to go.

Predictions of an even deeper eurozone recession this year, and a slower recovery, have dampened the mood - with that Melbourne lockdown also a drag on sentiment.

The UK’s FTSE 100 is the laggard now, down 98 points or 1.5%, with the wider Stoxx 600 now off 0.6%.

Connor Campbell of Spreadex says the Summer Forecasts poured some unseasonal cold water on the markets:

Already fearful of the covid-19 situation in the US and Australia – Melbourne has just been put in a 6-week lockdown – the European Commission’s latest forecasts merely compounded the market’s concerns on Tuesday.

The broad direction of the bloc’s GDP revisions was sharply downwards. As a whole the European Union is now facing am 8.3% contraction in 2020, compared to the 7.4% estimate announced in May. France saw one of the more significant changes, the country looking at a 10.6% drop, far higher than the 8.2% decline initial forecast.

Spain and Italy were both dealt their own ugly numbers, heading for -11.2% and -10.9% respectively. Germany, on the other hand, saw a minor improvement, their typical Teutonic efficiency resulting in a move from -6.5% to -6.3%.

Just in: the number of job vacancies in the US has risen, as companies emerged from their Covid-19 lockdowns.

Job openings rose to 5.397m in May, the US Labor Department reports, up from 4.996m in April. New hires jumped to, from 4m to 6.68m.

That backs up the message from recent Non-Farm Payroll reports, that US companies took on more staff in May and June.

It’s an encouraging sign, but economists are pointing out that the labor market is still weak:

I’m always a sucker for brightly-coloured charts, and this one shows nicely how the US stock market had clawed its way back from its slump in February and March:

US fast food restaurant chain Shake Shack has reported a hefty slump in sales during the Covid-19 pandemic

In its latest financial results, the seller of burgers, hot dogs and frozen custard (I kid you not) reports that it has reopened many outlets. However, sales were still down over 40% in the five weeks to June 24th.

Takings are picking up, but are particularly slow in New York, a key sales region.

It tells shareholders:

Same-Shack sales for the most recent week ended July 1 were down (39%), with the overall speed of company-wide sales recovery remaining uncertain due to ongoing volatility related to COVID-19.

In addition, same-Shack sales remain acutely impacted by New York City, one of the Company’s largest regions with some of the highest volume Shacks, which is expected to take a longer period of time to fully recover than other parts of the country.

For the most recent fiscal week ended July 1, New York City same-Shack sales were down (58%) versus the prior year, and with this region accounting for approximately 20% of the Company’s total Shack sales in the first quarter prior to the COVID-19 outbreak, it will continue to have a notable impact on total Company sales performance until there is a material recovery.

UK technology firm Micro Focus are the top faller in London today after posting a $1bn loss for the last half-year, and warning that conditions are unlikely to improve.

Micro Focus, one of the UK’s biggest tech companies, blamed the Covid-19 pandemic as it took a $922m impairment charge due to heightened economic uncertainty.

The firm bought Hewlett-Packard’s software business in 2017 for nearly £9bn, but has suffered “disruption to new sales activity and timing pressure on renewals” since the lockdown started.

Customers have been putting off renewing their software licences while they work out their future needs, now that many staff are working from home.

This situation may not improve for some time, with the company telling shareholders that:

Despite the resilience of Micro Focus’ customer proposition and financial model, the ultimate impact on the global economy of the COVID-19 pandemic remains unclear, as does the timing and extent to which that impact flows through into customer spending plans on enterprise software.

Our current assumption is macro-economic conditions are unlikely to improve in the second half of the financial year.

As a minimum, we continue to believe it appropriate to be prepared for further disruption to our new sales activity and timing pressure on renewals.

Shares in Micro Focus are down 14.5%, at the bottom of the FTSE 250 index. They’ve now lost two-thirds of their value this year.

Fashion chain River Island has joined the swelling ranks of retailers cutting staff.

Retail Week reports that 250 head office jobs are being cut. This follows a slump in sales since the pandemic began, even though stores did reopen last month.

They explain:

In an internal email sent to staff seen by Retail Week, River Island boss Will Kernan said the business will “now have a requirement for some 250 fewer people in the business”.

Retail Week understands these redundancies will be made across all the retailer’s head office departments.

More gloom: the OECD has warned that UK unemployment is on track to hit its highest level in decades, especially if we suffer another surge in Covid-19 cases.

My colleague Phillip Inman explains:

The number of unemployed people in Britain could soar to almost 15% of the working population if the country experiences a second wave of the coronavirus pandemic, the Organisation for Economic Cooperation and Development (OECD) has said.

A rise in the unemployment rate to 14.8% would take the UK to a higher level than France, Germany and Italy, but lower than Spain, according to the Paris-based thinktank, which is funded by 35 mostly rich countries.

If a second wave of Covid-19 can be avoided, the UK’s unemployment rate is likely to rise to 11.7% by the end of the year, the highest level since 1984 when it peaked at 11.9%. The current UK unemployment rate is 3.9%.

More here:

In a possible blow to UK manufacturing, chemicals firm Ineos is now considering building its new off-road vehicle in France.

Ineos had previously indicated it was planning to make the Grenadier 4x4 in Bridgend, Wales, creating 500 jobs. Now, though, it’s considering shifting manufacturing to France, where Daimler is selling a factory. Work is on hold in Wales, while worried workers await developments.

Reuters explains:

German carmaker Daimler said on Friday it wanted to sell its factory in Hambach in northeast France, as it tries to cut costs.

“As a result of the COVID-19 pandemic some new options such as this one... have opened up that were simply not available to us previously,” Ineos Automotive boss Dirk Heilmann said.

My colleague Joanna Partridge tweets:

Labour MP Chris Elmore, whose constituency includes Bridgend, is very concerned:

Wall Street is on track to fall at the open, having had a strong Monday (the Dow gained 1.8%).

Whitbread are still the top faller on the FTSE 100, down 4% despite reporting a pick-up in demand for holiday bookings in the UK’s regions.

Emilie Stevens, equity analyst at Hargreaves Lansdown, points out that Whitbread will suffer from a lack of overseas tourists this summer:

With the foreign holiday market still rebooting it looks like UK staycations could be the main holiday choice this summer, which is good news for Whitbread’s regional locations.

Before the pandemic London hotels were the boost and regional destinations the drag. But early booking data shows that regional tourist locations are seeing good demand while London remains subdued. Unfortunately, while higher levels of domestic tourism is good news, particularly if it’s a trend that holds, it’s no substitute for international and businesses travellers visiting the UK’s major cities.

For now though it’s a welcome break in an unfriendly market environment.

Here’s the full story:

Former stock market darling boohoo is having another rough day, after revelations that its Leicester-based suppliers have been paying workers below the minimum wage and ignoring Covid-19 guidelines.

Having plunged 23% yesterday (wiping out £1.1bn of value), they’re down another 5.5% this morning at 280p - having been worth over £4.20 last week.

My colleague Rob Davies explains:

Boohoo said on Monday it was investigating claims that staff at one of its Leicester factories were paid as little as £3.50 an hour and were working without proper equipment to guard against Covid-19.

The firm, which owns the Nasty Gal and Pretty Little Thing brands, said it would not hesitate to terminate its relationship with any suppliers that were found in breach of its code of conduct.

But the case has ignited broader concerns about working conditions in hundreds of small warehouse factories in Leicester’s garment industry, which supplies high street fashion brands.

European stock markets have fallen deeper into the red, after the EC warned that the Covid-19 slump will be even worse than feared.

Britain’s FTSE 100 index is now down 80 points, or 1.2% at 6207, down from yesterday’s two-week high. Every sector is down, led by healthcare (-2%), technology (-1.6%) and basic materials (-1.4%).

Germany’s DAX has shed 1.5%, with the wider Stoxx 600 index down 1.1%.

With a new Covid-19 lockdown underway in Melbourne, investors will be fretting about a second-wave of infections hitting Europe.

Marios Hadjikyriacos of trading firm XM explains:

Spearheading the worrisome virus news globally, Australia’s second most populous city – Melbourne – just announced a new full-fledged lockdown for six weeks to bring the recent outbreak back under control. The news sent the aussie tumbling, exacerbating the currency’s earlier troubles after the RBA struck a rather cautious tone at its meeting overnight.

This may be the biggest factor weighing on risk assets today in general, serving as a stark reminder that even if a country contains the pandemic successfully, future outbreaks still cannot be ruled out.

The EC also warns that Europe could easily suffer an even worse recession than it currently fears.

The risks to today’s forecast are “exceptionally high and mainly to the downside” it says. That’s partly due to the risk of a second wave of Covid-19 cases; trade wars are another danger, though.

Today’s report says:

The scale and duration of the pandemic, and of possibly necessary future lockdown measures, remain essentially unknown. The forecast assumes that lockdown measures will continue to ease and there will not be a ‘second wave’ of infections. There are considerable risks that the labour market could suffer more long-term scars than expected and that liquidity difficulties could turn into solvency problems for many companies. There are risks to the stability of financial markets and a danger that Member States may fail to sufficiently coordinate national policy responses.

A failure to secure an agreement on the future trading relationship between the UK and the EU could also result in lower growth, particularly for the UK. More broadly, protectionist policies and an excessive turning away from global production chains could also negatively affect trade and the global economy.

There are also upside risks, such as an early availability of a vaccine against the coronavirus.

Paolo Gentiloni, Commissioner for the Economy, is concerned that the pandemic will increase economic inequality in Europe.

He says:

“Coronavirus has now claimed the lives of more than half a million people worldwide, a number still rising by the day - in some parts of the world at an alarming rate. And this forecast shows the devastating economic effects of that pandemic. The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity.

This is why it is so important to reach a swift agreement on the recovery plan proposed by the Commission – to inject both new confidence and new financing into our economies at this critical time.”

The grim total of UK job losses since the Covid-19 pandemic began continues to rise - with media group Reach cutting hundreds of positions.

My colleague Joanna Partridge explains:

The owner of the Daily Mirror, Daily Express and Daily Star newspapers is to cut 550 jobs, 12% of its workforce, because of falling income amid reduced demand for advertising in its titles.

Reach, formerly known as Trinity Mirror, said its group revenue had tumbled by 27.5% during the second quarter, compared with a year earlier, as newspaper sales and advertising plummeted during the coronavirus crisis.

The company, which also owns hundreds of regional papers including the Manchester Evening News, Birmingham Mail and Liverpool Echo, said more people had been reading its products online over the past three months, but this was not enough to offset the loss in income.

Hospitality group Whitbread is the top faller on the FTSE 100 this morning, down 4%.

Whitbread told shareholders this morning that the reopening of its Premier Inn hotels and restaurants is “fully underway”, but added that demand is ‘subdued’ in some areas.

It is still very early days and therefore too early to draw any conclusions from our booking trajectory, especially as there has been volatility in hotel performance in other countries that relaxed controls before the UK.

However, in traditional regional tourist destinations, we are seeing good demand for the summer months, whilst the rest of the regions and metropolitan areas, including London, remain subdued.

Whitbread also reported that total sales crashed by nearly 80% in the March-May quarter - when it was forced to shut virtually all its hotels in the UK and Germany.

Interestingly, Chinese media are taking a rather calm tone today, reminding investors to be rational and mindful of potential risks.

That might pour some cold water on hopes of making a quick fortune in the stock market.....

The surge in Chinese stocks has also reminded IG’s Salaheddine Bouhmidi of the 2015 bubble....

Bloomberg has spotted that searches for ‘how to open a stock account’ surged on social media in China on Monday, after the Securities Journal urged readers to join the ‘healthy bull market’.

With shares rallying so hard this month , traders must be worried about missing out....