Time for a recap.

• China has posted its biggest jump in exports in 18 months, raising hopes that the global economy is picking up. Exports of Chinese goods surged by 9.5% in August, with demand for commodities such as copper particularly strong.
  
  
• Analysts said China was benefiting from surging demand for IT equipment, such as computers and gaming consoles, during the downturn. However, imports fell again - suggesting the domestic economy is weaker.
  
  
• Brexit worries have pushed the pound down nearly 1% against the US dollar and the euro, as London raises new fears of a no-deal crisis at the end of the year.
  
  
• Ireland has been dragged into recession by the pandemic, after suffering its biggest drop in quarterly GDP on record. But the slump was less severe than in the UK or the wider eurozone, with Ireland’s multinationals holding up well.
  
  
• Around 1,100 jobs are being cut at Pizza Express after creditors approved a restructuring plan.
  
  
• Primark has insisted that city centres have a future, after reporting better-than-expected sales since the lockdown lifted

• UK house prices have hit a new peak, with Halifax reporting the biggest jump in 18 months. Economists have warned that the rally cold soon fizzle out, though, as unemployment rises.
  
  
• Stocks have rallied across Europe, with the FTSE 100 now up 2.3% or 134 points at 5932 (with multinationals lifted by the weaker pound).
  
  
• Oil has fallen, though, after Saudi Arabia cut export prices. Brent crude is now down 1.6% at $42 per barrel, the lowest since late July.

That’s all for today, I think, as Wall Street is closed for Labor Day. Back tomorrow! GW

Ireland has just become the latest country to be dragged into recession by the Covid-19 pandemic, after suffering a sharp fall in GDP.

New data shows that Ireland’s economy shrank by 6.1% in April-June during the lockdown.

That’s a big slump, but much less severe than the record-breaking 20.4% plunge in GDP seen in the UK economy in Q2.

It’s also better than the eurozone, which contracted by 12.1%.

Ireland’s construction and hospitality sectors suffered the biggest hit, while its IT sector held up well.

Ireland’s GNP (or gross national product), which strips out the impact of multinational firms in the Republic, fell by 7.4%.

The first-quarter growth figures have also being revised down today, showing that GDP and GNP both fell in January-March (we previously thought they had risen).

That means Ireland’s economy has shrunk for two quarters in a row -- putting it into a technical recession.

Jennifer Banim, Assistant Director General at Ireland’s Central Statistics Office, explains:

‘The impact of the COVID-19 restrictions varied across the sectors of the economy in Quarter 2, 2020.

Sectors focused on the domestic market experienced significantly lower levels of economic activity in the quarter, with Construction contracting by 38.3% and the Distribution, Transport, Hotels and Restaurants sector contracting by 30.3%. Growth continued in some of the more globalised sectors, with Industry growing by 1.5%.

However, the multinational-dominated Information and Communication sector contracted by 2.3% in the quarter.

Brexit pressures have just pushed the pound down to its lowest level since 27 August.

Sterling has now shed a cent against the US dollar, at $1.3173, on growing fears that UK’s internal market bill will override parts of the Withdrawal Agreement.

It’s also lost further ground against the euro, now down 0.7% at €1.1137 (also the lowest since late August).

The EU’s chief Brexit negotiator, Michel Barnier, has said he’s worried by these reports that the UK could backtrack on previous commitments on state aid and customs processes in Northern Ireland.

He told France Inter radio:

“Everything that has been signed must be respected.

“We demand quite simply, and calmly, and until the end, that the political commitments in the text agreed by Boris Johnson be legally translated into this treaty.

Kallum Pickering of Berenberg Bank says the UK’s plan is ‘misguided’, and raises the risks of a bad outcome from the ongoing negotiations.

Together, the news skew the risks for the outcome at the end of the year away from a full or partial deal and more towards a disorderly hard exit than was the case so far. It adds to the near-term risks to the UK economy.

Whether this is a Trump-style negotiating strategy to up the ante in the hope that the EU will blink as the clock ticks down or a conscious approach by the UK to undermine the ongoing negotiations on the future relationship and settle for the hardest possible exit from the EU single market instead of a compromise is unclear.

It seems odd, to say the least, that the UK could be about to undermine its commitments to Ireland with upcoming legislation after the UK had recently taken steps in recent months to prepare Northern Ireland’s border for exit day. It suggests the UK is trying to increase the pressure to get a deal more to its liking rather than going for a hard exit. Either way, the strategy does not raise the chance of a good outcome

Just in: Pizza Express’s creditors have approved a restructuring deal which will see around 1,100 workers lose their jobs.

Nearly 90% of the pizza chain’s creditors have approved its proposed company voluntary arrangement. The CVA will allow Pizza Express to cut its rent bills and stop operating from 73 restaurants.

The CVA is part of a wider restructuring that could save around 9,000 jobs across the business, whose debts had hit £1bn even before the pandemic. Under this plan, current owner Hony Capital would hand control of the firm to its bond holders, unless a better offer comes along...

Mark Harris, chief executive of mortgage broker SPF Private Clients, says a ‘perfect storm’ of factors drove UK house prices to record levels last month.

‘Just as Nationwide recorded last week, Halifax’s house price index also shows prices hitting a record high in August. The perfect storm of pent-up demand, lockdown prompting a desire for bigger homes and the cut to stamp duty has created a strong surge in market activity, which has carried on into this month.

Miles Robinson, head of mortgages at online mortgage broker Trussle, points out that it’s getting harder to jump on to the housing ladder:

Large numbers of buyers are already locked out of the market. First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products.

The number of 90% LTV mortgage products available has dramatically decreased, with 92% of deals pulled from the market since March this year. Alongside this, rising house prices means first-time buyers will be getting less for their money, presenting a further hurdle to getting onto the property ladder.

Harris also points out that buyers with large deposits are getting the best deals, while it’s tougher for first-time home owners.

Guy Harrington, CEO of residential lender Glenhawk, reckons UK house prices will suffer once the job retention scheme ends:

“The pent-up demand has clearly defied the seasonal slowdown that normally takes place this time of year. However, the housing market can’t remain immune from the economic downturn indefinitely.

As the government’s furlough scheme comes to an end along with the mortgage and stamp duty holidays, as well as the prospects of a no-deal Brexit, we could very well see the impact become evident later in the year or in 2021.”

Just in: UK house prices hit a record high in August, according to the latest figures from Halifax.

The price of the average property surged by 5.2% last month, Halifax says. That’s the fastest rise since late 2016.

Prices jumped by 1.6% in August alone, a little faster than forecast, lifting the average price to £245,747.

In the June-August quarter, prices were 1.3% higher than in the previous three months.

It’s a clear sign that demand for property has risen since the lockdown was eased [rival lender Nationwide also reported prices were at record levels last week].

It’s partly due to the lockdown, with some families are looking to move to larger homes having been cooped up together for months. The temporary suspension of stamp duty on houses up to £500,000 is also helping.

Russell Galley, managing director at Halifax, explains:

“A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty.

But Galley also warns that house prices will come under pressure as Covid-19 drives unemployment up.

“Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained. The macroeconomic picture in the UK should become clearer over the next few months as various Government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.

Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium-term.”

Sterling is under some pressure this morning, as fears of a no-deal Brexit ripple through the City again.

The pound has dropped by half a euro cent to €1.1167, a one-week low. Against the US dollar, it’s lost half a cent to $1.322. These aren’t big falls, but they do show that Brexit fears are on the rise.

This comes after reports that the UK government is drawing up legislation that will override the Brexit withdrawal agreement on Northern Ireland -- a key part of the ‘oven ready’ deal agreed late last year.

Such a move could collapse the negotiations on the new UK-EU relationship, which Boris Johnson says must be completed within five weeks.

A UK government source told the Guardian the plan was part of the preparation for a no-deal exit that would present a number of new barriers to trade from Northern Ireland – and accepted that the move was likely to blow up at the negotiations this week.

In the City, shares have opened higher as investors try to put last week’s losses behind them.

The FTSE 100 has jumped by 1%, or 58 points, to 5859 - having hit a three-month low on Friday night.

Gainers include housebuilders Barratt (2.6%) and Persimmon (2.5%), despite regulators announcing on Friday they are investigating whether the industry ripped off customer who bought leasehold properties.

European markets have also posted gains, with share in car makers strengthening. The Europe-wide Stoxx 600 has gained 0.5%.

You might expect China’s jump in exports to push the oil price higher, as it indicates stronger global growth.

But no. Oil has dropped by 1% this morning, to its lowest level since July.

The selling was triggered by the news that Saudi Arabia lowered the price of its oil, by th the most in five months. That indicates weaker demand for crude, in a world still awash with oil following the global lockdowns.

Reuters has the details:

Saudi Arabia’s state oil producer Aramco cut its October official selling price (OSP) for its Arab Light crude oil to all destinations, the company said in a statement on Saturday.

Aramco reduced the OSP for its Arab Light crude grade to Asia by $1.40 a barrel, setting it at a minus $0.50 per barrel versus Oman/Dubai average.

This has knocked the benchmark Brent crude as low as $41.50 per barrel this morning, as optimism about increased oil demand fades.

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

China has got the new week off to a bright start, by reporting its strongest jump in exports in 18 months as the world economy emerged from Covid-19 lockdowns.

Sales of Chinese-made goods abroad jumped by 9.5% in August, compared with a year ago. That’s rather stronger than expected, and the biggest monthly gain since March 2019.

That suggests demand is picking up across the global economy, meaning more demand for manufactured goods. Hopefully, it’s a sign that growth picked up over the summer, following record-breaking economic contractions.

However, the value of China’s imports slumped 2.1% year-on-year in August....having fallen 1.4% in July.

That drop in domestic demand is concerning, given China was able to relax its coronavirus restrictions earlier than many other countries.

If exports keep rising faster than imports, then China’s trade surplus will swell - potentially sparking more trade war tensions.

As Louis Kuijs of Oxford Economics puts it:

“China’s exports continue to defy expectations and to grow significantly faster than global trade, thus gaining global market share.”

More reaction to follow....

Also coming up today

New UK house data from Halifax is expected to confirm that prices rose in August as the Covid-19 lockdown lifted. We also find out how Ireland’s economy fared in the second quarter of 2020.

After two days of chunky falls, Wall Street is closed for the Labor Day holidays. That gives investors more time to digest the tumble in technology stocks that began last Thursday.

The agenda

• 8.30am BST: Halifax house price survey for August
• 11am BST: Ireland’s GDP report for Q2 2020