And finally, the FTSE 100 index has closed at its lowest point since mid-May.

After a rather painful session, the blue-chip index ended 101 points lower at 5,862.

The slide in the US dollar continued to hurt exporters, with the pound at an eight-month high tonight ($1.342).

Covid-19 quarantine woes also hurt the market, pushing travel stocks down, as IATA warned that passenger demand is still down 90%.

On the upside, mining stocks ended higher following the pick-up in factory growth (which means more demand for copper, iron ore, coal, etc). But that wasn’t enough to prop up the market, or prevent Apple surging above the entire FTSE 100’s valuation.

Other European markets fared better (partly because they got their falls in yesterday when the City was closed for the bank holiday).

Jet engine maker Rolls-Royce led the selloff in London, tumbling over 14% to 206p. That looks to be the lowest point since autumn 2008, as last week’s disappointing financial results weigh on the company.

David Madden of CMC Markets sums up the day:

The FTSE 100 is set to finish deep in the red as a mixture of a firmer pound and a poor performance from banking and energy stocks has hurt the index. Diageo, GlaxoSmithKline, AstraZeneca, Ashtead and Unilever all derive a large portion of their revenue from overseas, so the push higher in the pound usually hits the stocks. The declines in Royal Dutch Shell, BP, HSBC and Lloyds are weighing on the British benchmark too. Mining stocks such as Fresnillo, Glencore, Anglo American and BHP Group are some of the best performers on the FTSE 100. The well-received manufacturing data from China overnight has lifted metal prices and in turn the mining companies.

Continental European equity markets are mostly in the red too, but the DAX 30 is showing a small gain as the German government now predicts the economy will shrink by 5.8% in 2020, which was an improvement on their previous prediction of a 6.3% fall in output.

Dunelm shares hit a fresh record high today on the back of a short and sweet trading update. The specialist in homeware confirmed that revenue in July and August jumped by 59% and 24% respectively. The company will publish its full year numbers next week, and given the price action of the stock today, traders clearly have high hopes for the numbers.

Rolls Royce shares are in the red again as Credit Suisse trimmed its price target for the struggling engineering company to 200p from 210p. Last week, Rolls Royce registered a first half adjusted operating loss of £1.67 billion, which was a far greater loss than what equity analysts were anticipating.

That’s all for today. Our main Covid-19 liveblog is here. We’ll be back tomorrow. Goodnight! GW

It’s official: global factories have posted their fastest growth in almost two years.

That’s according to JP Morgan, which has crunched all the new purchasing manager surveys from across Asia, Europe and the US published earlier today. It’s conclusion - activity in August expanded at the most rapid pace since November 2018.

They explain:

August saw manufacturing output increase for the second month running, following a five-month sequence of decline. Production rose across the three sub-sectors covered by the survey. Growth accelerated to a 16-month high at consumer goods producers and to 30- and 23-month peaks in the intermediate and investment goods categories respectively.

China, the US, Germany, the UK, India and Brazil were some of the larger industrial nations to register expansions of output during August. Mexico, the Philippines, Vietnam and Japan saw the steepest rates of contraction.

Olya Borichevska, global economist at J.P.Morgan, warns though that many factories are still cutting jobs:

“The recovery in the global manufacturing sector gathered further pace in August, with rates of expansion in output and new orders the steepest since mid-2018. The upturn should strengthen further in the short term if lockdowns and other restrictions in place to combat the COVID-19 pandemic are eased further as expected.

Business optimism and the orders-to-inventory ratio also point to further near-term gains. The labour market remains in the doldrums and could face prolonged weakness as companies restructure in light of the current normal.”

A group of protesters are demonstrating outside the Lloyd’s insurance market this afternoon, demanding that it stops supporting industries which cause the climate emergency.

Lloyd’s of London is reopening its underwriting room today, for the first time since March, having sent underwriters home when the pandemic struck. It’s a limited opening, with just 45% of the usual number of staff in place to comply with physical distancing rules

And those arriving or leaving the Richard Rogers-designed building will be greeted by calls to stop supporting the fossil fuel industry.

The demonstrators say Lloyd’s has been involved in several projects which will add to the climate crisis, including:

• Insurance for the proposed Adani Carmichael coal mine in Australia.
• Insurance for the Trans Mountain tar sands pipeline in Canada.
• Reinsurance for coal mines across Poland.

Lindsay Keenan, European coordinator at Insure our Future, wants the insurance market to clean up its act:

“Lloyd’s needs to act on the science, follow other leading insurers and stop providing the insurance cover that supports and enables climate destroying coal and tar sands projects.

Lloyd’s has both a moral imperative and a long-term self-interest to act as society’s risk manager and stop being a stain on the European insurance industry.”

Brazil, one of the countries worst hit by the Covid-19 pandemic, has just suffered its worst slump on record.

The country’s GDP contracted by 9.7% in April-June, according to statistics agency IBGE. That left the economy 11.4% smaller than a year ago.

Reuters’ Jamie McGeever has more details:

The magnitude of the slump in activity across the economy in the second quarter was huge: industry fell 12.3%, services 9.7%, fixed investment 15.4%, household consumption 12.5% and government spending 8.8%.

Household consumption, which accounts for two-thirds of all economic activity in Brazil, was a particularly heavy drag, IBGE said.

Only agriculture expanded in the quarter, by 0.4%.

Just in: America’s manufacturing sector continued to recover from the Covid-19 pandemic last month, new data shows.

Data firm Markit’s US manufacturing PMI has jumped to 53.1 in April, up from 50.9 in July. That shows that activity rose at a faster rate.

Purchasing managers reported that output and new orders both accelerated last month, at the fastest pace since January 2019.

That chimes with the stronger PMIs in China, the UK and Germany we’ve seen already today.

While European stocks suffer losses, the US Nasdaq index has hit yet another record high.

The Nasdaq has gained 37 points, or 0.2%, in early trading to 11,812 points for the first time ever.

Apple is among the risers, up 1.6% to $131 per share following its 4-1 stock split over the weekend.

That lifts its value over $2.2 trillion, or more than the entire FTSE 100 which is worth around $2trn today.

Yes, Apple is now worth more than all the major blue-chip firms in London -- from the global bank HSBC to mining giants Rio Tinto and BHP, from oil majors BP and Shell to pharmaceuticals companies AstraZeneca and Glaxo. Not forgetting consumer goods giants Unilever and Reckitt Benchizer, mobile phone operator Vodafone, engineering firms Rolls-Royce, global drinks firm Diageo, tobacco firm BAT, advertising titan WPP, the supermarkets, the housebuilders....

European stock markets are heading into the red now, with the Stoxx 600 down 0.8%.

London is leading the rout, with the FTSE down over 2% or 132 points at 5,830. That’s its lowest level since 18 May, as the stronger pound (and Covid-19 worries) hit stocks.

IATA, which represents the airline industry, has reported that passenger demand remained desperately weak in July - particularly for international flights.

Total revenue passenger kilometres (RPKs), a broad measure of demand, were nearly 80% lower than a year ago -- with international travel down over 90%.

IATA also reports that airline capacity was 70% lower than in July 2019, with many flights still grounded.

Aviation journalist Seth Miller has more details:

Back on Wall Street, Tesla is looking to feed the huge appetite for its shares - by selling some more.

Tesla told the SEC this morning it plans to issue around $5bn of fresh stock, just a day after its 5-for-1 stock split took effect.

The new shares will be sold by various Wall Street banks “from time to time”, it says.

There’s not much detail about what Elon Musk will do with the money - Tesla only says it will “further strengthen our balance sheet”, and be used for “general corporate purposes”.

Shares in Tesla surged by 12% yesterday to $498 after the stock split (retail investors keen to buy into the company at below $500 a pop, rather than $2,000?).

The stock has gained a stunning 1,000% in the last year, crushing bearish speculators who bet against Musk.

But can the astonishing rally last? FT Alphaville is sceptical, calling Tesla “the $463bn electric carmaker whose valuation has become unhinged from economic reality.”

On Monday alone, the stock rose 12.6 per cent, seemingly on the fact of a 5-for-1 stock split. In market cap terms, that’s a $51bn move -- or an entire General Motors, plus some change.

In 2019, General Motors shipped 7.7m cars. Tesla? Just over 360,000. In the past 12 months, GM has recorded $8.3bn of ebitda versus $3.5bn for Tesla.

Time for a quick recap

Factories across the globe have reported a pick-up in activity last month as Covid-19 restrictions eased.

In the UK, output grew at its fastest rate since 2014. But, bosses also slashed jobs at a faster rate - and analysts fear this will increase as Britain’s furlough scheme ends.

German and Italian factories also posted faster growth, but the recovery fizzled out in France and Spain, according to the latest figures from IHS Markit.

China got the day off to a strong start, with the fastest increase in factory activity since 2011. However, firms are a little less optimistic about future prospects, as the Covid-19 pandemic continues.

The coronavirus crisis has also pushed up unemployment in the euro area, and pulled its inflation rate back below zero. Economists predict the European Central Bank could be forced to increase its stimulus programme to drive prices higher.

The prospect of fresh stimulus measures helped to push shares higher in Europe this s morning, with Germany’s DAX currently up 0.5%.

Germany’s government has claimed a V-shaped recovery is underway, after raising its GDP forecast for this year.

But in London, falling travel company and bank shares have pulled the FTSE 100 index down by 1.3% or 76 points to 5,886, a one-month low.

Shares are also suffering because the pound has hit its highest level in eight months against the US dollar. Broadly, the dollar has sagged to a two-year low as investors anticipate even more monetary stimulus from the Federal Reserve.

But tech shares continue to enjoy a monster rally, with Apple now worth more than the entire FTSE 100 index.

The UK’s Eat Out to Help Out scheme wrapped up last night, after allowing millions of Britons to enjoy a half-price meal.

And the latest figures show that Rishi Sunak’s scheme succeeded in bringing people back to bars and restaurants.

Footfall across all retail destinations throughout the UK rose by 6% last week, new figures from retail Springboard show.

Although visitors numbers are still down year-on-year, they clearly picked up during August.

We still don’t know exactly how many half-price meals were sold under the scheme - a week ago, the total hit 64m.

Diane Wehrle, Insights Director at Springboard explains:

“The last full week of the ‘Eat Out to Help Out’ scheme led to the most positive footfall result of any week so far with increases in all three destination types from the week before, and year on year declines that were the most modest since the start of the lock down.

Not only did the week as a whole yield far more positive results those previously but, given the situation we find ourselves in and the much cooler weather this year, the Bank Holiday weekend proved to be a remarkable success for retail destinations.”

Here’s the details:

• All three destination types benefited from a rise in footfall, with shopping centres seeing an increase of +9.1%, +4.8% in high streets and +5% in retail parks
• The final full week of the ‘Eat Out to Help Out’ scheme led to the most positive footfall result of any week since the start of lock down
• This rise has led to an annual decline of -26.1%, a noticeable improvement on the year on year drop of -30.7% in the week before
• Bank Holiday weekend proved to be a success for all retail destinations with an annual drop of just -11% up to 5pm on Bank Holiday Monday

Unemployment across Europe has risen, in another sign of the economic damage caused by Covid-19.

The number of persons unemployed across the European Union by 336,000 in July, statistics body Eurostat reports. It rose by 344,000 within the euro area alone.

That lifts the eurozone unemployment rate to 7.9%, up from 7.7% in June, which is the highest since 2017.

Across the EU, it rose to 7.2% from 7.1%, the highest since 2018.

Eurostat estimates that 15.184 million men and women in the EU, of whom 12.793 million in the euro area, were unemployed in July 2020.

Many European countries brought in job retention schemes to allow companies to temporarily furlough staff rather than lay them off. That clearly hasn’t prevented some job cuts, but we’re not back at the levels seen during the euro debt crisis.

Crumbs: The eurozone has fallen back into deflation, as the Covid-19 pandemic hits demand and pushes down energy prices.

Consumer prices in the euro area dropped by 0.2% year-on-year in August, new data from statistics body Eurostat show.

Cheaper energy bills and petrol were a major factor - falling by 7.8% last month compared with August 2019.

Food, alcohol & tobacco prices rose by 1.7%, down from 2% per year in July, while non-energy industrial goods prices were down 0.1%.

Low inflation is obviously a boost to consumers, but it will cause alarm at the European Central Bank. It is already massively expanding its money-printing QE programme in an attempt to push CPI close to 2%....

The UK property market has also strengthened, as more people jumped onto the housing ladder or shimmied up and down it.

Mortgage approvals jumped to 66,300 in July, new Bank of England figures show, up from below 40,000 in June.

Transactions picked up as lockdown measures were lifted, and after chancellor Rishi Sunak temporarily slashed stamp duty.

Housing market analyst Neal Hudson has spotted that many house purchases are ‘cash only’, suggesting a pick-up in property investment:

Here’s one for the history books - Apple is now worth more than every company in the FTSE 100, combined!

After rallying (yet again) yesterday, the world’s most valuable company is now worth over $2.1 trillion, an all-time record.

In contrast the Footsie (which is woefully light on tech stocks) is now worth around £1.5 trillion, or roughly $2 trillion.

While Apple has surged by an astonishing 75% this year, the blue-chip FTSE 100 has lost over 20% of its value since January 1st, in a blow to UK savers and investors.

It’s a powerful example of the impact of the Covid-19 pandemic on the global economy and asset prices, as the lockdown has accelerated the move towards digital.

Banks, travel companies, property firms and retailers have all seen their earning slump, while tech giants have massively benefited from the boom in home-working, video-conferencing, cloud computing.

We saw this last night, when Zoom reported astonishingly strong figures - revenue rose 355% and paying customers were up 450%.

Apple’s shares also got a boost from its stock split. Investors now own four Apple shares for every one they owned last week.

That makes the stock more affordable to small investors (you only need $130 to buy one share, down from nearly $500 last week). Electric carmaker Tesla also split its shares, leading to another surge in its stock.

Stock splits don’t actually make these companies any more valuable, though, but investors do seem to be piling in....

Neil Wilson of Markets.com writes:

Some of the moves in US shares are striking. Apple rose over 3% to $129 after splitting, whilst Tesla shares rocketed 13% on its busiest day ever. Stock splits shouldn’t make a difference, except this time they have. Tesla is up 74% for the month.

Zoom rose almost 23% in after-hours trade after it reported a 355% rise in revenues to $663.5m for the July quarter, smashing forecasts for around $500m. Zoom has proved to be a Covid winner of epic proportions – but shouldn’t we all be going back to the office by now? The UK significantly lags Europe and others in ‘getting back to work’ statistics – this has a huge implication for productivity and for the wider economy.

We also have confirmation that UK factories strengthened last month - but this hasn’t prevented them cutting more staff.

The UK manufacturing PMI has come in at 55.2, showing strong growth, up from 53.3 in July, following the relaxation of lockdown measures.

Output rose at the fastest pace in six years, as purchasing managers across the UK reported that output and new orders rose at solid and accelerated rates.

Markit says:

Manufacturing production rose at the fastest pace since May 2014, reflecting solid expansions across the consumer, intermediate and investment goods sub-sectors. The steepest growth was registered in the intermediate goods category, whereas investment goods producers saw the lowest pace of growth.

That suggests the British economy continued to recover from its worst slump in decades.

But data firm Markit also cautions that firms are still cutting staff - a worrying sign, just as the government starts to wind back its job protection furlough scheme.

The main factors driving production and new orders higher have been the re-opening of manufacturers and their clients following lockdowns and a loosening of other restrictions in place to combat COVID-19.

This has not supported a similar recovery or stabilisation in demand for staff, however, with job losses recorded for the seventh successive month.

The latest PMI surveys from Europe are in...and they show that Germany and Italy’s factories strengthened last month, but Spain and France struggled.

The German manufacturing PMI rose to its highest level in almost two years, as activity picked up after Covid-19 restrictions were lifted. Italy also posted its strongest growth since summer 2018.

This helped to keep the overall eurozone factory PMI in positive territory, at 51.7 (down slightly on July’s 51.8). That shows a modest recovery - not as strong as in China, for example.

Both France and Spain fell back into contraction territory (below 50), in a reminder that the recovery isn’t assured.

Markit flags up that order book growth cooled slightly in August, with some firms now bracing for a near-term weakening of demand as the post-lockdown surge fizzles out.

Britain’s stock market isn’t joining in the party this morning.

The FTSE 100 has hit a one-month low of 5916 points in early trading (down 47 points or 0.75%). That’s its lowest level since the start of August.

That’s partly due to the stronger pound, and also because the City is catching up with Monday’s European losses after the bank holiday break.

Travel companies are among the big fallers, with British Airways owner IAG down 6% and jet engine maker Rolls-Royce losing 6.7%.

Mining companies are rallying, though, as the jump in Chinese factory growth could lead to more demand for commodities.

On the smaller FTSE 250 index, travel ticket vendor Trainline has plunged by 8% as many worker resist the government’s efforts to lure them back to the office. Property developer Hammerson has lost 5%.

European stock markets are rallying this morning, helped by the pick-up in growth at China’s factories.

The Europe-wide Stoxx 600 index has gained 0.3%, recovering some of Monday’s losses, on optimism for the global economic outlook.

Germany’s stock market is leading the way, lifted by exporters such as pharmaceuticals firms Bayer (+1.8%) and Merck (+1.5%) and carmaker BMW (+1.7%).

Chipmaker Infinion (+1.75%) is also rallying on reports that Apple has told suppliers to make at least 75 million 5G handsets to launch later this year.

• German DAX: up 99 points or 0.77% at 13,045
• French CAC: up 18 points or 0.4% at 4,956
• Italian FTSE MIB: up 174 points or 0.9% at 19,804
• Spanish IBEX: up 13 points or 0.2% at 6,983

In the currency markets, the pound has hit its highest level of the year against the US dollar.

Sterling sprang, gazelle-like, over the $1.34 mark this morning, for the first time since December 2019.

The euro is also rallying against the dollar, hitting $1.1966 for the first time in over two years.

The dollar continues to be dragged down by last week’s pledge by US central bank chief Jerome Powell not to tighten monetary policy if inflation rises.

Powell’s new softly-softly approach to inflation is being seen as a sign that US interest rates will remain low for a long time, which is bad for the dollar (but probably good for growth, which is why Wall Street is back at record levels).

Over in South Korea, factory output continued to fall last month, but at a slower rate.

The South Korean manufacturing PMI rose to 48.5 in August, up from 46.9 in July. That’s the best reading in six months, but still slightly below the 50-point mark showing flat growth.

That’s encouraging news for Seoul, just as new strict social distancing restrictions were brought in to fight a worrying rise in Covid-19 cases.

Tim Moore, director at IHS Markit, reckons the sector has reached a turning point.

The latest Manufacturing PMI reading was the highest since February and pointed to only a modest deterioration in overall business conditions.

Subdued global economic conditions due to the COVID-19 pandemic continued to hold back customer spending in August, but there were a number of reports citing a boost to demand from the return to work among clients in the US and Europe

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

China’s factories have got September off to a strong start, by reporting the strongest growth in almost a decade.

New export orders jumped last month, for the first time since the Covid-19 pandemic began, suggesting a pick-up in global demand. This has helped manufacturers to expand production at a faster rate than in July.

And with overall new orders also up, the slump in Chinese factory employment has also eased.

That’s all according to Caixin’s monthly survey of purchasing managers across the Chinese economy. This PMI index has jumped to 53.1 for August, up from 52.8 in July, showing the strongest increase in activity since January 2011.

China’s manufacturing PMI has now been in positive territory (over 50) for four months in a row, as the economy recovered from the disruption caused by the coronavirus outbreak.

Dr Wang Zhe, senior economist at Caixin Insight Group, says the momentum of the recovery remains strong, as stronger overseas demand encouraged factories to restock their supplies and stop laying off workers.

Wang adds:

“Overall, the post-epidemic economic recovery in the manufacturing sector continued. Supply and demand expanded with the pickup in overseas demand. Backlogs of work continued to increase. Both quantity of purchases and stocks of purchased items also grew. Companies’ future output expectations remained strong, reflecting a positive outlook for the manufacturing sector for the year ahead. Employment remained an important focus.

An expansion of employment relies on long-term improvement in the economy. Macroeconomic policy supports are essential, especially when there are still many uncertainties in domestic and overseas economies. Relevant policies should not be significantly tightened.”

South Korea and India have also reported improved PMIs this morning (more in a moment), in a sign that Asia-Pacific economies had a decent August.

European stock markets are expected to rise on the back of this, apart from the UK - which needs to catch up with yesterday’s losses following Monday’s bank holiday break.

We should get confirmation this morning that the UK and US factory sectors strengthened last month, and that eurozone manufacturing slowed (at least, that’s what the ‘flash’ readings last month showed).

The agenda

• 8.55am BST: German unemployment figures for August
• 9am BST: Eurozone manufacturing PMI survey for August - expected to drop to 51.7 from 51.8, showing slower growth
• 9.30am BST: UK manufacturing PMI survey for August - expected to rise to 55.3 from 53.3, showing faster growth
• 9.30am BST: UK mortgage approvals and consumer credit figures for July
• 10am BST: Eurozone inflation for August
• 1pm BST: Brazil’s GDP for Q2 2020
• 2.45pm: US manufacturing PMI reports - expected to rise to 53.6 from 50.9, showing faster growth