Time for a quick recap.

Stocks have fallen sharply on Wall Street, led by tech shares, as investors continue to fret about rising government bond yields and the prospect of higher inflation.

The Nasdaq composite index is currently down over 3% or 415 points at 12,582, and on track to close around 10% below last month’s peak. The broader S&P 500 index is down 2.3% in afternoon trading.

The selloff accelerated as Federal Reserve chair Jerome Powell insisted that the US central bank would continue to keep monetary policy loose to help Americans back to work.

Powell said it would take substantial time to achieve the Fed’s goals of full employment and 2% sustained inflation.

We want labor markets consistent with our assessment of maximum employment. That means all of the things.”

US bond prices also fell, pushing up yields, after Powell spoke, possibly on disappointment that he didn’t hint at action to calm the bond markets.

The Financial Times says Powell’s dovishness sent stocks and bonds lower.

With such a dovish tone, Powell failed to alleviate fears that the central bank is reacting too slowly to the recent rise in inflation expectations and long-term Treasury yields.

The Fed chair suggested that although central bank officials were closely watching the market movements, it would take much more to perturb them.

“As it relates to the bond market, I’d be concerned by disorderly conditions in markets or by a persistent tightening in financial conditions broadly that threatens the achievement of our goals,” Powell said.

Elsewhere...

Tax and spending experts have warned that Rishi Sunak’s Budget plans to repair the Covid-19 damage to public finances are unrealistic.

The number of Americans filing new unemployment claims has risen, showing the weakness in the jobs market a year into the pandemic.

Oil has jumped sharply, after Opec+ agreed not to expand production for another month.

The US has agreed to suspend tariffs on UK goods caught up in the Boeing-Airbus subsidy row.

UK car sales fell to their lowest level since 1959, as the lockdown hit the auto trade.

Deliveroo has decided that it will list on the London stock market, in a boost for the City:

And Jay-Z has sold majority stake in his Tidal music streaming service to Jack Dorsey’s Square.

US government bond yields have moved higher, as Federal Reserve chair Jerome Powell discussed the economic outlook on a Wall Street Journal jobs summit.

Powell sounded pretty relaxed about the inflationary risks, saying that it was unlikely that deeply ingrained expectations of low inflation would change.

The Fed chair also warned that there is a lot of ground still to cover to get back to maximum employment - and that it’s highly unlikely to happen this year. But he’s hopeful that rising vaccinations, and more fiscal support, will speed up job creation.

In further dovish comment, Powell also said he was inclined to see price increases from supply bottlenecks as being transitory (indicating the Fed might look through them, rather than feel pressure to raise interest rates).

He also insists that the Fed won’t raise rates to cool the economy just because employment levels rise, and doesn’t seem overly concerned about the recent fall in bond prices.

This all sounds reassuring, but yet... US government bond prices are taking a hit, pushing yields towards the one-year highs we saw last week.

I think that’s due to disappointment that Powell didn’t express more concerns about the bond market. Some traders have been predicting the Fed could be forced into another Operation Twist (buying long bonds and selling short bonds to move the yield curve), but we didn’t get any hints today.

The jump in the oil price has, predictably, drive up shares in BP and Royal Dutch Shell, by around 2.6% each.

And that’s lifted the FTSE 100 index off its earlier lows. It just closed 24 points lower at 6650, down 0.37%.

But there were still some hefty losses, with the mining sector down nearly 5% and financial stocks off 1.5%.

Orders at US factories jumped at the start of 2021 - an encouraging signal for the economic recovery this year

Factory orders rose 2.6% in January, up from 1.6% in December, which is stronger than expected.

If you strip out defence products, orders were still up 2.1% in January, from 1.8%.

More Americans filed new claims for unemployment benefit last week, as the Covid-19 pandemic continued to hit workers.

There were 748,078 new ‘initial claims’ for unemployment support last week, an increase of 31,519 (or 4.4 percent) from the previous week, the Labor Department reports.

This means that the initial claims figures has been over 700,000 each week for almost 12 months -- a level never seen before the first lockdown in March 2020.

On a seasonally adjusted basis, though, there were 745,000 new ‘initial claims’ for unemployment support last week, up from 736,000 a week earlier.

But in addition, another 436,696 people also filed for help under the Pandemic Assistance Programme (for self-employed workers freelancers, and others who can’t make initial claims).

This means more than one million Americans continue to sign on for unemployment support each week, a sign of the weakness and volatility of the US jobs market.

London and Washington have agreed a temporary ceasefire in the trade spat over aircraft subsidies - in a boost to the Scotch whisky business.

The US is suspending retaliatory tariffs on UK products caught up in the longstanding dispute between America and Europe over government aid to Boeing and Airbus, for four months.

The move comes three months after the UK unilaterally dropped out of EU tariffs on the plane manufacturer Boeing in the hope of securing a quick post-Brexit trade deal with the US.

British trade minister Liz Truss has welcome today’s move by the US, saying;

“I am delighted to say that our American allies – under their new President and his hard-working staff at the U.S. Trade Representative - have embraced our move to seek a fair settlement,”

Reuters has the details of today’s breakthrough:

The United States and Britain on Thursday agreed a four-month suspension of U.S. retaliatory tariffs imposed on goods such as Scotch whisky over a long-running aircraft subsidy row, saying they would use the time to resolve the dispute.

The U.S. administration under former president Donald Trump had imposed tariffs on an array of EU food, wine and spirits, including on Scotch whisky, which the industry says are putting its future at risk [nL8N2JP2T2]

“The United Kingdom and the United States are undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organization,” a joint statement said.

“This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China.”

Britain’s competition regulator has launched an investigation into Apple, over whether the technology giant is breaking UK competition law.

The Competition and Markets Authority says it will examine whether Apple is imposing unfair and anti-competitive terms and conditions on software developers who sell their products through its App Store.

The CMA says it will consider whether Apple has a dominant position in connection with the distribution of apps on Apple devices in the UK – and, if so, whether Apple imposes unfair or anti-competitive terms on developers using its App Store -- leading to users having less choice or paying higher prices for apps and add-ons.

The move follows complaints from developers about the terms imposed by Apple, and the commission charges they face.

The CMA explains that developers who offer ‘in-app’ features, add-ons or upgrades must use Apple’s payment system, which charges commission of up to 30%.

The CMA hasn’t decided whether Apple is breaking the law, but says complaints about the company ‘warrant careful scrutiny’:

Andrea Coscelli, Chief Executive of the CMA, said:

Millions of us use apps every day to check the weather, play a game or order a takeaway. So, complaints that Apple is using its market position to set terms which are unfair or may restrict competition and choice – potentially causing customers to lose out when buying and using apps – warrant careful scrutiny.

Our ongoing examination into digital markets has already uncovered some worrying trends. We know that businesses, as well as consumers, may suffer real harm if anti-competitive practices by big tech go unchecked. That’s why we’re pressing on with setting up the new Digital Markets Unit and launching new investigations wherever we have grounds to do so.

One of the UK’s leading thinktanks has criticised Rishi Sunak’s plans for an abrupt end to the £20 a week increase in universal credit, calling the decision not to phase out the uplift “remarkable.”

In its post-budget analysis, the Institute for Fiscal Studies contrasted the way in which the furlough, stamp duty holiday, the cut in VAT and business rates support were being phased out, with the cliff edge for universal credit (UC) in September.

Paul Johnson, the IFS’s director, said pressure would mount to maintain the £20 a week increase, even though it would cost the Treasury £6bn a year.

“It is, by the way, remarkable that while the chancellor felt the need for a gradual phase out of furlough, business rates support, stamp duty reductions and VAT reductions he is still set on a cliff edge reduction in UC such that incomes of some of the poorest families will fall by over £80 between one month and the next. Whatever the case for cutting generosity into the longer term, if you’re going to do so the case for doing it gradually rather than all at once looks unanswerable.”

Analysis of Rishi Sunak’s budget is pouring in this morning, with warnings that household incomes face a painful squeeze.

My colleague Jasper Jolly explains:

The real earnings of UK workers will fall this year and remain stagnant after that even as the economy recovers from the coronavirus pandemic, according to analysis of the budget that suggests the government will oversee one of the worst periods for UK living standards on record.

Incomes will lag behind inflation during 2021-22 – meaning living standards will drop – and will only rise by an average of 0.3% annually over the course of the next four years, according to the Resolution Foundation, an independent thinktank.

It will be the worst inter-election period for real household disposable income on record, barring the short parliament of 2015-17, when David Cameron and then Theresa May were prime ministers. That parliament was marred by a spike in inflation following the Brexit referendum result.

The overnight analysis of Wednesday’s budget suggested that Rishi Sunak, the chancellor, will have significantly more work to do if the government is to improve UK living standards – or to reach his stated goal of reducing the share of public net debt relative to GDP.

The construction PMI report highlights that getting hold of supplies is a real challenge for businesses right now.

Global supply chains are still bruised by the pandemic, at a time when vaccine optimism is creating more demand for raw materials.

That means builders are battling for plaster, bricks, timber - driving costs up at the fastest rate since summer 2008 (which will not calm concerns about rising inflation pressures...)

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, explains:

Strong demand for products added pressure to already impaired supply chains as sellers battled with raw material shortages, and the costs of business rose at the fastest rate since August 2008.

Though delivery times were still deteriorating as port disruptions made their mark, it was to a lesser degree compared to January suggesting the worst of the squeeze due to Brexit may have eased. Supply chain managers found themselves spinning a number of plates with creative ways to get stock including sourcing more local supply for some.

And here’s Tim Moore of Markit:

Stretched supply chains and sharply rising transport costs were the main areas of concern for construction companies in February. Reports of delivery delays remain more widespread than at any time in the 20 years prior to the pandemic, reflecting a mixture of strong global demand for raw materials and shortages of international shipping availability.

Subsequently, an imbalance of demand and supply contributed to the fastest increase in purchasing costs across the construction sector since August 2008.”

The UK construction sector has rebounded, with builders reporting a pick-up in commercial work last month -- and rising cost pressures.

Data firm IHS Markit reports that construction companies experienced a solid return to growth in February, after a brief contraction in January.

New orders also picked up, amid a pickup in projects as clients anticipated improving UK economic conditions over the course of the year. With workloads building up, builders took on more staff, the survey of purchasing managers found.

Builders are more optimistic too, Markit says:

Improving order books and early signs that the vaccine rollout will release pent up demand also led to the strongest degree of construction sector optimism for over five years.

But, construction firms also reported ongoing problems getting hold of supplies, with transport delays, greater shipping charges and rising commodity prices. This caused the fastest rise in cost burdens for more than 12 years.

This all lifted the construction PMI to 53.3 in February, up from 49.2 in January, a level which shows a solid increase on overall construction output.

While commercial construction projects picked up, homebuilding growth slowed, which may be partly due to problems obtaining supplies:

Residential work remained the strongest area of growth in February, although the speed of recovery eased slightly since January. There were some reports citing temporary delays on site arising from adverse weather and supply chain issues (especially for timber).

More concerning, however, is that these closures have stifled dealers’ preparations for March with the expectation that this will now be a third successive dismal ‘new plate month’.

Although we have a pathway out of restrictions with rapid vaccine rollout, and proven experience in operating click and collect, it is essential that showrooms reopen as soon as possible so the industry can start to build back better, and recover the £23 billion loss from the past year.”

Car buyers also moved towards greener vehicles: Battery electric (BEVs) and plug-in hybrid vehicles (PHEVs) accounted for more than one in eight registrations, up from just 5.7% in February 2020.

The London stock market is in the red this morning, as those worries about rising government bond yields hit stocks.

The FTSE 100 index is down 50 points or 0.75% at 6625 points, wiping out most of the budget day rally (travel, hotel and pub chains and banks jumped as the furlough scheme, and the lower VAT rate for hospitality, were extended).

Mining companies are having a rough day, with Rio Tinto down 6% and BHP Group off 5%.

Wednesday’s fall in government bond prices (pushing up yields, or interest rates) is raising fears that inflation pressures could force central bankers to tighten monetary policy, hitting growth (and thus demand for commodities).

Scottish Mortgage Investment Trust, a big investor in tech stocks, has fallen 6.5% following the Nasdaq’s slide last night.

Other European markets are softer too, with Germany’s DAX dropping back from record highs yesterday.

Kyle Rodda of IG says rising bond yields are back in focus....

After steadying since the start of the week, it appears that we have returned to watching the bond yields climb as the US 10-year Treasury yields rose to 1.48% levels into the Wednesday US session.

In turn, this had invited the jitters back to the foreground as the likes of the Dow and the S&P 500 indices closed lower after commencing the session wobbling between gains and losses.

Deliveroo’s IPO would give London a “much-need win” over rival markets, says the FT:

Deliveroo has chosen London for its highly anticipated initial public offering after Rishi Sunak, the UK chancellor, endorsed an overhaul of listing rules to allow founders to retain more control after going public.

The multibillion-pound IPO is expected to be among London’s largest this year, handing the City a much-needed win over New York and Amsterdam at a time of feverish activity in new tech listings.

[Amsterdam overtook London as Europe’s largest share trading centre in January, following Brexit].

The Evening Standard flags that the proposal to relax the UK’s stringent stock market rules encouraged founder Will Shu to pick the City, adding:

Until today, it was unclear whether the most hotly anticipated tech float of a UK company would be in the UK or on Wall Street.

Deliveroo’s float will follow those of tech companies Moonpig, The Hut Group and, in the pipeline, Trustpilot and Auction Technology Group.

In line with the new Lord Hill recommendations, Deliveroo is planning a dual-class listing of shares in which Shu’s stock will have greater voting rights than outside shareholders.

Here’s Bloomberg’s take:

The [dual-class] share structure, which typically gives founders a greater say in shareholder votes, will provide Chief Executive Officer Will Shu with “stability” to execute long-term plans, the food-delivery company said in a statement on Thursday.

Deliveroo, which was founded in 2013 and provides online ordering and delivery services to restaurants and grocery stores, was valued at more than $7 billion in its latest funding round in January. The company and others like it have seen an explosion in orders in the last year as Covid-19 restrictions kept customers out of stores and restaurants.

Food delivery services Deliveroo has announced it has chosen London for its hotly anticipated stock market debut, in a boost to the City.

The move comes just a day after the government endorsed recommendations for a relaxation on the UK’s stringent stock market rules, designed to encourage fast-growing technology firms to pick London rather than an overseas market.

A review by Lord Jonathan Hill, former EU financial services commissioner, recommended a wide range of reforms to loosen listing rules in the UK.

Deliveroo, which has boomed during the pandemic lockdown, says;

“After eight years of operations and rapid expansion around the globe, choosing London underlines Deliveroo’s commitment to making the United Kingdom its long-term home.”

Deliveroo is planning to use a dual-class share structure for the first three years of listing, and then move on to a single-class structure.

The FT explains:

Deliveroo said in a statement on Thursday morning that its dual-class structure would be “closely in line” with the Hill review’s recommendations and be limited to three years. However, the changes are unlikely to come into force before it has completed its IPO, with initial paperwork expected to be filed as soon as next week.

Companies with dual-class structures can already trade on the LSE’s standard listing. Once the new rules are in place, Deliveroo would be able to move up to a premium listing. A person close to the company said that the Hill review was also likely to attract more tech companies to London, making it more attractive as a listing venue overall.

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

Another bout of bond yield jitters are weighing on the markets today, just a day after chancellor Rishi Sunak’s budget highlighted that UK government borrowing is at a post-war high, with debt to its highest level in sixty years.

European markets have opened lower as a rise in bond yields rattled markets across Asia.

Japan’s Nikkei has fallen 2%, while China’s CSI 300 slumped 3% in a volatile session.

Investors are once again looking nervously at the bond market, where last night benchmark 10-year U.S. Treasuries rose to 1.477% -- back towards the one-year high of 1.614% seen last week.

Jim Reid of Deutsche Bank says these bond market gyrations are worrying:

Global risk appetite was subdued, with equity markets moving lower, especially in the US. As we’ve been saying for a while now I suspect this huge liquidity and recovery story is going to repeatedly lock horns against the risk of higher inflation and higher yields in 2021. This year won’t be for the faint hearted.

By the close, US Treasuries had witnessed another big selloff, with 10yr yields up +8.9bps to 1.481%, marking the 3rd biggest daily increase we’ve seen so far this year, with the moves higher driven by increases in both real rates (+6.6bps) and inflation expectations (+2.5bps).

Last night, the US Nasdaq index slumped 2.7%, extending its recent losses as tech shares took another hammering (Apple fell 2.5% while Tesla shed almost 5%).

Bonds are under pressure for good reasons -- predictions of a strong economic recovery aided by government stimulus and progress in vaccination programmes. But if bond prices keep falling, then the cost of borrowing to cover the cost of the pandemic will rise.

UK borrowing costs are still low -- the 10-year gilt is trading below 0.8%, meaning London can borrow pretty cheaply for the next decade.

But as the OBR reported yesterday, UK public sector net borrowing is forecast to reach 16.9 per cent of GDP (£355 billion) this year, its highest level since 1944-45.

That pushes the national debt to 100.2 per cent of GDP, its highest level since 1960-61, with further rises ahead:

The OBR calculates that an increase in interest rates of 1% would increase debt servicing costs by £20bn -- wiping out all the tax revenues which hiking corporation tax to 25% will bring in.

But.... if those rising interest rates are driven by better growth, then tax revenues should rise broadly, and automatic stabilisers (lower welfare payments) should kick in too.

The agenda

• 9am GMT: UK car sales for February
• 9.30am GMT: UK construction PMI for February
• 1.30pm GMT: US weekly jobless claims