And finally... Europe’s stock markets have closed higher ahead of the Easter break.

The Stoxx 600 index of European companies closed around 0.67% higher at over 432 points, as it continues to close in on its pre-pandemic high set in February 2020.

Germany’s DAX closed at a new record, while in London the FTSE 100 ended 23 points higher at 6737 points.

Airline group IAG (+5.6%) topped the FTSE 100 risers, with manufacturers Melrose (+4%) and Rolls-Royce (+3.4%), and equipment rental group Ashtead (+3.3%), also doing well.

Retailer Next closed 3% higher, after lifting its profit forecasts this morning, thanks to strong online sales.

The strong factory growth reported around the world today seemed to underpin confidence in the global recovery, alongside the prospect of loose monetary policy and more stimulus spending from the US.

Reopening optimism is also lifting Wall Street, with the S&P 500 index holding firm over 4,000 points for the first time.

Ed Moya of OANDA says:

Opening Day is here and baseball fans will happily be returning to stadiums, albeit mostly at partial capacity. America’s pastime is hopeful for full ballparks in 2021 and that type of optimism is being reflected across all pre-pandemic activities. The stimulus check impact on retail trading is waning and that could be because many Americans are looking to go big on attending sporting events, traveling across the country, vacationing, visiting family and friends, and revamping wardrobes before going out to restaurants/pubs and returning to the office....

The S&P 500 index finally rallied above the 4,000 level for the first time as investors embraced the US growth outlook following President Biden’s infrastructure plan. European indexes are outperforming as the COVID situation appears to be turning a corner in Europe as France sees the virus peak nearing.

With the US rapidly delivering COVID vaccines, herd immunity seems to be nearing and that means a floodgate of supply should be available for Europe in a couple of months.

And on that note, it’s time to wrap up. Goodnight, and have a lovely Easter!

Global manufacturing growth has hit a ten-year high as the world economy recovers from the shock of the pandemic.

Output, new orders and employment all expanded at a more rapid pace, with eurozone, US and UK factories all performing well.

That’s according to J.P.Morgan’s Global Manufacturing PMI, which has jumped to 55.0 in March, and its best reading since February 2011.

Based on the latest PMI surveys from around the globe (some of which we’ve covered already), it confirms that conditions in the global manufacturing sector continued to brighten at the end of the first quarter.

But, it also shows the risk that growth will be stymied by rising cost inflationary pressures and supply-chain disruptions.

As flagged earlier, the eurozone was a bright spot last month, with growth hitting a record pace.

Five of the six top-ranked nations were located in the euro area (Germany, the Netherlands, Austria, Italy and France), taking the combined PMI for the currency bloc to its highest on record, with unsurpassed readings also registered in both Germany and the Netherlands.

Outside the euro area, the strongest improvements were seen in Taiwan and the US. Improvements were signalled for Japan and China, but both PMIs were below the global average.

But, while factories globally reported that output, new orders and employment levels had all risen at a faster pace, they also reported more supply chain disruption.

That led to higher prices and longer delays, the report warns.

The increase in supplier delivery times was the second-greatest extent on record, surpassed only by April last year.

The combination of increased new orders at manufacturers and supplychain delays was the main factor underlying a sharp rise in backlogs of work, the steepest since May 2010. Demand outstripping supply also contributed to a marked increase in purchasing costs during March. Input price inflation surged to a near-decade high, the pass-through of which led to the steepest rise in output charges since data on selling prices were first tracked in October 2009.

Olya Borichevska, Global Economist at J.P.Morgan, explains:

“The performance of the global manufacturing sector continued to strengthen in March consistent with the idea that global activity is rebounding as vaccinations become more available.

In the latest PMI surveys, both the output and new orders PMIs increased by a solid amount. The new orders to finished goods inventory ratio at 1.2 stood out as it marked a high since 2010 suggesting strength in the manufacturing sector near-term.

However, the high ratio also likely reflects bottlenecks and supply-chain disruption which are feeding into pricing. Both the input and output prices PMIs increased again in March with the output prices PMI marking a record high in the series that dates back to 2009.”

US factories posted their strongest growth in almost four decades, according to the Institute of Supply Management’s PMI survey.

The ISM’s healthcheck shows strong growth in new orders, output and employment, in another sign that American factories had a blistering March.

ISM’s March Manufacturing PMI has jumped to 64.7 percent, an increase of 3.9 percentage points from the February reading of 60.8 percent. That’s the best reading since December 1983.

All of the six biggest manufacturing industries — Computer & Electronic Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; and Petroleum & Coal Products — registered strong growth in March, ISM reports.

Timothy R. Fiore, chair of the ISM’s Manufacturing Business Survey Committee, says:

“The manufacturing economy continued its recovery in March.

However, Survey Committee Members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus (COVID-19) impacts limiting availability of parts and materials. Extended lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are affecting all segments of the manufacturing economy.

Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential. Optimistic panel sentiment increased, with eight positive comments for every cautious comment, compared to a 5-to-1 ratio in February.

American factories have also had a very strong month. But, like in the UK and eurozone, price pressures and supply chain problems are mounting.

IHS Markit reports that its US manufacturing PMI has hit its second-highest level since the survey began in 2007. It rose to 59.1 in March, up from 58.6 in February (any reading over 50 shows growth).

US factories reported the steepest rise in new orders since June 2014, although production was reportedly held back by supply shortages.

Supplier lead times lengthened to the greatest extent on record. And with raw materials and parts in short shpply, cost burdens jumped at the quickest rate for a decade.

Firms partially passed on higher input costs to clients through the sharpest increase in charges in the survey’s history, IHS Markit adds -- a sign that inflationary pressure may be building.

Chris Williamson, chief business economist at IHS Markit says US manufacturers struggled to cope with a surge of new orders last month.

Although output continued to rise at a solid pace, capacity is being severely strained by the combination of soaring demand and supply chain disruptions: supply chain delays and backlogs of uncompleted orders are growing at rates unprecedented in the survey’s 14-year history, meaning inventories of finished goods are falling at a steep rate.

Pricing power has risen accordingly as demand outstrips supply: raw material prices are increasing at the sharpest rate for a decade and factory gate selling prices have risen to a degree not seen since at least 2007.

The fastest rates of increase for both new orders and prices was reported among producers of consumer goods, as the arrival of stimulus cheques in the post added fuel to a marked upswing in demand as the economy continued to pull out of the malaise caused by the pandemic.

With business expectations becoming even more optimistic in March, further strong production growth looks likely in the second quarter, but the big question will be whether rising price pressures also become more entrenched.”

Over in New York, stocks have opened higher - with the S&P 500 index hitting 4,000 points for the first time.

Technology stocks are among the risers.

• Dow Jones industrial average: up 115 points or 0.35% at 33,096 points
• S&P 500: up 28 points or 0.7% at 4,001 points
• Nasdaq: up 174 points or 1.3% at 13,421 points

Optimism over the US recovery has been lifting spirits on Wall Street, with stimulus spending and vaccination programmes boosting stocks.

Yesterday, president Biden outlined a plan to spend more than $2tn improving the nation’s infrastructure, creating jobs and help combat climate change - alongside a proposed increase in the corporate tax rate to 28% to help fund it.

The International Monetary Fund has called on governments to close the income gap between the richest and poorest that has worsened during the Covid pandemic, by spending more and taxing wealthy households.

In a warning that the economic shock triggered by the pandemic could undermine public attitudes to the fairness of taxation and welfare systems and lead to social unrest, the Washington-based organisation said surveys showed governments would have the support of the public if they shifted the burden of taxation away from low and middle earners to better-off members of society.

Calling for governments “to provide everyone with a fair shot”, the IMF said despite government finances coming under pressure from health and welfare spending during the pandemic, ministers needed to “enable all individuals to reach their potential – and to strengthen vulnerable households’ resilience, preserving social stability” and, in turn, broader economic stability.

The IMF, which acts as global lender of last resort and has issued tens of billions of dollars worth of loans to developing world countries over the last year, said trends during the pandemic that have accelerated a move to digital services would damage the job prospects of unskilled workers and lead to higher rates of long-term unemployment.

It says:

“Against this backdrop, societies may experience rising polarisation, erosion of trust in government, or social unrest. These factors complicate sound economic policymaking and pose risks to macroeconomic stability and the functioning of society.”

Back to economic data... and the number of Americans filing new claims for unemployment support has risen.

There were 719,000 fresh ‘initial claims’ for jobless support last week, an increase of 61,000 from the previous week [which has been revised down to 658,000, from 684,000].

That’s higher than expected.

But there’s encouraging news too -- the 4-week moving average for initial claims has dropped to 719,000, its lowest level since mid-March 2020, just before the first US lockdowns.

Another 237,025 self-employed and gig economy workers filed for help under the ‘pandemic unemployment assistance plan’, meaning there were roughly 950,000 new unemployment claims in total last week.

In addition, the number of Americans already on various unemployment support programmes (‘continuing claims’) remains distressingly high, at over 18 million.

Extinction Rebellion say they sprayed the Bank of England with fake oil today, because the central bank isn’t doing enough to fight the climate crisis.

They explain:

This morning in an elaborate April Fools prank two members of Extinction Rebellion dressed as the ‘Fossil Fools’ who are recklessly endangering our future for profit – sprayed the front of the Bank of England with fake oil. Others held a banner outside that read ‘No More Fossil Fools’.

‘Windows’ depicting images of the impacts of the climate and ecological emergency were placed outside the building. The ‘windows’, created specifically for the action, symbolised a view into the impacts of the Bank’s activities.

The action today is part of a wave of actions by XR’s Money Rebellion designed to expose the role of banks in the climate and ecological crisis. The world’s 60 largest banks have funded the fossil fuel industry to the tune of $3.8 trillion since 2016. The action today highlights the Bank of England’s failure to regulate these banks and points to the fact that it still holds investments consistent with 3.5C of warming by the end of the century.

Despite the Bank’s stated commitment to a green recovery from the impacts of the Covid pandemic, a report by Positive Money found that by June last year 56% of Covid funding distributed by the bank went to carbon intensive industries, including airlines, car manufacturers and oil and gas companies.

As flagged earlier, City of London police have tweeted that they’ve made five arrests.

Climate activists in London splashed black dye on the front of the Bank of England on Thursday as part of a protest, a Reuters photographer at the scene said.

Here’s the story:

Activists, some dressed as jesters, hurled the dye at the imposing neo-classical building, known as “the Old Lady of Threadneedle Street” as they demonstrated against the finance sector’s support of what they say is a climate catastrophe.

“This bank is killing us,” read a banner held up by one protester. “No more fossil fuels,” read another.

“The action today is part of a wave of actions by XR’s Money Rebellion designed to expose the role of banks in the climate and ecological crisis,” Extinction Rebellion said.

Two people were arrested by police.

“It is not okay that the Bank of England can distribute money to companies that are destroying our planet whilst millions face the destruction of their future because of their actions,” said activist Amelia Halls, 22.

The Liberty Steel owner, Sanjeev Gupta, has pledged not to shut down any of his steel plants even as creditors seek to wind up key businesses.

Gupta has been urgently seeking refinancing for GFG Alliance, the conglomerate that owns Liberty Steel, after the collapse three weeks ago of Greensill Capital, a key creditor.

The Greensill collapse has prompted fears over the future of GFG Alliance and the jobs of its 35,000 global employees, with metals interests stretching from Australia to Scotland. In the UK, GFG employs 5,000 people, including about 3,000 steelworkers.

Gupta said: “I am very confident that we will find short-term solutions through our own efforts, as well as long-term solutions through a refinancing.”

He said he was “committed” to his UK plants, and said he had received interest from an undisclosed number of financiers to refinance the business, in an interview on Thursday with BBC Radio 4’s Today programme, his first since the collapse of Greensill.

“None of my steel plants under my watch will be shut down for sure.”

British factories have reported a surge of orders last month - and severe supply chain disruption.

Markit’s UK manufacturing PMI has jumped to a decade-high of 58.9 in March, the highest reading since February 2011.

That signals a sharp expansion last month, as vaccine rollouts at home and abroad boost confidence, and the loosening of lockdown restrictions approaches.

Purchasing managers told Markit that they had seen stronger order growth, from both domestic customers and overseas, alongside a jump in output.

Encouragingly, business optimism hit a seven-year high, as did employment growth.

Markit explains:

Business sentiment was at its most elevated for seven years, hitting unsurpassed levels at both consumer and investment goods producers.

Almost two-thirds of manufacturers expect output to rise over the coming year (only 6% expect a contraction). Jobs growth was also at a seven-year high, supported by the sharpest rise in backlogs of work for 11 years

But (as in the eurozone) the sector remained beset by severe supplychain and logistic issues, however, leading to delivery delays from suppliers and disruption to production and distribution schedules.

Over in the eurozone, factories have reported their strongest growth in at least 24 years -- and unprecedent delays for supplies too.

That’s according to Data firm IHS Markit, which says that the eurozone’s manufacturing economy performed extremely strongly during March.

Its monrhly healthcheck found the biggest improvement in operating conditions in nearly 24 years of data collection.

Purchasing managers at factories across the euro area reported record increases in output, new orders, exports and purchasing activity last month.

This drove Markit’s eurozone PMI up to 62.5, up from February’s 57.9 , a level that shows rapid growth (50 = stagnation). It’s the highest reading since the survey began in June 1997.

Germany and the Netherlands’ factory sectors both recorded their highest ever PMI levels in March, with Austria, Italy and France also seeing rapid growth.

But...unprecedented supply-side delays drove the sharpest rise in input costs for a decade, and the longest delays for raw materials in the survey’s history.

Markit explains:

The further strengthening of trade, orders and production placed further strain on already stretched supply chains.

According to the latest data, average lead times for the delivery of inputs lengthened at an unprecedented rate as challenges in sourcing inputs due to product shortages, stronger global demand and ongoing logistical challenges linked to COVID-19 continued in March.

Steve Clayton, fund manager of the Hargreaves Lansdown Select funds (which hold NEXT plc shares) points out that Next has outperformed some UK rivals, thanks to its online offering:

“Profits may have more than halved, but to be reporting any sort of profit at all as a fashion retailer after a year like 2020 is a remarkable achievement. But NEXT is a remarkable business.

The group saw the potential of online retailing years before their rivals took it seriously. As a result Next was earning most of its money online, even before the pandemic struck.

That has left it in a far stronger position than rivals like M&S (loss-making), or Arcadia and Debenhams (both now bankrupt). When NEXT does reopen their doors they will be perhaps the strongest of the survivors and Britons have saved up a lot of spending money during lockdown. We see NEXT as incredibly well positioned to generate profit and cash in the years ahead”.

John Moore, senior investment manager at Brewin Dolphin, also predicts stronger times ahead following today’s financial results:

“It has almost become expected that Next will deliver ahead of guidance and, despite the highly challenging trading conditions of last year for most retailers, it has done so again. In fact, the business has already upped its central profit guidance for this year, with online sales overachieving in the first eight weeks of 2021.

As a destination people want to visit, Next is likely to be among the biggest beneficiaries as the economy re-opens; but its growing online business, integrated logistics offering, and add-ins like its Total Platform service for other brands give it a strong anchor in the online economy. Debt has been reduced significantly and, although there is no dividend for the year, shareholders can take solace that Next is investing in the business and its growing retail reach – ‘following the money’, in its own words – the benefits of which should start to materialise in 2022.”

Richard Hunter, head of markets at interactive investor, says Next has shown its financial resilience in the last year:

Online and finance now account for over 70% of overall sales, and in the first eight weeks of its new financial year Next has reported that online sales are 60% ahead of the figure from two years ago. The company concedes that it is difficult to predict how much of the change in consumer behaviour to online will stick post-pandemic, although the possibility remains that the new behaviour will have become largely entrenched.

It is therefore also keeping a close eye on its retail estate, ensuring that it is appropriate for the overall direction of the group. Over the last year city centre and shopping mall volumes dropped significantly – and unsurprisingly – and were partially offset by retail park revenues where social distancing was easier to introduce when stores were allowed to open.

Next chief executive Lord Simon Wolfson has also warned that the battle to keep its stores relevant in an online world is “far from over”.

In his review of the year (lengthy, but worth a read), Wolfson predicts that like-for-like stores sales could fall by a fifth this year, leaving them ‘marginally profitable’.

There remains a big question mark over the level of sales our stores will achieve when they reopen. The pandemic has served to accelerate a pre-existing social trend - the move to more online shopping. History has been given a shove and, having moved forward, seems unlikely to reverse.

That said, the steady reduction in Retail occupancy costs, the continued relevance of our stores to online shopping through collections and returns and (perhaps) the closure of competing shops, mean that the battle to keep our stores relevant in an online world is far from over.

So our base case for the year ahead is that store sales will decline, on a like-for-like basis, by -20%. At this level (after reversing out the effects of the current lockdown) our store network would remain marginally profitable.

That might concern Next’s landlords, point out the FT’s Jonathan Eley:

Given the disruption caused by the pandemic, it’s hardly surprising that Next’s earnings halved.

As the company points out:

If we had been told twelve months ago that our shops were going to be shut for 20 weeks, we could not have imagined the Group delivering the sales or profit we achieved last year.

So how did it still manage £342m of pre-tax profits, despite the impact of Covid-19?

According to CEO Lord Simon Wolfson, there were four main reasons:

Online Scale: Going into the pandemic, online sales (including finance) accounted for more than half of the Group’s turnover, giving it the scale to pick up lost high-street business.

Product Diversity: Where Next lost sales on smart clothes, it won them in the leisure aisles. It says:

Areas such as homeware, childrenswear, sportswear and stay-at-home basics (underwear, sweat tops, joggers, nightwear, etc.) all served to mitigate declines in adult’s formal and casual clothing, footwear and accessories.

Financial strength: A resilient balance sheet, strong cash resources and “the quality of our customer receivables” meant Next didn’t draw on emergency Government lending.

Store footprint: Next’s retail park store portfolio accounted for 62% of our Retail sales going into the pandemic, and coped better than the high street (when customers were allowed in):

In general, retail park stores are local and easier to access, with social distancing simpler to maintain both within and outside the store. So it is not surprising that these locations fared much better than city centres and shopping malls.

At the times when stores were open, like-for-like-sales in retail parks, although negative, were between 15% and 20% better than our other stores.

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

After an unprecedented year of disruption, UK fashion and homeware retailer Next has seen its profits halve. But it’s also boosting its earnings forecast for this year, after strong e-commerce sales in recent weeks.

Next, which runs retail outlets and sells online, reported this morning that annual pretax profits fell to £342m in the 12 months to January. That’s down from £729m in the previous year, just before the coronavirus pandemic struck.

Full price sales slumped by 15% -- unsurprising, in a year in which stores were shut for months, and demand for smart clothing such as office wear and party outfits shrivvelled.

Chairman Michael Rooney says:

In last year’s Full Year Results, published just as the UK went into lockdown, we stated that our sector was facing a crisis unprecedented in living memory. We also stated that our strong balance sheet and profit margins would allow us to weather the storm.

Both statements have proved true.

Rooney adds that Next expects the shift in consumer behaviour towards Online sales to continue for some time - so the company has been investing heavily in its web platform.

We accelerated part of our planned capital expenditure in the Online business, spending £121m on warehousing and systems.

And significantly, Next is also raising its profit guidance for this year, by £30m, after seeing a strong start to the year.

In its latest guidance to the City, Next says:

• Total Brand full price sales guidance remains unchanged and flat against 2019/20 (a two-year comparison).
  
  
• The anticipated end of the third lockdown in April⁵ is two weeks later than we had allowed for in our previous guidance. However, the profit lost from those additional two weeks has been offset by the benefit of the extension of business rates relief announced in March.
  
  
• In the first eight weeks of the year, Online sales have been stronger than expected and are up more than +60% on two years ago. This overachievement plus the expected transfer of sales from Retail during the additional two weeks of lockdown, are expected to add £30m of profit. As a result, we are raising our central profit guidance by £30m from £670m to £700m.

Here’s some early reaction from the Times’s Ashley Armstrong...

..and the Telegraph’s Laura Onita.

Also coming up today

Meal delivery chain Deliveroo is reeling from its dire debut on the London stock market yesterday. Shares in the company slumped 26% in conditional trading, in what the Financial Times has dubbed the ‘worst IPO in London’s history’.

Concerns about treatment of workers, and its path to profitability once the pandemic ends, weighed on Deliveroo (swiftly dubbed ‘Deliveroops’ by Twitter wags).

But more broadly, investors seem to be in a positive mood ahead of the Easter break, with president Joe Biden’s plans for a huge new infrastructure programme boosting spirits.

We get manufacturing reports from the UK and across the eurozone this morning, and later from the US, which will probably also that activity strengthened this month.

Overnight, PMI reports from Japan and South Korea have shown that factory activity expanded in March thanks to solid demand at home and abroad -- a good sign for the global recovery.

The agenda

• 9am BST: Eurozone manufacturing PMI for March
• 9.30am BST: UK manufacturing PMI for March
• 1.30pm BST: US weekly jobless claims report
• 3pm BST: US manufacturing PMI for March