And finally, Wall Street has closed in the green, as investors put inflationary worries behind them...for at least today.

The main indices have all closed higher, despite the jump in US producer price inflation to its highest in over a decade.

• Dow Jones industrial average: up 433 points or 1.3% at 34,021 points
• S&P 500: up 49 points or 1.2% at 4,112 points
• Nasdaq: up 93 points or 0.7% at 13,124 points

That recovers a chunk of the Dow’s losses yesterday, but still leaves the index around 1,000 points off its record high above 35k set back on Monday.

Retailers, financial firms, industrial stocks and big tech firms all strengthened. Traders took a more positive view of the economic recovery, with jobless claims falling to their lowest since March as firms reacted to stronger demand.

But energy companies lagged, as oil was caught up in a wider dip in commodity prices (after a record run).

David Cameron was on Thursday told that his persistent lobbying of ministers, begging for favours on behalf of the controversial bank he worked for, had “demeaned” the position of the prime minister and left his “reputation in tatters”, my colleague Rupert Neate reports.

The former prime minister was forced to deny that his text message and WhatsApp lobbying campaign on behalf of Greensill Capital was driven by fears that an “opportunity to make a large amount of money was at risk”.

Cameron, who joined Greensill as an adviser and lobbyist exactly two years after he left No 10, repeatedly refused to tell MPs how much money he stood to make from Greensill before the bank collapsed last year.

He told MPs he was paid “a generous amount, far more than I earned as prime minister” but declined to give even a ballpark figure, claiming that his pay was “a private matter”.

Cameron, 56, also refused to state how many shares he had been granted in the bank. He dismissed as “completely absurd” reports that he had boasted to friends that he stood to make £60m from a successful flotation of the supply chain financing firm...

More here:

The star technology investor James Anderson took a parting shot at fellow fund managers addicted to the “near pornographic allure” of earnings reports and macroeconomic headlines today, as he claimed the industry was “irretrievably broken”.

The outgoing co-manager of the FTSE 100-listed Scottish Mortgage Investment Trust said his own “greatest failing has been to be insufficiently radical” over the past two decades (despite doubling its value in the last year during the pandemic).

Anderson, who is stepping down in a year’s time, has generated returns of 1,700% for investors in Baillie Gifford’s flagship fund by giving early backing to technology companies such as Tesla, Amazon and China’s Tencent and Alibaba.

Anderson argues that the world of conventional investment management is “irretrievably broken” due to this short-termism, rather than a disciplined focus on long-term change, saying:

It is inherent to the notion of efficient markets that all available information is incorporated in share prices. Only new information matters.

This is used to justify the near pornographic allure of news such as earnings announcements and macroeconomic headlines. In turn this is reinforced by the power of near-term financial incentives.

Here’s the full story:

Back in the US, McDonald’s has announced it’s raising hourly wages by around 10% as it tries to hire another 10,000 workers.

The fast food company says the increases will benefit 36,5000 staff at its US company-owned restaurants.

But it won’t directly apply to franchise stores, which make up around 95% of sites and set their own pay.

The increases are being rolled out over the next few month, and will lift the entry-level pay range for crew to at least $11-$17 an hour, and the starting range for shift managers to at least $15-$20 an hour, based on restaurant location.

The move comes as McDonald’s tries to recruit more staff to handle increased demand as the US economy reopens.

It says:

Entering into the busy summer season with dining rooms re-opening where it is safe, McDonald’s-owned restaurants are looking to hire 10,000 new employees over the next three months.

But... the move falls short of the $15 minimum wage supported by President Joe Biden, many congressional Democrats and labor activists, points out CNN.

McDonald’s says some restaurants will hit the $15/hour mark this year, but the overall average won’t reach that level until 2024.

It explains:

Based on this trajectory of the current marketplace, McDonald’s expects the average hourly wage for its company-owned restaurants to increase to $15 an hour in a phased, market-by-market approach. Some restaurants have, or will, reach an average hourly wage of $15 an hour in 2021, and average hourly wages are expected to reach $15 an hour by 2024.

The move also comes as McDonald’s workers plan to strike across 15 cities on May 19th to demand higher wages, of at least $15 per hour.

Wall Street has opened sharply higher, defying fears of further falls.

Stocks are bouncing back after two days of heavy losses, with the main indices all rallying, and tech stocks among the risers.

Here’s the situation:

• The Dow Jones industrial average: up 487 points or 1.45% at 34,075 points
• S&P 500: up 59 points or 1.5% at 4,122 points
• Nasdaq Composite: up 204 points or 1.55% at 13,236 points

The mood may has been brightened by today’s fall in US jobless claims, which indicate that American firms are seeing stronger demand.

That may be helping investors shrug off the jump in producer prices last month -- even though it highlights the dilemma facing the Federal Reserve as it wonders how long to maintain its stimulus package.

As Reuters reports:

A surge in commodity prices, labor shortage and much stronger-than-expected consumer prices data this week have stoked inflation concerns that could force the U.S. Federal Reserve to raise interest rates, despite its reassurances that the rise in prices to be temporary.

“All of this comes down to the fact that the market believes that the Fed is going to have to do something sooner than anticipated,” said Victoria Fernandez, chief market strategist at Crossmark.

“Perhaps we’re not in a situation where market has come down and we’re going to stay there for an extended period of time. We’re in a more volatile time period where we could see swings one way or the other.”

The prices charged by US producers surged last month, in another signal that inflationary pressures are building.

The US producer price index jumped by 0.6% in April alone, following a 1.0% jump in March.

That lifts the annual PPI index up to 6.2% for April, higher than expected, and the biggest increase since the agency started tracking the data in 2010.

Manufacturing prices jumped 0.6% during April, driven by steel prices, along with natural gas, meat and dairy food products.

The Bureau of Labor Statistic says:

A major factor in the April increase in prices for final demand goods was the index for steel mill products, which jumped 18.4%. Prices for beef and veal, pork, residential natural gas, plastic resins and materials, and dairy products also moved higher.

Services prices also rose by 0.6% in the month, with the BLS saying:

Within the index for final demand services in April, prices for portfolio management rose 1.5%. The indexes for airline passenger services; food retailing; fuels and lubricants retailing; physician care; and hardware, building materials, and supplies retailing also moved higher.

It underlines that firms are putting up prices, following the surge in commodity prices and rising demand as pandemic restrictions are eased (as we saw with yesterday’s jump in Consumer Price inflation).

But the sharp annual increase in the PPI also follows the slump in demand in April 2020 during the first wave of the pandemic.

Core PPI inflation, which strips out volatile factors like food and energy, jumped by 0.7% in April and was 4.6% higher than a year ago – the largest advance since 12-month data were first calculated in August 2014.

The number of Americans filing new unemployment claims has fallen to a fresh pandemic low.

Around 473,000 ‘initial claims’ for jobless support were filed last week (to Saturday 8 May), on a seasonally adjusted basis.

That’s the lowest reading since jobless claims surged back in mid-March 2020, in the first wave of Covid-19.

It’s down from 507,000 in the previous week (which has been revised up), showing that US companies are laying off fewer staff as the economy strengthens.

But, it’s still more than double the levels of jobless claims before the pandemic:

After a tough morning, the London stock market is on track for its second hefty fall this week.

The FTSE 100 index is currently down 1.6% today, or 114 points lower at 6890. That would be lowest close in around three weeks (it earlier hit a five-week low, before rebounding somewhat).

Luxury fashion group Burberry (-7.5%) still leading the fallers after reporting this morning that operating margins will be hit by increased investment, while cutting out discounts in favour of full-price sales will weigh on sales growth.

BT is also in the fallers (-6%) after it reported a 23% drop in annual profits and a fibre-rollout boost. Hargreaves Lansdown are also lower (-5.2%) after flagging that trading volumes have started to fall as pandemic curbs ease.

Mining and energy stocks are also continuing to drop, with Anglo American now down 5.3%, BHP Group down 4.3% and Rio Tinto off 4.5%, following the drop in commodity prices today.

Investors are clearly worried that central banks will take action to cool inflation (even though at least some of the recent prices rises appear transitory).

Sophie Griffiths, market analyst at OANDA, says:

US inflation jumping to its highest level in 13 years has spooked the market, whilst a sell off in commodities is giving the bears more room to run.

Inflation fears have been stalking the market all week and are showing few signs of easing. Whilst some inflation is good for companies and the market, the latest US consumer price data points to the balance moving too far in one direction. US CP1 jumped to 4.2% in April, the highest level since 2008. The data confirmed investors fears of overheating and prompted bets that the Fed could move on rates earlier.

The prospect of tighter monetary policy boosted the US Dollar, which has acted as a drag on commodities. Base metals, which have surged in recent weeks are trading lower, pulling down the heavy weight miners. Falling oil prices are dragging on the oil majors.

Shares in Canadian chip designer Alphawave IP have slumped by a fifth this morning, after it floated on the London Stock Exchange.

Alphawave, whose semiconductor technology is used in high-speed data networks, sold shares at 410p each, valuing the Toronto-based firm at around £3.1bn.

But they swiftly fell, dropping by around 20% to 326p at present, leaving investors with hefty paper losses.

Alphawave designs high-speed connectivity technology for chips used in areas such as data centres, artificial intelligence, 5G, data networking and self-driving cars.

It licenses this intellectual property to major tech firms – a major growth area, given the demand for faster wireless and the growth of the Internet of Things.

Alphawave chose to float in London rather than New York, despite concerns that Deliveroo’s disastrous IPO could have hurt the City’s appeal to tech firms.

It’s a tricky week to be floating, of course, given the market volatility and the recent move away from tech stocks.

But such a tumble suggests the float may have been priced rather too richly, as Russ Mould, investment director at AJ Bell, says:

The 410p offer price put a £3.1bn price tag on the company – hardly a knock-down sum for a firm which, according to the prospectus, generated $44m in sales, $24m of operating profit and generated $15m in cash from operations.

Granted, Alphawave IP is growing very quickly, but such a valuation prices in a lot of future growth already and does so at a time, again, when investors may be able to buy plenty of cyclical, immediate growth cheaply if we do get a strong, post-pandemic upturn, with the result that they may not feel such a need to pay premium valuations for long-term secular growth well out into the future.

Here’s some more reaction, from Ben Martin of The Times:

And Abhinav Ramnarayan of Reuters:

Andy Haldane, the outgoing Bank of England chief economist, has predicted that UK growth and inflation will both accelerate this year... meaning that policymakers need to start “tightening the tap” on their stimulus.

Writing in the Daily Mail today, Haldane reiterates his earlier optimism for a strong recovery – saying Britain could bounce back like a tennis ball.

He argues that the UK could outpace international rivals:

In its latest forecasts, the Bank revised down its estimate of peak unemployment from 7.75% to less than 5.5%. It is currently around 5%.

A year from now, it is realistic to expect UK growth to be in double-digits, activity to be comfortably above pre-Covid levels and unemployment to be falling.

Such a tennis ball bounce in the UK economy would put it at the top of the G7 growth league table.

But... Haldane also warns that the Bank of England needs to ensure that this boom does not turn to bust with an unwanted bout of inflation.

Last week, Haldane was a lone voice on the Bank’s MPC committee voting to reduce the size of its bond-buying QE programme.

And today, ahead of his departure next month to run the Royal Society of Arts, he warns:

Inflation inflicts collateral damage on our finances, squeezing the purchasing power of our pay and causing rises in the cost of borrowing.

And experience during the 1970s and 1980s demonstrates that, once out of the bottle, the inflation genie is notoriously difficult to get back in.

By the end of this year, inflation is likely to be above its 2% target, largely due to the temporary effects of higher energy prices.

At that point, the UK economy is likely to be growing rapidly above its potential. This momentum in the economy, if sustained, will put persistent upward pressure on prices, risking a more protracted – and damaging – period of above-target inflation. This is not a risk that can be left to linger if the inflation genie is not, once again, to escape us.

That is why, at last week’s meeting of the Bank’s Monetary Policy Committee, I voted to begin throttling back the degree of support provided to the economy.

To be clear, this is not a case of slamming on the brakes, but rather gently taking our foot off the accelerator.

Other Bank of England policymakers sound less concerned; yesterday, Jonathan Haskel said he was “not that worried about inflation”.

Concerns about rising inflation are pushing government bond yields higher.

The yield, or interest rate, on 10-year UK gilts has risen to around 0.92% today. That’s its highest level since the market turmoil in March 2020 (when there was a surge of selling to raise funds).

Exclude that ‘dash for cash’, and yields are at their highest level in almost two years.

Yields rise when bond prices fall; so these moves suggests investors are bracing for central banks to slow their bond-buying stimulus packages, or raise interest rates.

Reuters explains:

British 10-year gilt yields hit their highest in almost two years – excluding a brief surge seen during last year’s “dash for cash” – as investors sold government bonds globally after a jump in US inflation.

Ten-year gilt yields rose as high as 0.919%, up about two basis points on the day, following a climb in other European government bond yields on Thursday.

Twenty-year gilt yields also hit their highest since March 2020 when the coronavirus pandemic crisis began to hit the west.

German bond yields have also extended their recent rally (although the 10-year bund is still trading at a negative yield, around -0.1%).

With the holiday season approaching, Britain’s competition watchdog has warned package companies to promptly refund holidaymakers whose trips are cancelled due to the pandemic.

The Competition and Markets Authority (CMA) has written to UK travel firms to remind them of their legal obligations, insisting they ensure refund options are clear and accessible.

The CMA was deluged by complaints last year when the pandemic hit, from people saying they’d been refused refunds when holidays were cancelled, or pressured into taking vouchers instead.

It says:

Since March 2020, the CMA has received over 23,000 complaints from consumers about refund issues relating to package holidays that could not go ahead due to the pandemic.

In a clear warning shot, the CMA reminds holiday firms that it will act if companies breaking the law by refusing or delaying refunds this summer.

Under the law:

• holidays cancelled by package holiday companies must be refunded within 14 days under the Package Travel Regulations (PTRs).
• any offer of a refund credit note must be accompanied by the option of a full refund. Customers should be able to exchange their credit note for a refund at any time.
• people have a right to a full refund where they decide to cancel their package because unavoidable and extraordinary circumstances at the destination significantly affect the holiday they have booked or their travel there.
• if the FCDO (Foreign, Commonwealth and Development Office) is advising against travel to the package holiday destination when the consumer is due to leave, that is, in the CMA’s view, strong evidence that these unavoidable and extraordinary circumstances are likely to apply. If the consumer is refused a full refund, the package holiday company should fully explain why it disagrees that the holiday or travel is significantly affected.

Holiday group TUI - one of several major holiday firms investigated by the CMA last year - has given a formal pledge to provide clearer information on refunds upfront to customers whose holidays have been cancelled due to coronavirus.

London’s stock market has opened in the red, with the FTSE 100 sliding by 1.4%

The blue-chip index dropped by around 100 points at the open, to as low as 6902 points - its lowest level in almost three weeks.

Mining companies and oil producers are among the early fallers, with Rio Tinto down 3.2%, Anglo American losing 2.8%, and Royal Dutch Shell off around 3%.

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

Inflation worries continue to grip the markets today, after US consumer prices jumped much more sharply than expected in April amid supply shortages and rising demand as lockdowns ease.

The news that the Consumer Price Index has climbed 4.2% during the month from a year earlier – the fastest since 2008 – fuelled fears that the US economy could be running too hot.

It triggered Wall Street losses last night, and in Asia-Pacific bourses where shares fell for the third day running.

With government support packages driving consumer spending, and stretched supply chains creating a scramble for raw materials, investors are concerned that the jump in inflation may not be temporary as the Federal Reserve believes.

The Dow fell 681 points, or 1.99%, to notch its single-worst session since January – a day after its biggest fall since February.

The selloff has rippled round the globe again, sending Japan’s Nikkei sliding 2.5% and Australia’s S&P/ASX 200 down almost 1%, adding to losses earlier this week.

London is heading for a lower start too, with the FTSE 100 tipped to fall almost 1%, wiping out yesterday’s mild recovery after Tuesday’s slump.

Some economists, though, point out that US inflation was driven up by one-off factors as the economy emerged from pandemic restrictions, so it could be a temporary spike.

Used car and truck prices, shelter and lodging, airline tickets, recreational activities, car insurance and furniture all pushed CPI higher, as the reopening of businesses created temporary quirks in the data.

New US producer prices data, and weekly jobless claims are due today, which will give new insight into how the world’s largest economy is faring.

It will take time to tell if inflation is transitory or permanent, so this issue is going to loom for months.

Jim Reid of Deutsche Bank predicts regular pockets of volatility as the two sides tussle it out:

It’s dangerous to read too much into one number but the broad strength gives us confidence that this is not just a transitory story. Another buzz word for us has been how this year will be “complicated” for markets especially once reopening happens. This release personifies that thought process.

You may get dull periods but this year is going to be a big battle between the bullishness of mass reopening/stimulus on one hand and the inflationary consequences on the other. Expect regular pockets of vol. I still lean heavily on the inflationary camp but the reality is that the battle is still in the early stages and non-inflationists will still be able to use the transitory argument for several more months yet.

Bitcoin took a tumble overnight, after Elon Musk announced in a tweet that Tesla was suspending vehicle purchases using Bitcoin, citing the environmental impact of mining the cryptocurrency.

Musk added that Tesla would not sell any of the bitcoin it bought earlier this year, and intends to use bitcoin for transactions as soon as mining uses to more sustainable energy.

This sent bitcoin tumbling – from over $54,000 just before Musk’s tweet to below $46,000. It has recovered a little since, to around $51,000 – but still down over 10% over the last 24 hours.

Other cryptos also slid, including ether and dogecoin:

The agenda

• 1.30pm BST: US weekly jobless claims figures
• 1.30pm BST: US Producer Price Inflation report for April