And finally (again) US stocks have posted a strong day of gains, making up lost ground after chunky falls last week.

The Dow has surged by nearly 590 points to close 1.8% higher, its best day in several months, while the broader S&P 500 climbed 1.4%.

CNN has more details:

The Dow snapped a five-day losing streak, its longest since January, while the S&P recorded its first gain in four days — its longest losing streak since February. It was the S&P’s best day in about five weeks.

Monday’s rebound was the Dow’s best performance since early March and is bringing the index back from “extremely oversold levels,” said analysts at Bespoke Investment Group.

The tech-focused Nasdaq Composite finished up 0.8%.The recent stock market losses came on the heels of last week’s Federal Reserve policy update, which paved the way for a sooner-than-predicted interest rate hike.

My colleague Nils Pratley has some advice for Morrisons’ board, as they face the prospect of a private equity takeover:

If Andrew Higginson, Morrisons’ chair, wants to fight for independence, or even just a decent price, he needs to sound more indignant. The late Sir Ken Morrison would have been spitting with fury by now, rallying shareholders to recognise Morrisons’ inherent strengths. The few boilerplate words that emerged from the Bradford HQ at the weekend were too timid.

Higginson could try modelling sale-and-leaseback structures of his own, if that’s what shareholders want. At least prepare a dossier on the property portfolio, including its farms. And ring Amazon to see if it’s interested in buying an equity stake to add to its online partnership deal. David Potts, the chief executive, could do his bit by expanding on his recent refrain about a “renaissance” for UK supermarkets. What does he think it means for dividends over the medium-term? Sketch out a few scenarios to switch the focus from the market’s soft rating of the entire supermarket sector.

Berenberg’s analysts, incidentally, calculated that CD&R would still be able to make an internal rate of return of 19% if it paid 270p a share. Morrisons board should take that as a challenge. Do not capitulate cheaply or be fooled by notional fat takeover premiums. Morrisons is a good business and independence suits it.

And finally... here’s our news story on the Morrison’s deal:

Britain’s largest investor has criticised the £5.5bn takeover bid for Morrisons by a US private equity firm, saying it was “not adding any genuine value” as shares in the supermarket group rose by more than one-third.

Legal & General Investment Management (LGIM), the seventh-largest shareholder in Morrisons, raised concerns about the price of the bid from Clayton, Dubilier & Rice as well as the possibility that the suitor could try to sell its shops to generate cash.

Shares in Morrisons surged by 35% on Monday, after the chain rebuffed the offer, potentially sparking a bidding war.

The price move was spurred by news over the weekend that Morrisons, which employs about 120,000 people in the UK, had become a takeover target, making the Bradford-based supermarket group the top FTSE 250 riser on Monday morning, the first opportunity to trade shares after the approach was made public.

Goodnight. GW

New flexible rail season tickets will disappoint passengers and fail to bring them back to the railway, passenger groups and campaigners have said as the tickets went on sale in England on Monday.

The government scheme is designed to make rail travel cheaper for part-time workers, with more splitting their time between the home and office since the coronavirus pandemic.

However, the new tickets, part of a wider shake-up of the rail industry, were criticised by campaigners and commuters for offering paltry savings as the prices were revealed.

Alice Ridley, of Campaign for Better Transport, said:

“Many passengers are going to be disappointed. There’s a danger that people will change the way they commute and start driving, and we wanted flexible tickets to encourage people back onboard trains. We don’t think these tickets are going to do that or provide the savings that people had hoped for.”

The heads of the UK’s largest business lobby group and two major City employers have warned against giving workers the legal right to demand remote working, claiming it would harm young employees and city centre economies.

Lord Bilimoria, the president of the CBI, said that while employees should be able to request the option of working from home, flexible working arrangements must be allowed to evolve in their own way.

“The worst thing possible would [be to] have any legislation that entitles people to the right to work from home,” he said, speaking at the City Week conference on Monday.

“They should have the right to request it. But every employer should make that decision about the mix of working from home [and the office],”.

Bruce Carnegie-Brown, the chairman of the insurance market Lloyd’s of London, agreed with Bilimoria, saying legislation would be “inappropriate”.

Anne Richards, CEO of asset manager Fidelity International, said flexible employers who treated staff like grownups could end up having a “competitive advantage” in the job market.

Here’s the full story:

Danni Hewson, AJ Bell financial analyst:

“After a year of feeding the nation Morrisons looks like it could be the subject of a feeding frenzy after turning down a takeover bid. Shares in the supermarket have ridden the roller coaster of anticipation today ending up 34.6% at 240.20, giving the FTSE 250 a much-needed boost.

The more domestically focussed of London’s indices was unsurprisingly downbeat for much of the day that was supposed to be “Freedom Day” but rallied after lunch and ended the day up 0.6% at 22,457. Morrisons’ rival stores seemed to be living vicariously with investors contemplating the future of the entire sector which increasingly seems to be undervalued with major changes to business practices possibly overlooked by some because of covid costs. Ocado and Sainsbury topped the day’s FTSE 100 risers.

Chris Hunt, head of retail at law firm, Gowling WLG:

“This is an interesting crossroads that has huge potential for further market penetration. Whatever the outcome of the inevitable further wooing of the Board, there is a real opportunity to enhance and evolve a successful supermarket formula that already resonates with a strong customer base.

Looking out for the supply chain pitfalls that govern keeping or improving on their pole position is vital to this effort of course.”

Andy Halliwell, senior director at digital consultancy Publicis Sapient,

Morrisons occupies an unusual space in the grocery landscape of the UK, for a couple of reasons. Morrisons still own much of their supply chain all the way back to the producers and farms that supply it, as well as the manufacturing of many of their own-brand goods for stores, which is an asset at a time when supply chains are challenged by a combination of COVID-19 and Brexit. They also have a unique relationship with Amazon, being the supplier of much of the product for Amazon Prime Pantry and their Go store recently opened in London.

When you combine this with their financial situation – trading at almost 1 to 1 book value, yet with a pension surplus and minimal debt and lease commitments, you can see how the business could become a target. I would be surprised if there aren’t a number of very hurried discussions taking place with Amazon though, to see if they’re looking to launch the Whole Foods brand through a Morrisons acquisition in the UK (despite their current distinct brand positions) or perhaps as a way of accelerating the rollout of the Amazon Grocery store brand. It may just be too soon for Amazon to commit to the UK marketplace though – where they’ve traditionally preferred a more staggered, test & learn approach, and ultimately I don’t believe they’re interested in owning such a large amount of real estate. An Amazon offer would almost certainly be preferred by existing shareholders, and the offer could be comparatively cheap for Amazon if they offered an appealing mix of cash and shares rather than a pure cash-buyout.

This will be a cause of concern for the employees across Morrisons however – an industry which has seen its fair share of turmoil over the last 12 months. However the situation plays out, there is likely to be a restructure ahead, potentially with assets being sold off and a change in strategy, and some consolidation of the organisation. With layoffs at Sainsbury’s recently as well, many new digital technologies and touch points, the supermarket industry is seeing significant pressure on recruitment, talent and long-term stability. It will be fascinating to see how things evolve in the next few months.”

Shares in WM Morrisons have closed 34% higher tonight, at 240.2p each, its highest closing level since November 2018.

Such a surge, over last week’s private equity approach of 230p, indicates that the City is anticipating a higher bid for the UK’s fourth-largest supermarket chain.

That values Morrisons at around £5.75bn, compared with Clayton, Dubilier & Rice’s offer of around £5.5bn, and up from £4.3bn on Friday night.

[CD&R’s bid has an enterprise value of £8.7bn, as they’d also take on £3.2bn of net debt].

Losses at the British fintech firm Revolut nearly doubled last year, despite cashing in on the year-end cryptocurrency boom.

The company – founded by the former Lehman Brothers trader Nik Storonsky and chaired by the ex-Standard Life Aberdeen boss Martin Gilbert – said it made £39m on its cryptocurrency investments last year, while growing demand for its crypto trading services helped pushed revenues up 34% to £222m in the 12 months to 31 December.

It followed the meteoric rise in the price of the leading cryptocurrency bitcoin, which jumped nearly 300% to $28,500 in 2020, before hitting a short-lived peak of more than $64,000 in mid-April this year, and falling to today’s two-week low.

While the company said it was finally profitable in the final two months of the year – coinciding with some of the strongest demand for cryptocurrencies in 2020 – further investment in engineers and share-based payouts for employees pushed Revolut to a pretax loss of £207,875 last year. That is nearly double the £107,680 loss in 2019, according to the company’s annual report.

Its finance chief, Mikko Salovaara, said the company went on to experience “very strong profitability in the first quarter” of 2021, but would not confirm whether it was heading for its first annual pretax profit on record. “We don’t give any forecasts, but so far so good,” he said.

In the crypto world, bitcoin has taken a tumble today after China intensified its crackdown.

Bitcoin has fallen around 8% today to around $32,300, a near two-week low, following reports that China’s central bank had demanded a tougher crackdown on the use of crypto currencies.

Reuters’ Shanghai bureau has the details:

China’s central bank said on Monday it had summoned some banks and payment institutions recently, urging them to crack down harder on cryptocurrency trading.

The People’s Bank of China’s meeting with institutions including Agricultural Bank of China (AgBank) and Alipay came after China’s State Council, or cabinet, last month vowed to crack down on bitcoin trading and mining.

The PBOC urged institutions to launch thorough checks on clients’ accounts to identify those involved in cryptocurrency transactions, and promptly cut their payment channels.

“Speculative trading in virtual currencies roils economic and financial order, spawns the risks of criminal activities such as illegal asset transfers and money laundering, and endangers people’s wealth,” the PBOC said in a statement.

At today’s price, bitcoin has almost halved in value since hitting a record high of nearly $65,000 in April, but is still up 12% this year.

The PBOC’s move comes days after China’s crackdown on cryptocurrency “mining” widened - reaching the southwest province of Sichuan, where authorities ordered the closure of cryptocurrency mining projects in the major mining centre.

Reuters reported:

The Sichuan Provincial Development and Reform Commission, and the Sichuan Energy Bureau issued a joint notice, dated Friday and seen by Reuters, demanding the closure of 26 suspected cryptocurrency mining projects by Sunday.

Sichuan is China’s second-biggest bitcoin mining province, according to data compiled by the University of Cambridge. Some miners move their activities there in the rainy summer to take advantage of its rich hydropower resources.

The notice orders state electricity companies in Sichuan to conduct inspections and make corrections, reporting their results by Friday. They are to immediately stop supplying electricity to cryptomining projects they have detected.

The authorities urged local governments in Sichuan to start combing for cryptomining projects and shut them down. It banned new projects.

UK shopper numbers fell by 3% last week, as the widespread, and sometimes heavy, rain showers dampened enthusiasm among consumers.

Research group Springboard reports that footfall in UK retail destinations fell by 3.1% last week (to Saturday 19th).

High streets were worst hit, with footfall dropping 5.4% - and by 10.1% at high streets in Greater London.

Visits to shopping centres were down 1.3%, while retail park footfall was only 0.1% lower.

This is the second consecutive week on week decline, and means retail footfall was 22.8% lower than in 2019 (from -18.4% the week before). That shows that retailers are still under pressure despite many reopening this spring, with data last week showing retail sales dipping in May.

Diane Wehrle, Insights Director at Springboard, says bad weather and the delay to ending lockdown rules in England both hit confidence.

“The news announced last Monday that regulations will not be eased for another month seems to have acted as a dampener on consumer activity last week, with footfall across UK retail destinations lower than the week before for the second consecutive week despite hot and sunny weather in the first half of the week.

For most of the UK rain dominated the last few days from Thursday onwards, which inevitably impacted high streets most heavily of the three destination types; here the drop in footfall between Thursday and Saturday was more than twice that between the previous days.”

It’s been a choppy start to trading in the financial markets.

The FTSE 100 hit a one-month low early in the session, despite the lift from Tesco and Sainsbury, dropping through the 7,000 point mark to as low as 6949 points.

But the blue-chip index has since rebounded, now up 14 points or 0.2% at 7031 points, clawing back a little of Friday’s 1.9% slide.

Global markets also hit a four-week low, dragged down by losses in Asia as investors worried about the prospect of US interest rate rises coming sooner than expected.

Japan’s Nikkei closed 3.3% lower, while Australia’s S&P/ASX 200 lost 1.8%, as traders caught up with Friday’s wobble in Europe and the US.

But markets have now revived, with Europe’s Stoxx 600 rising 0.3%, after the US futures market indicated Wall Street may open higher after its worst week in months.

Online supermarket technology firm Ocado is now the top riser on the FTSE 100, up 4.2% (Morgan Stanley upgraded its recommendation to ‘overweight’ from ‘equalweight’, as Ocado’s shares have dropped by a third since their peak last September.)

Sainsbury are 3.8% higher, while Tesco are now up 1.7%.

British Airlines owner IAG is the top FTSE 100 faller, down 1.3%. Bank stocks are also weaker, with HSBC (-1%) and Barclays (-1%) lower. Insurer Admiral are 1.2% lower, while mining giant Rio Tinto are off 1%.

And on the smaller FTSE 250 index, Morrisons are still sharply higher - currently trading at 235p (+31.7%).

AJ Bell investment director Russ Mould has written an interesting note on the takeover interest in Morrisons.

He points out that the UK supermarket sector had been seen as a “slow growth, highly competitive market”, so not a natural source of takeover activity.

“Mergers were more plausible, such as we saw with Sainsbury’s trying to marry Asda to gain scale and find a new source of earnings growth. But non-trade buyers swooping for deals didn’t seem like an obvious play until we saw the Issa brothers snap up Asda after the Sainsbury’s deal collapsed.

“Strategically Morrisons has cemented an important relationship as a key supplier and partner to Amazon, and to McColls convenience stores. It has also established a successful online delivery service.

Mould also points out that Morrison’s balance sheet looks attractive, especially to a private equity firm looking to sell assets to release cash.

“Morrisons’ balance sheet has plenty of asset backing and the valuation was relatively depressed before news of private equity interest.

“The business had done a lot of hard work and put itself in a stronger position to continue fighting competitive threats, but the market hadn’t recognised this shift and the shares had languished due to concerns about the difficult environment in which Morrisons operates.

“The market value of the business had weakened so much that it clearly triggered some alerts in the private equity space to say the value on offer was looking much more attractive.

“As of the market close on Friday, Morrisons had shareholder equity of £4.2 billion according to the last set of accounts and a market value of £4.3 billion, so it was trading at pretty much one times book value – a good start for any value-oriented investor.

“There was a pension surplus, only £2.3 billion of debt and £1.3 billion of lease liabilities. Add all of those up and the enterprise value for Morrisons was £7.9 billion, yet the firm has £7.4 billion of property and assets on its balance sheet – prime private equity territory. Limited liabilities plus lots of assets offers scope for quickly releasing cash from the business.

“Other attractive facets include the firm’s heavily vertically integrated model – in tune with the zeitgeist when it comes to food provenance and environmental, social and governance trends.

So, this morning’s share price surge suggests the City expects either a higher bid from Clayton, Dubilier & Rice, or another suiter, Mould concludes:

“This is not to say Morrisons is a slam-dunk. But you can see the value case for the shares and that must be the key attraction for CD&R. The issue now is how the big shareholders respond and whether they – and the Morrisons board – feel they can squeeze out a higher bid or feel sufficiently confident in Morrisons’ strategy and long-term competitive position to spurn the offer altogether.

“The shares traded at 235p early on Monday which is higher than that 230p proposal from CD&R. The market therefore seems confident that the suitor will have to raise its offer price or someone else might step into the game and we’ll see a bidding war.

“Amazon has long been touted as a potential buyer for Morrisons to help give it a much stronger foothold in the UK grocery markets so that’s an obvious name to watch.”

Shares in Wm Morrisons have surged by around 30% at the start of trading in London.

They’ve jumped to around 233p, up from 178.45p on Friday night.

That’s slightly above the 230p per share conditional cash offer made by Clayton Dubilier & Rice (CD&R), which valued Morrisons at just over £5.5bn, and which was rejected.

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

A shock takeover approach for Wm Morrison from private equity firm Clayton Dubilier & Rice has raised fears over possible job losses, and could prompt a bidding war for the UK’s fourth largest grocer.

Although Morrisons rejected CD&R’s £5.52bn possible cash offer, analysts believe the company will face further overtures - and that other potential buyers could enter the mix too.

Nick Bubb, an independent retail analyst, predicted:

“I suspect a [Morrisons] deal can be agreed at 250p-260p and after that the focus will increase on a potential breakup of Sainsbury and even Tesco, so it should be a lively day on the stock market.

I certainly wouldn’t want to be a hedge fund short of any of the big three.

We’ll get the City’s verdict when stock market trading begins at 8am.

Another analyst said that other supermarket chains could now be ‘in play’:

“The whole industry is in play now. It’s not unrealistic to say that there could not be a single quoted British supermarket left in the foreseeable future.”

The private equity industry have a reputation of swooping on undervalued businesses, loading them with debt, creating risks to jobs and pensions - and the wider economy - if things turn sour.

The Labour Party has expressed concerns that Morrisons - one of the supermarkets that kept the UK fed through the lockdown - could fall into private equity hands.

Seema Malhotra, the shadow minister for business and consumers, warned:

“Britain’s supermarkets stepped up to serve communities during the pandemic. Our supermarkets that play a role at the heart of our communities need owners that put the long-term interests of the business and its employees first.

“When Debenhams went bust we saw private equity firms walk away while employees lost their jobs and staff who have paid into the pension scheme were left out of pocket. Too often dodgy private equity firms load the companies with debt and leave while pocketing the dividends. This has to end.”

As well as employing around 120,000 staff and running almost 500 stores, Morrisons also has a significant food manufacturing businesses, including bakeries, abattoirs, fishing fleets and egg farms.

CD&R is likely to wait before taking its next step, to gauge investor and public reaction. It has 28 days to make a formal offer, or walk away.

Here’s my colleague Julia Kollewe’s story on the bid:

Also coming up today....

Financial markets feel edgy after tumbling on Friday, amid fears that rising inflation could force central banks to slow their unprecedented stimulus measures.

Asia-Pacific markets have fallen sharply, catching up with Friday’s losses in Europe and the US, which saw the FTSE 100’s worst day in a month and the Dow Jones’s Industrial Average’s worst week since last October.

Japan’s Nikkei has led the slump today, sliding around 3.3% in late trading, while South Korea’s KOSPI has dropped around 1%.

European markets are expected to open lower too.

Friday’s slide was partly fuelled by St. Louis Fed President James Bullard, who said America’s central bank had turned “more hawkish” to contain inflationary pressures.

The prospect of tighter monetary policy has hit the move into stocks likely to benefit from a global rebound and a jump in commodity prices, as Jeffrey Halley, senior market analyst, Asia Pacific, OANDA explains:

Federal Reserve official James Bullard became the proverbial bull in a China shop on Friday when he said that the Fed might need to raise rates in late 2022 instead of 2023. That sparked a run for the exit door for equity markets and commodities while the US Dollar powered higher.

The US yield curve continued to flatten as long-dated bond yields slumped, notably in the 20-year tenor.

The major casualty has been the global reflation/cyclical recovery trade.

The agenda

• 11am BST: Germany’s Bundestag’s monthly report
• 1.30pm BST: Chicago Fed National Activity Index for May