Finally, the New York stock market has posted heavy losses on the first day of the new quarter.

The main indices have sunk over 4%, taking them down to one-week lows.

Here’s Marketwatch’s take:

Wednesday’s action comes as U.S. investors are coming to grips with the prospect of a long haul for the economy and the markets amid a pandemic that has been contracted by more than 800,000 people world-wide.

On Tuesday, President Donald Trump warned that a “very, very painful” two weeks lie ahead for the country in face of a rapidly spreading COVID-19 epidemic, which originated in December in Wuhan, China and has brought much of the world to a screeching halt to slow the spread of the deadly pathogen.

Goodnight, GW

Here’s my colleague Gwyn Topham on the push to rescue Virgin Atlantic:

Virgin Atlantic’s quest for a state bailout has been backed by some of aviation’s biggest companies, with the aerospace giants Airbus and Rolls-Royce as well as Heathrow all lobbying the government on the airline’s behalf.

The trio have sent letters to the transport secretary, Grant Shapps, this week urging state assistance for Sir Richard Branson’s airline, which is seeking hundreds of millions of pounds in loans and credit guarantees with planes grounded and bookings vanishing because of coronavirus.

Virgin has ordered a fleet of Airbus 330 aircraft, with Rolls-Royce engines, whose wings are made at the Airbus Broughton plant in north Wales. The airline also had plans before the coronavirus to expand at London Heathrow.

In one of the letters, according to Sky News, John Harrison, the general counsel and UK chairman of Airbus, said that Virgin’s “collapse could have an extremely negative impact on the A330 programme”.

He added: “As you will be aware, all wings for these aircraft are designed and manufactured in the UK, and orders from airlines like Virgin are vital for the continuation of our business.”

Rolls-Royce has also stressed the “significant importance” of Virgin’s custom to the company and its UK supply chain.

A Heathrow spokesperson confirmed that the airport had written on Virgin’s behalf, and said: “The government must take urgent steps now to safeguard the future of the sector or it will risk undermining the recovery of Britain’s economy once we beat the virus.”

Here’s the full story:

Airlines aren’t the only industry struggling right now, of course.

Britain’s brewers have also been hit, hard, by the government’s lockdown rules and the forced closures of pubs.

But all isn’t lost, thirsty readers. A website called Beer Is Here is trying to keep small breweries alive, by connecting them with customers.

Type in your postcode and it pulls up a list of breweries near you that deliver or do takeaway, and who may be very grateful for the business right now....

A group of civil society organisations have written to the Chancellor of the Exchequer to demand that any bailouts for the airline industry come with strict conditions.

They argue that airline workers need to be protected, but that the industry must be forced to address its contribution to the climate emergency, and to local air and noise pollution.

It’s a timely intervention, given the pressure building to rescue Virgin Atlantic.

The group, including Greenpeace, Amnesty International, Common Wealth and Friends of the Earth, say:

While all of our minds are rightly focused on the need to protect ourselves and our communities against the serious health threat of COVID-19 and its wider economic impacts, the climate and nature emergencies have not gone away and are quietly getting worse. Indeed, aviation sector carbon emissions are increasing globally, and airports are a major contributor to local air and noise pollution, risking public health.

Any bailouts that are granted must be used to address these challenges together, and avoid exacerbating them.

Therefore any support packages for airline companies must set conditions to protect workers’ rights, prevent public money from being diverted into the pockets of shareholders, and reorientate the industry towards helping to meet the Paris climate agreement. Demand reduction measures should be implemented gradually over time to bring the sector within safe limits for the climate.

The group also want the government to take a controlling stake in any airlines it rescues, so it can drive through change, and to guarantee workers rights - including no lay-offs during the coronavirus emergency.

The Covid-19 crisis is putting all airlines under severe pressures, including Virgin Atlantic - who has been hit by Donald Trump’s travel ban, and flight restrictions elsewhere.

Now, Sky News reports, a “frantic lobbying campaign” to secure taxpayer support for Virgin Atlantic Airways is underway.

Apparently it involves two of the aviation industry’s biggest manufacturers, Airbus and Rolls-Royce Holdings, and Heathrow Airport - who are also all suffering from the crisis.

These businesses have separately to Grant Shapps, the transport secretary, to urge the government to “do all it can to support Virgin in these extremely difficult times”.

Sky’s Mark Kleinman explains:

In one letter, John Harrison, general counsel and UK chairman of Airbus, warned that Virgin Atlantic’s “collapse could have an extremely negative impact on the A330 [aircraft manufacturing] programme”.

“As you will be aware, all wings for these aircraft are designed and manufactured in the UK, and orders from airlines like Virgin are vital for the continuation of our business,” Mr Harrison wrote.

Similar messages are understood to have been communicated by Heathrow and Rolls-Royce, both of which are also significant customers of Virgin Atlantic.

One industry source said the letters had been written at the instigation of the British airline.

Virgin has said it plans to ground 85% of its fleet, and terminate its route between Heathrow and Newark.

The airline industry has been making increasingly vocal noises about needing help for weeks, with potential lost revenue from Covid-19 spiralling into the hundreds of billions of dollars.

But rescuing airlines is tricky territory for governments. There’s no certainty when flights will resume as normal. Should taxypayers really help keep planes in the air anyway, given the climate crisis?

The optics of rescuing Virgin Airlines aren’t great either, given company founder Sir Richard Branson is a billionaire with his own luxury island [Branson has committed $250m of his fortune to help his empire]

Newsflash: Output across America’s factories slumped at the fastest rate since the financial crisis last month.

Data firm Markit reports that US manufacturing output declined at the fastest pace since August 2009 in March, as the COVID-19 outbreak intensified.

New orders and employment also contracted at the fastest rate since the financial crisis, and business confidence slumped (which largely mirrors the picture in the UK and eurozone!).

Chris Williamson, Chief Business Economist at IHS Markit says there’s worse to come:

“Growing numbers of company closures and lockdowns as the nation fights the COVID-19 outbreak mean business levels have collapsed.

While some producers reported being busier as a result of stockpiling and anti-virus activities, notably in the food and healthcare sectors, these are very much the minority, and most sectors reported a rapid deterioration in demand and production.

The New York stock exchange has begun the new quarter as it ended the old one - with a wave of selling.

The Dow Jones Industrial average has plunged by 4% at the start of trading, shedding 864 points to 21,053. That’s a one-week low, I reckon.

The broader S&P 500 index surrendered 94 points, or 3.6%, falling back to 2,489 points, while the Nasdaq dropped 3%.

Donald Trump’s warning of a “very, very painful” two weeks lies ahead as the COVID-19 pandemic continues has clearly alarmed investors, crushing any lingering hopes that the outbreak could be contained easily.

The latest US jobs report is out.... and fails to give a true picture of the economic cost of Covid-19.

The monthly payroll report from ADP shows that US companies cut their workforce by 27,000 last month. But the data only runs to 12 March, so fails to catch the coronavirus lockdown (which caused jobless claims to spike by over 3 million the following week).

But the ADP report does show one thing -- small US firms were already cutting back, reducing their headcount by 90,000.

On Friday, the official Non-Farm Payroll will give a more timely (and grizzlier) view of the US economy last month.

Allianz’s chief economist, Mohamed El-Erian, fears that companies who can’t access loans, or issue debt, will face solvency problems soon.

Speaking on CNBC, El-Erian explained here are two groups of companies right now.

One has access to the debt market, and “they are taking on a ton of debt... building a ton of cash”. That will help them through the Covid-19 crisis, but such a debt pile will hurt their credit worthiness in future.

Those on the other side have an immediate problem - no access to loans or debt issuance.

“For them, a liquidity problem will become a solvency issue,” says El-Erian.

This means a reversible shock will become a permanent capital impairment shock

The markets are still working through this issue, he adds, but the upshot is “lower valuations from here”.

Frasers Group, which owns Sports Direct and has already apologised for the way it began its response to the Covid-19 pandemic, is trying to make further amends by committing to restrict the salaries of its top executives to a maximum of £40,000.

It has also pledged to pay “virtually” all its “direct retail and head office staff their salaries until at least the end of April 2020”.

In an email to staff sent on Tuesday, the company’s boss Mike Ashley said that by making the pledge it has guaranteed March and April salaries for over 20,000 individuals, during which time the group’s shops are likely to remain closed.
He added:

“As part of this, our senior management team have taken voluntary pay reductions to ensure the group has the best chance of continuity.

Each individual has reduced their basic pay to a maximum of £40,000 a year, taking effect from May onwards. This is a tremendous first step and show of support towards securing the future of the Frasers Group.”

Ashley is not paid a salary by the group, which he founded (and is still majority shareholder).

While the news will be welcomed by the company’s shop and office workers, the email made no reference to plans for the thousands of agency staff that work in the group’s giant Derbyshire warehouse in Shirebrook.

The facility remains open to fulfill online orders and the company has suggested it has been struggling to enforce coronavirus safety rules inside the depot, where some workers say they feel pressured into turning up for work.

The union Unite has called for Shirebrook workers to be sent home on full pay, while the TUC has called today for the government to publish tough new rules about safety for businesses that are staying open – and to close them down if they won’t comply.

Last week Ashley issued a public apology following a spat with the government about trying to keep his Sports Direct chain open when non-essential businesses were ordered to close, arguing that selling sporting and fitness equipment made the company a vital asset as Britons were forced to stay at home.

He reversed the decision and said:

“I am deeply apologetic about the misunderstandings of the last few days. Given what has taken place over the last few days, I thought it was necessary to address and apologise for much of what has been reported across various media outlets regarding my personal actions and those of the Frasers Group business.”

The most surprising story of the morning is that British American Tobacco is, it says, working on a potential vaccine for COVID-19 using proteins extracted from tobacco leaves.

In happier times, this could have been an April Fool’s joke (we’ve seen worse over the years). But BAT insist that it’s true.

My colleague Mark Sweney explains:

Tobacco giant BAT, maker of brands including Lucky Strike, Dunhill, Rothmans and Benson & Hedges, has said it has a potential coronavirus vaccine in development.The company said that its US bio-tech subsidiary is in pre-clinical testing using “new, fast-growing tobacco plant technology”.

BAT is hopeful that, with the right partners and support from government agencies, between 1 and 3 million doses of the vaccine could be manufactured per week, beginning in June,” the company said.

BAT, which is listed on the London Stock Exchange, said that its work on coronavirus is being carried out on a not-for-profit basis.

BAT’s plan is to use a cloned portion of COVID-19’s genetic sequence to create an antigen that is then inserted into tobacco plants for reproduction.

Once harvested, the antigens are extracted and purified and inserted into the body. This prompts the immune system to produce antibodies to fight the antigen. Those antibodies would also fight the Covid-19 pathogen, giving resistance to the virus.

Whether BAT’s biotech experts will actually deliver a breakthrough is another matter. Many other companies are close to human trials of potential vaccines... but that process can take months, as ineffective or downright dangerous options are weeded out.

Some vaccinologists believe it could take 18 months for a Covid-19 vaccine to be fully developed, properly tested and approved for human use.

Still, given the urgent need for a vaccine, let’s hope BAT are onto something.

Despite the government’s lockdown, some companies are still encouraging workers into the office.

And the unions aren’t happy, and are demanding much better protection for those who can’t work from home.

TUC general secretary Frances O’Grady fears that some are being exposed to unnecessary Covid-19 risk because their employers are not putting adequate safety measures in place.

The TUC is calling for:

• Strong new rules from government on the safety measures employers should put in place
• Every employer that expects workers to come in to work to complete a full formal risk assessment, following government guidance and with the involvement of their staff unions.
• A new enforcement body, involving employers, unions and the Health and Safety Executive. This body would have the power to issue enforcement notices for immediate compliance and to shut down workplaces if employers fail to comply. Similar arrangements are already in place in Wales, Northern Ireland and Scotland.
• Protection for workers who refuse to go to work during this period because they are genuinely afraid that they’re being put at avoidable Covid-19 risk

More bad news. UK factories are cutting jobs at the fastest rate since the great recession more than a decade ago.

Manufacturers have reported that production contracted sharply last month.

Output and new orders both fell at the fastest rate since July 2012. Factories also suffered transport delays and shortages of raw materials, due to global efforts to combat Covid-19.

Data firm Markit, which compiled the report, says bosses are their most pessimistic since their survey began 28 years ago.

The downturns in output and new orders were widespread, with contractions seen across the consumer, intermediate and investment goods sub-industries.

Manufacturers reported that disruption resulting from the COVID-19 outbreak, lower market confidence and company shutdowns had all contributed to the drops in production and new business. Business sentiment was also affected, falling to a series-record low.

With demand slumping at home, and abroad, many customers cancelled orders. And this has led to sharp job losses.

Markit says:

Employment fell for the eleventh time in the past 12 months in March, and at the fastest rate since July 2009. Where job losses were reported, these were linked to lower levels of production and new orders, in many cases due to the outbreak of COVID-19. Redundancies, workforce restructuring, natural wastage and only replacing essential positions all contributed to lower staff headcount.

This dragged Markit’s UK manufacturing PMI down to a three-month low of 47.8 (showing a contraction).

Confusingly, the real picture is probably worse, as supplier delays and supply shortages boost the PMI (they normally indicate strong economic demand).

Newsflash: European factories had a torrid time in March, particularly in Italy, Greece and France.

Manufacturers have reported that output and new orders slumped last month, due to the impact of Covid-19 shutdowns, forcing a surge in job cuts.

This dragged the Eurozone manufacturing PMI (a survey of purchasing managers) down to just 44.5, from 49.2 in February.

That’s shows a very sharp contraction (50=stagnation), and is the lowest reading since 2012. It’s also worse than last week’s ‘flash’ reading, showing that conditions worsened during last month.

Manufacturing output, new orders and exports all fell at the fastest rate since the spring of 2009 (when the global economy was in recession).

Markit adds that this forced many bosses to lay staff off:

Manufacturers also cut their employment levels over the month, with the net reduction in staffing numbers the sharpest recorded by the survey in over a decade. Job losses were especially acute in Austria, Germany and Ireland.

Oof! Shares in Britain’s banks have fallen heavily at the start of trading, after they collectively cancelled last year’s dividends and vowed not to pay any for this year.

HSBC have tumbled by 8%, closely followed by Lloyds (-5.8%), Standard Chartered (-5.8%), Barclays (-5.6%), and Royal Bank of Scotland (-3.5%).

This has dragged the FTSE 100 index of blue-chip shares down to 5487 points, down 187 points or 3.3%. That more than wipes out yesterday’s 100 point leap.

Britain’s biggest banks are all cancelling their dividends, due to the economic shock of Covid-19.

It’s a blow to millions of small shareholders and pension holders, although it will make the banks stronger to handle the looming threat of loan defaults as the UK lurches into recession.

It will also rattle the City of London, and help drive markets down today.

Late last night HSBC, Royal Bank of Scotland, Standard Chartered, Barclays and Lloyds Banking Group axed their outstanding 2019 dividends, to protect their cash reserves.

They have all agreed not to make dividend payments in 2020, and to suspend share buybacks, in a flurry of co-ordinated announcements.

My colleague Kalyeena Makortoff explains the impact:

The cancellation of the 2019 dividends will give the banks an additional financial cushion worth nearly £8bn in total, as they are pushed to increase lending to businesses and households during the Covid-19 lockdown.

The decisions will be felt most immediately by Barclays shareholders who were set to receive more than £1bn on Friday. Barclays said the decision to scrap the 2019 payout was “in response to a request from the UK Prudential Regulation Authority and to preserve additional capital for use in serving Barclays’ customers and clients”.

Here’s the full story:

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

Good news! The worst quarter for the London stock market since 1987 is over.

Bad News! The new quarter is getting off to a bad start too.

Stocks have fallen across Asia today, and European markets are expected to follow, as investors grow more anxious about the Covid-19 crisis.

The FTSE 100, which slumped by almost 25% in the first quarter of this year, is on track to drop by over 3% this morning, as the global economy continues to deteriorate fast.

Anxiety about the extent of the global recession is mounting.

With the global death toll passing 42,000, and nearly 860,000 infections recorded, hopes that the global economy could bounce back from the economic shock look optimistic.

Last night, US president Donald Trump predicted that America faces two “very, very painful two weeks”, with experts warning that up to 240,000 lives could be lost, even if current social distancing guidelines are maintained.

This warning knocked Wall Street futures into the red, pushing Japan’s Nikkei down 4.5% and nudging China’s CSI300 index into the red.

Also coming up today

Data firm Markit’s latest UK, eurozone and US purchasing manager surveys will show how badly factories have suffered from the Covid-19 shutdown in March.

The ‘flash’ PMI readings released last week were grim -- with heavy slumps in output as manufacturers shut down. Today’s final readings should have more detail, including for Spanish and Italian factories.

Jim Reid of Deutsche Bank explains:

The final numbers don’t often change much from the flash but given the severity of the lockdowns in the second half of the month this will be one to watch.

We’ll also get a first look at Italy and Spain which given their more savage impact from the virus, these will be a big focus.

The agenda

• 9am BST: Eurozone manufacturing PMI for March
• 9.30am BST: UK manufacturing PMI for March
• 3pm BST: US manufacturing PMI for March
• 3.30pm BST: US weekly oil inventories