Time for a recap.

• The oil market is having another highly volatile day, amid concerns that producers will soon run out places to store crude oil.
  
  The US crude oil contract for May has recovered some of Monday’s historic slump, now trading at $5 per barrel (the barrel, alas, is not included). That’s up from minus $40 last night, when traders were effectively being paid to take oil from American drillers.
  
  
• Brent crude, sourced from the North Sea, has plunged today. The cost of a barrel of Brent in June is down 22% at $19.71, the lowest since 2002.
  
  The contract for US oil delivery in June has also been pummelled today, dropping to $16 per barrel from around $25 on Monday. Some analysts believe it could suffer the same fate as May’s contract (which expires, or rolls over today).
  
  
• US president Donald Trump has pledged to protect jobs across the US energy sector, where indebted shale oil producers face the threat of bankruptcy unless prices rise.
  
  But given demand is so weak during the lockdown, and oil storage is saturated, heavy production cuts may be needed.
  
  
• Markets have been spooked by the oil market’s gyrations. European stocks have fallen around 3% today, wiping 171 points off the FTSE 100 in London.
  
  In New York, the Dow is currently down 658 points or 2.8% at 22,992.22.

• Sterling has been hit too, with the pound hitting a two-week low against the US dollar and the euro.
  
  
• There are fresh signs that the global economy is weakening, US home sales slid in March and German investors reporting that current economic conditions have worsened dramatically.
  
  
• The Scottish government’s chief economist has predicted its economy could shrink by a third in the coming months. Ireland expects its GDP to fall by at least 10% this year.
  
  In the UK, labour market data show unemployment had risen even before the lockdown began.

• Retailers are struggling too, with Primark writing off almost £300m of stock which it can’t sell. Cath Kidson is shutting all its UK stores through a rescue deal that will wipe out 900 jobs. John Lewis is furloughing 14,00 staff:

That’s all for today. Thanks for reading and commenting. GW

Oof. A late burst of selling has helped wipe almost 3% off Britain’s stock market.

The FTSE 100 has just closed for the day, down 171 points or 2.96% at 5,641 points.

Mining stocks and oil companies were among the fallers, along with other recession-sensitive stock such as equipment hire firm Ashtead (-8.8%).

BP lost 3% and Royal Dutch Shell fell 2.5%, both rattled by the slump in oil prices.

European stock markets were also hit, with the Stoxx 600 index of leading companies dropping around 3.3%.

Just in: US home sales have fallen at their fastest rate since late 2015, even before the Covid-19 lockdown hit the economy.

Sales of ‘existing homes’ tumbled by 8.5% in March, the National Association of Realtors reports. Those deals will mostly have been done in January and February - when coronavirus jitters were starting to worry investors, but before the big crash last month.

Lawrence Yun, chief economist for the NAR, fears that the market will slump by 3o% to 40% in the coming months:

“The first half of March held on reasonably well, but it was the second half of March where we saw a measurable decline in sales activity.”

President Trump has promised to help America’s oil and gas industry ride out the oil price crash:

Anxiety over the oil markets is hanging over the New York stock exchange, as trading begins.

The Dow Jones industrial average has dropped by 565 points, or 2.4%, to 23,085.00.

The Bank of England’s chief economist has firmly denied that the central bank is dabbling in monetary financing or helicopter money.

Andy Haldane insists that the BoE is simply ‘co-ordinating’ its response to the Covid-19 crisis with the Treasury, which he calls s ‘whopper’ of a crisis.

Reuters’ Andy Bruce has the details:

Britain’s gilt market should be confident that the Bank of England is not directly financing the state as part of its efforts to stimulate the economy, chief economist Andy Haldane said in a podcast published on Tuesday.

He said the institutional safeguards against such actions were strong in Britain.

“That gives me lots of confidence, and it should give the gilts market confidence, that this isn’t monetary financing. This is not helicopter drops, this is simply fiscal and monetary policy acting in tandem to tackle what is a whopper of a crisis,” Haldane told the Institute for Government think tank.

In recent weeks the BoE has pledged to buy another £200bn of government debt through its QE programme, and expanded the Treasury’s ‘overdraft’, potentially letting ministers tap it for billions more.

All very handy for Westminster, given the huge cost of supporting the economy through the crisis.

But you can see why Haldane is playing it down -- monetary financing would mean the central bank was funding government spending, potentially inflationary and destabilising for the currency.

The Covid019 shutdown has hurt demand for clothes, as well as oil -- especially with many stores shut.

Primark’s owner Associated British Foods has written down £284m of stock, including Euro 2020 merchandise, after closing the fashion chain’s entire global network of 370 stores during the coronavirus crisis.

The retailer, which does not sell fashion online, said it now had 68,000 staff on furlough backed by government schemes around the world and was losing £650m of sales a month during the international high street lockdown. It has cancelled all orders with suppliers as it has stocks of £1.5bn in its warehouses and in transit, up from less than £1.2bn typically held.

It said it had booked the £284m writedown on stocks that would now be difficult to sell including items related to Euro 2020, Father’s Day and spring merchandise.

ABF has cancelled its half-year dividend and its executive directors have agreed to cut their pay by half while non-executives have taken a 25% cut. The group, which also owns Twinings and Ovaltine, said it could not predict profits for the year because of uncertainty around when its stores would be able to reopen.

It said half of operating costs had been offset by savings including government-backed furlough schemes but Primark was still paying out £100m in cash a month.

“Looking forward, the greatest uncertainty is the timing, phasing and nature of the reopening of Primark stores,” ABF said in a statement which noted that trading might be restricted by social distancing measures once they did open. But it added:

“We are confident that we have the necessary resources to meet even the most pessimistic of our forecasts.”

ABF’s chairman George Weston, who said two senior ABF employees had died in the last three weeks from coronavirus, said it was clear that Primark’s stores could not reopen until the coronavirus had been suppressed:

“In time we can rebuild the profits. We can’t replace the people we lose.”

In another alarming development, the Brent crude oil price has now plunged to an 18-year low.

Brent (sourced from the North Sea) for delivery in June is trading at just $19 per barrel, down 25% today alone, following the slump in US crude oil prices below zero last night.

That’s its weakest level since early 2002, when the world economy had weakened after the dot-com bubble and the 9/11 terrorist attacks.

Earlier today, the former boss of BP predicted prices will say low for some time. John Browne told the BBC the current situation reminds him of the 1980s oil glut.

With demand low, supply high, and storage full -- prices will remain weak, Browne explained:

“The prices will be very low and I think they will remain low and very volatile for some considerable time.

There is still a lot of oil being produced that is going into storage and not being used.

Scotland’s output is likely to shrink by a third during the lockdown period, triggering an unprecedented economic crisis which dwarfs the recession of 2008/09, the Scottish government’s chief economist, Gary Gillespie, has forecast.

Gillespie said in a Scottish government report.

“This is no ordinary economic downturn – many productive, profitable and sustainable businesses have been required to temporarily close bringing immediate financial stress.

[The] collapse in economic activity is also steeper and faster than in previous downturns and it has similarly impacted our major trading partners. The latter means many of our external markets both for goods and supplies are also impacted.”

He said the Scotland PMI business survey recorded the quickest and sharpest declines in activity since it started in 1998; the Fraser of Allander Institute’s business survey found the crisis had impacted 89% of firms; staffing levels and permanent staff appointments fell at their sharpest rate since the recession of 1989.

Scotland’s GDP was estimated to total around £175bn in 2018, including a Scottish share of North Sea oil and gas production, and it has grown at a slower rate than the UK’s as a whole, at 0.8% in 2019 compared to 1.4% for the UK.

Gillespie’s report said the impact on tourism, which generated more than £10bn in income from overseas and domestic visitors in 2018, had been “rapid and significant”. Hotel occupancy rates were 80% lower this month than in 2019. Edinburgh had cancelled all its lucrative festivals in August.

The OECD had estimated a fall of between 45% and 70% this year, with the industry predicting it could take several years for tourism to reach pre-epidemic levels.

Gillespie’s report states:

“VisitScotland’s Survey of Tourism Businesses indicates that substantial numbers of respondents had experienced cancellations, declines in bookings, or fewer visitors. Industry feedback indicates the shock has created significant challenges for businesses’ operating conditions.”

It added that nearly every sector would be affected, with manufacturing, construction, retail, the arts and recreation sector, and the hospitality industry the most exposed. Those sectors told to immediately suspend all activity accounted for about 22% of the economy, directly affecting 920,000 jobs and 144,000 businesses.

Scottish GDP is expected to have fallen 10% in March, followed by 25% decline this month, and no uplift until July – assuming the lockdown restrictions are eased by then, although there is a significant degree of uncertainty around those forecasts, it warned.

Cath Kidston is to permanently close all 60 of its stores in the UK with the loss of hundreds of jobs under a rescue deal with its Hong Kong-based owner Baring Private Equity Asia.

The vintage-inspired fashion label will continue to to trade online and via its wholesale and franchise businesses around the world which includes more than 100 stores. Some 908 people are being made redundant, with just 32 jobs saved in the UK.

Melinda Paraie, the chief executive of Cath Kidston, said:

“While we are pleased that the future of Cath Kidston has been secured, this is obviously an extremely difficult day as we say goodbye to many colleagues.

Despite our very best efforts, against the backdrop of COVID-19, we were unable to secure a solvent sale of the business which would have allowed us to avoid administration and carry on trading in our current form.”

Cath Kidston called in administrators after Baring failed to find a buyer for the brand which opened its first store in 1993.

The company employs 941 people in the UK, 820 of whom were furloughed on 22 March under the government scheme.

Here’s my colleague Phillip Inman on today’s UK jobs report:

Britain’s jobs market weakened in the three months to February before the coronavirus outbreak, despite a record number of people in employment.

Figures covering the months leading up to the Covid-19 outbreak showed the economy struggling to overcome Brexit uncertainty and the impact of cuts to welfare benefits that forced many older women and young people to take low-paid employment.

Unemployment increased from 3.9% to 4.0%, the number of job vacancies edged lower for the tenth consecutive month and wages continued to fall from a peak last June, the Office for National Statistics said.....

More here:

Minister for Employment Mims Davies MP says the UK economy has ‘strong foundations’, which will help as it faces the economic shock of the coronavirus.

Here’s her take on today’s unemployment figures:

“In the midst of the worst public health emergency in our lifetimes, today’s employment figures have already been overtaken by current events - and we’re doing all we can to help families make ends meet.

“But the statistics – including a 4% unemployment rate – do serve as an important reminder of the strong foundations we have built as we look to withstand impact on the global economy.”

The Department for Work and Pensions has also tweeted that more than 1.5 million people have filed claims for universal credit in the last month (which isn’t included in today’s jobs report).

These people will have lost their usual source of income since the Covid-19 lockdown started.

European stock markets have opened in the red, hit by the slump in the US oil price below zero last night.

Britain’s FTSE 100 index has shed 80 points, or nearly 1.4%. Oil giants are leading the rout, with BP and Royal Dutch Shell both down over 4%.

With US producers paying to give supplies away right now, amid an unprecedented glut in crude supplies, demand for energy is clearly weak -- despite Donald Trump claiming it’s a short-term problem.

So why haven’t BP and Shell fallen further? For one thing, Brent crude from the North Sea is still trading around $25 per barrel (still very cheap, but at least something).

Second (and more importantly), if US suppliers are forced to cut production, then we could face shortages in coming years if demand bounces back. Unless we plunge into a deflationary depression, of course....

Analyst Ehsan Khoman of Japanese bank MUFG expects the pain to continue until Congress acts to incentivise US oil producers to cut supply or the global lockdowns ease allowing demand to pick up.

Dr John Philpott, Director of The Jobs Economist, is alarmed to see that the UK unemployment market was weakening even before the lockdown began.

‘The UK labour market looks to have cooled before the Covid-19 lockdown measures placed the economy in a coma to help save lives.

Although the number of people in work increased by a fairly healthy 172,000 in the three months to February this was not enough to prevent a rise of 58,000 in the number unemployed, lifting the unemployment rate back to 4%. Cooling was also evident in a fall in total hours worked, fewer job vacancies and softening in the rate of growth of average weekly earnings, which dipped to 2.9% excluding bonuses (or 1.3% in real terms)

‘Given what we know about the massive shock to the economy in the past month, it’s disconcerting to see that the jobs market was already starting to look a bit off colour when Covid-19 arrived on our shores.

Some early economic news: Britain’s unemployment rate has risen, even before the coronavirus crashed into the UK economy.

The UK jobless rate rose to 4.0% in the three months to February, new figures from the Office for National Statistics show. That’s up from 3.9% in the previous quarter - but still low in historic terms.

The ONS estimates that 1.364 million people were unemployed in the December-February quarter. That’s an increase of 58,000 people during the quarter, and 22,000 more than a year ago.

Wage growth also slowed a little - with regular pay growing by 2.9% per year, down from 3% a month ago.

It suggests the labour market was weakening, even before Covid-19 triggered what could be the deepest recession in decades.

However, the UK employment rate also picked up, to a record high of 76.6%.

But, of course, all this data has also been rather overtaken by events since.

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

Global stock markets are on edge today after the oil price plunged into negative territory last night - an unprecedented move, highlighting the slump in the global economy under the Covid-19 pandemic.

In astonishing scenes last night, the cost of a barrel of US oil for delivery in May slumped to MINUS $40 per barrel.

This remarkable slump came as the futures contract ticked towards expiry - meaning anyone holding it has to actually take delivery of a barrel in Cushing, Oklahoma.

And that’s a problem, because the slump in demand for energy under the Covid-19 lockdown means oil suppliers are actually running out of places to put crude. The market is literally saturated.

The US oil price has now bounced back into positive territory overnight, with a barrel costing a whole dollar (not a sentence one ever expected to write).

The futures contract for oil delivery in June is holding steady at around $20 per barrel -- but there’s a risk it will head the same way as May’s, unless demand picks up (unlikely).

The oil price slump spooked the markets, with the US Dow Jones industrial average shedding almost 600 points - or 2.% last night. Asia-Pacific markets also fell, with Japan’s Nikkei losing 2%, and Europe is expected to drop this morning.

Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, explains:

The US crude turned negative for the first time in history and traded as low as $-40 per barrel on Monday. This is because the global oil glut has become so large that there is no space left to store this large quantity of unexploited oil. The market is literally submerged.

Hence the panic rose yesterday to an unprecedented level, as no one wanted to hold oil contracts due to expire today, therefore, rewarding investors who are ready to buy this unwanted oil, and store it.

Brent crude (sourced from the North Sea) is trading at around $25 per barrel, incidentally - its lowest level since 1st April, and close to an 18-month low.

Later today we get the latest survey of economic optimism (make that pessimism) in the eurozone, and learn how badly US house sales fell last month.

The agenda

• 10am BST: ZEW survey of eurozone economic optimism in April
• 3pm BSTY: US home sales in March (expected to tumble by 8.2%)