A late PS: The US stock market ended the day rather lower too, as anxiety over Covid-19 weighed on shares in New York.

Airlines, energy firms, chemical producers, financial stocks and were manufacturers among the fallers. United Airlines lost 8.5%, making it the top S&P 500 faller.

Here’s the closing prices:

• Dow Jones industrial average: down 256 points or 0.75% at 33,821
• S&P 500: down 28 points or 0.7% at 1
• Nasdaq Composite: down 128 points or 0.9% at 13,786.

And then... streaming service Netflix reported results... showing that it added rather fewer customers than epxected.

CNBC has the details:

Netflix shares fell as much as 11% in after-hours trading after reporting a large miss in subscriber numbers in its first-quarter earnings report. The company also said it only expects to add about 1 million subscribers in the current quarter.

Here are the key numbers:

• Earnings per share (EPS): $3.75, vs $2.97 expected, according to Refinitiv survey of analysts
• Revenue: $7.16 billion, vs $7.13 billion expected, according to Refinitiv
• Global paid net subscriber additions: 3.98 million vs 6.2 million expected, according to Factset

The company’s revenue still grew 24% year over year and was in line with its beginning of quarter forecast, Netflix said. It also delivered a strong beat on earnings compared to Street estimate

The FTSE 100 fell sharply on Tuesday, taking it back below 7,000, as global markets were dragged lower by growing investor concern over the Indian variant of Covid-19 and sliding tobacco shares.

The blue-chip index dropped by 2% or 140 points to close the day at 6,860, led by the British Airways owner, IAG, amid fears over renewed travel restrictions and as shares in major tobacco firms fell on the prospect of tougher rules being introduced by the Biden administration.

It was the worst day for the FTSE – which had risen above the 7,000 mark on Friday for the first time since the pandemic – in two months.

Shares in IAG fell more than 8%, while the jet-engine manufacturer Rolls-Royce fell by almost 6%. Wizz Air, FirstGroup and the cruise operator Carnival were among the biggest fallers on the FTSE 250, reflecting renewed investor fears about prospects for travel.

More here:

And here are more of today’s stories:

On Wall Street, the Dow continues to slide - now down 362 points or 1% at 33,715, as airlines, retailers, financial stocks and manufacturers are all hit by Covid-19 worries.

I’ll pop back with the Wall Street close later - otherwise, goodnight!

The City regulator has warned social media sites that it may take action if they continue to promote risky and sometimes fraudulent investments to often inexperienced consumers.

The Financial Conduct Authority is concerned about the growing influence that sites such as YouTube, Instagram and TikTok are having on a new breed of mainly younger DIY investors, whom it believes are taking big financial risks when investing in cryptocurrencies, foreign exchange trading and other high-risk products.

In a speech, Nikhil Rathi, the FCA’s chief executive, said the big internet companies “need to take greater responsibility” for their role in connecting consumers with these investment offers.

He said too many of the “investment opportunities” that people were finding online “prove too good to be true”, and the FCA was looking at how social media sites were adapting to new rules on so-called financial promotions, adding:

“If needed, we will take action.”

Wall Street’s main indexes are still in the red, with the Dow Jones industrial average now down 256 points or 0.75% at 33,821 points.

Reuters has more details on the selloff:

Shares of airline operators and cruiseliners including JetBlue Airways, American Airlines, Norwegian Cruise Line and Carnival Corp, which were hammered last year as widespread lockdowns led to a halt in global travel, fell between 5% and 9%.

“Rising COVID-19 cases around the world is a risk,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“Investors may be taking a little bit of profit as they recognize that a lot the ‘reopening trade’ may already be priced in to the markets at this point.”

Here’s Danni Hewson, AJ Bell financial analyst, on the market selloff today:

“Whilst last week investors were rushing to drink the Kool-Aid, or a pint of whatever brew was handy to toast reopening, this week that optimism is giving way to a sort of grudging gloom.

In the UK the FTSE 100’s hurtled back below the 7,000 mark. The 2% fall wiping around £37 billion off the value of shares fuelled by a mixed bag of economic news. Big tobacco’s concern about potential caps on nicotine levels from Joe Biden’s administration delivered two of the biggest slides of the day but there was also further to go for Primark owner, Associated British Foods.

Shares finished down almost 6% at £23.14 despite record sales on re-opening and an unexpected restoration of its dividend.

“But it’s growing concern that new variants will set back recovery that seems to be having the greatest impact, particularly amongst airlines like British Airways owner IAG worried those rays of summer hope might be obscured behind another Covid-cloud. US markets have also been pulled down by the travel industry; some of the biggest declines have included United and American Airlines and Carnival Cruises.

Ouch.

The UK’s blue-chip FTSE 100 index has racked up its biggest one-day fall in almost two months.

It has fallen around 140 points, to close at just below 6860 points, as anxiety over rising Covid-19 cases hit stocks today.

That’s a 2% fall - the Footsie’s biggest one-day drop since 26th February.

British Airways parent group IAG was the biggest faller, tumbling by 8.1%, on concerns that travel plans will be hit by rising Covid-19 cases, and new variants such as the one raging in India.

It was followed by British American Tobacco (-7.6%) and Imperial Brands (-7.3%), due to the threat of a US clampdown on nicotine levels in cigarettes and a possible menthol ban.

Hospitality stocks also fell sharply, such as hotel operators Whitbread (-4.8%) and Intercontinental (-4%). They would obviously also suffer from any delays to reopening the UK economy, or restrictions on travel.

The smaller FTSE 250 index lost 1.75% today; cruise operator Carnival ended 6.3% lower, with easyJet off 5%.

In New York, stocks have opened a little lower.

The Dow Jones industrial average is down 103 points, or 0.3%, at 33,974 points, dipping further from Friday’s record high.

Firms who will benefit most from the reopening are among the fallers, including sportswear firm Nike (-2.3%), aircraft maker Boeing (-2.7%), chemicals group Dow (-1.8%), and construction equipment maker Caterpillar (-1.3%).

Technology and pharmaceuticals firms are rising; with IBM up 3.6% after beating expectations with its first-quarter results last night, Johnson & Johnson rising 1.2%, and Merck gaining 0.7%.

Back in the City, shares in some travel and hospitality companies are also falling today,

Airline group IAG is down 5%, pushing the FTSE 100 index a little deeper into the red (although the tobacco firms are still doing the most damage). Jet engine maker/servicer Rolls-Royce is also lower (-2.6%).

Education and publishing group Pearson (-2.5%) and events firm Informa (-2.3%), who will both benefit from the reopening of the economy, are also among the FTSE 100 fallers so far today.

On the smaller FTSE 250 index, travel operator First Group has fallen around 4.5%, with pub chain Mitchells & Butler down 3.3% and cinema chain Cineworld losing 3.5%. Budget airline easyJet has dropped by 2%.

Those moves, although obviously not dramatic, suggest investors are a little more anxious about the pandemic.

This follows India being added to the UK’s red list for travel, as it battles a devastating rise in infections and a new variant of coronavirus that has spread to other countries including the UK.

Ths FTSE 100 is now down 77 points at 6922, a 1.1% drop, to a near one-week low.

AJ Bell investment director Russ Mould says:

“Investors seem to be struggling to make up their minds on where we are with the Covid-19 pandemic, unsurprisingly as this is a global picture with plenty of moving parts.

“The markets are bouncing from reopening optimism to concerns over mounting infections in parts of the world as the rollout of vaccines proves patchy.

Our main Covid-19 liveblog reports that India has recorded 1.59m cases in the last week alone -- with “record daily case numbers overwhelming already stretched hospitals and medical supplies”.

ING Developed Markets Economist James Smith has dug into the ONS’s data, and found more signs that the labour market is turning a corner:

The UK jobs market has proved fairly resilient through the latest lockdowns.

The latest unemployment rate covering the three-month period to February dipped to 4.9% - and new weekly data suggests it has gone as low as 4.6% during that time. More timely payroll data dipped back slightly in March but also suggests that – outside of the hard-hit consumer services sector – other parts of the jobs market are beginning to turn a corner.

Nevertheless, like most economists, we expect the unemployment rate to rise this year. A combination of the end of the furlough scheme, and to a lesser extent a potential increase in inbound UK migration later this year (partly reversing last year’s population fall) are both likely to trigger a temporary spike in the jobless rate to 6-6.5%.

Cyrille Lenoël, senior UK economist at NIESR, points out that employment rose month-on-month in February (and in January, although because it fell in December employment was slightly lower in December-February, quarter-on-quarter):

“The small rise in employment recorded in February during a period of national lockdown, is proof of the increased resilience of the UK economy to lockdowns.

The improved optimism that the worst of the pandemic may be over should be tempered by the fact that employers generally wait until the end of a lockdown period to reassess their business plans and we may still see a rise in redundancies later on if business activity doesn’t recover quickly to pre-pandemic levels.”

The jump in vacancies last month is an encouraging sign that employment levels will rise again once the lockdown is lifted, says Josie Dent, managing economist at the CEBR:

Single-month figures suggest that job vacancies began to grow again in March 2021, rising from 562,000 in February to 650,000.

This 16% increase was likely in anticipation of lockdown restrictions lifting. Last month’s rise in vacancies came after a 3% contraction in February, and takes the number of vacancies to its highest level since March 2020.

The biggest rises were seen in professional services, construction and hospitality. The hospitality industry in particular will have been recruiting in the hopes of a large resurgence in demand as outdoor venues were permitted to open on 12th April. Despite the fall in March payrolls, this increase in vacancy levels suggests that employment levels will rise again as social distancing is eased.

Tej Parikh, chief economist at the Institute of Directors, says the UK jobs market seems to be ‘turning a corner’, partly thanks to the furlough scheme:

“While the labour market continues to battle with the pandemic, there are signs it is turning a corner.

“The Job Retention Scheme is doing a lot of heavy lifting and is helping to keep a lid on jobs losses. Over 2021 the unemployment rate will creep upward as firms tend to weak balance sheets and furlough support ends in September. Nonetheless, the green shoots of a recovery in the jobs market are emerging.

And on vacancies, Parikh predicts there will be “significant growth in new positions over the spring and summer”, barring a return to tighter restrictions.

As more of the economy reopens over the coming months, businesses will look to take on more staff to meet pent-up demand.

Encouragingly, the number of vacancies jumped last month, as companies prepared to reopen from the lockdown.

The Office for National Statistics says that vacancies jumped by 16% month-on-month in March alone, compared with February.

Its single-month vacancy estimates show there were 650,000 vacancies last month, up from 562,000 in February, suggesting a pick-up in hiring ahead of the easing of Covid-19 restrictions.

That’s a more positive picture than in the quarterly data, which showed a rather smaller improvement (which we covered earlier), due to the drop in vacancies earlier in the lockdown.

[Although payroll numbers did fall in March too, of course, so the picture is still mixed].

The ONS adds:

The online job advert estimates estimates also provide an early insight into a possible strengthening of vacancies in March and into the first two weeks of April 2021.

According to the KPMG and REC, UK Report on Jobs published in April 2021, the number of permanent and temporary vacancies grew rapidly in March 2021 compared with February 2021. Demand for permanent workers rose at the quickest rate in six years, reflecting the anticipated easing of lockdown restrictions.

Joanne Frew, head of employment at legal business DWF, says there are reasons for cautious optimism, with the unemployment rate down to 4.9% in December-February and the redundancy rate slowing.

“There are some further positive signs, with the ONS reporting a marked rise in job vacancies in March 2021, coinciding with the lifting of restrictions. With the vaccination programme on target and producing good levels of protection against COVID-19 and businesses working diligently to re-open, we can expect to see the labour market figures remain steady and continue to improve in the short to medium term.

The continued success of the vaccination programme will prove critical for the UK job market in advance of the furlough scheme expiring in September. Although ONS describes the labour market as “subdued”, these figures give cause to be cautiously optimistic and there is certainly an element of anticipation as we watch the government’s four-point plan unfold.”

Britain’s competition regulator is worried the £6.8bn takeover of Asda by the billionaire Issa brothers and private equity group TDR Capital could push up fuel prices for motorists in parts of the UK.

The Competition and Markets Authority says it has concerns about the takeover of the supermarket chain. That’s because Mohsin and Zuber Issa and TDR also own EG Group, which operates 395 petrol stations in the UK, while Asda owns 323.

Many of Asda’s and EG’s petrol stations are located in the same parts of the UK, the CM says.

Thus, the deal raises local competition concerns about supply of road fuel in 36 areas across the UK and the supply of automatic liquified petroleum gas in another area.

The CMA has given the buyers five working days to provide legally binding proposals to address this, and avoid an in-depth investigation.

Joel Bamford, Senior Director of Mergers, said:

Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump. These are two key players in the market, and it’s important that we thoroughly analyse the deal to make sure that people don’t end up paying over the odds.

Right now, we’re concerned the merger could lead to higher prices for motorists in certain parts of the UK. However, if the companies can provide a clear-cut solution to address our concerns, we won’t carry out an in-depth Phase 2 investigation.

It’s a busy time for EG Group - on Sunday, it announced the purchase of healthy fast food chain Leon for £100m, as part of a strategy to turn their petrol stations into mini shopping centres.

Shares in UK-listed tobacco giants are sliding this morning, following a report that the US government is considering whether to cap nicotine levels in cigarettes.

According to the Wall Street Journal, the Biden administration is considering requiring tobacco companies to lower the nicotine in all cigarettes sold in the U.S. to levels at which they are no longer addictive.

The move could help Americans to quit, or encourage them to move onto less harmful alternatives.

The Journal adds that the White House is also pondering a ban on menthol cigarettes - to curb young people getting the habit:

Administration officials are considering the policy as they approach a deadline for declaring the administration’s intentions on another tobacco question: whether or not to ban menthol cigarettes.

The Food and Drug Administration must respond in court by April 29 to a citizens’ petition to ban menthols by disclosing whether the agency intends to pursue such a policy. The Biden administration is weighing whether to move forward on a menthol ban or a nicotine reduction in all cigarettes—or both, the people familiar with the matter said.

Shares in British American Tobacco have slumped by 6.5% this morning, with Imperial Brands down 6%, as traders anticipate that making cigarettes less addictive would hurt sales (as would a straight ban on menthol cigarettes, research shows).

This has pulled the FTSE 100 index back below the 7,000 point mark (which it hit last Friday, for the first time in over a year). It’s currently down 60 points, or 0.85%, at 6940 points.

Sterling hit the $1.40 mark against the US dollar for the first time in over a month this morning, amid signs that the UK economy is picking up.

The pound traded as high as $1.4009, its highest since early March, adding to strong gains yesterday when the US dollar was broadly weaker.

It’s dipped back below $1.40 since, though.

Neil Wilson of Markets.com says sterling is benefitting from “clear signs” that the UK is getting back to business, including today’s drop in unemployment and last week’s reopening of non-essential shops.

Retail footfall and consumer spending is picking up rapidly.

Of course, all this data is massively skewed by interventions – furlough masks the true employment situation, arbitrary reopening dates skew spending to the first few days and weeks as the pent-up demand is let out.

Nevertheless, these are encouraging signs.

Sam Cooper, vice president of market risk solutions at Silicon Valley Bank, adds:

“The improvement in the unemployment rate provides further evidence the UK economy is on the road to recovery.

The better than forecast data will add fuel to the recent GBPUSD rally, however expect a flurry of profit taking within the FX market while GBPUSD sits above the 1.40 handle as participants de-risk their sterling balances”

Primark reported record sales last week when non-essential retailers were allowed to reopen in England and Wales, with shoppers eager to buy spring and summer clothes, as well as stay-at-home staples.

Associated British Foods, which owns the clothing and homewares retailer, said more than half the stores broke their own sales records, as many of them offered extended opening hours.

Large queues formed outside some shops before 7am on 12 April, following a three-month closure due to the latest coronavirus lockdown.

The retailer set out the cost of the pandemic, saying it had taken a £3bn hit to sales and lost £1bn of profit in the past 12 months, but that all of its 65,000 jobs globally were saved thanks to job retention schemes in the UK and Europe.

Britain’s unions say the government must do more to help people back into work, and provide more support for the unemployed.

Particularly younger people (as under-25s suffered over half the job losses in the last year).

TUC General Secretary Frances O’Grady said:

“Now that Covid-19 restrictions are easing we need urgent action to support the recovery.

“Young workers are bearing the brunt of this pandemic. Many of them working in badly-hit industries like retail, hospitality and the arts have lost their jobs and are at risk of long-term unemployment.

“Ministers must reboot the kickstart scheme and create good new jobs in green transport, infrastructure and social care. And boost universal credit so that people who have lost their jobs are not plunged into poverty.”

On universal credit, the government extended the £20-per-week increase by six months in March’s budget, to the end of September, as part of its latest support package.

But alarmingly, a new study has found that around 500,000 people in the UK chose not to claim universal credit, even though they most likely would have been entitled to it.

The research, from the Welfare at a Social Distance project, found that 55,000 did not apply for the scheme because they were worried about a perceived stigma around benefits (fearing they could be seen as “dole scroungers”, “freeloaders” or benefits tourists, even though they were probably entitled to these benefits.).

Others thought the system was too complicated, felt they didn’t need the money, or didn’t realise they were eligible.

Our social policy editor Patrick Butler has the details:

Researchers said government could help change public perceptions of benefits by treating claimants with dignity and ensuring that the Department for Work and Pensions and ministers spoke respectfully about them.

Ben Baumberg Geiger, lead author of the report and a senior lecturer at the University of Kent, said: “Some of these people say they don’t need benefits – but others don’t claim because they don’t understand that they are eligible, hope that things will get better soon, or are put off by the perceived ‘hassle’ or stigma of claiming.”

The British Chambers of Commerce’s head of economics, Suren Thiru, warns that the long-term damage caused by the pandemic means the government must provide more support, once the furlough scheme ends.

In particular, young people will need help, even once the economy is recovering.

“The latest data confirms that the UK labour market remains subdued. While there was a marginal fall in the unemployment rate, the squeeze on activity from ongoing restrictions helped drive a decline in payroll employment in March.

“Unemployment remains on course to peak towards the end of 2021, once the furlough scheme expires and those who stopped job hunting during the pandemic look to return to the workforce as restrictions ease.

“Although the furlough scheme will limit the peak in job losses, the longer-term structural unemployment caused by Covid-19, particularly among young people, may mean that the road back to pre-pandemic levels lags behind the wider economic recovery.

“Further action will be needed to support the labour market when the furlough scheme ends, including supporting businesses to recruit and retain staff through a temporary cut in employer national insurance contributions.”

Minister for Employment Mims Davies MP says:

“Another drop in unemployment, vacancies on the rise, and over half a million people joining payrolls in the last month is welcome news as we continue on our roadmap to recovery with key sectors of our economy reopening.

“This is still a challenging time, but right across the country our Plan for Jobs is helping people of all ages to get back on their feet and giving employers the confidence to recruit as we push to build back better.”

Hang on, though, I hear you cry. If so many people have joined payrolls, why is our headline saying they fell?

Well....today’s labour market data does indeed show a inflow of 613,334 people onto payrolls in March, meaning they found a job - great news at any time, especially in the pandemic.

But there was also a larger outflow of 669,449 people leaving payrolls in March. That gave us the net fall of over 56,000 jobs last month.

Our economics correspondent Richard Partington explains why net figures give a better picture:

The number of vacancies at UK firms has risen slightly, but remains much lower than before the pandemic.

In January 2021 to March 2021, there were an estimated 607,000 job opportunities at UK businesses.

That’s up from around 589,000 at the end of 2020, but 178,000 (or 22.7%) fewer than the estimated 785,000 vacancies in March 2020 (just before the first lockdown).

The ONS explains:

The increase in vacancies over the latest quarter was 17,000, which is a six-month consecutive slowdown in the quarterly figures from the 165,000 increase seen in September 2020.

Arts, entertainment and recreation, and accommodation and food services continue to be the worst affected, as they are most impacted by the current restrictions.

• vacancies in arts, entertainment and recreation down 78.9% (18,000) from a year ago and 54.7% from the previous quarter; vacancies in accommodation and food services are down 70.3% (59,000) from a year ago and 13.2% from the previous quarter.

Small companies also reined in their hiring over the last quarter:

• The slowing down in the rate of recovery for job vacancies to March 2021 is more evident among smaller companies; businesses employing one to nine employees had 21.9% fewer vacancies in January 2021 to March 2021 compared with a quarter ago, and is the only size band displaying a fall on the quarter.

Around 813,000 workers have been cut from company payrolls in the last 12 months, as the pandemic has hit the jobs market hard.

That’s based on company payroll data from tax office HMRC, released with the ONS this morning.

And worryingly, it shows that 56,000 workers were cut from company payrolls in March alone. That’s the first monthly drop since last November.

The ONS explains:

Early estimates for March 2021 indicate that there were 28.2 million payrolled employees a fall of 2.8% compared with the same period of the previous year and a decline of 813,000 people over the 12-month period.

Compared with the previous month, the number of payrolled employees decreased by 0.2% in March 2021 – equivalent to 56,000 people.

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

The UK jobless rate has fallen for the second month in a row, but more workers have left company payrolls in March as the pandemic continues to grip the economy.

New figures from the Office for National Statistics show that the UK’s headline rate of unemployment fell to 4.9% in the three months to February -- a period in which the country entered its latest lockdown.

That’s down from 5% a month ago, and also lower than the previous quarter -- the first quarterly decrease since October to December 2019.

The ONS says that the jobs market appears to have been ‘broadly stable’ in recent months, a sign that initiative such as the furlough scheme have prevented a larger surge in job losses.

But the report also shows the damage caused by Covid-19: the economic inactivity rate increased (meaning more people stopped looking for work), the employment rate continued to fall.

Total hours worked fell too, as some companies were forced to close their doors again to comply with coronavirus restrictions.

And worryingly, the number of employees on company payrolls fell by 56,000 between February and March, the ONS says, reversing a recent improvement.

Her’s the details:

• The UK employment rate was estimated at 75.1%, 1.4 percentage points lower than a year earlier and 0.1 percentage points lower than the previous quarter.
  
  
• The UK unemployment rate was estimated at 4.9%, 0.9 percentage points higher than a year earlier but 0.1 percentage points lower than the previous quarter.
  
  
• The UK economic inactivity rate was estimated at 20.9%, 0.7 percentage points higher than a year earlier and 0.2 percentage points higher than the previous quarter.
  
  
• The total number of weekly hours worked was 959.9 million, down 92.3 million hours on the same period the previous year and down 20.1 million hours compared with the previous quarter

Reaction to follow...

Also coming up today

The markets are a little subdued, after US stocks dropped back from their latest record highs last night.

Japan’s Nikkei has dropped almost 2%, while commodity prices are being pushed up by the weaker US dollar. Cryptocurrencies are also softer, after bitcoin posted its biggest fall in a month over the weekend.

Michael Hewson of CMC Markets says:

European stocks started the week in a subdued fashion, with the FTSE100 only just managing to close above the 7,000 level, while the DAX also slipped back from its record highs of last week.

US markets also finished the day on the back foot, weighed down largely by weakness in tech stocks, which may well have been prompted by a large fall in Bitcoin over the weekend.

Despite yesterday’s modest weakness, sentiment by and large still remains positive, with most discussion/outrage on social media more about the European Super League, than the big falls seen in bitcoin and Ethereum.