After a week dominated by worries about inflation, US consumer confidence has taken a hit.... but the markets seem less concerned tonight.

US consumers are increasingly worried about rising prices, according to the University of Michigan’s monthly gauge. It fell unexpectedly this month, with inflation expectations rising to the highest level in a decade.

US retail sales also missed expectations, unchanged month-on-month, although economists took comfort in March’s spending spree proving even larger than first estimated.

Manufacturing output growth at American factories slowed too, with carmakers suffering from the shortage of semiconductors. And the situation could last for

But markets bounced higher, with the S&P 500 index now up 1.4% in New York and the Dow up 1%.

European markets rallied too, with the FTSE 100 climbing 80 point by the close, as City traders snapped up bargains after a volatile week.

Commodity prices eased back from their recent record highs, with copper dipping back and iron ore slumping 9% in China (where steel producers in Tangshan were given a stern warning not to collude, hoard materials, or drive up prices).

In the UK, the Serious Fraud Office launched an investigation into the financing of Sanjeev Gupta’s metals empire, including its links to Greensill Capital.

The SFO’s move immediately caused the collapse of a rescue deal for Liberty Steel and raised fears over thousands of British jobs.

San Francisco-based investor White Oak Global Advisers on Friday pulled out of a deal to provide finance to GFG. It had last week agreed terms to lend to operations in both the UK and Australia, but both were subject to due diligence checks.

Fashion label Amanda Wakeley, is entering administration after failing to find a buyer following the economic impact of the Covid pandemic.

Amazon has announced it will take on 10,000 more staff in the UK, and also spend £10m on staff training, a move welcomed by ministers.

A campaign has been launched to encourage large firms to pay small suppliers on time, and help them recover from the pandemic.

And... the City watchdog has laid out new plans to force financial companies to put the interests of their customers first (!), which could force them to change their cultures and tackle problem such as the “loyalty penalty”.

Goodnight! GW

In other news today, a campaign has been launched to encourage the UK’s largest companies to fast-track payments to small suppliers

Called the Good Business Pays campaign, it is encouraging major firms to give smaller organisations a helping hand out of the pandemic, by paying swiftly.

The campaign is backed by the Federation of Small Businesses, the CBI, manufacturers group Make UK, the BCC, IoD and the Creative Industries Federation.

Mastercard are the first firm to sign up.

According to the campaign, 50,000 small businesses go out each year due to cash flow problems. So, with the economy reopening, big firms can do their bit for the recovery by paying suppliers on time.

FSB National Chairman Mike Cherry said:

“Late payments have long been a scourge, causing financial hardship for smaller suppliers and contractors, and inhibiting their ability to grow. There have been some important steps along the way to improve this, including development of the role of Small Business Commissioner.

But more needs to be done to ensure small businesses and the self-employed are paid on time for work done and products provided, and that includes a cultural shift in bigger businesses towards faster payment practices. Good Business Pays is an excellent opportunity to create both pressure and a positive argument for change.”

Good Business Pays is also launching a new online tool that shows how long it takes for companies to pay their invoices. That’ll let small businesses tell which potential customers are speedy payers, and which are laggards who might mess up the cash flow....

After a volatile week, Britain’s blue-chip stock index has ended the day with solid gains.

The FTSE 100 has closed 80 points higher at 7043 points, up 1.15%.

Most shares rallied, with investors snaffling up some of the stocks that dropped earlier this week.

Fashion chain Burberry (+4.4%) finished as the top riser, as it bounced back from its losses yesterday. Hotel chains Whitbread (+3.85%) and InterContinental (+3.3%) also rallied, suggesting optimism about the recovery.

Accountancy software group Sage gained 3.8% after reporting that its shift to cloud computing services was on track.

Manufacturers also had a good day, with weapons maker BAE Systems (+3.5%), jet engine maker Rolls-Royce (+3.2%), and engineering group Melrose (+3.2%) in the risers.

But mining companies still lagged, following the drop in commodity prices such as iron ore and copper today. Rio Tinto (-2.7%) and Antofagasta (-2.2%) led the nine fallers.

This still leaves the FTSE 100 down around 1.2% for the week, but still quite a recovery from its tumble on Tuesday, and wobble on Thursday.

This tweet from Greg Daco of Oxford Economics show how US consumers are more worried about inflation:

Reminder: US CPI surged to a 13-year high of +4.2% last month, so consumers are already seeing higher prices.

Economist Julian Jessop thinks the Federal Reserve should be concerned:

Kathy Jones, chief fixed income strategist at Charles Schwab, argues it’s too early to tell if inflation expectations are becoming entrenched.

Just in. US consumer confidence has fallen unexpectedly this month, as Americans grow more concerned about rising prices.

The University of Michigan’s Index of Consumer Sentiment has dropped to 82.8 this month, down from 88.3 in April, preliminary data shows. Economists had expected it to rise, to 90.4.

Chief economist Richard Curtin, who directs the survey, says inflation expectations jumped this month:

Consumer confidence in early May tumbled due to higher inflation--the highest expected year-ahead inflation rate as well as the highest long term inflation rate in the past decade.

Expectations for inflation over the next year rose to 4.6% in the month, the highest in a decade, Friday’s data show.

Long-term inflation expectations also rose, to 3.1% -- above the Federal Reserve’s target of 2%.

Rising inflation also meant that real income expectations were the weakest in five years, Curtin adds:

The average of net price mentions for buying conditions for homes, vehicles, and household durables were more negative than any time since the end of the last inflationary era in 1980.

Curtin warns that the US could see an ‘inflationary psychology’, as pent-up demand and record savings will support consumer spending... unless the Federal Reserve was to change its stance.

Shifting policy language and even minor rate increases could douse inflationary psychology. Indeed, such a policy would be consistent with consumer expectations since two-thirds expect a rate hike in the year ahead.

It should be no surprise that consumers anticipate a booming economy over the next year or so, including rapid job gains as well as increases in the inflation rate and interest rates. Indeed, consumers think these economic prospects are the natural result of stimulating an economic boom from last year’s shutdown.

Wall Street has opened higher, as New York traders try to end a volatile week on an upbeat note.

Here’s the position:

• Dow: up 260 points or 0.75% at 34,282 points
• S&P 500: up 37 points or 0.9% at 4,149 points
• Nasdaq: up 121 points or 0.9% at 13,246 points

Nearly every stock is higher on the Dow, led by Chevron (+2%) following the pick-up in the oil price today.

Goldman Sachs (+1.8%), Microsoft (+1.6%) and Boeing (+1.5%) are also in the top risers.

But Walt Disney are falling, down nearly 5% after reporting fewer new subscribers to its Disney+ streaming service than expected last night.

US industrial output rose by 0.7% in April, below forecasts of a 1% rise, new figures show.

The narrower measure of manufacturing output rose 0.4%, but car production fell -- as US auto firms struggled to get hold of semiconductors amid the global shortage.

The Federal Reserve, which compiles the data, says the index for motor vehicles and parts fell 4.3% in April:

Automotive products, transit equipment, and consumer parts all recorded losses, as shortages of semiconductors held back motor vehicle assemblies.

Among the other market groups, chemical materials and consumer energy products posted strong gains of 6.7% and 3.8%, respectively.

The Fed has also revised its data from earlier this year, to show a deeper plunge in industrial output during the winter storms in February (-3.5%, down from -2.6%), and then a faster rebound in March (+2.4%, up from 1.4%).

An important contributor to the gain in factory output was the return to operation of plants that were damaged by February’s severe weather in the south central region of the country and had remained offline in March.

The weather-induced drop in total industrial production in February and the subsequent rebound in March are now estimated to have been larger than reported last month.

Just in: US retail sales were unchanged in April, after a surge of spending in March.

That’s below than the 1% monthly growth which had been expected, as the US economy picked up speed.

However March’s reading has been revised even higher, from 9.7% to 10.7%, showing very strong spending that month.

On an annual basis, retail spending was 51.2% higher than in April 2020, when the US went into its Covid-19 lockdown during the first wave of the virus.

If you exclude motor vehicles and parts, retail sales fell 0.8% month-on-month in April -- but again, were much higher than a year ago (up 40%).

The minutes of the European Central Bank’s last monetary policy meeting are out, and show that policymakers expect a ‘firm’ rebound in growth later this year, thanks to Covid-19 vaccines.

At the meeting (on 21st-22nd April), the ECB’s governing council agreed that:

While the recovery in global demand and the sizeable fiscal stimulus were supporting global and euro area activity, the near-term economic outlook remained clouded by uncertainty about the resurgence of the pandemic and the roll-out of vaccination campaigns.

Looking ahead, progress with vaccination campaigns and the envisaged gradual relaxation of containment measures underpinned the expectation of a firm rebound in economic activity in the course of 2021.

The minutes also flag that some eurozone countries have been hit harder by the pandemic than others, and will take longer to recover [particularly those more reliant on services, such as tourism].

While in some countries activity was expected to return to pre-pandemic levels by the end of 2021, in others – especially those in which the services sector had been most affected – it was expected still to be below the pre-pandemic level at the end of 2022.

The minutes also show a ‘range of views’ about how consumers will behave once lockdowns are lifted, which will be a crucial factor when setting monetary policy.

Some governing council members predict a surge in spending, while others reckon people will be more cautious.

The minutes say:

It was suggested that forced savings might unwind more dynamically than expected. A one-off boost to consumption later in the year was considered a possibility, based on previous observations, when higher consumption had followed lower infection rates and an easing of restrictions last summer. Still, it was also possible that the boost to consumption from pent-up demand might unfold more gradually. At the same time, it was argued that consumers might prove to be more cautious in their spending this year.

Against this background, it was generally felt that risks to activity had become more balanced over the medium-term horizon, with a view also being expressed that they were now marginally tilted to the upside.

At the meeting, the ECB decided to maintain its current stimulus, and vowed to keep buying bonds at the accelerated pace it began in March.

The minutes add that there was “broad agreement” to retain the risk assessment, and then revisit it “more fully” in June, when the central bank will have new economic forecasts to chew through.

The big question for the ECB is when it should dial back (or ‘taper’) the speed of its €1.85trn pandemic stimulus package, having speeded up in March.

In a hint that June’s meeting could be a belter, the minutes say:

Members recalled that the monetary policy meeting in June would provide the next opportunity to conduct a thorough assessment of financing conditions and the inflation outlook, at which time the assessment would be informed by the new Eurosystem staff macroeconomic projections.

ING’s Carsten Brzeski predicts that the debate on tapering will intensify, with some hawkish ECB members keen to slow down, and dovish colleagues eager not to tighten too fast.

UK accountancy software firm Sage is the top FTSE 100 riser, up 3.3% so far, after beating forecasts this morning, with a 4.4% rise in organic recurring revenue.

Sage also reassured the City by reporting that its move towards cloud computing was on track, helping it win customers.

Revenues from ‘native solutions’ (apps that live in the cloud) were up 36% in the last six months (to the end of March) as it wins new customers, and migrates existing ones.

Sage also lifted its revenue guidance:

Following a strong performance in the first half, we now expect organic recurring revenue growth for FY21 to be towards the top end of our guidance range of 3% to 5%.

However, on a statutory basis, revenues fell 4% in the last six months while pretax profits fell over 30% to £190m, with Sage’s profit margins being squeezed by extra investment in the move to cloud.

Sage, based in Newcastle upon Tyne, was created back in 1981, selling accountancy, payroll and other enterprise software.

AJ Bell investment director Russ Mould explains why its move to the cloud is a challenge:

Historically Sage was a ‘steady-eddy’ business built on a license sales model, where most of the contracted cash came up front with high margin servicing and maintenance income rolling in over the term of the contract.

“In recent times its market has been disrupted by cloud computing as clients look to access applications on any internet-enabled device and this has led to volatility in the share price.

“Even if users stick with Sage’s cloud offering, the shift away from licences typically diminishes upfront revenue and cash flow, and requires significant investment.

“This in turn drags down growth rates in the near term even if it produces a typically reliable subscriptions-based income stream over time.

“Plus Sage operates in a competitive marketplace and has plenty of rivals who were ‘born in the cloud’ and therefore don’t face the same painful metamorphosis it does.

“To convince the market it will eventually emerge as a beautiful butterfly of a business, the company needs to show it can improve profitability while continuing to grow its subscription revenue.”

GFG say they will ‘co-operate’ fully with the Serious Fraud Office’s investigation.

It also says its factories are still working around the world, and that it is ‘making progress’ in its search for new financial backing -- following the collapse of Greensill.

A GFG Alliance spokesperson said:

“GFG Alliance notes the UK Serious Fraud Office (SFO)‘s announcement that it has opened an investigation into GFG Alliance. GFG Alliance will co-operate fully with the investigation. As these matters are the subject of an SFO investigation we cannot make any further comment.

GFG Alliance continues to serve its customers around the world and is making progress in the refinancing of its operations which are benefitting from the operational improvements it has made and the very strong steel, aluminium and iron ore markets.”

The Serious Fraud Office’s investigation into the financing of Sanjeev Gupta’s metals empire by Greensill Capital will heighten concerns over the future of thousands of UK jobs at Liberty Steel.

My colleague Jasper Jolly explains:

The UK’s anti-corruption agency said it suspected fraud, fraudulent trading and money laundering related to the financing of Gupta Family Group (GFG) Alliance, the loose grouping of steel and metals trading companies controlled by Gupta.

It includes its financing arrangements with Greensill Capital UK Ltd, the supply chain finance provider set up by the banker Lex Greensill. Previous court representations have suggested Greensill lent Gupta’s companies as much as $5bn (£3.6bn).

Since Greensill collapsed in March, Gupta has been scrambling to secure finance for various parts of the group of companies. Last week GFG was understood to be nearing a deal for a refinancing of Liberty Steel UK, which employs about 3,000 people.

Here’s the full story:

The UK’s Serious Fraud Office has announced it is investigating Sanjeev Gupta’s GFG Alliance and its financing arrangements with Greensill Capital.

GFG Alliance owns Liberty Steel, which employs 3,000 steel workers in the UK. It employs 35,000 people at metalworks across the world.

It was one of the largest borrowers from Greensill, the supply-chain finance company which collapsed earlier this year.

In a statement, the SFO says:

The SFO is investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital UK Ltd.

As this is a live investigation, the SFO can provide no further comment.

Pressure has been growing on the SFO to investigate GFG’s practices, and the way in which supply-chain financing (or ‘reverse factoring’) has been used to raise money from invoices.

On Tuesday, the UK’s financial regulator said it was “formally investigating” the circumstances leading to Greensill’s collapse.

Nikhil Rathi, the Financial Conduct Authority (FCA) chief executive, said some of the allegations facing Greensill were “potentially criminal in nature”.

In a letter to the Treasury Committee, he said:

“We are also cooperating with counterparts in other UK enforcement and regulatory agencies, as well as authorities in a number of overseas jurisdictions.

Jobs news: Amazon is create 10,000 new permanent jobs in the United Kingdom this year, taking its UK workforce over 55,000.

The new roles are split across its corporate offices, Amazon Web Services (AWS) and in its operations arm, as it expands its delivery network.

Amazon says it is opening a new ‘parcel receive centre’ in Doncaster, Yorkshire, along with new ‘fulfilment centres’ (warehouses where staff assemble customer orders) in Dartford, in Kent, Gateshead, Tyne and Wear, and Swindon, Wiltshire, each creating over 1,300 jobs.

It’s also hiring 700 more staff for a new fulfilment centre in Hinckley, East Midlands.

This will create “thousands of new permanent roles on teams including engineering, HR and IT, health and safety, finance, and those that pick, pack and ship customer orders”, the company says.

It’s also creating corporate roles in offices in London, Manchester, Edinburgh, and Cambridge. Amazon says it will cover a range of areas, including fashion, digital marketing, engineering, video production, software development, cloud computing, AI and machine learning.

Business Secretary Kwasi Kwarteng has welcomed the move:

“Amazon’s announcement today is fantastic news and a huge vote of confidence in the British economy, helping us deliver on our commitment to level up across the UK with a whopping 10,000 new permanent jobs.

As we build back better from the pandemic, this is a prime investment in our retail sector.

Amazon’s UK sales soared by 51% last year during the pandemic, to a record $26.5bn (£19.4bn), as the lockdown drove a surge in demand for online shopping as high streets shut down.

But tax campaigners continue to probe the company’s corporate set up, as our wealth correspondent Rupert Neate explained last week:

Fresh questions have been raised over Amazon’s tax planning after its latest corporate filings in Luxembourg revealed that the company collected record sales income of €44bn (£38bn) in Europe last year but did not have to pay any corporation tax to the Grand Duchy.

Accounts for Amazon EU Sarl, through which it sells products to hundreds of millions of households in the UK and across Europe, show that despite collecting record income, the Luxembourg unit made a €1.2bn loss and therefore paid no tax.

Copper prices are on track for their first weekly loss in a month, Reuters says.

Having hit record highs on Monday, the copper price has dipped back, down 1.8% earlier this morning, and around 2.5% down for the week.

It’s still extremely high, with three-month copper on the London Metal Exchange trading over $10,100 per tonne in London (levels last seen in the 2011 commodities boom).

But Reuters flags that worries of tightening credit could potentially cap demand:

“Supply will improve, while we note credit impulse data in the United States and China is easing, which will help demand taper off later this year and next,” said Fitch Solutions in a report.

“Metal prices will ease later in the year as the ongoing supply-demand mismatch eases.”

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

Inflation fears are easing today as commodity prices fall back from their recent peaks.

In China, iron ore futures have tumbled for the second day running, down over 9%, with steel prices also sliding on signs of a clampdown by Chinese authorities.

Prices dropped after officials in the city of Tangshan, a key steel producer, warned factories to maintain market order.

They warned that any factories engages in illegal acts -- such as collusion, manipulating prices, fabricating information, hoarding or driving up prices -- would be “strictly investigated and dealt with in accordance with laws and regulations.”

If the circumstances are serious, it shall be ordered to suspend business for rectification, or its business license shall be revoked and publicly exposed.

This knocked steel prices by around 6%, with traders also anticipating weaker demand for iron ore and coke.

Other commodity prices are also cooling, with copper dipping back from its record highs.

Oil is also weaker, with crude prices dropping the most in a month yesterday. Brent crude is back below $67 per barrel, for the first time since the start of May.

So after a turbulent week dominated by worries about inflation, the markets seem to be finishing on a calmer note today.

Wall Street rallied last night, and European markets are expected to make gains this morning.

Yesterday, Bank of England governor Andrew Bailey tried to calm anxiety about rising prices, after US inflation hit a 13-year high last month.

“So the really big question is, is [higher inflation] going to persist or not? Our view is that on the basis of what we’re seeing so far, we don’t think it is.”

US central bank policymakers have also been insisting that they’re in no hurry to raise interest rates.

As Jim Reid of Deutsche Bank sums up:

Richmond Fed President Barkin said that he didn’t see persistent recurring inflation as likely, while later on Fed Reserve governor Waller joined the chorus saying that the rise in prices is “temporary”.

This comes even as he forecasts inflation remaining above the 2% target through 2022, though he acknowledged that persistent 4% monthly increase would be “very concerning”. Waller wants to observe a few months of economic data before calling any point an outlier or adjusting any policy stances.

The US economy will be under the microscope again later, with new data on retail sales, factory output and consumer sentiment.

The agenda

• 12.30pm BST: ECB monetary policy meeting accounts published
• 1.30pm BST: US retail sales for April - expected to rise by 1%, down from 9.8% in March
• 2.15pm BST: US industrial production data for April - expected to rise by 1%, down from 1.4% in March
• 3pm BST: University of Michigan consumer sentiment index for May - expected to increase to 90.4, from 88.3