Stock markets tumbled in Europe and Asia, with UK and European indices losing between 1.1% (FTSE 100) and 1.7% (Italy’s FTSE MiB). On Wall Street, the Dow Jones gained 0.3% while the S&P 500 rose 0.5% and the Nasdaq added 0.7%.

The parent company of troubled Thames Water has told its creditors it has defaulted on its debt, raising the prospect that the company could collapse or face a significant restructure.

Kemble Water has missed an interest payment that was due on Tuesday and said it was requesting its lenders and bondholders to take no creditor action so as to “provide a stable platform while all options are explored” with its stakeholders.

Britain’s biggest water company said last week its shareholders had refused to pay £500m promised to stabilise its finances, heightening concerns over its survival.

UK house prices fell in March for the first time in six months as more costly mortgage deals and continued uncertainty about when the Bank of England would start cutting interest rates hit the property market.

House prices fell by 1%, or £2,908, in March compared with February, according to Halifax’s house price index. The average property now costs £288,430. Compared with the same month last year, property prices were up 0.3%.

Other main stories:

The US workforce added 303,000 jobs last month, far more than expected and the 39th straight month of job gains in the US. The unemployment rate dipped to 3.8%.

Joe Biden hailed the report as “a milestone in America’s comeback”.

The shorts worn by Muhammad Ali during his famous “Thrilla in Manila” fight in 1975 are expected to smash auction records at Sotheby’s in New York next week.

The white satin Everlast trunks, which Ali signed with a black Sharpie pen, have attracted bids of $3.8m (£3m) in an online auction that closes on 12 April. That puts the trunks on course to become the most expensive item of Ali memorabilia sold at auction. Experts at Sotheby’s said they expected bids to increase to as much as $6m.

Rail passengers across England will face significant disruption on Friday as train drivers at five operating companies carry out industrial action.

The 24-hour strike will be the first of three days of rolling strike action being taken by the train drivers’ union Aslef, with services on Avanti West Coast, CrossCountry, East Midlands Railway, London Northwestern Railway and West Midlands Railway all affected.

Starbucks paid a “derisorily low” £7.2m in UK corporation tax last year despite making a gross profit of £149m on sales of £548m in Britain.

Its UK division, which has faced years of criticism for paying very little to the Treasury, paid £40.4m in royalty and licensing payments to a parent company, more than five times the amount it paid in tax to HM Revenue and Customs.

McDonald’s is buying its 30-year-old Israel franchise from Alonyal Ltd, taking back ownership of 225 restaurants in the country that employs more than 5,000 people, the companies said on Thursday.

The US fast-food chain has been subject to boycotts and protests since Alonyal announced shortly after the 7 October attack by Palestinian Islamist group Hamas that it would be donating free meals to Israeli military.

McDonald’s is a global chain but its franchises are often owned locally and operate autonomously.

Many popular US bandage brands contain alarming levels of toxic PFAS “forever chemicals”, new research suggests, raising questions about the products’ safety.

Testing of 40 types of bandages made by companies such as Band-Aid, Curad, Walmart and CVS found 26 products, or 65%, contain alarming levels of a marker of PFAS. The chemicals were detected in the adhesive flaps and in absorbent pads that press against wounds.

With thick black frames and hidden cameras, the glasses look designed for espionage or the metaverse but instead the eye-tracking headgear is being deployed to get inside shoppers’ heads as part of the drive to cut plastic packaging from the weekly food shop.

It is an unlikely scene. Hooked up with the glasses a shopper is being tailed around a Waitrose produce department by a researcher carrying a large tablet that displays live footage of them picking up banal things such as potatoes, apples and bananas.

The US economy created 303,000 new jobs in March, far more than expected, while the unemployment rate unexpectedly dipped to 3.8%.

Analysts had expected 200,000 new jobs, and the jobless rate to stay at 3.9%.

At the same time, growth in average hourly earnings slowed to 4.1% from 4.3%, according to the US Labor Department, in line with expectations.

The US drug giant Johnson & Johnson has agreed to buy Shockwave Medical for $13.1bn to broaden its portfolio of medical devices used in treating heart diseases.

The acquisition gives J&J access to a device that uses shockwaves to break down calcified plaque in heart vessels, similar to how kidney stones are treated.

The company is keen to build up its cardiac health business – it already spent $16.6bn to buy heart pump maker Abiomed two years ago, and $400m to buy another heart-centric device maker Laminar.

Thames Water’s parent company has sent a formal notice to bondholders telling them that it has defaulted on its debt, after missing an interest payment that was due on Tuesday.

This looks to be the start of a potentially messy restructuring at the owner of Britain’s largest water utility.

Kemble Water said it is requesting its lenders and noteholders to take no creditor action so as to “provide a stable platform while all options are explored” with its stakeholders. It sent a formal notice of default to holders of its £400m bonds due 2026.

Thames Water said last week its shareholders had refused to stump up £500m promised to stabilise its financial position, intensifying concerns over the utility’s survival.

Kemble is the ultimate parent of the Thames Water operating company, which has 16 million customers. The water company’s executives have said that Thames and its customers are insulated, should Kemble collapse.

Train drivers have been pictured picketing at rail stations across the country today, as the first day of rolling strikes by union Aslef has brought services on five major lines to a halt.

Today sees drivers working for Avanti West Coast, CrossCountry, East Midlands Railway, London Northwestern Railway and West Midlands Railway taking industrial action as part of their 20-month long dispute over pay.

All of the operating companies have confirmed that they will not be running any services on Friday, while some Saturday services could also be affected.

Drivers in Scotland and Wales are not on strike but Avanti’s cross-border rail services will be disrupted.

Saturday will see workers at Chiltern, GWR, LNER, Northern and TransPennine, take action, while Monday services on Greater Anglia, GTR’s Great Northern, Thameslink and Southern/Gatwick Express, Southeastern, South Western Railway and SWR Island Line will be disrupted by action.

In a video posted on its X feed, Aslef’s general secretary, Mick Whelan, said it was time for the government and employers to “come back to the table” and work with the union to resolve the long-running dispute.

Senior doctors in England have voted to accept an improved pay offer from the government.

The British Medical Association said today that 83% of senior doctors, also known as consultants, voted in favour of the offer, on a 62% turnout. They had rejected a previous offer in a narrow vote in January.

The BMA had recommended that they accept the new offer, which includes a 2.85% pay rise for those who have been senior doctors for four to seven years and changes to a doctors’ pay review body.

NHS nurses ended strike action last year after accepting a pay deal but a long-running pay dispute with junior doctors, who staged a five-day strike in February, remains unresolved.

Shell is now the only riser on the FTSE 100 index, despite its warning that it expects significantly lower results from its liquefied natural gas trading business in the first three months of this year, after an “exceptional” fourth quarter of 2023.

However in an update ahead of quarterly results on 2 May, Shell, the world’s largest oil and gas trader, also said its oil trading results are expected to be much higher than the last quarter of 2023. It also expects a smaller loss in its chemicals business, which has been under heavy pressure due to weak global demand.

Shell shares edged 0.1% higher, perhaps buoyed by the Brent crude oil price, which is closing in on $91 a barrel.

Britain’s construction sector returned to growth in March, ending a six-month period of decline.

A survey from S&P Global, the UK construction purchasing managers’ index (PMI), showed a slight increase in overall construction output last month. The index rose from 49.7 in February to 50.2 in March. Any reading above 50 indicates expansion.

Civil engineering was the best-performing area where output increased at a marginal pace. Firms cited increased work on infrastructure projects and resilient demand in the energy sector.

House building and commercial construction activity were both broadly unchanged in March. The stabilisation in residential work represented the best performance for this category since November 2022.

Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey said:

The near-term outlook for construction workloads appears increasingly favourable as order books improved again in March and to the greatest extent for just under one year. Construction companies generally commented on a broadbased rebound in tender opportunities, helped by easing borrowing costs and signs that UK economic conditions have started to recover in the first quarter of 2024.

Staff hiring was a weak spot for the construction sector in March amid lingering concerns about margin pressures and continued risk aversion among major clients. Construction firms often reported delays with replacing departing staff, which led to a decrease in total employment numbers for the third month in a row.

Supply chain pressures eased across the construction sector as subdued purchasing activity helped to alleviate strains on capacity. Improved supply conditions also led to a slowdown in the rate of cost inflation, which slipped to a three-month low in March.

US Treasury Secretary Janet Yellen said today that concerns are growing over the global economic fallout from China’s excess manufacturing capacity, as she started a four-day visit to China.

China is too big to just rely on exports for rapid growth and would benefit by reducing excess industrial capacity, which is putting pressure on other economies, Yellen told 40 representatives of the American Chamber of Commerce in Guangzhou, according to Reuters.

Yellen and other US officials are becoming increasingly concerned about China’s overproduction of electric vehicles, solar panels, chips and other goods that are flooding into other markets, as demand in China has slumped.

The US Treasury Secretary is expected to raise the issue in a series of meetings with Chinese officials this week. She said:

Overcapacity isn’t a new problem, but it has intensified, and we’re seeing emerging risks in new sectors.

She told Guangdong province governor Wang Weizhong that US companies and workers need a “level playing field”.

This includes the issue of China’s industrial capacity, which the United States and other countries are concerned can cause global spillovers.

Some trade experts see the increased US criticism as an initial step towards raising US tariffs on Chinese electric cars and clean energy goods to protect US industry. Yellen has not raised any threats of new trade barriers, but said during her visit to Guangzhou that she would not rule out more actions to protect the US economy from cut-price Chinese imports.

Yellen also said that a financial working group composed of officials from both countries had been working on measures to contain the financial risks from a potential bank collapse in either economy.

We’ve held technical exchanges between our sides, including an exercise on how we would jointly deal with the failure of a large bank in the US or in China.

Stock markets are sliding in Europe, following in Asia’s footsteps, amid escalating tensions in the Middle East and ahead of key US labour market data, while oil prices have risen slightly.

The FTSE 100 index is down almost 1% at 7,900, and has only three risers at the moment: artificial hips and knees maker Smith & Nephew, British Gas owner Centrica, and the oil giant Shell.

The German, French and Italian stock markets have lost more than 1%. In Asia, Japan’s Nikkei closed almost 2% lower while Hong Kong’s Hang Seng was little changed, and the South Korean market fell 1%.

Markets are concerned over a possible retaliatory attack after an Israeli strike on Damascus on Monday night that killed three top commanders in Iran’s al-Quds force and four other officers.

There were also cautious messages from US Federal Reserve officials yesterday about potential interest rate cuts, with Minneapolis Fed president Neel Kashkari saying that if inflation continues to stall (rather than slowing), there may be no rate cuts at all this year.

Brent crude, the global oil benchmark, is trading 0.2% higher at $90.84 a barrel, closing in on $91.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said:

The FTSE 100 has gone backwards on its last trading day of the week, as investors digest PMI data as well as a downbeat tone over in the US. The major indices all shed between 1.2-1.4% on Thursday, with broad based declines suggesting the malaise is a widespread mood problem, rather than a sector specific issue.

Investors are now looking ahead to today’s US job data which will highlight the strength of the labour market. The narrative around the potential for interest rate cuts has been slightly contradictory this week, so there’s a lot resting on this data to help steady the ship. A looser labour market could help back the argument that the economy is returning to more stable footing.

There is a fly in the ointment, in the form of the storming oil price. This is adding real inflationary concerns back into the market, and isn’t helped by the significant uncertainty that comes with geopolitical tensions.

Brent crude is close to $91 a barrel, as efforts to instigate peace in the Middle East have gone unrewarded. Ongoing reduced supply mandates from OPEC+ are also causing upset to the price. Strong US data has boosted demand expectations too. Fundamentally, oil prices are cyclical, with ups and downs always to be expected. However, the trajectory of the price has been particularly bumpy in recent years and it’s unclear when this will smooth out over the longer-term.

Britain’s biggest drugmaker AstraZeneca has received a boost, as its blockbuster cancer drug Imfinzi showed positive results as a treatment for aggressive lung cancer in a late-stage clinical trial.

The drug demonstrated a “statistically significant and clinically meaningful improvement” in both the overall survival of patients with limited-stage small cell lung cancer, and the survival of of patients without the disease progressing.

Small cell lung cancer is a highly aggressive form of cancer that typically recurs and progresses rapidly despite initial response to chemotherapy and radiotherapy, with only 15%-30% of these patients alive five years after diagnosis, AstraZeneca said.

Susan Galbraith, executive vice president of oncology research & development at the drugmaker, said:

These exciting results build on the transformative efficacy of Imfinzi in extensive-stage small cell lung cancer and demonstrate the potential to bring a curative-intent immunotherapy treatment to this earlier-stage setting of small cell lung cancer for the first time.

These data… underscore the pioneering role of Imfinzi in the treatment of early lung cancer following chemoradiotherapy.

After ramping up research spending and through a series of smart bets, AstraZeneca has built up a portfolio of cancer drugs that accounts for almost a quarter of the company’s annual revenues.

Imfinzi is already approved for another type of lung cancer as well as gallbladder and liver cancer. However, the drug suffered a setback in a trial in November aimed at expanding its use for another terminal lung cancer.

The firm is hoping that Imfinzi will become a treatment option for more than half of lung cancer patients by 2030.

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

House prices across the UK fell by 1% last month following five months of growth, according to Britain’s biggest mortgage lender.

A typical home now costs £288,430, around £2,900 less than last month, said Halifax, which is part of Lloyds Banking Group. The monthly drop, the first since September, came after a 0.3% gain in February.

Compared with a year earlier, prices rose 0.3%, compared to 1.6% last month.

A rival survey from Nationwide building society showed that the average UK house price fell by 0.2% month on month in March.

Kim Kinnaird, director of mortgages at Halifax, said:

That a monthly fall should occur following five consecutive months of growth is not entirely unexpected, particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022. Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs.

Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.

Financial markets have also become less optimistic about the degree and timing of Base Rate cuts, as core inflation proves stickier than generally expected. This has stalled the decline in mortgage rates that had helped to drive market activity around the turn of the year.

Markets are pricing in a potential first cut in interest rates by June, and a total of three quarter-point reductions by December.

The broader picture is that prices are up year-on-year, reflecting the opposing forces of an easing cost off living squeeze and relatively high interest rates, she said.

Kinnaird predicted that the housing market will remain subdued this year:

Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre-pandemic levels.

Looking ahead, that trend is likely to continue. Underlying demand is positive, as greater numbers of people buy homes, demonstrated by recent rises in mortgage approvals across the industry and underpinned by a strong labour market. And with rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work.

However the housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year.

Train drivers in England begin a three-day series of strikes today.

Rail passengers across England will face significant disruption as train drivers at five operating companies carry out industrial action.

The 24-hour strike will be the first of three days of rolling strike action being taken by the train drivers’ union Aslef, with services on Avanti West Coast, CrossCountry, East Midlands Railway, London Northwestern Railway and West Midlands Railway all affected.

The five companies have said they will not be running any services throughout Friday and warned that services on Saturday could also be affected.

At lunchtime, we’ll get the latest US unemployment figures.

The Agenda

• 1.30pm BST: US non-farm payrolls for March (forecast: 200,000)

• 1.30pm BST: US jobless rate for March (forecast: 3.9%)