E3: UK household finances weakest since 2011 amid Covid-19 lockdown – business live

Rolling live coverage of business, economics and financial markets as British economic prospects slump

Hopes for the future for British households also look to have been severely curtailed, if the job security reading in IHS Markit’s household finances index is anything to go by.

The reading fell off a cliff to by far its lowest since the survey began (although bear in mind that it was founded after 2008, when uncertainty during the financial crisis was at its highest).

The UK Household Finance Index is already showing wide-reaching financial consequences of the lockdown measures implemented in late March.

Around one-in-three UK households reported a decline in income from employment during April, which was by far the largest number since the survey began in 2009.

Nevertheless, we can still draw a small degree of positivity from the latest results, with overall measures of cash available to spend and household debt proving much more stable than workplace incomes. There was a slight pick-up in unsecured lending needs, while in some cases savings were depleted to meet immediate financing needs.

Limiting the adverse impact on UK household balance sheets will be crucial in the coming months so that when economic activity does recover, consumers are not stuck repaying debts and instead are able to boost discretionary spending to aid a strong recovery.

British household finances have reached their weakest point since November 2011, according to an index broadly followed by economists.

IHS Markit’s UK household finance index, which measures households’ overall perceptions of financial wellbeing, plummeted to a reading of 34.9 in April, with the biggest monthly drop since the survey was started in 2009, as the financial crisis raged.

Just out from @IHSMarkitPMI team: UK household sentiment and financial wellbeing collapsed in April, with job security plummeting. More at https://t.co/rtUx3Uc5hl pic.twitter.com/8SjEq31p8x

With a large degree of uncertainty surrounding the time frame to which the emergency public health measures will be maintained, financial wellbeing expectations also fell sharply. Overall, the respective index signalled the strongest level of pessimism for almost eight-and-a-half years.

There were almost 70,000 applications for the state wage support in the first half hour of the portal being open, according to the head of HM Revenue and Customs.

This is from the Financial Times (£) write-up of HMRC Jim Harra’s appearance on BBC radio earlier:

Harra said that the website was working, with about 67,000 claims from employers before 8.30am. He said: “We have scaled our IT system to cope with the maximum number of claims. There are over 2m PAYE schemes and our system is big enough to handle a claim from every one of those.”

This morning is an important day for the UK government’s efforts to cushion the blow of the lockdown recession: the launch of the furlough scheme that will allow companies to claim back 80% of the wages of employees not working.

Under the scheme, the government will cover 80% of workers’ wages, up to £2,500 a month, if they are not working but kept on their employers’ payroll, reports the Guardian’s Julia Kollewe. Workers across the economy have been furloughed because of the Covid-19 lockdown.

Related: Fears of 'flood' as UK's Covid-19 furlough scheme opens

There are some worrying moves on bond markets, with Italian government debt pricing in more risk ahead of an EU summit this week where coronabonds will be on the agenda.

The yield on the 10-year Italian bond rose by almost 10 basis points (0.1 percentage points) to 1.898% on Monday morning; yields rise when prices fall due to lower demand. On the other hand, German 10-year Bund yields were little changed at -0.482%.

Selling pressure on Italian government bonds has returned in the past week, undoing some of the benefits of the European Central Bank’s massive bond-buying scheme, after eurozone politicians failed to agree to common debt issuance as a means of addressing the crisis.

Italian Prime Minister Guiseppe Conte used an interview with Germany’s Sueddeutsche Zeitung on Monday to repeat calls for the EU to issue common eurozone bonds to demonstrate the bloc’s solidarity in the face of a pandemic that is likely to trigger the worst recession in years.

Thursday is the key day this week with the EU leaders summit a potentially big event for the future of Europe as they discuss how close the region can get to joint issuance in the near future.

Expect creative ambiguity to rule as it normally does on the continent. Nevertheless you would expect more explicit details to be outlined as to how Europe will help Italy. Will this be enough to keep Italian spreads (and domestic politics) in check though?

The selloff in US crude oil futures was a brutal 21% in early Monday trade, and there is little sign of any imminent recovery, with West Texas Intermediate May prices still bumping along below $15 per barrel.

“Don’t panic,” suggest analysts led by Mark Haefele, chief investment officer in UBS’s wealth management arm. They forecast prices of WTI and Brent crude of $20 per barrel at the end of June, and over $40 per barrel at the end of the year.

The volatile trade comes amid fears US storage facilities could soon max out, leaving markets watching both domestic production and inbound crude tankers due for US ports. If the current pace of the inventory build continues, we could see US tanks
hit max capacity roughly by the end of June.

But the sharp swing in the front month contract also reflects thinned trade, with most of the market already shifting to the June contract before the Tuesday rollover.

Regardless of what OPEC does, there will be structural demand loss for oil due to less travel. At a minimum, oil prices will be the last asset class to recover from lockdown. End transport demand will only occur in the final stages of reopening when border crossing is allowed, and travel restrictions get lifted. People will then flock again to planes, trains, and automobile

One possible explanation for the bumpy ride on the FTSE 100 this morning (it is now mildly negative): the prospect of the UK easing restrictions appears to be fairly distant.

Culture secretary Oliver Dowden is doing the media rounds this morning. He confirmed that the government is reluctant to lift the lockdown for fear of sparking a second wave of infections, telling BBC Breakfast:

The worst thing we could possibly do would be to prematurely ease the restrictions, and then find a second peak and have to go right back to square one again, potentially with even more draconian measures.

Related: UK coronavirus live: Boris Johnson 'against lifting lockdown over second wave fears'

The positive start to the week on European stock markets was very short-lived indeed: the major indices are now negative today.

The FTSE 100 is down by 0.3%, and the Stoxx 600 is down by 0.2%.

The other big mover on the FTSE 350 is Aston Martin Lagonda, as the struggling carmaker got away a rights issue. Shares are up by 12% at 65p (although still barely a third of where they were at the start of the year).

The rights issue and the investment that I, and my co-investors in the consortium, have made has underpinned the financial security of, and our confidence in, the business. We can now focus on the engineering and marketing programmes that will enable Aston Martin to become one of the preeminent luxury car brands in the world.

In this first year we will reset the business. Our most pressing objective is to plan to restart our manufacturing operations, particularly to start production of the brand’s first SUV, DBX, and to bring the organisation back to full operating life. We will do this in a way that ensures we will protect our people, wherever they work - their safety is our overwhelming concern.

Interesting timing on this announcement from spreadbetting company Plus 500: its chief executive has just resigned. Shares are down 7%, making it the biggest faller on the FTSE 350.

Spreadbetting companies have seen a remarkable boom during quarantine measures, as historic market volatility coupled with the fact of millions of people being locked inside have contributed to an enormous surge in revenues.

The FTSE 100 has gained 0.4% in the first exchanges in a relatively gentle start for these volatile times. FTSE 100 investors endured a rocky ride last week, with the index falling back before recovering some of its losses on Friday.

In Germany the benchmark Dax gained 0.7%, while France’s Cac 40 gained 0.7% and Spain’s Ibex rose by 0.6%.

Good morning, and welcome to our live coverage of business, economics and financial markets.

The US oil price benchmark has hit its lowest level since March 1999, with investors seeing little in the way of demand growth while coronavirus lockdowns continue in the world’s largest economies.

With above-ground storage bulging at the seams, WTI’s only hope, it appears, is for production cut action from the impending decisions of state authorities in Texas and Oklahoma, and lots of producers going out of business.

China cut its benchmark lending rate as expected on Monday to reduce borrowing costs for companies and prop up the coronavirus-hit economy, after it contracted for the first time in decades.

The one-year loan prime rate (LPR) was lowered by 20 basis points (bps) to 3.85% from 4.05% previously, while the five-year LPR was cut by 10 bps to 4.65% from 4.75%.

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