And finally, European stock markets have closed in the red.

The FTSE 100 lost 1%, or 62 points, to 6207 points. France’s CAC shed 1.3%, with Spain down 1.5%.

Worries about Covid-19 are combining with renewed anxiety about US-China relations, with Beijing furious that it’s been told to shut its Houston embassy.

David Madden of CMC Markets points out that the Beijing administration has vowed to retaliate, undermining this week’s optimism.

Recently, the relationship between the two largest economies in the world has been strained because the Chinese government is eroding Hong Kong’s autonomy, and that has attracted the anger of many countries.

Dealers are fearful that today’s development could spark a new escalation in tensions. President Trump has an election to contest in a few months, so he might not be overly aggressive with China for that reason.

Nonetheless, dealers dropped stocks as they were coming from a relatively strong position on the back of the €750 billion rescue fund deal from the EU, and the hopes for a Covid-19 vaccine.

Bill Ackman’s short-term caution, and concerns about highly indebted companies, may also be weighing.

The US dollar is still weak too, pushing the euro up to $1.158 for the first time since October 2018.

Gold and silver are holding onto their early gains too, with bullion sparking at $1,865 per ounce tonight, up over 1%, for the first time since 2011.

Goodnight. GW

Back in Europe, European Central Bank chief Christine Lagarde has criticised the EU’s new €750bn Covid-19 recovery fund.

Lagarde told an interview with the Washington Post that she’d rather the package provided more grants to struggling countries, with less money for loans:

“It could have been better but it’s a very ambitious project.

The original plan was for €500bn of grants for countries worst hit by the pandemic, funded by the EC borrowing on the financial markets. That was driven down to €390bn by the Netherlands, Austria, Denmark and Sweden, over several days of talks in Brussels.

The ECB had backed the original proposal, perhaps keen for the debt burden of individual countries such as Italy to not be pushed higher.

Investors, though, weren’t disappointed by the final deal. Instead, they were encouraged that the EU was moving towards fiscal union, with this first attempt at collective borrowing.

As Davide Oneglia, economist at TS Lombard, explains:

What really matters is the symbolism behind the plan, and the precedent it sets: the EU will be borrowing to spend on the basis of need, and will oversee fiscal transfers between member state governments.

For all the pretence that this is a “one-off” response to a once-in-a-century catastrophe, the ratchet effect of European integration is exceptionally hard to reverse, and the pressure to repeat the exercise will be enormous as soon as the next crisis hits.

The heads of government in Brussels know that that this is an irreversible step in the direction of fiscal union – hence the the frugals’ rearguard action.

Boom! US home sales surged by a fifth in June, new figures show, the biggest rise on record.

Sales of existing homes (ie, excluding new builds) jumped by 21% in June, compared to May, to an annual rate of 4.72m.

That’s the best monthly gain since the National Association of Realtors started collecting the data in 1968.

However, it’s a little lower than expected, and means home sales are still much lower than a year ago as the pandemic hits demand.

Four months after famously warning that “hell is coming”, billionaire investor Bill Ackman has blasted CNBC for scaring investors with his comments.

Appearing on CNBC again today, Ackman defended his warning back in March that the US was underestimating the severity of the coronavirus crisis, and that Donald Trump shut down for 30 days and close the borders.

During the emotional March appearance, Ackman said he was extremely worried about the coronavirus, and that a nationwide lockdown should be imposed immediately. Warning about the risk that the virus posed, he revealed:

I went into lockdown almost a month ago, to save my father’s life.

In a 30-minute interview that went viral in March as stocks tumbled, Ackman warned that a “tsunami was coming”, and that until a vaccine was discovered the US would go through “a Depression-era period” in which up to a million Americans will die.

He also revealed that he had warned the CEOs of companies he invested in that “hell is coming”, and they should draw down credit lines and stop spending money on share buybacks.

Forbes called it The Billionaire Interview That Tanked The Stock Market -- stocks fell to fast that day that circuit-breakers were triggered, forcing trading on Wall Street to be temporarily suspended.

But back on CNBC today, Ackman insisted:

“I really blame CNBC.

It took 15 seconds of my interview and then went around scaring people because it was good television... I gave a very bullish message. I said I was buying stocks.”

Indeed he did. But what Ackman didn’t say in March was that his hedge fund had taken out short positions which paid out $2.6bn as the markets kept tanking.

Today’s message is that Ackman’s Pershing Square fund is “long-term bullish” on America, although cautious in the short term and bearish about highly-leveraged companies.

The interview on CNBC got somewhat tetchy, when Ackman’s March appearance came up:

Q: Why isn’t hell still coming, as we still don’t have a vaccine and Covid-19 cases are rising?

Ackman replies:

Hold on... Let’s be super-clear. I said if we do nothing and we have 18 months of the virus running roughshod across the country, then hell is coming.

Ackman also warned that America is experiencing a “sloppy reopening”, as many states report rising cases.

He predicts that things won’t get meaningfully better until the second half of 2021. If a working vaccine comes to market, then that would help a lot, but people should wear marks in the meantime.

Here are some clips:

The pandemic lockdown is sparking renewed interest in DIY.

Kingfisher, which owns B&Q, has reported that like-for-like sales surged by 25% in June compared with the previous year. E-commerce sales surged by 225% during the month, another reminder of how Covid-19 is accelerating the move to online shopping.

Kingfisher says it sees “strong demand for home improvement”, creating “a sound footing in the current crisis and beyond”.

It now expects half year adjusted pre-tax profit to be ahead of last year - an impressive achievement, given its stores were closed for several weeks.

This has sent Kingfisher’s shares up 10% this morning.

In some cases, furloughed workers will be taking the opportunity to improve their homes - perhaps finally having time to paint the fence or mend that leaky tap.

The sudden explosion in home working is also a factor - creating new demand for storage, extra tables and chairs, and garden furniture as families find they’re stuck at home for months.

Kingfisher warns, though, that the outlook is uncertain:

While we are entering the second half with a favourable trading backdrop, second half visibility remains low given uncertainty around COVID-19 and the wider economic outlook.

Shares in turnaround specialists Melrose have slumped 15% this morning, after it updated the City on the impact of Covid-19.

Melrose, which took over UK aerospace and automotive giant GKN in 2018, says the last six months were ‘extraordinary’. Revenues slumped by 27%, as its automotive, aerospace and powder metallurgy factories were either shut, or struggling to find work.

For part of this Period the Automotive and Powder Metallurgy businesses had factories that were largely closed in Europe and the Americas, and the Aerospace and Nortek businesses had factories which were largely open but with hugely reduced requirements.

Melrose was loss-making in the second quarter of this year, but managed to reach break-even in June (on an adjusted operating profit level anyway).

But the pandemic will disrupt its turnaround plans, and that means job losses as it tries to cut costs and generate cash.

Melrose tells shareholders:

It is also necessary to adapt the businesses for the new economic environment, which means that there has to be an even stronger focus on cost reduction throughout the Group with some inevitable impact on employee numbers.

After rallying yesterday, equities are on the back foot this morning.

European stock markets have dropped by around 0.7% on average, wiping out Tuesday’s rally after EU leaders signed off on the recovery Fund.

This follows losses in Asia-Pacific markets, with Australia’s S&P/ASX 200 losing 1.3%.

Donald Trump’s (belated) warning that the Covid-19 pandemic will worsen is weighing on equities.

The president finally struck the right tone on the pandemic (although quite the wrong tone on Ghislaine Maxwell...) by urging Americans to use masks. That’s welcome, but also suggests there really is worse to come.

Connor Campbell of SpreadEx explains:

It appears that Trump’s pivot towards the presidential in an attempt to boost his plummeting approval ratings – urging Americans to wear face masks during a relatively sombre first daily covid-19 press conference since April – has worried investors.

After all, if Trump has now dropped his long-held stance that everything is OK, then it is probably time to REALLY be concerned.

The FTSE 100 has lost around 0.5%. Top fallers in London include luxury fashion chain Burberry (-3.2%), hotel group Whitbread (-3.2%), airline group IAG (-2%), and global advertising giant WPP (-1.5%).

Silver has enjoyed an explosive surge this month.

It hit $22.8 per ounce this morning for the first time since 2014, meaning it’s rallied by over 20% since the start of July.

Silver is an intriguing commodity to track. Like gold, it can be popular with investors trying to protect themselves against inflation. But unlike gold, it is used in a range of industrial applications such as solar panels and switches.

That means it can benefit from economic optimism, as well as speculation.

The Financial Times’s Neil Hume says silver is benefiting from recovery hopes, and investment in renewable energy.

Silver, which has a lively following among retail investors, can enjoy explosive spurts when conditions are right. Catalysts typically include a pick-up in manufacturing demand and loose monetary policy, which increases its relative attraction as a store of value.

“We see both of these factors driving silver higher over the next 6-12 months,” said analysts at Citi this week. The bank expects the price to hit $25 an ounce by the middle of next year.

Industrial applications, including electronics and photovoltaic cells used in solar panels, account for about 55 per cent of silver demand, according to RBC Capital Markets.

This contrasts with gold, where investment makes up a far larger proportion of demand, making its price more susceptible to swings in sentiment. Investors have picked silver as a way to play this “green” recovery, said Colin Hamilton, analyst at BMO Capital Markets.

The price of gold hit $1,865 per ounce for the first time since September 2011 this morning.

Gold has surged by 20% since the depths of the pandemic, and some analysts reckon it could hit $2,000 for the first time ever.

A weak dollar is good for gold, given its reputation as a safe-haven from inflation and money-printing.

Gold’s major flaw as an asset is that it doesn’t provide a return (unlike shares, where you might get a dividend, or bonds, where you receive a coupon)

But with interest rates so low, and many government bonds trading with negative yields, this matters less.

ANZ analyst Daniel Hynes says (via CNBC) the prospect of fresh stimulus packages is also boosting gold.

“The spectre of these stimulus packages has pushed investors back into non-yielding assets like gold,.

“The likelihood of interest rates remaining low for the foreseeable future and the weaker U.S. dollar have really boosted investor appetite.”

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

The US dollar is taking a pummelling, sending commodity prices rattling higher.

The dollar has sunk to its lowest level since early March, when the coronavirus crisis was sweeping global markets. The selloff has driven the euro to its highest level in 18 months, at $1.1547 this morning.

Sterling has also benefited, hitting $1.276 last night for the first time in six weeks.

Anxiety over the surge in Covid-19 cases in America, relief that European leaders agreed a stimulus package yesterday, and optimism about the global economic outlook all appear to be weighing on the dollar.

US president Donald Trump has also jolted the markets, warning last night that the pandemic will get worse before its gets better and urging Americans to wear masks.

If the move continues, the greenback could hit its lowest point since late 2018.

The weak dollar is triggering a strong rally in commodity prices, and particularly precious metals. Gold is trading at a nine-year high, while silver has rocketed to a six-year high (more on this shortly).

Kyle Rodda of IG says the EU’s new €750bn Covid-19 recovery fund has cheered the markets, making Europe look more attractive.

That means investors are piling into the euro, and selling the dollar.

Europe’s new stimulus program moved the foundations in foreign exchange markets overnight. The EUR/USD surged to its highest levels since January 2019, to push through the 1.15-handle in overnight trade.

The stronger EUR brought about broad-based weakness in the US Dollar, with the US Dollar Index threatening to retest the lows it recorded in late February.

But while there was (eventual) unity in Brussels, US politicians on Capitol Hill are still trying to hammer out a fresh stimulus package to support Americans through the pandemic.

Jeffrey Halley of OANDA reckons that optimism over a Covid-19 vaccine is also hurting the dollar (a typical safe-haven in troubled times).

The overnight session was notable for the renewed energy seen in the great US Dollar rotation trade. The Dollar fell almost everywhere as the tailwinds from the EU pandemic package, and the inspiring news on the Covid-19 vaccine front turned into hurricane-force winds.

The agenda

• 9.30am BST: UK corporate profitability report published by the Office for National Statistics
• 3pm BST: US home sales data for June
• 3.30pm BST: US weekly oil inventory figures