Good evening,

Apple’s forecast of an $8bn hit from problems, including supply chain shortages and factory shutdowns in China, underlines the fact that pandemic disruption to global business is far from over.

Half of the company’s 200 top suppliers have operations in the Shanghai area, where restrictions are having a severe impact on business, according to Nikkei Asia analysis. Most of these companies also serve other multinational giants such as Google, Microsoft and Intel, as well as domestic companies such as Huawei, Xiaomi and Oppo.

Problems in China have been a recurrent theme during first-quarter earnings season.

Intel, the biggest US chipmaker by revenue, cited the lockdowns as the reason — in combination with the war in Ukraine — for the weakening outlook for PC sales. Texas Instruments too was downbeat, cutting its growth forecast on concerns that some Chinese customers would have to suspend operations.

Conglomerate General Electric also reported China-related supply chain problems, warning of the effect on its full-year results, while carmaker Volvo said it was looking beyond China for auto parts to limit disruption from Covid-19 restrictions. “The longer the pandemic stretches, the more uncertainty there is. We have already implemented a strategy of ‘make where we sell’ and ‘source where we make’,” said Volvo Car’s chief executive Jim Rowan.

Experts and business figures have repeatedly warned of the economic damage caused by China’s zero-Covid policy.

Even though the wave of Omicron infections has begun to fade, intercity restrictions are still in place, hitting links between suppliers and manufacturers. “The supply chain impact from this lockdown will be at least as bad, if not worse, than in spring 2020,” said Lu Ting, chief China economist at Nomura.

The founder and chair of one of Asia’s biggest private equity investors said yesterday Beijing had caused a “deep economic crisis” comparable to the global financial crash. You can read more about Weijian Shan here.

Recent panic buying in Beijing, where 20mn residents have been ordered to undergo three rounds of tests by Saturday, was taken as an ominous sign by Lu at Nomura who said: “We believe the worst is yet to come.”

The government has belatedly recognised the problem. A statement from the Chinese Communist party today promised to “strengthen macro adjustments” and “achieve full-year economic and social development goals”. It also pledged more supportfor the country’s stricken property market and promised to use “every type” of currency policy tool.

Although the announcement drove up Chinese stocks, which had been heading for the steepest monthly loss in six years, it sharpened the sell-off of the renminbi.

The FT editorial board said last week that one of the key reasons for China’s problems was its reluctance to approve foreign mRNA vaccines, leaving its people to take less effective domestic jabs.

It concluded: “Beijing now has a stark choice: start a mass vaccination programme using foreign mRNA vaccines or sustain the ruinous economic and social costs of continued lockdowns.”

I’m disrupting my own time over the next month by taking a break from the newsletter. Jonathan Moules and colleagues will be your reliable guides to the world’s ups and downs until June 1. After a May Day break on Monday, the next issue of Disrupted Times will be in your inbox on Wednesday. (Darren Dodd)

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For up-to-the-minute news updates, visit our live blog

Need to know: the economy

Economic growth in the eurozone economy weakened during the first quarter, while inflation hit a new record in April, raising the spectre of stagflation. Germany was the only one of the four biggest EU economies to beat expectations, but showed just 0.2 per cent growth from the previous three months as inflation hit a new 40-year-high of 7.8 per cent. The European Central Bank admitted it had persistently underestimated inflation, blaming soaring energy prices, supply chain problems and a faster economic recovery from the pandemic.

The European energy crisis continues. Brussels said European buyers of Russian gas would be in “breach” of sanctions if they accepted Kremlin demands for payment in roubles, after some companies were preparing to accept Russia’s demands. Here’s our explainer on Moscow’s rationale for cutting off gas supplies to Poland and Bulgaria plus some new research showing how Russia is still able to generate revenue from fossil fuel exports.

Latest for the UK/Europe

Growing calls from rightwing Conservative MPs to scrap the Northern Ireland protocol, which governs the province’s trading relationship with the UK and the EU, are being watched closely in Brussels. Business hit out at the UK government for again delaying full post-Brexit border checks and causing them to waste money preparing for a new regime.

UK chancellor Rishi Sunak announced proposals to reform rules around insurance companies, in what has been billed as the first big break between UK and EU financial rules since Brexit, to allow them to invest more in infrastructure, including green energy.

Official data show four in 10 UK households are having problems paying gas and electricity bills and are buying less food after the big jump in the government’s energy price cap. It’s also been a grim time for public sector workers whose wages have fallen behind those in the private sector with little hope that the government will rectify the situation.

UK economic growth may be slowing but house prices certainly aren’t. The average price of over £267,000 is now up £52,000 since the start of the pandemic.

Russia’s central bank cut its benchmark interest rate to 14 per cent as it tries to overcome the shock of western sanctions. It expects GDP to shrink by 8-10 per cent this year and return to growth in late 2023.

Sweden’s central bank made a dramatic U-turn as it raised interest rates and said it would shrink its balance sheet, while warning of more increases to come as it belatedly responded to surging inflation. The Riksbank had said in February it would only lift interest rates from zero towards the end of 2024.

Global latest

The US economy shrank unexpectedly in the first quarter, falling 1.4 per cent on an annualised basis after rising 6.9 per cent in the fourth quarter of 2021, its first contraction since mid-2020. The headline figure was pulled lower by a record trade deficit in March as import volumes and prices surged. The dollar hit its highest level in 20 years on Thursday, as investors increased bets on aggressive interest rate rises from the Federal Reserve.

The yen on the other hand fell to a 20-year low after the Bank of Japan defied the global trend towards higher rates and vowed to keep bond yields at zero.

China’s pension reforms are attracting international investors such as BlackRock. The country’s pension market reached Rmb12tn ($1.8tn) at the end of 2020, doubling from 2014, according to EY, but new products for the private retirement scheme could fuel a massive expansion.

As pandemic restrictions fall away, a scramble for rented property across the world is leading to spiralling prices and bidding wars. FT House and Home examines the global rental squeeze.

Need to know: business

The public spat between Twitter’s bosses and prospective new owner Elon Musk presages some significant personnel changes if Musk is successful. He has raised almost $4bn from selling part of his stake in Tesla, boosting his cash position as he pushes ahead with the deal. The company recently admitted overstating its audience figures.

Join our special subscriber event on May 4 for a virtual briefing on Elon Musk’s takeover attempt. Send your questions in advance and claim your free pass here.

Nearly 75 per cent of European companies have beaten profit forecasts and 86 per cent of US businesses have reported a more upbeat picture than expected during first-quarter earnings season, according to Barclay’s research, even as costs have risen and the geopolitical outlook darkens.

US oil giants ExxonMobil and Chevron reported stellar quarterly earnings on the back of surging crude and gas prices. Total benefited similarly despite a $4.1bn charge from a project hit by sanctions. The company has not yet explained how it plans to exit its various holdings in Russia, but has said it would halt all new investment and phase out oil and diesel purchases. Our Energy Source newsletter examines whether the surge in oil and gas prices will hasten the move to greener energy.

Amazon shares dived after the company reported its slowest-ever revenue growth in the first quarter, as online retail sales dropped and costs increased, while rapid expansion left it overstaffed. But overall revenue of $116.4bn was still 7 per cent higher than last year.

Reckitt Benckiser became the latest consumer products group to start passing on increases in commodity costs to customers. Price rises of more than 5 per cent in the first quarter helped compensate for the fall in disinfection demand as Covid-19 restrictions eased. At Unilever, the overall jump in prices was more than 8 per cent. The company has been hit by Indonesia’s ban on exports of palm oil exports, which it uses for everything from soap to ice cream.

Business insolvencies in England and Wales hit a 60-year high in the first quarter as inflation and supply chain problems began to bite. Separate data showed nearly a quarter more UK businesses closed during the first three months of this year compared with last year. Around 137,000 have shut, the highest number since comparable data began in 2017.

J Sainsbury, the UK’s second-largest supermarket, said “significant external pressures and uncertainties” would affect this year’s profits. The Big Four chains are all keen to avoid repeating the strategic blunders of the financial crisis, when they ceded share to discounters Aldi and Lidl by trying to keep profit margins up rather than cutting prices.

Renault is in talks to sell its majority stake in Lada carmaker Avtovaz to a Russian state institute for one rouble, in one of the starkest examples yet of the vanishing exit options for foreign companies trying to leave the country.

The Latin American tech boom has been a rare bright spot in a region ravaged by the pandemic, but it risks becoming a blip unless governments improve investments in areas such as mobile and fixed broadband. Read more in our special report: The Americas’ Fastest Growing Companies.

“Arguably the strangest thing to emerge from an English car park since they found Richard III under a Leicester pay-and-display.” The world’s first airport for flying taxis has opened on a nondescript patch of asphalt in Coventry.

Science round-up

Scientists are investigating the reasons behind an unexpected rise in hepatitis cases in children and whether it could be linked to coronavirus.

Climate change will accelerate the threat of viruses between animal species as they encroach on urban areas, creating the possibility of future pandemics, the journal Nature has warned.

Health and science reporter Oliver Barnes reviews a new book on preventing the next pandemic by public health expert Devi Sridhar.

Distribution problems, rather than supply, was the reason poorer countries had lower vaccination rates, argued two large shareholders in Moderna as they rejected proposals to transfer the pharma group’s vaccine tech to the developing world. The idea, drafted by Oxfam, was also on the agenda at Pfizer’s annual meeting.

After gaining a significant boost during the pandemic, the UK science sector is attracting some of the world’s biggest property investors, drawn in by the high number of top-tier universities and research institutions plus strong support from venture capital and government.

Get the latest worldwide picture with our vaccine tracker

And finally . . . 

“We’ve been at this crossroads before. The true implications of data gathering on the internet crept up on us. We should be mindful to not let the same thing happen again.” San Francisco correspondent Dave Lee sends a warning about “the great post-Covid privacy creep”.