Emma Boyde 5/6/2020, 11:48:44 PM

PPP going to areas with pre-existing bank relationships

Mamta Badkar in New York

A new study by economists at the New York Federal Reserve adds to evidence that emergency small business loans have not gone to areas hit hardest by the coronavirus pandemic. Instead, they have been concentrated with companies that have pre-existing relationships with banks that process loan applications.

New York, New Jersey, Michigan and Pennsylvania, which were some of the hardest hit by the pandemic, received fewer loans from the Paycheck Protection Program — or PPP, designed to keep small businesses afloat during the coronavirus crisis — than some Mountain and Midwest states, economists at the New York Fed said.

Using coronavirus cases as a proxy for the economic impact from the outbreak, they said:

In New York, the epicentre of the coronavirus in the United States, less than 20 per cent of small businesses have been approved to receive PPP loans. In contrast, more than 55 per cent of small businesses in Nebraska are expecting PPP funding.

Instead, they found, “that lenders’ preference for borrowers with an existing relationship and the market share of community banks are the main factors explaining the geographical variation in PPP funding”. Despite the first-come, first-served nature of PPP, it is quicker for banks to accept loan applications from existing customers as they already have relevant information and can screen them faster.

The study is likely to further fan complaints that communities that have been less affected by the disease have been among the biggest recipients of the emergency loans. The first $350bn tranche of PPP funding was exhausted on April 16 and the programme was relaunched with $310bn in additional funding late last month.

Emma Boyde 5/6/2020, 11:49:13 PM

US death toll tops 67,000

Peter Wells in New York

Nearly 2,000 people died in the US over the past day, taking the total number of fatalities in the country above 67,000.

The daily increase of 1,949 was a moderation from Tuesday’s rise of 2,527, according to data compiled by the Covid Tracking Project on Wednesday.

New Jersey saw the biggest increase, with a further 305 deaths over the past 24 hours. That took the total in the second hardest hit state to 8,549 since the pandemic began.

New York, the hardest hit state, recorded 232 deaths, although levels in the past few days are down from recent weeks. Massachusetts had the third-largest daily increase, with 208 deaths.

Pennsylvania, which on Tuesday saw a state record increase on Tuesday of 554, moderated to 94 deaths over the past 24 hours.

Since the outbreak began, 67,256 people have died in the US, according to CTP.

Alice Woodhouse 5/7/2020, 12:06:53 AM

Asia-Pacific stocks broadly lower ahead of China trade data

Stock markets in Asia-Pacific dipped on Thursday ahead of China trade figures that are expected to give more clues on the extent of the disruption brought by the pandemic.

Japan’s Topix was down 0.8 per cent on its return from a holiday break, the Kospi in South Korea slipped 0.4 per cent and Australia’s S&P/ASX 200 was flat.

China will release its April trade figures on Thursday morning as well as the purchasing managers’ index for the country’s services sector.

Overnight, the S&P 500 ended 0.7 per cent lower as Donald Trump pushed for the country’s economy to reopen and as an increase in US inventories pushed down oil prices.

S&P 500 futures edged up 0.1 per cent.

West Texas Intermediate, the US marker, was down 0.9 per cent at $23.78 in morning trading in Asia, after snapping a six-day run of gains on Wednesday.

Emma Boyde 5/7/2020, 12:09:20 AM

Corporate news latest

Rideshare company Lyft delivered strong results in its first quarter, but declined to offer investors much insight into the impact of coronavirus on its business in April, or what might lie further ahead.

US retailer Gap announced it would reopen up to 800 of its stores by the end of this month as states nationwide gradually begin to ease lockdowns.

Delphi Technologies, a car engine components manufacturer, agreed to a lower takeover offer from BorgWarner after its rival claimed that it breached the terms of the $3.3bn deal when it tapped out a credit revolver in response to the coronavirus pandemic.

Uber is to cut 3,700 jobs, roughly 14 per cent of its corporate workforce, blaming the blow to business caused by the coronavirus pandemic.

Emma Boyde 5/7/2020, 12:59:55 AM

News you might have missed

Brazil’s central bank on Wednesday announced it would slash 0.75 percentage points off the benchmark interest rate as a growing political crisis compounds the economic damage from coronavirus.

Poland’s presidential election is set to be postponed, after the ruling Law and Justice party abandoned its attempts to push ahead with a poll on May 10.

Two-thirds of New York victims fell ill at home, new data show, compared with 18 per cent at a nursing home. Most were also non-essential workers, meaning they were not regularly braving public transportation and other potential hazards to do their job. More than a third were retired.

Spain’s parliament has granted the government’s request to prolong the extraordinary legal order that underpins the country’s lockdown.

Vladimir Putin has backed calls to begin easing a national lockdown despite a steady growth in Covid-19 cases, as a poll showed the pandemic has driven the Russian president’s approval ratings to the lowest level in two decades.

An additional 649 fatalities means the confirmed coronavirus death total in Britain has topped 30,000.

Alice Woodhouse 5/7/2020, 1:05:59 AM

Budweiser APAC sees improvement in China, South Korea markets

Budweiser APAC reported a loss in the first quarter as the Covid-19 outbreak hit sales, but the brewer noted an improvement in China and South Korea since mid-March after the two countries eased restrictions introduced to control the spread of coronavirus.

Anheuser-Busch InBev’s Asian-listed operation reported a $6m loss in the first three months of 2020, with revenue down 39 per cent year on year at $956m, it said on Thursday. The company said normalised earnings before interest, taxes, depreciation and amortisation fell 68 per cent to $171m.

The brewer of Budweiser, Corona and Stella Artois, said its business “had been improving consistently week over week driven by a recovery in China and South Korea” since mid-March.

Volumes in China were down by around 17 per cent in April against the same period in 2019 and compared with a 46.5 per cent fall in the first quarter. The company warned in February that it had seen “almost no activity in the nightlife channel”.

“Starting in March, we have observed an encouraging trend of business recovery as various government incentives were implemented to stimulate business recovery and consumer spending (e.g., e-coupons),” the company said of its business in China.

China introduced strict limits on the movement of people from the end of January as coronavirus spread across the country, but these restrictions have slowly been reduced and businesses have reopened. Wuhan, where the pandemic started, reopened in early April.

Budweiser APAC said it was difficult to estimate the impact of India’s lockdown and prohibition on the sale of alcohol on its business, while it was “starting to experience the impact of the pandemic” in south-east Asia.

Alice Woodhouse 5/7/2020, 1:29:20 AM

Taiwan keeps its borders shut to keep coronavirus out

Kathrin Hille in Taipei

Taiwan’s borders will remain sealed to foreigners as it prepares to loosen some restrictions on key economic activity, with officials indicating travel will only return to normal when a vaccine is found.

Chen Shih-chung, the health minister, said on Wednesday that while the government would try to gradually allow some foreigners to enter for important economic activity that could not be conducted remotely, the country was not even close to discussing a broader lifting of an entry ban on foreign nationals imposed to keep the disease out.

Taipei’s caution, despite its early success at containing the virus, serves as a stark reminder of the difficulties countries face when mapping exit strategies from epidemic prevention regimes, as governments in Europe, some US states, Australia and New Zealand attempt to ease lockdowns.

Taiwan has become a global role model for its handling of Covid-19 as it has recorded only 439 confirmed cases and six deaths. Early screening of arriving travellers and border closures, thorough contact tracing and meticulous quarantine measures helped contain the virus before it could spread in the community.

Read more here.

Alice Woodhouse 5/7/2020, 1:43:43 AM

Amazon tribes appeal to the world for help to fight coronavirus

Andres Schipani in São Paulo

Amazonian indigenous groups on Wednesday slammed the “inaction” of governments in the face of coronavirus in the world’s largest tropical rainforest calling for donations to help them survive the pandemic.

The Amazon Emergency Fund wants to raise $8m in two months to help over 3m indigenous people who live in the vast rainforest and are vulnerable to the Covid-19 due poor healthcare and sanitation, said COICA, a grouping of Amazonian indigenous people from nine different countries.

“If the governments of the region are not going to help, let the international community do so,” said José Gregorio Diaz Mirabal, general co-ordinator of COICA and a member of the Wakuenai Kurripaco people from Venezuela. “States always talk about the sovereign power of the territory, but such power goes hand-in-hand with the responsibility of caring for their people.”

COICA warned that as the virus spreads through the Amazon basin, indigenous peoples are “disproportionately vulnerable to disease”. The goal of the fundraising campaign is to provide food and medicine, as well as protection against impending intrusions on indigenous lands.

“Covid-19, which affects the whole world, has reached indigenous territories putting our lives at risk. But it should be said that this virus joins other pre-existing threats, of which we are permanently living with in indigenous communities. Such threats are the direct environmental contamination due to the indiscriminate exploitation of natural resources, which limits access to public health,” said Francinara Soares Baré, native of the Baré people in Brazil.

The struggle of Amazonian indigenous peoples has gained renewed prominence since Brazilian President Jair Bolsonaro took office last year. These indigenous groups have long enjoyed a symbiotic relationship with the rainforest, living off the land and protecting it in turn. As deforestation gains pace, they find themselves vulnerable.

Mr Bolsonaro has condemned what he sees as excessive legal protection for Brazil’s ethnic groups and the sheer size of their constitutionally mandated land reserves.

Emma Boyde 5/7/2020, 1:48:58 AM

Coronavirus hits illegal drug supply chains

Andres Schipani in São Paulo, Gideon Long in Bogotá and Jude Webber in Mexico City

The coronavirus pandemic has hit cocaine traffickers, a UN report has found, as global lockdowns have brought transport to a near-standstill and disrupted a business that relies on legal trade to “camouflage” its activities and on individuals being able to distribute drugs to consumers.

“The measures implemented by governments to counter the Covid-19 pandemic have thus inevitably affected all aspects of the illegal drug markets, from the production and trafficking of drugs to their consumption,” according to the report from the UN Office on Drugs and Crime.

Anticipating a slowdown in trade from Covid-19, drug traffickers had increased shipments just ahead of the imposition of lockdowns, only to be trounced due to a number of seizures.

In the first three months of this year, UNODC confiscated 17.5 tonnes of cocaine bound for Europe coming from South America. In Rotterdam, confiscations shot up from 4.1 tonnes in the first quarter of last year to 6.6 tonnes in the same period this year.

Read more here

Emma Boyde 5/7/2020, 1:59:04 AM

Colombia declares second ‘state of economic emergency’

Gideon Long in Bogotá

Colombia has declared a second “state of economic emergency” in response to coronavirus — a move that allows the president to issue decrees to bolster the economy without parliamentary consent.

In a televised address, President Iván Duque said that with the country in lockdown until May 25, the move was necessary to support thousands of workers and businesses hit by the pandemic.

He said the government would subsidise the wages of workers from companies that can show that their turnover has dropped by 20 per cent or more due to the virus. Businesses will also be allowed to defer tax payments until next year.

This is the second time Mr Duque has announced an economic state of emergency since the outbreak began. The first expired late last month.

Colombia boasted the fastest-growing economy among major Latin American nations last year, with gross domestic product up 3.4 per cent, but economic activity is expected to drop sharply this year not only because of the lockdown but also due to the fall in the price of oil, the country’s most valuable export commodity.

The third most populous country in Latin America, Colombia has recorded 8,859 cases of coronavirus and 397 deaths — relatively low figures per capita.

Alice Woodhouse 5/7/2020, 2:26:50 AM

State media says all parts of China now at low risk for coronavirus

Christian Shepherd in Beijing

All of China is now considered low risk for coronavirus, state media announced, even as President Xi Jinping warned of the continued threat of a resurgence.

The decision to lower the threat level in the city of Mudanjiang in north-east Heilongjiang province, which faced a small cluster outbreak last month, meant there were no more high risk areas in China, state broadcaster CCTV said on Thursday.

Despite the milestone, Mr Xi told the ruling Communist party’s Politburo standing committee on Wednesday evening that “considerable uncertainty” remains, due to continued spread of the virus outside of China.

Alice Woodhouse 5/7/2020, 2:44:54 AM

China services companies cut jobs at fastest rate since 2005

China’s services sector contracted for a third consecutive month in April as the pandemic hit business and companies cut staff at the fastest rate since 2005, a private survey found.

The Caixin-Markit services purchasing managers’ index rose to 44.4 in April, an improvement on the 43 level for March. A figure below 50 marks a deterioration in conditions.

New business fell for a third month, although the decline had eased from February when the Chinese government imposed strict restrictions on when companies could resume work to control the coronavirus outbreak.

Export sales dropped at the second-fastest pace on record as global clients faced lockdowns in their own countries.

Companies cut staff at the fastest rate since the survey began in late 2005.

“The second shockwave for China’s economy brought about by shrinking overseas demand should not be underestimated in the second quarter,” said Zhengsheng Zhong, chairman and chief economist at CEBM group.

Alice Woodhouse 5/7/2020, 3:49:22 AM

Mitsubishi Heavy Industries to complete Bombardier regional jet acquisition

Robin Harding in Tokyo

Mitsubishi Heavy Industries will complete the acquisition of Bombardier’s regional jet division on 1st June but take an immediate write-down of ¥50bn-¥70bn ($470m-$660m) as coronavirus continues to wreak havoc on the aerospace industry.

Completing the deal means that MHI is doubling down yet again on its costly attempt to break into the regional jet market and become one of few companies in the world capable of designing, manufacturing and integrating a passenger aircraft.

The company has spent years struggling to win approval for its own SpaceJet aircraft. Acquiring Bombardier’s ageing programme for $550m in cash brings the Japanese company a ready-made maintenance, support and refurbishment network around the world.

Completion of the deal comes shortly after the collapse of a similar agreement for Boeing to buy the regional jet division of Embraer. It means that MHI will now face off against the Brazilian company in the global market for jet airliners with less than 100 seats.

MHI said it was hard to forecast the future cash flows of its SpaceJet division at present. It would therefore write off all the acquired goodwill and intangible assets from Bombardier in its accounts to March 2021.

Emma Boyde 5/7/2020, 4:12:54 AM

US-China spat over origins of coronavirus shows no signs of abating

Christian Shepherd in Beijing

The US-China spat over the origins of coronavirus shows no signs of abating even though US secretary of state Mike Pompeo appeared late on Wednesday to ease off his claim of having evidence that the virus leaked from a Wuhan lab.

The shift in tone was seized on as a victory by some nationalists in China. “[This move] clearly shows that the Trump government’s propaganda campaign to frame the Wuhan lab has hit a setback,” Hu Xijin, editor of popular nationalist tabloid the Global Times, wrote on Chinese social media.

China’s foreign ministry on Wednesday challenged Mr Pompeo to provide evidence for his claims that Covid-19 leaked from a lab in Wuhan, China.

Responding to Mr Pompeo’s comment that the US had “enormous evidence” that the coronavirus pandemic originated from a virology research institute in Wuhan, a ministry spokesperson said that “he simply doesn’t have it.”

“This is a very serious scientific question that must be investigated by scientists and medical experts on the basis of facts and science,” the ministry said.
The Wuhan lab has become a focal point of a war of words between Beijing and Washington over who is ultimately to blame for the global pandemic.

President Donald Trump insists he has seen evidence that coronavirus originated at the institution, while China has accused US officials, Mr Pompeo in particular, of trying to shirk responsibility for their sluggish response to the outbreak.

Emma Boyde 5/7/2020, 4:22:42 AM

Philippines economy contracts for first time in 22 years

John Reed in Bangkok

The Philippine economy has contracted for the first time in 22 years as coronavirus-related lockdowns hit the country’s manufacturing, transport, and hospitality sectors.

The Philippine Statistics Authority reported a 0.2 per cent decline in gross domestic product for January to March compared with the same period last year, the first negative growth reported since the fourth quarter of 1998, during the Asian financial crisis.

The government agency said that farming and fishing contracted by 0.4 per cent in the quarter, and industry by 3 per cent, but services posted growth of 1..4 per cent during the period.

Since March, President Rodrigo Duterte has assumed emergency powers and imposed strict lockdowns on Luzon island and in other parts of the archipelago nation to combat the spread of Covid-19.

The country has confirmed more than 10,000 cases of the disease and 658 deaths, the highest number of infections in south-east Asia after Singapore and Indonesia.

Before the pandemic, its consumption and service-driven economy had been growing at an average annual rate of 6 per cent.

Alice Woodhouse 5/7/2020, 4:35:03 AM

Japan to approve remdesivir to treat Covid-19

Kana Inagaki in Tokyo

Japan plans to approve the use of Gilead Sciences’ potential coronavirus drug remdesivir on Thursday, according to Prime minister Shinzo Abe.

The decision follows last week’s decision by the US Food and Drug Administration to approve Gilead’s antiviral for emergency use after positive results from a US-led trial were announced.

Mr Abe had indicated earlier in the week that the government would use a special fast track for the approval process and specified the date for approval during an online programme late on Wednesday.

The unusual decision comes even as the positive data from the remdesivir study run by the US government were accompanied by several caveats that it was not a “knockout” trial.

On Monday, Mr Abe said he would also aim to have Fujifilm Holdings’ anti-flu drug Avigan approved for use as Covid-19 treatment by the end of this month.

Alice Woodhouse 5/7/2020, 5:20:51 AM

India calls on private doctors as Covid-19 cases expected to rise

Amy Kazmin in New Delhi

India’s financial capital, Mumbai, is gearing up for a wave of up to 75,000 coronavirus cases in the coming weeks, as the spread of the virus shows no sign of slowing down even after the country’s six-week national lockdown.

The densely populated port city now has 10,000 confirmed cases. It is the Indian urban centre hardest hit by the virus, which has spread rapidly through crowded slums and tenements where millions live cheek by jowl, sharing amenities like toilets, showers, kitchens and water pipes — making social distancing impossible.

To cope with an expected surge in the coming weeks, the Maharashtra state government has ordered all the city’s 25,000 private doctors to immediately report for a 15 days of duty at one of the city’s Covid-19 hospitals, where health care professionals are struggling to cope with the high patient load.

The government has said that doctors who fail to comply will face the loss of their medical licences, although doctors over the age of 55, or with health issues that make them more susceptible to serious illness from the coronavirus, will be exempted.

Meanwhile, the Brihanmumbai Municipal Corporation is rushing to set up temporary quarantine centres — known as Covid Care Centres — in municipal schools and large open-air public spaces.

India’s bustling cities account for most of the country’s coronavirus cases. Mumbai accounts for about 20 per cent of the national caseload, while the capital, New Delhi, has about 11 per cent of total cases. The business hub of Ahmedabad comes third, with about 9 per cent of the national caseload.

India’s total caseload has risen to 53,000 of whom 1,785 have died and 15,433 have recovered.

Alice Woodhouse 5/7/2020, 5:46:23 AM

AB InBev global beer sales drop by a third in April

Judith Evans in London

The world’s largest brewer Anheuser-Busch InBev sold almost a third less beer in April than a year earlier as the coronavirus pandemic closed bars and restaurants across large parts of the world.

The brewer of Budweiser, Stella Artois and Corona said on Thursday that global volumes were down by 32 per cent in April following a first quarter in which they declined 9.3 per cent as the pandemic began to take hold.

The group said revenues dropped 5.8 per cent in the first quarter — slightly worse than analysts had expected — to $11bn, taking the company to a normalised loss of $845m, down from a $2.4bn profit a year earlier.

“Social distancing and lockdown measures were put in place in most of our markets starting in mid-March 2020. This had a disproportionately negative effect on the on-premise channel [bars and restaurants], which represented approximately one-third of our global volume last year,” the company said.

However, it said “early signs of recovery” were emerging in markets hit early by coronavirus, such as China and South Korea, with “steady reopenings of many of our customers” from March. Volumes in China were down 17 per cent year on year in April, compared with a 46.5 per cent drop in the first quarter.

The group has put in place cost-cutting measures including renegotiating sponsorships and a salary cut of 20 per cent for senior executives. Last month it said it would cut its final dividend by half, to €0.50 a share.

ABI’s shares have shed almost half their value since the start of the year to trade at €38.96 by the end of Wednesday, weighed down by concerns over its debt levels: net debt was $95.5 billion as of December 31.

Philip Georgiadis 5/7/2020, 5:55:34 AM

Bank of England: What to watch

The Bank of England is due to announce its interest rate decision and release forecasts for the UK economy in the next few minutes.

The FT’s economics reporter Delphine Strauss has said there are four key issues to watch for:

1. Will the BoE announce any new stimulus?

2. How bad does the MPC think the impact of lockdown has been?

3. What kind of recovery does the BoE expect?

4. Does the BoE think the financial sector is coping?

Read more on what to watch here.

Philip Georgiadis 5/7/2020, 6:06:10 AM

BoE keeps interest rates on hold

The Bank of England has kept its interest rate at 0.1 per cent, and kept its asset purchasing programme unchanged at £645bn.

The nine-person monetary policy committee voted unanimously to keep rates unchanged, although two voted to increase the target for the stock of asset purchases by an additional £100bn at this meeting.

On the state of the economy, the bank said:

The spread of Covid-19 and the measures to contain it are having a significant impact on the United Kingdom and many countries around the world. Activity has fallen sharply since the beginning of the year and unemployment has risen markedly.

Sarah Provan 5/7/2020, 6:18:46 AM

Reinsurer Munich Re’s Q1 hit by scrapped events such as Euro 2020

Olaf Storbeck in Frankfurt

Munich Re’s profit plunged 65 per cent year-on-year in the first quarter as the world’s second-largest reinsurance group was hit by €800m in coronavirus-related losses, driven by a spike in payouts for event cancellation insurance.

Over the past three months, events around the world including the 2020 Olympic Games, the Uefa Euro 2020 as well as trade fairs, concerts and other events have been cancelled as governments imposed far-reaching social distancing measures designed to slow down the spreading of coronavirus.

Between January and March, the group generated €221m in quarterly profit, compared to €633m a year earlier.

In mid-February, the group’s head of reinsurance Torsten Jeworrek told journalists that the group’s exposure to event cancellation insurance stood at a “medium triple-digit million” euro amount.

Munich Re in late March ditched its profit target of €2.8bn for 2020 and suspended its share-buyback programme, pointing to the uncertainty created by the pandemic. “Munich Re will not specify a new profit target for 2020 at this time,” the group said on Thursday.

The group this week paid out its dividend of €9.80 a share, a 6 per cent increase compared to the previous year.

Philip Georgiadis 5/7/2020, 6:22:59 AM

BoE: UK economy could contract 30% in first half

Chris Giles, Economics Editor

The Bank of England decided not to pump additional money into the UK economy, preferring a wait-and-see approach as economic output plunges in the worst recession in a century.

In its monetary policy report, the UK’s central bank presented a less certain than normal forecast with the economy contracting 30 per cent in the first half before a rapid recovery.

Andrew Bailey, BoE governor, said that because he expected the government’s support schemes would be successful, “there is only limited scarring to the economy”.

Not all monetary policy committee members supported the majority decision. Two of the nine members, Jonathan Haskell and Michael Saunders, voted to increase quantitative easing by another £100bn.

The BoE undertook an exercise to test whether the financial system could cope with the expected once-in-a-century recession and concluded that it could.

It assessed that banks would lose less money than in its latest stress test and “the core banking system has capital buffers more than sufficient to absorb losses”.

Sarah Provan 5/7/2020, 6:29:49 AM

BT suspends dividend for this year and next

Patricia Nilsson and Nic Fildes in London

BT will not pay a dividend for the first time since the beginning of the millennium as the telecoms group said it needed to ensure it could continue investment in the UK’s full fibre network.

The group will axe its final dividend for 2019/20 and the upcoming year to create capacity for investment and to manage through the Covid-19 crisis. Analysts had only factored in a 30 per cent cut. BT last passed on paying an interim dividend in 2001/2002.

The company expects to resume paying dividends in 2021/22, rebased to 7.7p per share.

“BT plays a key role in sustaining critical national infrastructure – as magnified by the Covid-19 crisis – and many stakeholders trust and rely on the connectivity we provide,” said Jan du Plessis, BT’s chairman.

He said the company was “ready” to build out its full fibre network to 20m premises by the end of this year, but that cutting the dividend was needed to “navigating the unprecedented uncertainties caused by Covid-19 without compromising our credit rating”.

Myles McCormick 5/7/2020, 6:34:07 AM

BA parent IAG warns of further cuts as recovery set to take 3 years

British Airways parent IAG warned it will have to take further action to survive the blow inflicted by the coronavirus pandemic as it predicted it would take three years before passenger demand returns to normal.

The airline group, which last week announced BA would be cutting 12,000 jobs, said that the slow return to normality meant further restructuring across the group would be “essential”.

“We do not expect passenger demand to recover to the level of 2019 before 2023 at the earliest,” said IAG chief executive Willie Walsh. “This means group-wide restructuring is essential in order to get through the crisis and preserve an adequate level of liquidity. We intend to come out of the crisis as a stronger group.”

Lockdowns and travel curbs imposed by governments across the world have caused a collapse in air traffic and left the aviation industry reeling from the worst crisis in its history.

IAG – which owns Ireland’s Aer Lingus and Spain’s Iberia as well as the UK flag carrier – hopes to return its planes to the skies from July and expects passenger capacity to be down by around half for the year as a whole. But it said these plans remained “highly uncertain and subject to the easing of lockdowns and travel restrictions”.

The group’s comments came as it reported results for the first three months of the year, with an operating loss of 535m, down from a profit of €135m a year ago, in line with expectations. Its pre-tax loss was €557m, down from a profit of €86m. Revenue slid 13 per cent to €4.6bn.

Given restrictions to curb the spread of the virus only began in late February the worst of the crisis was not reflected in the first quarter results. It expects the second quarter to be “significantly worse”.

Philip Georgiadis 5/7/2020, 6:34:16 AM

Sterling higher following BoE

The pound rose slightly after the Bank of England held interest rates and unveiled its forecasts for the UK economy.

Sterling was recently 0.2 per cent higher against the US dollar at $1.236.

The central bank said economic forecasting  is “unusually uncertain at present”, but that in a “plausible scenario” the UK economy could shrink 14 per cent this year. It added the speed of the recovery “will also be affected by how households and businesses respond once measures are lifted.”

Jon Hudson, UK equities investment manager at Premier Miton, said:

With two members voting for an increase in asset purchases and inflation likely to fall further below the Bank’s 2% target in the coming months, the key takeaway appears to be to expect more stimulus in the coming months.

Harry Dempsey 5/7/2020, 6:42:44 AM

Holiday Inn owner says it could last 18 months with rooms empty

Alice Hancock in London

InterContinental Hotels Group, the owner of the Crowne Plaza and Holiday Inn brands, said that it could currently last 18 months with no one in its hotels as the industry faces its “most significant challenge” ever.

Keith Barr, IHG’s chief executive, said that occupancy levels had dropped to “historic lows” across the group as government-enforced closures, combined with the shutdown in global travel, hit the hotel industry.

“Covid-19 represents the most significant challenge both IHG and our industry have ever faced,” he said.

Despite only around 15 per cent of IHG’s estate being closed at the end of April, occupancy levels were around 20 to 25 per cent with revenue per available room – the industry’s favoured metric – down 55 per cent in March compared to the same month in 2019. It expects revpar to drop by 80 per cent in April.

In China, only 10 of IHG’s hotels were closed compared to 178 at the height of the outbreak there. Revpar had improved from a like-for-like decline of 89 per cent in February to around 75 per cent in April.

InterContinental, which operates around 5,900 hotels, said last month that it had secured a $740m loan through the Bank of England’s coronavirus support scheme and that it had around $2bn liquidity to see it through the crisis. On Thursday, it said that it had also extended the term on a $1.28bn credit facility until September 2023. The group has waived its debt covenant tests until 2021.

Philip Georgiadis 5/7/2020, 6:50:47 AM

Germany reports slight rise in new cases

Guy Chazan in Berlin

Germany reported 1,284 new coronavirus cases on Monday, an increase on the day before, but saw a slight decline in the number of recorded deaths from the disease.

According to official data from the Robert Koch Institute in Berlin, the number of people who died of Covid-19 over the past 24 hours rose by 123 to 7,119. The total number of detected infections increased to 166,091, though around 139,900 of them have already made a full recovery.

Sarah Provan 5/7/2020, 6:51:42 AM

India factory gas leak kills at least five as industries restart

Benjamin Parkin in New Delhi and Jung-a Song in Seoul

A gas leak at a factory in southern India, since brought under control, has killed more than five people and made hundreds unwell as industries reopen after the weeks-long coronavirus lockdown.

The suspected leak of deadly styrene gas took place at a factory in Visakhapatnam operated by South Korea’s LG Chemical. Hundreds have been hospitalised and injured, according to officials and local media.

“Hundreds of people have inhaled it and either fell unconscious or having breathing issues,” Srijana Gummalla, the municipal commissioner, wrote on Twitter.

LG chem said the gas leak at its Indian plant has been brought under control and it is taking measures to protect villagers and workers.

“We are currently assessing the extent of the damage on the town’s residents and are taking all necessary measures to protect residents and employees in cooperation with related agencies,” the company said in a statement, adding that it was still checking the cause of the accident and the extent of damage.

The incident comes days after many Indian industries were given the green light to start operating again after the government ordered India into a lockdown in late March to stem the spread of coronavirus.

A gas leak in 1984 in the Indian city of Bhopal killed thousands, still making it one of the worst industrial disasters in the world.

Myles McCormick 5/7/2020, 6:53:48 AM

German industry suffers record 9.2% fall in output

Martin Arnold in Frankfurt

German industrial production fell by a record monthly amount of 9.2 per cent in March, as the pandemic forced companies to shut their doors and workers to stay home, according to new data published on Thursday.

The sharp fall in output underlines how the coronavirus crisis has brought added misery for Germany’s manufacturing sector, which has long been the export-focused powerhouse of Europe’s largest economy, but for the past two years has suffered from declining orders.

The Federal Statistics Agency said the monthly drop in German manufacturing production was the biggest since it started its survey in 1991, while construction was a rare bright spot with its production increasing by 1.8 per cent in March.

The automotive industry was one of the hardest hit sectors, with its output falling 31.1 per cent, while production of recorded media, pharmaceutical products and clothing all fell between 11.5 and 12.5 per cent.

Economists expect an even steeper drop in production for April as full lockdowns were only introduced for many European countries in mid-March. A sign of tougher times ahead came with this week’s news that orders for German industry fell by a record 15.6 per cent in March.

The German government this week outlined a timetable for a gradual lifting of the coronavirus lockdown on the country and many factories are expected to ramp up production this month and next month.

But Andrew Kenningham, economist at Capital Economics, said: “No matter how quickly Germany gets back to normal it will be constrained by the recovery in the rest of Europe given its dependence on external demand.”

Anna Gross 5/7/2020, 6:53:57 AM

European stocks set to eke out gains

European stocks point to a reversal of yesterday’s losses, with futures for the Europe-wide Stoxx 600 set for gains of 0.3 per cent.

FTSE 100 futures point to mild 0.2 per cent riser after the Bank of England announced its decision to hold interest rates, while the German Dax is pitched to open up 0.15 per cent higher.

Stocks on Wall Street are set for much stronger gains later in the day, with futures for the S&P 500 pointing to a 0.9 per cent rise.

The positive sentiment in Europe and the US follows a muted performance in Asia, following the release of a mixed bag of Chinese economic data.

Sarah Provan 5/7/2020, 7:00:04 AM

Air France-KLM expects to burn through €400m in cash a month

David Keohane in Paris

Air France-KLM expects its capacity to be almost wiped out in the second quarter, when it forecasts it will burn through €400m in cash a month as the coronavirus pandemic hobbles the global airline industry.

The French-Dutch airline expects to spend millions of euros in the April-to-June period despite cost-cutting measures such as the extensive use of government partial unemployment schemes that is saving it €350m a month.

The group, which was formed by the merger of Air France and KLM of the Netherlands in 2004, expects capacity to be down 95 per cent in the second quarter and 80 per cent in the third, compared with a year earlier. It said it did not see demand recovering “to pre-crisis levels before several years”.

Air France-KLM reported its operating loss in the first three months of the year, when only two weeks showed the effects of the coronavirus lockdown, increased to €815m, from €515m a year earlier.

Air France-KLM predicted “significantly negative” earnings over the full year and “a significantly higher current operating income loss in the second quarter than in the first quarter 2020”.

Myles McCormick 5/7/2020, 7:02:45 AM

Puma warns worse to come as profits halve in first quarter

Olaf Storbeck in Frankfurt

Puma warned investors on Thursday that the financial hit from the coronavirus pandemic will become worse in the second quarter after a 50 per cent year-on-year plunge in operating profit between January and March.

“2020 is and will continue to be a difficult year, where the goal for Puma is to survive, recover and then emerge stronger with growth again,” the Herzogenaurach-based group said on Thursday, pointing out that it is currently selling only about half as many shoes and apparel as in normal times.

Over the first quarter, where the economic fallout from the pandemic for Puma was largely limited to its Asian business, operating profit stood at €70m, down from €142.5m a year earlier as costs increased and inventories shot up.

Earlier this month, the company secured a new, government-backed revolving credit line of €900m. Puma said that it is currently undergoing a recovery in China and South Korea and reopening stores in some European countries. In the Americas, however, its distribution “is still almost fully shut down”.

The group said that the situation was too unpredictable to give a reliable financial outlook for the full year.

Philip Georgiadis 5/7/2020, 7:09:46 AM

Economists expect further QE from BoE in coming months

Economists expect the Bank of England to boost its quantitative easing programme over the coming months, after the bank’s rate setters held off making any new changes this month.

James Smith, an economist at ING, said he expects the UK’s economic recovery to be slower than the bank’s central forecast, and “that means quantitative easing is likely to be boosted over coming months”.

 Of course there is plenty of uncertainty about what will happen later this year and beyond, but we suspect the true path of the recovery will be more gradual. We don’t expect the economy to recover its lost ground until at least 2022, and perhaps later.

Seema Shah, chief strategist at Principal Global Investors, said “the onus is surely for additional QE to be announced in June” after two members of the monetary policy committee voted for further easing at this month’s meeting.

The Bank’s report also would have made some interesting reading for the UK government, showing that each additional two weeks of lockdown costs the UK economy around £28bn and another 0.75% rise in unemployment. The economic price of lockdown is clearly meaningful.

QE could be expanded at the bank’s next meeting in June, of not the following one in August, according to Paul Dales, chief UK economist at Capital Economics.

With two of the seven members voting to expand QE by £100bn at this meeting and the other five suggesting they didn’t because they preferred to wait for more information, it feels like only a matter of time before the MPC expands QE. 

Harry Dempsey 5/7/2020, 7:35:05 AM

BT shares slide after dividend suspended

Shares in BT dropped almost 10 per cent at the market open in London, after the telecoms group said that it would not pay a dividend for the first time since the beginning of the millennium.

Shares in the company fell 9.6 per cent to 103.21p apiece. The telecoms group said that it will suspend its final dividend for 2019/20 and all payouts in the upcoming financial year to help it invest in 5G telecoms and get through the Covid-19 crisis. Analysts had expected the dividend to only be reduced by 30 per cent.

The move came as Liberty Global and Telefónica struck a landmark deal to combine their British operations O2 and Virgin Media in a £31.4bn agreement to become the UK’s second-largest broadband provider.

The dividend cuts are part of a broader five-year plan to cut costs by £2bn a year and modernise the company with new technologies.

Shares later trimmed some of the losses to trade at 106.15p per share, down 7 per cent.

Sarah Provan 5/7/2020, 8:01:40 AM

Rolls-Royce lowers delivery target to lowest in almost 10 years

Peggy Hollinger in London

Rolls-Royce has slashed its delivery target by more than 40 per cent for this year and found an extra £250m in cash savings as it braces for a protracted downturn in demand for aero-engines.

The company, which is preparing to cut 8,000 jobs due to the aviation crisis sparked by Covid-19, on Thursday said it expected to deliver 250 passenger jet turbines in 2020 against expectations of 450. That would be the lowest level of deliveries in almost a decade. Rolls-Royce earns profits not on the sale of engines but on the installed base, with carriers agreeing long-term contracts to pay for the time the turbines are flying.

Rolls-Royce said engine flying hours were about 40 per cent lower than expectations in the first four months of the year as airlines around the world grounded their fleets. In April alone they fell by 90 per cent.

At the annual meeting, which was held online due to social distancing measures during the lockdown, Warren East, chief executive, also warned of a significant cash outflow in the second quarter, although the level was not quantified.

Mr East said the company was taking measures to reduce the cost base. Referring to the planned job cuts, first reported by the Financial Times, Mr East said the group had made better than expected progress on conserving cash since announcing a £750m cash flow benefit in 2020. The group now expects to deliver some £1bn in cash savings this year.

This would add to other measures to bolster liquidity, including the cancellation of the dividend resulting in cash flow savings of £137m, and an additional revolving credit facility of £1.5bn.

“The severity of the disruption caused by Covid-19 is expected to lead to a smaller commercial aerospace market which may take several years to recover,” the group said. “As a result, we are actively pursuing changes to our business, particularly in civil aerospace, to better align to medium-term market conditions.”

The group also said it expected a “material deterioration” in its power systems division.

Shares fell almost five per cent in mid-morning trading to 279.7p, down close to 70 per cent over the last year.

Philip Georgiadis 5/7/2020, 8:01:49 AM

World’s biggest steelmaker ArcelorMittal suspends dividend

Michael Pooler in London

The world’s biggest steelmaker outside China, ArcelorMittal, has suspended its dividend after swinging into the red in the first quarter compared with a year earlier as Covid-19 hit construction and manufacturing activity.

The Luxembourg-based group predicted a 30 per cent slump in shipments during the second quarter after posting a net loss of $1.12bn for the three months ended March 31.

Like other producers of the metal, ArcelorMittal has temporarily idled furnaces in response to falling demand from carmakers and building sites, but said it was seeing signs of customers restarting production.

Chief financial officer Aditya Mittal said lower capital expenditure would help reduce cash needs by $1bn in 2020. “We entered this period from a position of significant strength. Our net debt [at $9.5bn] is its lowest ever and our liquidity is strong,” he said.

ArcelorMittal also withdrew its closely-watched forecasts for global steel demand this year because of the uncertainty caused by the pandemic.

Myles McCormick 5/7/2020, 8:07:43 AM

Anglo American starts on thermal coal demerger

Neil Hume in London

Anglo American has started work on a possible demerger of its thermal coal operations in South Africa, where the mining industry is emerging from a coronavirus lockdown.

The London-listed miner said it believed the long-term prospects of the business, which serves the domestic and export markets, might be better served under “different ownership”.

In response to its questions submitted ahead of its annual general meeting this week, the company said:

We are therefore working towards a possible demerger of our thermal coal operations in South Africa as our likely preferred exit option, expected in the next two to three years, with a primary listing on the Johannesburg Stock Exchange for the demerged business.

Production from its coal mines in the country is expected to increase through May and June as travel and other Covid-related restrictions ease.

Anglo, which has positioned itself as an environmental and social champion, has come under pressure from large shareholders to exit coal and set out formal plans to reduce carbon emissions.

Philip Georgiadis 5/7/2020, 8:08:53 AM

Russian business activity sinks

Henry Foy in Moscow

Russia reported a new record daily increase in coronavirus cases on Thursday as the country leapfrogged France and Germany to become the world’s fifth most affected.

The continued surge in cases comes as data showed business activity in the country’s service sector experienced its sharpest contraction on record in April, as a six-week long lockdown paralysed the country’s economy.

The purchasing managers’ index for services fell to 12.2 in April from 37.1 in March, its lowest reading since records began in October 2001, according to survey provider IHS-Markit. The index for manufacturing also plunged below 20. Any score below 50 represents a contraction.

That data came as Russia’s government said it had recorded another 11,231 cases of Covid-19, a new daily record that takes the country’s total cases above 177,000. More than 1,600 people have died from the virus in Russia.

Despite that continued rise in infections, president Vladimir Putin on Wednesday agreed to allow construction firms and industrial companies to restart work in Moscow from next week, in the first move to ease the lockdown.

Harry Dempsey 5/7/2020, 8:20:27 AM

European corporate news round-up

UK

BT will not pay a dividend for the first time since the start of the millennium and told shareholders to brace themselves for lower payouts in the future as the UK telecoms group focuses on improving its broadband network and safeguarding its credit rating.

British Airways parent IAG warned it will have to take further action to survive the blow inflicted by the coronavirus pandemic as it predicted it would take three years before passenger demand returns to normal.

InterContinental Hotels Group, the owner of the Crowne Plaza and Holiday Inn brands, said that it could currently last 18 months with empty hotels as it expects revenue per average room to be 80 per cent lower than last year in April.

Rolls-Royce expects to cut £1bn of costs this year, £250m more than previously estimated, as the company slashed its delivery target by 40 per cent for the year.

Ticket booking platform Trainline said that UK and European passenger volumes are down as much as 95 per cent and reported a 17 per cent rise in ticket sales in the year to the end of February.

Morgan Sindall said that 80 per cent of its construction sites are operational, albeit at lower levels of productivity, in a sign of a return to economic activity in the UK. 1,700 employees are currently furloughed, it added.

Continental Europe

The world’s largest brewer Anheuser-Busch InBev sold almost a third less beer in April than a year earlier as the pandemic closed bars and restaurants across large parts of the world.

Puma warned investors on Thursday that the financial hit from the coronavirus pandemic will become worse in the second quarter after a 50 per cent year-on-year plunge in operating profit between January and March.

Air France-KLM expects its capacity to be almost wiped out in the second quarter, when it forecasts it will burn through €400m in cash a month as the coronavirus pandemic hobbles the global airline industry.

Reinsurance provider Munich Re suffered €800m in losses related to Covid-19, largely due to insurance for event cancellations, reducing profits for the first quarter to €221m, a third of that achieved a year earlier.

Equinor reported that adjusted earnings before tax halved to $2.05bn in the first quarter, as the Norwegian oil major suspended guidance for the year due to government-imposed production curtailments, part of wider global efforts to reduce supply to support crude prices.

Euronav said that rates for its supertankers were $95,000 per day in the second quarter to date due to continuing demand for floating storage of oil, as profits at the Belgian tanker group surged to $225m, up from $20m a year ago.

Sarah Provan 5/7/2020, 8:21:50 AM

Norges Bank cuts rates to zero as economy faces twin shocks

Richard Milne in Oslo

Norway’s central bank cut interest rates to a record low of zero but said it was unlikely to go negative as the rich Scandinavian country faces up to the twin shocks of coronavirus and a dramatic oil price collapse.

Norges Bank said on Thursday that the 0.25 percentage point cut would not prevent Covid-19 from having “a substantial impact on the Norwegian economy, but can help dampen the downturn”, including by stopping high unemployment becoming entrenched.

“In the committee’s current assessment of the outlook and balance of risks, the policy rate will most likely remain at today’s level for some time ahead. We do not envisage making further policy rate cuts,” said governor Oystein Olsen.

Norway has cut its interest rate by 1.5 percentage points in the past two months amid the country’s biggest economic slowdown since at least the second world war. Home to the world’s largest sovereign wealth fund with about $1tn in assets, Norway has more room than most to stimulate its economy but the pressure on its oil industry – it is the largest crude producer in western Europe – mean that many economists expect it to face a more straitened future after the twin crises.

Norges Bank forecast that mainland growth, which strips out the oil industry, would decline by 5.2 per cent this year while unemployment is expected to rise to 6.3 per cent, well below the current 14.6 per cent rate.

Philip Georgiadis 5/7/2020, 8:25:58 AM

Eurozone construction sinks as lockdowns weigh on economy

Valentina Romei in London

Another set of historically weak data has highlighted the impact of the pandemic on the eurozone economy.

The virus has resulted in the largest fall on record in eurozone construction activity, and in industrial production in France and Germany.

The IHS eurozone purchasing managers’ index for construction crashed to 15.1 in April from 33.5 in March, the lowest reading since the record began in 2000.

April’s PMI construction index for France fell to 3.8 and that for Italy to 4.8, for both by far the worst on record. In Germany, the drop was less severe, reflecting less stringent restrictions than in France and Italy.

Germany and France’s industrial production also contracted at the fastest pace on record in March, according to official statistics also released on Thursday.

The figures came as France’s national statistics office revealed that employment in the eurozone second-largest economy dropped by 2.3 per cent in the first quarter, marking a return to employment levels seen at the beginning of 2017.

The number of temporary jobs, which accounts for a significant part of French employment, shrank by 37 per cent. At the peak of the financial crisis, temporary employment fell by 13.9 per cent.

Harry Dempsey 5/7/2020, 8:28:23 AM

More than 450,000 French jobs destroyed in first quarter

Victor Mallet in Paris

French private sector employment fell 2.3 per cent in the first quarter, with “net destruction of 453,800 jobs” as the coronavirus crisis strikes deep.

The job losses resulting from the coronavirus crisis and lockdown of the eurozone’s second-largest economy have left private sector employment at its lowest level since the third quarter of 2017, just after President Emmanuel Macron was elected. The biggest decline was in temporary employment, which was down by 291,800 jobs or 37 per cent, the statistics institute Insee said on Thursday.

Most jobs threatened by the crisis have been protected by the government’s “temporary unemployment” scheme, under which the state subsidises companies to pay the salaries of employees unable to work.

More than 12m out of France’s 20m private sector workforce are benefiting from the scheme.

French economic activity dropped by about a third as a result of the crisis, Insee said in a separate report.

Charlotte Middlehurst 5/7/2020, 8:39:23 AM

Nigeria to extend flight ban by one month

Neil Munshi, west Africa correspondent

Nigeria will extend its ban on all flights for another four weeks from Thursday, as Africa’s most populous country takes further steps to contain the coronavirus pandemic.

The government is easing a five-week lockdown in Nigeria’s commercial centre of Lagos, its capital Abuja and Ogun state. However, new daily case counts are rising by hundreds while local media have reported on scores of mysterious deaths in three northern states.

Nigeria has reported around 3,100 confirmed cases of Covid-19 since it recorded sub-Saharan Africa’s first case. However, testing remains limited and the country has only conducted around 20,000 tests for its 200m people.

Myles McCormick 5/7/2020, 8:45:10 AM

Fears rise over South Korean spread after partygoer tests positive

Song Jung-a in Seoul

A South Korean nightclubber’s infection with coronavirus has renewed concern about further possible community spread just as the government eased its social distancing campaign.

The 29-year-old resident of Yongin, a city outside Seoul, is one of four new cases reported in South Korea on Thursday. The other three infections were imported. The patient, with no overseas travel record, visited bars and clubs in Itaewon, a party district in central Seoul, before testing positive for the virus, marking the first local infection in four days.

Health authorities are conducting an epidemiological probe to trace those who have come into contact with the man. The Korea Centers For Disease Control and Prevention said it had identified 57 people with whom he had come into contact and expects the number to increase. One of the 57, who lives in Anyang near Seoul, also tested positive after visiting Itaewon with the Yongin resident.

South Korea has eased social distancing rules as of Wednesday, lifting tough restrictions on entertainment facilities. But health authorities remain on alert over cases with unknown sources of infection, which accounted for about 6.5 per cent of new cases for the past two weeks.

Harry Dempsey 5/7/2020, 8:49:45 AM

Munich Re financial chief ‘puzzled’ by stock market rebound

Olaf Storbeck in Frankfurt

Munich Re’s chief financial officer Christoph Jurecka said that he was “puzzled” by the sharp rise in global share prices since mid-March, warning that the recent rebound on the equities market appeared to be “decoupled” from fundamental developments in the corporate sector and the wider economy.

Mr Jurecka made the remarks on an earnings call with journalists on Thursday, stressing that he was giving his “personal opinion” rather than an official view of the German reinsurance provider.

Since mid-March, the Dow Jones industrial average has risen more than 27 per cent, recovering roughly half of the losses incurred since February.

“I am personally puzzled by the strength of the recovery,” said the chief finance officer of the world’s second-largest reinsurer, adding that the rebound to a large degree seemed driven by expansive central bank policy.

“The question is: how long will this last?”, said Mr Jurecka, adding that “the developments on the equity markets are surprising” relative to the poor performance of the corporate sector and the looming macroeconomic recession.

He expects the recovery to reverse if it becomes clear that there is a second wave of coronavirus infections, if not before then.

Charlotte Middlehurst 5/7/2020, 8:58:51 AM

Retailer H&M says trading ‘muted’ in reopened shops

Richard Milne, Nordic and Baltic Correspondent

Sales at Hennes & Mauritz have plunged 57 per cent in the past two months, with trading “muted” in shops that have reopened.

The world’s second-largest fashion retailer said sales from March 1 to May 6 dropped by between 11 per cent in South Korea to 76 per cent in Spain, and 80 per cent in Italy, compared with the same period a year earlier.

The Swedish company reiterated its forecast that the second quarter, which ends at the end of May for H&M, would be loss-making despite a 32 per cent rise in online sales in the past two months compared with a year earlier.

At the peak of the coronavirus pandemic, about 80 per cent of H&M’s stores were closed compared with 60 per cent that have remained shut, it said on Thursday.

The retail group stressed its liquidity was “good” with cash and unused credit facilities of SKr23.8bn ($2.4bn) but said it wanted “financial flexibility” so was looking “to secure additional credit facilities”.

Charlotte Middlehurst 5/7/2020, 9:25:53 AM

Pret plans to reopen 100 more UK outlets

Alice Hancock in London

Pret A Manger will reopen 100 shops from Monday after piloting social distancing measures, such as limiting customer numbers and separating staff working areas with acrylic screens.

The UK sandwich and coffee chain plans to pivot its business model towards selling more groceries, introducing a macaroni cheese ready-meal range next week, as Britons stay at home and prepare most of their food in their own kitchens.

The decision follows a row back from rival cafe chain Greggs, which halted plans to reopen last week after an enthusiastic response on social media prompted fears of a scrum of customers. Other operators have also been wary, with Patisserie Valerie saying it was cautious of “doing a Greggs”.

Pret, which opened 30 of its sites near to National Health Service hospitals on April 30, intends to open an additional 70 in London.

Harry Dempsey 5/7/2020, 9:28:33 AM

England and Wales figures show ethnic minorities more at risk

Valentina Romei in London

Covid-19 mortality rates for some ethnic groups are higher than for those of white ethnicity in England and Wales since poorer socio-economic conditions and a higher rate of employment in public-facing occupations expose them more to the virus.

Black men and women are at least four times more likely to die from coronavirus than white peers, age-adjusted data released by the Office for National Statistics covering England and Wales revealed on Thursday.

People of Bangladeshi, Pakistani, Indian and mixed ethnicity also had a statistically significant raised risk of death involving Covid-19 compared with those of white ethnicity, the data showed.

However, when accounting for socio-demographic conditions and self-reported health problems and disability, those of black ethnicity were 1.9 times more likely to die of the disease than white people. In other words, geographic and socio-economic factors account for more than half the difference in risk between those of black and white ethnicity.

Myles McCormick 5/7/2020, 9:33:59 AM

UK financial regulators forced to push back majority of initiatives

Matthew Vincent in London

Britain’s financial regulators have disclosed that two-thirds of their planned initiatives for the next 12 months are being delayed by the coronavirus pandemic — but their priorities are to hit the original deadlines for introducing post-Brexit and bank capital rules.

The UK regulatory forum, which comprises the Bank of England, Prudential Regulation Authority, Financial Conduct Authority, Payment Systems Regulator and Competition and Markets Authority, on Thursday brought forward the publication of its timetable “grid” as it helps financial groups’ planning amid the Covid-19 crisis.

Of the 80 initiatives listed, 52 have had their timings amended in response to the pandemic. Among the “higher impact” rule changes being delayed are companies’ climate risk disclosures, new requirements to strengthen the operational resilience of IT systems, and consultations on higher standards of consumer protection.

However, half of the 10 higher impact changes listed maintain their original timescales, indicating they remain the regulator’s priorities for 2020. These include “EU exit financial services legislation” and future “supervision of branches of international firms” — both Brexit preparation measures.

In addition, work on updating UK rules to meet Basel III bank capital requirements and transitioning from the tainted Libor lending benchmark will continue as planned.

Naomi Rovnick 5/7/2020, 10:14:21 AM

Most US voters trust state governors over Trump on lockdown strategy

More than 70 per cent of likely American voters trust their state’s governor over Donald Trump to decide when to reopen businesses, a poll for the Financial Times shows, signalling mounting dissatisfaction with the president’s handling of the coronavirus crisis.

That is the finding of the latest monthly survey carried out by the Financial Times and the Peter G Peterson Foundation, which you can read more about here.

The poll also found that 48 per cent of likely voters believed President Trump’s policies had helped the economy, the lowest level since November. Only 34 per cent thought they were better off financially than they were when Mr Trump took office — also the lowest level since November.

Sarah Provan 5/7/2020, 10:15:17 AM

Climate finance envoy Carney urges nations to keep targets in mind

Leslie Hook in London

Mark Carney, the former governor of the Bank of England, says that governments must keep climate policies in mind as they design their coronavirus recovery plans.

“We are all Leninists now – Leninist in the sense of decades happening in weeks,” he said in remarks in an online panel. “There has been an acceleration of some trends in the economy, many of which are positive… some of which will be challenges.”

He clarified later in the discussion: “Just to be clear, my ‘Leninism’ only extended to the speed of acceleration in some of the changes of the economy.”

Mr Carney continued: “We have large swaths of our population that are either unemployed or having brushes with unemployment, a sense of what it is to be unemployed. And that changes people’s narratives.”

Mr Carney, who departed from the Bank of England in March and is currently an unpaid climate finance envoy for the UN climate talks, added that bailouts of highly polluting industries should take climate goals into consideration.

The larger heavy-emitter industries, most of them are under extreme pressure, and most of them will face some form of restructuring [as we come out of the coronavirus crisis].

As we come of this, certainly, there will be quite a massive reallocation [of] capital required, and the question is, how is that capital going to be channelled.

Climate regulation such as climate risk disclosure should be maintained or extended despite the coronavirus crisis, he added, to give businesses more clarity.

Myles McCormick 5/7/2020, 10:15:28 AM

UK traffic levels returning to pre-lockdown levels, AA says

Peter Campbell in London

Traffic on Britain’s roads is crawling back towards pre-lockdown levels, findings from the AA reveal.

The breakdown group reported a 40 per cent fall in callouts from normal levels in the week following Britain’s lockdown in mid-March. That figure has since climbed to 90 per cent of expected activity, as people increasingly venture out in their vehicles, chief executive Simon Breakwell said on Thursday.

While around half the callouts are for people unable to start their cars on the driveway, often with flat batteries after weeks of sitting idle, the figures do indicate that traffic on the roads is increasing.

“It’s true, far more cars are getting back on the road,” said Mr Breakwell.

The government has warned people only to make essential journeys, such as buying food or medicine or to drive a short distance for exercise, and to avoid visiting family members or going into work unless necessary.

During the lockdown the AA has sent all non-patrol staff home and furloughed some employees. It expects annual profits this year to be “slightly below” last year’s levels due to the outbreak.

In the 12 months to January 31, the AA posted a 3 per cent rise in trading profit to £350m, with revenues 2 per cent higher at £995m, the business said on Thursday. During the year it stemmed a historic fall in paying members, which rose by 8,000 to 3.2m.

Charlotte Middlehurst 5/7/2020, 10:34:34 AM

Free to read

From blood clots to ‘Covid toe’: medical mysteries

When the first cases of a new coronavirus started to appear in China in December, the disease seemed to be an aggressive respiratory infection. An “urgent notice” that month from the Wuhan health commission warned of “successive cases of unknown pneumonia”.

But less than five months after it was first identified, the virus is managing to throw up a series of medical mysteries — from blood clots and strokes to digestive problems — that are confounding the scientific community.

Clive Cookson reports on the variety of Covid-19 symptoms.

Myles McCormick 5/7/2020, 10:43:38 AM

Hilton first-quarter revenues slide 13% on Covid-19 hit

Alice Hancock in London

Hilton, the hotel group, said that revenues had dropped by $284m, or 13 per cent, in the first quarter of 2020 compared with last year as it copes with an “unprecedented” reduction in its business due to the coronavirus pandemic.

Despite occupancy being down only 14 per cent across the group in the three months to the end of March, Chris Nassetta, Hilton’s chief executive, said on Thursday that the company had not been significantly impacted by Covid-19 until March. Rival IHG saw declines of 80 per cent in the first quarter due to its exposure to China.

Hilton did not give any guidance as to how its hotels had performed in April but said that the pandemic would have a “material negative impact” on its business “for an indeterminate length of time”.

At the end of March, it said that it had $9.6bn of long term debt outstanding and cash of $1.8m. It has drawn down the entirety of a $1.75bn revolving credit facility, issued $1bn in senior notes and pre-sold $1bn worth of loyalty points in order to boost liquidity. It has also cut its dividend and halted an ongoing share buyback programme.

Shares in all the major hotel groups have fallen between 32 and 46 per cent since January due to the shutdown in global travel as coronavirus has spread.

Harry Dempsey 5/7/2020, 11:18:48 AM

No quick return to pre-crisis levels of global oil demand, Euronav says

The global economy will not return to consuming 100m barrels of oil per day in the near future and 5 per cent of global demand could be destroyed permanently as a result of coronavirus, said Hugo De Stoop, chief executive of Euronav, one of the largest crude tanker companies.

“We don’t believe the world will go back to 100m barrels per day of oil consumption any time soon. This Covid crisis is playing a role for the long-term,” Mr De Stoop told the Financial Times. “We may go back to 95m b/d by the end of year but the last 5m barrels may have been deleted permanently.”

The tanker market is benefiting from lofty day rates, which have been about $60,000 for supertankers in the past week, because of a spike in demand for floating storage. Although rates have come down from a peak above $200,000 a day, it is highly profitable given a break-even rate of $28,000 per day for Euronav, Mr De Stoop said.

High average levels are due to the fact that we have two types of demand: transportation and storage. They are competing against each other.

The chief of the Belgian company said that it continued to see more requests for its tankers to store oil, despite signs that producers of the fossil fuel were curtailing output amid depressed crude prices.

Investors expect a rough downturn ahead for tanker companies when refineries begin drawing down on their inventories and demand for floating storage dwindles as production cuts take place. A permanent reduction in demand due to reduced travel and less globalised trade would push the tanker market into a supply glut in the long-term, Mr De Stoop said.

Harry Dempsey 5/7/2020, 11:45:34 AM

Teva shares climb on demand for respiratory products

Hannah Kuchler in New York

Shares in Teva jumped as much as 10 per cent in pre-market trading after the Israeli drugmaker confirmed its full-year guidance and beat expectations, partly because of a surge of sales of its respiratory products due to the Covid-19 pandemic.

Sales rose 5 per cent year on year to $4.4bn, beating estimates of $4.2bn, with revenue from respiratory products, including inhalers, up 20 per cent year on year in Europe. In the US, Teva said there had been higher demand for its ProAir authorised generic inhaler because of the pandemic.

The company estimates that about $100m of the revenue came from patients and providers stockpiling because of the pandemic.

Mr. Kare Schultz, Teva’s president and chief executive, said the global crisis is a reminder of the “importance of reliable supplies of high quality generic medicines to meet critical demand”.

Teva swung to net income of $69m, from a net loss of $105m in the same period the year before. Non-gaap earnings per share were 76 cents, far higher than the consensus forecast for 59 cents, as the company also benefited from reduced travel and sales expenses due to the crisis.

For the full year, it still expects net revenues of between $16.6bn and $17bn, and non-gaap earnings per share from $2.30 to $2.55.

Philip Georgiadis 5/7/2020, 11:48:20 AM

Second phase of Moderna’s vaccine trials approved

Hannah Kuchler in New York

Moderna has received US regulatory approval to start the second phase of its trials for its potential Covid-19 vaccine, sending shares in the Boston-based biotech up 10 per cent in pre-market trading.

The company — which was the first in the US to get a vaccine into human testing — said it will now begin the trial shortly. It expects phase three trials, usually by the final stage where the vaccine is tested on a very large group of participants, to begin early in the summer.

Stéphane Bancel, Moderna’s chief executive, said the phase two trial is a “crucial step” towards potentially getting a vaccine approved by 2021. Moderna also signed a deal with Swiss group Lonza in the quarter to boost production of the vaccine candidate, known as mRNA-1273.

“We are accelerating manufacturing scale-up and our partnership with Lonza puts us in a position to make and distribute as many vaccine doses of mRNA-1273 as possible, should it prove to be safe and effective,” he said.

Joshua Oliver 5/7/2020, 11:52:38 AM

Manchester airport group makes masks obligatory

Andy Bounds in Manchester

Manchester, London Stansted and East Midlands airports have told passengers to wear face coverings and gloves from today, the first UK airports to do so.

Manchester Airports Group, which owns the three airports, said all its staff will also wear masks and gloves and will provide them for passengers who do not have them “in the early stages of the pilot”.

Such measures are common in many airports, but those in the UK have followed government guidance that masks are not necessary.

MAG will trial temperature tests, though will not stop those with a fever travelling, and is considering asking all passengers to make a health declaration before entering its airports, which were the third and fourth busiest in the UK prior to the lockdown.

The airport group said it believes people will only start flying again if they feel safe from coronavirus.

Mamta Badkar 5/7/2020, 12:05:49 PM

JetBlue revises Airbus order and seeks to slow cash burn

JetBlue reduced its order book with Airbus as the company looked to lower its aircraft capital expenditures amid the coronavirus pandemic and said it saw a bottom in demand around mid-April.

The New York-based carrier said the revised order with Airbus resulted in a $1.1bn reduction aircraft capex through 2022. The company like other airlines is looking to lower its cash burn and said it is going through about $10m day in May, excluding support from the Cares Act, down from $18m a day on average in the second half of March as the aviation industry struggles to manage a sharp drop in demand caused by coronavirus. JetBlue said its liquidity position reached $3.1bn including payroll support.

“Although the overall number of bookings remained extremely limited, we believe that we reached the bottom in terms of demand around mid-April, and expect to have a better sense of [demand in the] third and the fourth quarter of 2020 by early summer,” Joanna Geraghty, chief financial officer, said.

First quarter revenues fell 15.1 per cent from a year ago to $1.59bn as demand and ticket prices tumbled in March when the coronavirus lockdowns began to take effect. That missed Wall Street projections of $1.69bn.

The company swung to a loss of $268m or 97 cents a share, compared with a profit of $42m or 14 cents a share in the prior year quarter. On an adjusted basis the company reported a loss of 42 cents a share, worse than expectations for a 36 cent loss.

Shares in the carrier fell 1 per cent to $7.91 in pre-market trade.

Philip Georgiadis 5/7/2020, 12:14:20 PM

Sturgeon says ending ‘stay at home’ message could be ‘catastrophic’

Mure Dickie reports from Edinburgh

Scotland’s first minister said that it could be a “potentially catastrophic mistake” to drop the official calls for the public to “stay at home” to contain the coronavirus pandemic.

At her daily briefing Nicola Sturgeon made clear her concerns about reports that Boris Johnson, prime minister, is planning to announce on Sunday a relaxation of the UK’s lockdown. Mr Johnson is expected to outline the UK’s phased exit from lockdown this weekend.

Ms Sturgeon said the Covid-19 reproduction number appeared to be higher in Scotland than other parts of the UK and “could still be hovering around 1”, a level that would suggest no overall fall in cases.

The first minister said she still preferred that Scotland and other nations of the UK should ease lockdown together, but that she would not be “pressured” into a risky premature action.

I particularly strongly believe that for us to drop the clear, well understood, ‘stay at home’ message right now could be a potentially catastrophic mistake.

Joshua Oliver 5/7/2020, 12:17:47 PM

Reach stocks rise despite lockdown hit to regional newspaper revenues

Patricia Nilsson in London

Reach said revenues dropped by almost a third in April, as the lockdown hurt both newspaper circulation and the small businesses that normally advertise in its titles.

The UK’s largest regional news publisher also said emergency cost cuts had saved the company £33m, giving it a cash balance of £58m, including £25m that it has drawn from its revolving credit facility. Since the crisis struck, Reach has rolled out pay cuts, furloughed 20 per cent of staff and scrapped its dividend.

Investors reacted positively to the company’s trading update ahead of its annual general meeting on Thursday, sending its stock price up by as much as 13 per cent. Analysts at Citi summarised the new figures as “cost savings to the rescue”.

Chief executive Jim Mullen said a 5 per cent rise in digital revenue over the four months to 26 April signalled “underlying health”.

The National Union of Journalists criticised Reach for furloughing roughly 1,000 employees and cutting pay for reporters by 10 per cent despite the strong cash reserves.

Adam Samson 5/7/2020, 12:38:43 PM

US jobless claims since lockdowns began exceed 33m after fresh jump

Mamta Badkar

More than 3m Americans filed for first-time unemployment benefits last week taking the number of applications since the coronavirus lockdowns began in mid-March to 33.5m.

The number of initial jobless claims fell to 3.17m in the week ended May 2, the US labour department said on Thursday, from 3.85m the previous week. That compared with economists’ expectations for 3m.

The report showed California processed the largest number of claims at 318,064, according to preliminary state-level estimates that have not been seasonally adjusted.

While the number of jobless claims dipped for the fifth consecutive week, the overall level remains elevated and economists have questioned whether backlogs at state unemployment offices are understating the depths of the hit to the US labour market.

The data come ahead of Friday’s non-farm payroll report, which is expected to show the US economy shed a record 21m jobs and the unemployment rate surged to 16 per cent in April.

Charlotte Middlehurst 5/7/2020, 12:44:41 PM

Coronavirus tracker: Global death toll rises for third day in a row

Steve Bernard, Senior Visual Journalist

Daily deaths increased for the third day running, as 6,811 people died of the disease caused by coronavirus on Wednesday, bringing the global death toll to 257,973.

In the US, 1,949 people died on Wednesday, bringing the number of fatalities to more than 67,000. New Jersey saw the biggest increase, with a further 305 deaths reported. The state is now the second-hardest hit with a total of 8,549 deaths since the outbreak began. New York continues to see a downward trend as it reported 232 deaths, well down from the peak of over 1,000 in early April.

Globally, the number of newly confirmed Covid-19 cases climbed by 89,007 on Wednesday, bringing the total number of infections to 3.71m, according to data from the European Centre for Disease Prevention and Control.

Brazil recorded its deadliest day yesterday as 667 fatalities were reported. Newly confirmed cases soared as 10,503 infections were registered bringing the total to 125,218 in Latin America’s hardest-hit nation.

Russia posted its fourth consecutive day of 10,000 or more new cases. It registered 41,875 infections over the past four days alone as the total number of cases hit 177,160.

Explore data about the pandemic to better understand the disease’s spread and trajectory in the live-updating and customisable version of the FT’s Covid-19 trajectory charts.

Charlotte Middlehurst 5/7/2020, 1:08:40 PM

FDA authorises new coronavirus genetic test

Hannah Kuchler in New York

The US Food and Drug Administration has given emergency approval to the first Crispr-based diagnostic test, a one-hour test that uses a pioneering genetic technology.

Sherlock Biosciences’ test, designed for use in laboratories, was co-developed with one of the first scientists to show how Crispr can be used to edit human genes, Dr Feng Zhang at Boston’s Broad Institute.

Crispr, which stands for clustered regularly interspaced short palindromic repeats, enables the test to identify precisely the exact genetic signature of the Sars-Cov-2 virus that causes Covid-19.

Rahul Dhanda, chief executive of Sherlock, said:

While it has only been a little over a year since the launch of Sherlock Biosciences, today we have made history with the very first FDA-authorised use of Crispr technology, which will be used to rapidly identify the virus that causes Covid-19.

Charlotte Middlehurst 5/7/2020, 1:17:44 PM

Q&A: Can companies still afford to care about sustainability?

Now that companies’ standard operations are being upended by the coronavirus pandemic, we’re going to see just how much they value their sustainability goals — and whether those goals survive when a business is just trying to stay afloat.

Today FT specialists will answer your questions on whether environmental and social initiatives can survive Covid-19.

Members of the Moral Money team Gillian Tett and Billy Nauman, along with Andrew Hill, the FT’s management editor, are available to take any queries posted here.

Harry Dempsey 5/7/2020, 1:31:11 PM

ViacomCBS shares rise as viewers stream during lockdowns

Anna Nicolaou in New York

ViacomCBS shares soared as coronavirus lockdowns boosted streaming at the company behind Homeland, Star Trek and Survivor.

The media company saw record viewing on its streaming platforms in the first three months of March, boosting streaming and digital video sales to $471m, up 50 per cent from a year ago. Subscribers to ViacomCBS streaming platforms reached 13.5m in the quarter.

April was even better. Showtime’s streaming service reported that viewership of TV shows like Homeland grew 50 per cent compared with the same month a year ago. CBS All Access, the streaming service that offers shows such as Star Trek, The Good Fight and Survivor, also reported viewership was up “significantly”.

Shares in ViacomCBS jumped as much as 18 per cent in pre-market trading.
The company also revealed an expanded distribution deal with YouTube, adding 14 channels including MTV and Comedy Central to Google’s live television service this summer.

Total revenues dropped 6 per cent year over year to $6.7bn, while adjusted earnings per share fell 23 per cent to $1.13. Both were ahead of Wall Street forecasts of 94 cents a share on $6.6bn in sales.

Results were “better than feared” said Bernstein analyst Todd Juenger, although he warned that the numbers largely covered a timeframe “before the pandemic decimated advertising and cord-cutting”.

Myles McCormick 5/7/2020, 1:49:25 PM

Oil demand to outweigh supply by June 1, says Goldman Sachs

Demand for oil is set to outstrip supply as early as next month as the emergence of countries across from lockdowns triggers a jump in consumption, according to analysts at Goldman Sachs.

Sweeping restrictions on travel and social contact have caused oil demand to crater this year, falling by as much as a third as people were forced to stay home to halt the spread of coronavirus. The glut this created forced US benchmark crude prices into negative territory for the first time ever in April – meaning producers were in effect paying for contracts to be taken off their hands.

But analysts at the Wall Street bank reckon a rapid increase in demand as countries loosen restrictions, coupled with a drop off in supply as producers slash output, mean the market is on the cusp of rebalancing and falling back into a deficit by June 1.

“A balanced market is within eyesight,” said Jeff Currie, global head of commodities research at Goldman, on a call with reporters. “We’ll likely turn the corner sometime in the next few weeks.”

Demand reached a nadir in mid-April, tumbling by more than 30m b/d from the 100m b/d consumed at the beginning of the year, according to Goldman. It is now down by about 19m and rising. Meanwhile about 12m b/d has been taken out of the market through economic necessity and voluntary reductions.

“There is a lot less supply out there than there was a week and a half ago and demand is a lot stronger than it was a week and a half ago,” said Mr Currie. “I’m not going to say were out of the woods in any shape or form right now. The main point is that we have a line of sight to that rebalanced market.”

Matthew Rocco 5/7/2020, 1:50:38 PM

Wall Street climbs as jobless claims slow

US stocks rallied after the opening bell, as the pace of weekly jobless claims continued to ease.

The S&P 500 jumped 1.4 per cent to 2,888, a day after shedding early gains to snap a two-day winning streak. Strength in the communication services and technology sectors led the index higher on Thursday morning. The tech-heavy Nasdaq Composite was also up 1.4 per cent, taking it to positive territory for the year.

The US labour department said on Thursday there were 3.17m Americans who filed for unemployment benefits last week, down from 3.85m during the previous week. Jobless claims in the past seven weeks have totalled more than 33m amid widespread business closures during the pandemic.

Capital Economics noted that a rise in continuing claims last week suggested that “very few people on temporary layoff were being recalled to work”.

“But that may just be because the lockdowns didn’t begin to ease until the last week, so hopefully there will be a much smaller increase in continuing claims, even a decline, when the figures for the week ending May 2nd are reported,” the group said.

Oil prices were higher, with West Texas Intermediate crude up 9 per cent to $26.15 a barrel. Brent rose 5.7 per cent to $31.42 a barrel.

Charlotte Middlehurst 5/7/2020, 2:03:47 PM

What you might have missed…

To readers in the Americas just tuning in, here is the latest coronavirus news from our FT reporters.

The US Federal Drug Administration has granted emergency approval to a new coronavirus test called Crispr that uses genetic technology designed by Sherlock Biosciences.

Biotech company Moderna was given a green light to begin the second phase of trials for a potential Covid-19 vaccine, sending its share price up 10 per cent in pre-market trading.

Global deaths increased for the third day running as Covid-19 claimed 6,811 lives as of Wednesday. The total toll has risen to 257,973.

A fresh jump in US jobless claims stoked labour market fears. The number of applications made since the lockdowns began rose to above 33m last week.

Scotland’s first minister Nicola Sturgeon said that it could be a “potentially catastrophic mistake” to drop the official calls for the public to “stay at home” to contain the coronavirus pandemic.

Mark Carney, former governor of the Bank of England, urged governments to keep climate policies in mind as they design their coronavirus recovery plans.

Hilton, the hotel group, reported revenue falls of $284m, or 13 per cent, in the first quarter of 2020 compared with last year.

Naomi Rovnick 5/7/2020, 2:03:47 PM

Czech Republic cuts interest rates for third time in two months

James Shotter in Warsaw

The Czech central bank has cut its benchmark interest rate for the third time in two months, as it seeks to stifle the economic impact of the coronavirus pandemic.

The Czech National Bank said that it was cutting its two-week repo rate by 0.75 percentage points to 0.25 per cent. It also lowered its Lombard rate by 1 percentage point to 1 per cent.

The Czech Republic has fared far better than many countries in western and southern Europe during the crisis and has already begun relaxing many of the restrictions put in place to stem the spread of the novel virus.

However, like other countries in the EU, its economy has been hit hard by the lockdown. In recent weeks both the government and the central bank have launched a series of measures to protect companies and jobs.

The central bank said that it would announce further measures later on Thursday.

Naomi Rovnick 5/7/2020, 2:18:54 PM

Bonus uncertainty narrows City of London workers’ home loan options

James Pickford

British bankers and other financial workers who receive much of their overall pay in bonuses have seen their mortgage options narrow sharply as lenders take fright at the risks of variable pay in the coronavirus crisis. 

Before the pandemic, most lenders would accept bonus payments when judging whether a borrower could afford a mortgage. If they could show a consistent level of bonuses over three years, between 50 to 100 per cent of the bonus would be added into the affordability calculation depending on the lender’s policy. 

Since April, however, the biggest lenders have been telling mortgage brokers they will either not consider bonus or commission payments or would only consider a much smaller percentage of the bonus than previously. 

Read more from James on City workers’ mortgage woes here.

Mamta Badkar 5/7/2020, 2:32:35 PM

Neiman Marcus files for bankruptcy protection

Alistair Gray

Neiman Marcus, the upscale department store chain that began by bringing high fashion to downtown Dallas in 1907, has filed for bankruptcy protection, becoming the latest retailer to be tipped over the edge by the coronavirus shutdown.

The private-equity backed company, which staggered on with a heavy debt burden for years despite its struggles to compete in the age of ecommerce, finally succumbed after business ground to a halt in recent weeks.

Neiman Marcus said on Thursday it planned to use the Chapter 11 process to eliminate $4bn worth of debt. Large creditors had committed to provide $1.43bn in financing to help it through the court-mandated restructuring and would become majority owners of the retailer, it said.

The filing, which comes just three days after the bankruptcy of preppy clothing chain J Crew, throws into doubt the future of 14,000 employees, many of whom had already been furloughed.

Neiman’s filing also casts a shadow over the retail property market in several US cities. The chain’s locations include Beverly Hills, Boca Raton and New York’s Hudson Yards, where it opened last year.

Sarah Provan 5/7/2020, 2:34:20 PM

France plans to relax lockdown from next week

Victor Mallet in Paris

France has confirmed it will start easing its two-month-old lockdown across the whole of the country except the Indian Ocean territory of Mayotte from Monday.

Some special restrictions will continue to apply in the densely populated Paris region because the number of Covid-19 cases remain high, the prime minister said on Thursday, even if new infections are slowing.

Public transport will be tightly controlled to ensure social distancing, and secondary schools and parks in the capital will remain closed.

Édouard Philippe described the process of deconfinement as a “tightrope walk” in which it was essential to restore economic and social life but equally essential to protect the health of the population. More than 25,000 people have died in France as a result of the pandemic since March 1.

“The aim of the whole of France, not just the government, is to ensure that we can live with this virus and learn to protect ourselves,” Mr Philippe said, reminding the nation in a televised address that there was as yet “no vaccine, no treatment, and no collective immunity”.

Mayotte was excluded from deconfinement because the number of cases, albeit low, is rising.

Peter Wells 5/7/2020, 2:58:29 PM

GM to issue bonds with junk territory yields

Claire Bushey in Chicago and Joe Rennison in London

General Motors is issuing bonds paying yields in junk territory as the company shores up liquidity.

The Detroit automaker is issuing a seven-year senior unsecured note that will pay investors 7 per cent above benchmark Treasury yields. Three- and five-year notes will pay interest of 6 and 6.5 per cent above Treasuries, respectively.

GM turned a $294m profit in the first quarter despite a pandemic that closed factories and collapsed demand for new cars and trucks. Although US and Canadian autoworkers will return to plants on May 18, chief executive Mary Barra said on Wednesday the virus’s second-quarter impact will be worse.

The company said on Thursday that “these actions are precautionary and proactive to make sure we have additional liquidity buffers in place … Once we do restart, we expect our liquidity will stabilise from the levels we experienced while we were not producing vehicles.”

Fitch Ratings downgraded GM on Thursday to BBB-, one notch above junk.

The size of the issuance is expected to be announced later in the day and will depend on investors’ appetite for the bonds.

Naomi Rovnick 5/7/2020, 3:22:19 PM

WHO: Covid-19 may overwhelm sub-Saharan Africa’s health systems

Neil Munshi, west Africa correspondent

Up to 44m people in sub-Saharan Africa could be infected with Covid-19 in the first year of the pandemic if containment measures fail, leading to as many as 190,000 deaths, the World Health Organization has warned.

WHO research published on Thursday took into account the virus’s likely slower transmission rate on the world’s youngest continent, which has recorded roughly 52,000 cases and 2,000 deaths.

But it also warned that without adequate containment measures the virus, which is thought to have arrived later in sub-Saharan Africa than in many other regions, would “smoulder” in hotspots and overwhelm fragile medical sectors.

Dr Matshidiso Moeti, the WHO Regional Director for Africa, said: “While Covid-19 likely won’t spread as exponentially in Africa as it has elsewhere in the world, it likely will smoulder in transmission hotspots.”

Covid-19 could become a fixture in our lives for the next several years unless a proactive approach is taken by many governments in the region. We need to test, trace, isolate and treat.

The WHO predicted deaths in a range of 83,000 to 190,000 and infections of between 29m and 44m if effective containment measures are not implemented.

Of this forecast range, the 3.6m-5.5m cases that would require hospitalisation would overwhelm the available medical capacity in much of Africa, the WHO warned.

A WHO survey of the 47 countries in March revealed that there are on average just nine ICU beds per country. “These would be woefully inadequate,” the WHO said.

The study, based on prediction modelling, examined the 47 countries that make up the WHO African Region, which roughly corresponds to sub-Saharan Africa and excludes the north African countries that have seen some of the continent’s highest rates.

Beyond South Africa, few countries are testing widely. Some, like Nigeria, have begun easing lockdowns even as the number of cases continues to rise, as they seek to mitigate the economic impact that lockdowns are having on citizens who largely live hand-to-mouth.

Joshua Oliver 5/7/2020, 3:31:15 PM

Canada to top up wages for key workers

Canada will provide a salary top-up for essential workers earning minimum wage.

The federal government will spend roughly $C4bn (US$2.9bn) to fund three quarters of the wage boost, prime minister Justin Trudeau said, according to a deal reached with all regional governments.

The federal government last month pledged to lift wages for key workers, including those in the health, care, and food sectors. Under the deal announced by Mr Trudeau, regional governments will provide the remaining quarter of the extra cash and determine eligibility and the amount of aid.

“If you are risking your health to keep this country moving and you’re making minimum wage, you deserve a raise,” Mr Trudeau said.

Canada has reported 4,280 deaths from Covid-19, with 63,895 confirmed cases.

Peter Wells 5/7/2020, 4:13:37 PM

New York pushes deadline for rent relief out to August

New York will extend the moratorium for coronavirus-related hardship by two months, providing additional rent relief for affected residential and commercial tenants.

The original moratorium was due to expire in June, but that deadline will now be pushed out by 60 days to August 20, Governor Andrew Cuomo announced on Thursday at his daily press conference.

Mr Cuomo said the biggest issue citizens have raised with him is that they need to pay their rent, a situation that has been exacerbated for some by the loss of their job. “I hope it gives families a deep breath,” he added.

The governor said he did not have a “crystal ball” and it was too soon to decide what would happen to the moratorium after the August deadline.

A further 231 people in New York died from coronavirus over the past 24 hours, Mr Cuomo said today, one fewer than Wednesday’s rate of increase. That has seen the daily death rate hover between 200 and 300 for about the past week.

Mr Cuomo revealed additional findings from the state’s antibody test survey, namely that frontline workers like medical staff, had lower rates of coronavirus infection than the general population.

Sarah Provan 5/7/2020, 4:18:50 PM

Trump offers in call to Putin to send medical kit to Russia

Max Seddon in New York and Katrina Manson in Washington

US president Donald Trump has offered in a telephone call to his Russian counterpart Vladimir Putin to send Russia a shipment of medical equipment to help fight the pandemic, the Kremlin claimed on Thursday.

In a conversation held to mark the 75th anniversary of the end of the second world war in Europe, Mr Trump “offered to send a shipment of medical equipment to Russia”, the Kremlin said in a readout of the call.

The White House said that Mr Trump “reiterated that the United States is working hard to care for Americans at home and is also ready to provide assistance to any country in need, including Russia”, White House press secretary Judd Deere said, but did not say whether the US would send Russia medical supplies.

Mr Putin sent a planeload of medical supplies to the US last month as part of a charm offensive that also saw aid dispatched to Italy and Serbia.

Naomi Rovnick 5/7/2020, 4:24:05 PM

UK promises ‘sure-footed’ and gradual easing of lockdown

George Parker in London

British foreign secretary Dominic Raab has said that any easing of Britain’s lockdown would be carried out in a “sure-footed and sustainable” way, with ministers reserving the right to reintroduce restrictions.

More than 30,000 people have now died from Covid-19 in Britain, according to government figures.

Speaking at the daily Downing St press conference, Mr Raab said:

We’ve prevented the number of deaths rising to even higher levels.

He added that Boris Johnson, prime minister, would on Sunday set out “milestones” for the gradual lifting of the lockdown and the conditions that would have to be met before restrictions were eased.

At the briefing, Mr Raab was challenged on why British people should refrain from sunbathing over the bank holiday weekend when newspapers had been briefed that Mr Johnson would lift a ban on some outdoor activities on Sunday night.

Mr Raab said:

The prime minister will set out a roadmap.

Any changes in the short term will be modest, small, incremental and very carefully monitored.

Mr Johnson is widely expected to set out modest “modifications” to the lockdown when he addresses the country on Sunday evening.

Mr Raab said at Thursday’s briefing that the UK’s R measure – the average number of people infected by each person with coronavirus – stood between 0.5 – 0.9; earlier in the week it was set at 0.6 – 0.9 per cent.

He also confirmed the government had failed to hit its target of testing 100,000 people a day for the fifth day in a row; the latest data showed 86,583 people had been tested.

Mr Raab said any lifting of restrictions would be based on scientific advice and would be measured against any risk that they might lead to a damaging second peak in infections.

The foreign secretary also admitted that the country had faced “real challenges” in handling the virus, notably in the provision of protective equipment and in defending care homes.

Peter Wells 5/7/2020, 4:36:42 PM

Northern Ireland extends lockdown by three weeks

Arthur Beesley in Dublin

Northern Ireland’s leaders urged people to consider using face coverings in a bid to hold back Covid-19 as the region’s devolved government prolonged its lockdown by three weeks from Saturday.

The decision on Thursday came as Arlene Foster, the first minister, criticised a member of her Democratic Unionist party for shopping online during a meeting on coronavirus of the regional assembly’s health committee.

“Today we have decided not to make any alterations to the regulations,” Mrs Foster told a virtual press conference in reference to lockdown measures that have shut large parts of the regional economy. “We still believe that they are needed and are proportionate to deal with the threat of spread of the virus.”

Michelle O’Neill of Sinn Féin, the deputy first minister, said the situation remained “precarious” with a virus reproduction number of 0.8-0.9 in the region. “It demonstrates to us that we have no headroom for change,” she said. “We’re still on a knife-edge in terms of our fightback.”

Mrs Foster said the executive resolved that people consider covering their faces for short periods in enclosed spaces where social distancing was not possible. “It is important to differentiate between the use of face masks manufactured for a clinical setting and face coverings, which are often home-made, or natural clothing items, used by individuals in day-to-day life — and we are focused on face coverings.”

At an earlier meeting of the health committee Alex Easton, a DUP assembly member, was pictured looking at boots on his laptop, for which he apologised. Mrs Foster said: “Alex has acknowledged that he should not have been doing that and of course he should not have been shopping online at a time when we are in this health crisis.”

Peter Wells 5/7/2020, 4:39:12 PM

Personal valet to Trump tests positive for Covid-19

James Politi in Washington

A member of the US military who works at the White House has contracted the coronavirus, a senior Trump administration official said on Thursday, as US media identified the individual as one of Donald Trump’s personal valets.

“We were recently notified by the White House Medical Unit that a member of the United States Military, who works on the White House campus, has tested positive for coronavirus. The President and the Vice President have since tested negative for the virus and they remain in great health,” Hogan Gidley, a White House spokesperson said.

Mr Trump has taken more precautions in recent weeks to prevent exposure to the coronavirus, after initially remaining in close proximity with top aides and even shaking hands with business leaders at public events.

Matthew Rocco 5/7/2020, 4:47:34 PM

US gun maker reports surge in demand amid pandemic

A “rapid” uptick in US consumer demand for guns began in March as states implemented lockdown measures, boosting sales at firearms manufacturer Sturm Ruger.

Background checks – a gauge of US gun sales – were the highest on record last year, and the FBI reported a sharp rise in each of the past four months. Demand has historically accelerated in presidential election years, but this year’s jump in sales has also coincided with stay-at-home orders and other restrictions in response to the spread of coronavirus.

Ruger chief executive Christopher Killoy said there has been a “significant increase in consumer demand” since the latter stages of the March quarter. “Anecdotal evidence suggests that this increased demand, especially during the last few weeks of the quarter, may likely be related to Covid-19, the impact of state-level restrictions and heightened concern for personal protection,” he added.

Mr Killoy also noted the “suddenness” of the demand surge, drawing a contrast to a gun sales boom in 2012 and 2013 that followed an election cycle.

US background checks were up 42 per cent year on year in the first quarter when adjusted to strip out non-purchasing activity such as permit applications. Ruger estimated that sales from its distributors to retailers increased 37 per cent. The company said it was unable to ramp up production quickly enough to keep up with demand in March, leading to a reduction in inventory.

The Connecticut-based company booked first-quarter earnings of 87 cents a share, up from 74 cents, on net sales of $123.6m, compared with $114m a year ago. The results beat analysts’ forecast of 72 cents a share in earnings and revenue of $116.1m.

Shares rose 1.5 per cent in recent trading. The stock has gained more than 14 per cent since the start of the year.

Peter Wells 5/7/2020, 5:01:10 PM

Norway to reopen entire school system

Richard Milne in Oslo

Norway will become one of the first European countries to reopen its entire school system after it said that all pupils aged over 10 would return from Monday.

Prime minister Erna Solberg said she hoped Norway would get its “every day” back by mid-June under plans announced on Thursday evening.

Secondary schools would open next week – local councils will be able to decide the exact day – as would driving schools, and bingo and sports halls.

From June 1, bars and other establishments that do not serve food will be allowed to re-open with table service only, as will theme parks and organised swimming. Two weeks later, events for up to 200 people will be allowed – up from 50 today – while fitness centres and swimming pools will open to the public.

“The government has chosen to prioritise children, then working life, and finally other activities …You have shown us patience, now it’s our turn to give something back,” Ms Solberg said.

Norway locked down on March 12 but has in recent weeks re-opened kindergartens and primary schools.

Peter Wells 5/7/2020, 5:14:16 PM

UK government recoups most of the £90m it spent on dodgy testing kits

Camilla Hodgson in London

The UK government has recouped £70m of the £92m it spent on millions of unreliable Covid-19 antibody tests it ordered.

Ministers ordered 17.5m antibody tests – which screen for whether someone has recovered from the disease – from nine suppliers this year, only to find that none of the tests worked well enough to be used.

On Friday, Kathy Hall, director of Covid-19 Testing Strategy at the Department of Health and Social Care, disclosed that the government had issued purchase orders totalling around £92m, but that it had managed to cancel £70m worth of orders “with no liability.”

“Negotiations are ongoing with other suppliers,” she added.

Ms Hall said that, where possible, the department only bought samples without committing to larger purchases, but in other cases had to buy tests based on the seller’s minimum order rules.

“We placed a limited number of these minimum volume orders in order to secure manufacturing output when almost every country around the world was placing similar orders,” she said.

“We did not want to be in a position of finding a suitable test, and then not being able to source supply.”

Mamta Badkar 5/7/2020, 5:33:40 PM

Denmark to open eateries and shops on Monday as restrictions ease

Richard Milne in Oslo

Denmark is to re-open restaurants, cafés, shops, and secondary schools in the next two weeks as part of the second phase of its re-opening from its coronavirus lockdown.

Danish political parties on Thursday evening agreed that on Monday restaurants, cafés, and shops could open. A week later on May 18, schools from 6th to 10th grade can re-open as can libraries and churches.

Bars, fitness centres, theatres and cinemas are not allowed to re-open under the plan, under which the government will also announce on June 1 whether it will allow foreigners to enter Denmark’s borders again.

Danish health authorities published models earlier showing the spread of the virus was likely to slow in the country even if most of society was re-opened so long as social distancing of 2 metres was maintained.

Mamta Badkar 5/7/2020, 5:48:11 PM

Varadkar says virus may have circulated in Ireland late last year

Arthur Beesley in Dublin

Ireland reported further progress in suppressing Covid-19 as Leo Varadkar, the prime minister, said the disease may have circulated late last year in the country, weeks before the first cases were discovered.

On Thursday evening, Dublin reported 29 new coronavirus deaths, taking the total to 1,403. The number of infections rose by 137 to 22,385, the lowest since late March, and data show the numbers of intensive care admissions, new cases and deaths have fallen for more than a week.

“We’ve seen a range of trends that have given us continuing reason for optimism that we’re continuing the journey of improvement,” Tony Holohan, the chief medical officer, told a press conference. The country’s virus reproduction number is now between 0.5 and 0.6, down from 4.5 at the beginning of the outbreak.

Although the first Irish cases were detected in February among people who had travelled in northern Italy, Mr Varadkar said it should not be assumed that the virus came to the country from Italy. “It is noteworthy that initial experts suggest from retrospective testing, that the virus was circulating in France as far back as December last year. That is before the virus even had a name or a test for it,” he told parliament.

“In some ways this is not surprising, France is well connected to China with dozens of flights every day. And Ireland is well connected to France. Indeed, it is possible that the virus was already in Ireland last year or in January this year.”

The current phase of Ireland’s Covid-19 lockdown continues until May 18, but Mr Holohan said it was still too early to say whether the country could start to reopen the economy at that point.

Peter Wells 5/7/2020, 7:02:26 PM

JPMorgan staff told they will not be returning to their offices for several weeks

Laura Noonan, in New York

JPMorgan Chase has warned staff that they will not be returning to their offices for several weeks after countries and cities announced they would be easing their restrictions, highlighting the extensive preparations that must be carried out before workers get back to their desks.

America’s biggest bank laid out its approach to bringing staff back to the office in an internal memo on Thursday. The bank’s group operating committee acknowledged that “restrictions are being lifted” in some countries and parts of the US, but asked staff to be patient.

“We are still facing a global pandemic and the lifting of restrictions is just one important piece of being in a position to return employees safely to the office,” the operating committee wrote.

“We must have the right processes, protocols and practices in place before more employees return.”

Those processes include health screening on the way into buildings, rearranging desks, and working out how to get people through large buildings while maintaining social distancing.

“It is also important to note that not all employees will return to a location at the same time,” JPMorgan said. “It will happen in waves over a period of time, with business leaders prioritising who returns when.”

The bank has convened a “Return to the Office” taskforce, which will update staff as decisions are made. It hopes to give “two to three weeks notice” to workers returning to their office, so they can make arrangements for childcare and transport.

Peter Wells 5/7/2020, 8:07:20 PM

Uber sales top forecasts as food delivery offsets ride sharing

Dave Lee in San Francisco

A tumble in global ride-sharing demand was offset by a surge in food delivery, Uber said, as it reported stronger than expected revenues for its first quarter.

But the company’s losses swelled to $2.9bn for the quarter, from a $1bn loss a year ago. It attributed the loss to a previously-announced $2.1bn writedown on the value of its investments, which it blamed on the impact of the coronavirus pandemic. Uber’s portfolio includes minority stakes in China’s Didi Chuxing, and Grab, an app popular in south-east Asia.

Without the charge, Uber said its net loss would have been $1.1bn.

Despite income from rides dropping 3 per cent on the same period last year, overall revenues grew to $3.5bn, up 14 per cent on 2019, and slightly above Wall Street’s expectations.

As customers began entering lock down, use of Eats surged, Uber said. Gross bookings increased 54 per cent year-on-year, though the segment still operated at a loss of $313m, discounting interest, taxes, depreciation and amortisation costs.

The company did not offer guidance for the second quarter.

“While our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” Dara Khosrowshahi, Uber’s chief executive, said.

“Along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up.”

Financial assistance for drivers, plus free rides and deliveries for vulnerable citizens and medical workers, cost the company $19m in revenue, it said. A further $5m was spent on other Covid-19-related measures, mostly the procurement and distribution of personal protective equipment.

Matthew Rocco 5/7/2020, 8:11:51 PM

Tech stock rally turns Nasdaq positive for the year

Tech stocks helped lead a Wall Street rally that sent the Nasdaq Composite into positive territory for the year, even as sliding US Treasury yields indicated the depth of concern about the economy.

The tech-heavy Nasdaq climbed 1.4 per cent, wiping out its 2020 losses. The S&P 500 jumped 1.2 per cent, with its communication services sector — which includes Facebook and Google’s parent company, Alphabet — up 2 per cent.

The advances came as investors tracked the lifting of lockdowns that have paralysed economic activity across the globe.

Equity investors took another set of hefty US jobless claims in their stride, focusing on the slowing trend of furloughs and lay-offs. A total of 3.17m Americans filed for unemployment benefits last week, down from 3.85m a week earlier, bringing the tally for the past seven weeks to more than 33m.

The Treasury market signalled that the economic damage will necessitate very low interest rates for a long time. The two-year yield hit a record low of 0.129 per cent, down 0.05 percentage points, and the five-year note hit 0.293, also a record low, down 0.08 percentage points.

The yield on the benchmark 10-year Treasury note fell 0.09 percentage points to 0.63 per cent.

Peter Wells 5/7/2020, 9:40:33 PM

US death toll tops 70,000 as New York fatalities surpass 20,000

New York’s coronavirus death toll topped 20,000 on Thursday, taking the total number of deaths in the US since the pandemic began to just over 70,000.

The hardest hit state has reported 20,828 deaths, according to data compiled on by the Covid Tracking Project.

Andrew Cuomo, the state’s governor, said today that a further 231 people in New York had died from coronavirus over the past 24 hours. But the overall New York tally increased by 941, with the Covid Tracking Project saying most of those “were newly confirmed, but did not occur in the last 24 hours”.

Including the revised New York deaths, the US’s daily toll of 2,746 represents a record high, up from 1,949 on Wednesday. The previous daily record was 2,700 on April 29.

Other states that had large increases over the past day were: Pennsylvania, up 310; New Jersey, up 252, and; Illinois, up 137. These are, respectively, the fifth, second and sixth hardest hit states in terms of total fatalities.

Since the pandemic began, 70,002 people have died from Covid-19 in the US, according to the Covid Tracking Project.

Peter Wells 5/7/2020, 10:30:10 PM

US banks call for clarity on which companies can keep PPP money

Kiran Stacey in Washington

US banks are urging the Trump administration for clarity on which companies should be allowed to keep the money they received under the Paycheck Protection Program, which is designed to encourage them to continue employing staff during the coronavirus crisis.

Rob Nichols, the chief executive of the American Bankers Association, has written to Steven Mnuchin, the US Treasury secretary, and Jovita Carranza, the head of the Small Business Administration, asking them to set out guidance on which businesses should return their PPP funds.

Several companies, including the chain restaurants Potbelly and Shake Shack, have returned their PPP money after an outcry that they were crowding out smaller enterprises. Others are unsure whether they will be allowed to keep their money or forced to repay it, especially if they have been unable to hire back the number of staff mandated by the terms of the scheme.

Mr Nichols urged the two departments, which are running the $610bn scheme, to be clearer about the terms under which loans would be forgiven. He said in his letter: “This program has already provided more than 4m loans to small businesses across the country, but until we resolve some of these remaining issues, this financial lifeline will remain a work in progress. Only by finalising this much-needed guidance will borrowers and banks have the certainty they need to move forward.”

Peter Wells 5/7/2020, 11:07:52 PM

Investors pull money from US equity funds for third consecutive week

Richard Henderson in Melbourne

Investors have pulled money from US equity funds for the third consecutive week despite a bumper run in the stock market that led to the biggest monthly gain in more than three decades in April.

Mutual funds and exchange traded funds that invest in US stocks had $9.3bn in outflows in the week ending Wednesday, extending the sum over the past three weeks to $12.9bn, according to data from EPFR Global.

The outflows come after a recent jump for the stock market: US blue-chips are up 29 per cent from the low point reached in March. Equities staged a swift fall earlier this year as countries around the world imposed lockdowns to stem the spread of coronavirus, crippling global commerce.

April marked the best monthly gain for the S&P 500 since 1987 as investors looked beyond the health crisis and the near-term hit to corporate profits, which are expected to fall 14 per cent in the first quarter alone, according to Credit Suisse data.

Earnings for the full year are anticipated to drop by one third to $110 a share for companies in the S&P 500 before rocketing back in 2021 to surpass levels seen last year, according to Goldman Sachs estimates, helping explain the optimism driving the recent rally.



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