US death toll rises by more than 2,000 for third straight day
Peter Wells in New York
The US’s death toll increased by more than 2,000 for the third day in the row, taking the total to more than 57,000.
Over the past 24 hours, a further 2,041 people died from coronavirus, according to data compiled by the Covid Tracking Project, down from a record daily increase of 2,700 on Wednesday.
New York had its smallest daily increase in deaths — 306 — since March 30, but the 18,321 fatalities since the outbreak began keep it placed as the hardest-hit state in the country.
New Jersey reported a further 458 deaths over the past 24 hours, a record daily increase that takes its overall tally to 7,228. It is the second-hardest hit state.
Since the outbreak began, 57,266 people have died, according to CTP.
Visa’s payments networks recover, driven by debit card spending
Robert Armstrong in New York
Spending on Visa’s payments networks has recovered in recent weeks, the company said as it reported its results for the March quarter.
Spending by Visa customers bottomed in the last week of March, when it fell almost 30 per cent from a year earlier. But in the week ended April 28, the decline was just over 10 per cent.
The recovery has been driven by debit card spending, which is now up slightly from a year earlier. Spending on credit cards remains deeply depressed.
The company also reported a surge in online payments. Transactions completed without a physical card, excluding travel, were up almost 30 per cent in recent weeks.
The spending patterns match those reported by Visa’s competitor Mastercard earlier in the week. Mastercard’s results spurred a sharp rally in the shares of credit card lenders.
Revenues and earnings at the company, at $5.9bn and $1.38 a share, rose 7 per cent and 6 per cent respectively in the first three months of the year, as much of the quarter’s activity was not affected by the coronavirus pandemic. Both figures were slightly ahead of Wall Street’s estimates.
Visa’s shares fell 1 per cent in after-market trading. They are up 16 per cent in the past month.
Asia-Pacific stocks track Wall Street lower
Stock markets in Asia-Pacific slipped on Friday after US stocks fell following a larger-than-expected jump in unemployment claims underlining the hit to the economy from the coronavirus pandemic.
The Topix in Japan started May 0.9 per cent lower and the S&P/ASX 200 in Australia fell 0.6 per cent.
South Korean, Hong Kong and Chinese markets are closed for Labour Day.
The S&P 500 closed 0.9 per cent lower on Thursday, but managed to gain 12.7 per cent for April, its best month since January 1987. That fall came after more than 3.8m Americans filed for jobless benefits last week, taking the total number of claims to 30m in the six weeks since lockdowns began.
S&P 500 futures were down 1 per cent.
West Texas Intermediate, the US crude benchmark was up 3.3 per cent at $19.46 a barrel.
Bangladesh starts to reopen clothing industry after lockdown
Susannah Savage in London
Bangladesh is reopening its garment factories that supply some of the world’s biggest clothing brands, raising concerns that workers are being put at risk to help the country reboot its economy.
The world’s second-largest exporter of clothes, whose 4,500 factories supply retailers such as Walmart and Marks and Spencer, has reported just 6,000 cases out of a population of 170m. But critics say testing has been low and warn that many of the coronavirus hotspots are in the garment industry districts on the outskirts of Dhaka, the capital.
The sector is a backbone of Bangladesh’s economy and has been pummelled by the country’s lockdown measures at a time when it is also suffering in Europe and North America. The industry is worth $34bn, contributes more than 80 per cent to the country’s export revenue and represents about 13 per cent of gross domestic product.
Since March, however, more than $3.5bn worth of clothing orders have been cancelled, according to the Bangladesh Garment Manufacturers and Exporters Association.
Read the full story here.
Here’s a pick of the latest corporate news
Strong growth in Apple services and accessories, such as Airpods and watches, helped the iPhone maker beat analysts’ estimates and increase revenues slightly last quarter, even though it shut retail stores across the globe because of coronavirus.
Amazon warned coronavirus measures could cost it as much as $4bn in its next quarter, potentially wiping out any gain from a surge in sales.
Ford has unveiled what it calls “the playbook” for keeping employees safe from the spread of Covid-19 when North American plants reopen. The new routine, learned from reopening plants in China, involves temperature checks and issuing employees a kit that includes a mask, face shield, goggles and hand sanitiser.
German insurance giant Allianz ditched its 2020 profit target after operating earnings dropped 23 per cent year-on-year between January and March.
News you might have missed
A third of France is currently in a “red category” zone that would prevent release from the coronavirus lockdown on May 11 if the circulation of Covid-19 and the capacity to treat and test patients does not improve by then, according to maps released by health minister Olivier Véran on Thursday.
Spain has set out rules for people going for walks or exercising outdoors in the latest, incremental relaxation of the country’s almost seven-week-old lockdown.
Russian prime minister Mikhail Mishustin says he has been diagnosed with Covid-19, the infection caused by coronavirus.
British prime minister Boris Johnson said he was confident the economy would bounce back strongly but added that austerity would “certainly not be part of our approach” when it came to rebuilding public finances, speaking at a Downing Street press briefing.
Global smartphone shipments fall 16.8% in first quarter
Shipments of smartphones fell 16.8 per cent in the first three months of 2020 as the coronavirus outbreak forced production to be shut down and consumer demand fell, according to a research house.
Omdia’s Smartphone Intelligence service found shipments fell to 274.4m units in the first quarter, down from 329.9m a year earlier, with all major brands feeling the squeeze.
Lockdowns and restrictions on the movement of people in China forced factories to extend the lunar new year break, which stopped production of phones and the components used in handsets.
Apple on Thursday reported that sales of its iPhone fell 6.7 per cent in the three months to March, however this was offset by sales of accessories such as its watches.
Launches for new models had also been affected, Omdia said. It forecasts global smartphone shipments will fall 13.1 per cent year on year in 2020 to 1.2bn units.
Samsung shipped 58.9m units, down 17 per cent year on year, with Huawei shipments also falling 17 per cent to 49m units. Apple shipments were down 12 per cent to 38.5m units.
South Korea posts first trade deficit in 8 years as pandemic hits exports
Edward White in Wellington
South Korea has suffered its first trade deficit in eight years, highlighting the economic challenges facing the country despite its success in battling the coronavirus outbreak at home.
The value of exports from Asia’s fourth-biggest economy sank 24 per cent from the year before to $36.9bn, while imports dropped 16 per cent to $37.8bn, according to Refinitiv data.
Shipments of computer chips, the country’s biggest export item, were down 15 per cent, while exports to China fell 18 per cent.
April marked the first time in more than eight years that the export-dependent economy has suffered a monthly trade deficit, according to state news agency Yonhap.
The data come a day after health officials in Seoul reported no locally transmitted coronavirus cases for the first time in two months, the latest sign that Seoul’s focus on rapid testing and contact tracing has proved an effective model for battling the pandemic.
The government in Seoul has already announced virus related spending of almost $200bn as it attempts to shore up battered industries and financial markets as well as protect jobs.
Beijing cracks down on Hong Kong while world looks away
While the world is distracted by the coronavirus pandemic, Beijing has ramped up the pressure on Hong Kong’s pro-democracy movement. Fifteen of its most high-profile members have been arrested for unauthorised assembly.
The FT’s Sue-Lin Wong talks to two of them, Jimmy Lai, owner of the pro-democracy newspaper Apple Daily, and Martin Lee, Hong Kong’s so-called father of democracy.
Boeing says it will not seek government funding
Claire Bushey in Chicago
Boeing said on Thursday evening that the market’s appetite for a completed $25bn bond offering earlier in the day eliminated the need for it to seek funding from the US government.
The announcement marks a reversal from remarks made by David Calhoun, Boeing chief executive, earlier this week and what the Chicago company initially told potential investors.
“The robust demand for the offering reflects strong support for the long-term strength of Boeing and the aviation industry,” the company said, adding that it did not “plan to seek additional funding through the capital markets or the US government options at this time.”
The offering from the aerospace and defence group was made to help weather a cash drain of as much as $20bn this year, according to people briefed on the matter.
It will add to the almost $39bn in debt the company carried at the end of March.
The debt issuance comes after Boeing reported a $641m net loss for the first quarter and said it would cut 10 per cent of its workforce and reduce production of most of its commercial aeroplanes.
China reports 12 new coronavirus cases, no new deaths
Health authorities in China recorded 12 new coronavirus cases to the end of Thursday, up from four the previous day.
Of those new cases, six were found in people who had recently returned to mainland China, while the remaining six were local cases.
Five of the local cases were reported in Heilongjiang, a province in north-east China that borders Russia, while one case was found in Inner Mongolia, which borders both Mongolia and Russia.
Heilongjiang authorities have moved to reimpose virus control measures following an influx of citizens infected with coronavirus returned home over a land border.
The new cases brought the total reported infections in China to 82,874 and 4,633 deaths.
Trump confident Covid-19 originated in Wuhan lab
Demetri Sevastopulo and Katrina Manson in Washington
Donald Trump said he had seen strong evidence that Covid-19 originated from a scientific laboratory in Wuhan, in an escalation of his attacks on China over its role in the spread of the coronavirus.
Asked on Thursday if he had seen information that gave him a “high degree of confidence” that the coronavirus emanated from the Wuhan Institute of Virology in China, Mr Trump told reporters: “Yes, I have.”
When pressed on what had given him the confidence to make the claim, the US president said: “I’m not allowed to tell you that.”
He ruled out cancelling US debt held by China as a way of punishing Beijing for its role in allowing the virus to spread.
“We can do it in other ways. We can do it with tariffs. We can do it other ways even beyond that, without having to play that game. That’s a rough game.”
Read more here
Asia-Pacific stocks slip as major US companies warn over pandemic hit
Hudson Lockett in Hong Kong
Asia-Pacific stocks tumbled at the start of a new month, as a succession of after-market earnings reports from the US undermined investor hopes that global markets had put the worst of the coronavirus pandemic behind them.
Japan’s benchmark Topix index fell 1.6 per cent, while Australia’s S&P/ASX 200 dropped 4 per cent in early Asian trading.
Markets in China, Hong Kong and South Korea were closed for holidays.
Those falls came after Amazon warned that severe coronavirus-related strain could leave operating income in the second quarter anywhere between a loss of $1.5bn and a gain of the same amount.
That sent shares down 5 per cent in after-hours trading after rising to a record high on Thursday.
Apple shares were trading down 2.5 per cent after the close after the company reported a slight rise in revenues for the three months to the end of March but declined to offer guidance for the current quarter.
UN food agency fears millions will go hungry in pandemic
The UN Food and Agriculture Organization has warned that millions of people are likely to join the ranks of the hungry as a result of the coronavirus pandemic.
An FAO policy brief released on Thursday forecast that between 14.4m and 38.2m more people worldwide could become malnourished as a result of the Covid-19 outbreak.
“The policy brief offers evidence in favour of making hunger reduction a priority of the economic stimulus measures to address Covid-19,” Marco Sánchez, deputy director of the FAO’s agricultural development economics division, said in a statement.
The Rome-based agency urged governments to take action to keep food supply chains accessible to the poor.
Cash and in-kind transfers, new credit lines, safety nets, income support, distribution programmes such as food banks, and school meals were among the measures recommended.
Australian soldiers test positive for coronavirus
Four members of Australia’s armed forces returned home on Friday after testing positive for coronavirus while on deployment in the Middle East.
The four were transferred from the Royal Australian Air Force base in Darwin to a local hospital after their arrival, the country’s defence department said in a statement.
A fifth soldier is in mandatory quarantine in Brisbane after testing positive after his deployment, it added.
A Northern Territory health department spokeswoman said during a briefing on Friday that the Covid-19-positive defence personnel posed no danger to the wider public.
There have been 39 Covid-19 cases recorded among Australia’s military personnel, of whom 32 have recovered, the defence department said.
Holiday tests China’s ability to prevent ‘second wave’ of infections
Tom Mitchell in Singapore
China marked the start of an extended May Day holiday on Friday, in a major test of the government’s ability to reduce travel and other restrictions without sparking a “second wave” of coronavirus infections.
The holiday, which runs until May 5, is typically a peak travel period. This year, however, Chinese travel agents are expecting people in the world’s most populous nation to make only about 90m trips — or about half normal levels.
Earlier this week, authorities in Beijing announced that people visiting the capital from most parts of the country will no longer have to spend 14 days in quarantine. Such measures had made normal business and tourist travel impossible.
After the announcement, there was a surge in flight services in and out of Beijing’s two major airports. In another sign of official confidence that the outbreak is largely under control, China’s national parliament announced that it would hold its delayed annual session later this month.
International travel, however, will remain in effect off-limits for most Chinese tourists. Popular regional destinations, such as Singapore, are still banning visits by foreign nationals.
The south-east Asian city state is halfway through a strict two-month lockdown after a surge of new infections began to race through crowded dormitories that house hundreds of thousands of migrant workers.
Moderna signs deal with Lonza to make potential Covid-19 vaccine
Hannah Kuchler in New York
Moderna has signed a deal with Swiss healthcare manufacturer Lonza to expand manufacturing of its potential vaccine for Covid-19, after the Boston-based biotech received almost $500m from the US government to bolster production.
The companies will start manufacturing the vaccine candidate together in the US in July. Then they will expand production to Switzerland and later other sites around the world, as they gear up to eventually make a billion doses a year.
No financial details were disclosed for the partnership, which will last 10 years and include Moderna’s other potential vaccines for conditions including a strand of flu and Zika.
Earlier this week, Moderna said it had applied for permission to move to the next stage of human trials for the Covid-19 vaccine candidate, intending to enrol 600 healthy participants.
Malaysia plans to reopen economy after lockdown
Stefania Palma in Singapore
Malaysia will reopen almost all economic sectors from May 4 as the south-east Asian country eases out of a coronavirus lockdown that started more than six weeks ago.
Muhyiddin Yassin, Malaysia’s prime minister, said in a national address that nearly all business activities would resume next week, except those involving large public gatherings such as theme parks, karaoke centres, and movie theatres as well as conferences and exhibitions.
Kuala Lumpur kicked off a national lockdown on March 18. Restrictions on travel were imposed as well as the closure of non-essential businesses and schools.
Bazaars for the Islamic holy month of Ramadan will also remain closed after May 4.
Mr Muhyiddin added trips back to hometowns for Eid al-Fitr, the holiday celebrating the end of Ramadan, were prohibited, mirroring Indonesia’s ban on mudik, the annual mass migration that follows the fasting month.
But Indonesia is now ramping up health checks at the border as tens of thousands of migrant workers return home.
Authorities have selected specific entry points to welcome the returnees, with quarantine structures to house those showing coronavirus symptoms.
The coronavirus infection rate in Malaysia has slowed in recent days, with the country counting 6,002 cases and 102 deaths.
Indonesia has one of the highest mortality rates in the world with 10,118 cases and 792 deaths.
India’s Maruti Suzuki says it did not sell a single car in April
Amy Kazmin in New Delhi
India’s largest carmaker, Maruti Suzuki, says it did not make or sell a single car in the country during April, as a national lockdown brought a total halt to operations of an automotive sector that had already been under pressure from a protracted economic slowdown.
“In compliance with government orders, all production facilities were closed,” the Japanese-owned company, which typically accounts for a large chunk of Suzuki’s annual profits each year, said in a statement on Friday morning.
The company sold 143,245 vehicles in April 2019.
Prime Minister Narendra Modi’s government ordered all but essential industries — including food and pharmaceutical companies — to suspend operations in late March.
Since then, authorities have tried to ease some of the restrictions to permit resumption of manufacturing activities in areas with no coronavirus cases.
But industries say that a rule based on location is unfeasible given the dispersed nature of India’s supply chains.
In its statement, Maruti, which also exports cars, said it was able to ship 632 cars in April, after port operations were restarted.
India’s national lockdown is due to be lifted next week, but with stringent restrictions likely to continue in regions with high coronavirus caseloads, India’s automotive industry — which is one of the country’s largest employers — could remain paralysed.
Three-fifths of new coronavirus cases in China show no symptoms
Yuan Yang and Nian Liu in Beijing and Jane Pong in Hong Kong
Three-fifths of new coronavirus cases in China showed no symptoms of the illness when they were diagnosed, according to data that are likely to complicate moves by governments around the world to lift strict lockdown measures.
A Financial Times analysis of the more complete data into Covid-19 that the Chinese government began publishing at the start of April found that 60 per cent of confirmed cases recorded over the past month were non-symptomatic at time of testing.
The prevalence of non-symptomatic cases will be a concern for the authorities not just in China but around the world as they seek to reopen their countries after months of lockdowns. It suggests that large numbers of people are likely to be out in the community spreading the virus without knowing it.
Read the full story here
Macau gambling revenue plunges nearly 97% in April
Primrose Riordan in Hong Kong
Gambling revenue in Macau dropped by 96.8 per cent in April after restrictions imposed by authorities in both the semi-autonomous Chinese territory and in neighbouring China kept visitors away.
Visitors spent 754m patacas (US$95m) in casinos in April, compared with 23.5bn patacas the year before.
Casinos in the Chinese territory were briefly closed due to the virus earlier in the year. They reopened in February, but Macau imposed restrictions on the number of inbound visitors to combat the spread of the virus.
Neighbouring Guangdong province in China also introduced a mandatory 14-day quarantine on people arriving from Macau.
The decline was slightly greater than the 94 per cent fall analysts polled by Bloomberg were expecting.
RBS becomes latest lender to report large jump in loan loss provisions
Nicholas Megaw
Royal Bank of Scotland’s bad debt provisions increased almost 10-fold in the first quarter, as the company braced for a steep increase in business customers running into difficulties.
The bank, which is majority-owned by the British government, put aside £802m to deal with an expected increase in future defaults, compared with £86m in the first quarter of last year. As a result, net profit dropped 59 per cent to £288m.
Despite the significant increase in impairments in percentage terms, however, the bank’s relatively small credit card business meant it took a smaller absolute hit than its main rivals Lloyds, Barclays and HSBC. Instead, the biggest factor in its new provisions was an expected increase in defaults among its commercial banking customers.
Revenues fell 1.6 per cent year-on-year, to £3.2bn, and RBS said the recent interest rate cuts would hit its revenue generation for the foreseeable future.
UK regulator to seek court ruling on business interruption insurance
Oliver Ralph
UK regulators are to go to court in an effort to sort out the growing controversy over business interruption insurance.
Many struggling businesses say that the terms of their policies provide cover for the disruption caused by the coronavirus outbreak, but insurers disagree and say that in most cases losses are not covered.
There are fears that many small companies could go bust before the dispute is resolved.
The Financial Conduct Authority on Friday said that it planned to speed the process up by going to court itself to get a ruling on whether some commonly-used policy wordings should apply to this situation.
It has written to a number of insurers to ask for clarity on their policy wordings before going ahead with the court action.
“Our intended court action is designed to resolve a selected number of key issues causing uncertainty as promptly as possible and to provide greater clarity for all parties,” said Christopher Woolard, interim chief executive of the FCA. “It is clear that decisive action is appropriate given the severity of the potential consequences for customers.”
The FCA also told insurers to make sure that their products still offered value to customers, and to refund premiums if appropriate. For example, it said that liability insurance that has been bought by bars and restaurants may no longer be relevant because of the shutdown.
Ryanair to cut 3,000 jobs as outlook for aviation darkens
Tanya Powley
Ryanair is preparing to cut up to 15 per cent of its 19,000 workforce as it becomes the latest airline to warn about a slow recovery from the coronavirus crisis which has battered the aviation sector.
Europe’s largest low-cost carrier said it expected it will now take at least two years for a return to 2019 passenger demand and pricing, estimating summer 2020 at the earliest, as it laid out plans to cut further costs.
Ryanair is preparing to cut up to 3,000 pilot and cabin crew jobs, and introduce pay cuts of up to 20 per cent as well as closing a number of aircraft bases around Europe until air travel recovers. Michael O’Leary, chief executive, will extend his 50 per cent pay cut for the remainder of the financial year to March 2021.
It comes as the outlook for the aviation industry has worsened this week, and carriers have moved from furloughing workers to making redundancies as optimism for a fast rebound has evaporated.
Shopping centre owner Intu secures credit waivers until June
George Hammond in London
Intu, the heavily indebted shopping centre owner, has reached a stop-gap agreement with its lenders as it fights to retain control over its malls.
The company was set to breach covenants with its lenders, having collected just 40 per cent of the rent it was due for the second three months of the year. It has negotiated waivers to covenants related to its £600m revolving credit facility until June 26, two days after rent is due for the next three months, the company said.
The June payment date is unlikely to produce a huge windfall, with only essential shops open across the company’s estate and most tenants withholding rent. Some larger brands with the ability to pay were choosing not to, said Intu. “In these instances we are prepared to take more robust action to enforce the legally binding terms of those leases,” it said.
Intu has also appointed turnround specialist David Hargrave to the role of chief restructuring officer.
A group of Intu bondholders, with debt secured against four shopping centres, have independently appointed the financial advisory firm Moelis & Company to look at restructuring options, first reported by React News. One option being explored by bondholders is the appointment of a new asset manager to take over some of the malls.
Mike Prew, an analyst at Jefferies, said that lenders would only take control of assets — a process known as enforcement of security — as a last resort.
IAG turns to Spain’s coronavirus loan-guarantee scheme
Two of International Consolidated Airlines Group’s subsidiaries have turned to the Spanish government’s business support scheme to guarantee more than €1bn in loans, as the coronavirus pandemic darkens the outlook for the aviation sector.
IAG said that Spanish flag carrier Iberia and low-cost airline Vueling had signed syndicated financing agreements for €750m and €260m respectively, and would ask the Spanish business relief scheme to guarantee those loans.
The financing is conditional on the guarantees being available, and the loans restrict the cash being sent upstream to other IAG branches, such as British Airways.
The pandemic has had a particularly acute impact on the aviation sector, as travel has ground to a near total standstill. IAG has warned that a return to 2019 passenger levels would take several years, and this week reported an operating loss before exceptional items of €535m for the first quarter, compared with a profit of €135m last year.
Heathrow reports collapse in April passenger numbers
Heathrow expects passenger numbers to have plummeted 97 per cent in April and that demand will remain weak until governments deem it safe to lift travel restrictions, underscoring the unlikelihood of a quick recovery from the shock dealt by coronavirus to the travel industry.
The UK’s largest airport said that it was working with partners to establish a common international standard for safe air travel to encourage passengers to return quickly to flying and to speed up the country’s economic recovery.
“When we have beaten this virus, we will need to get Britain flying again so that the economy can recover as fast as possible,” said John Holland-Kay, chief executive of Heathrow. “That is why we are calling on the UK government to take a lead in setting a common international standard.”
It came as the airport reported that it fell to a £278m loss before tax in the first quarter of the year, compared with a profit of £132m in the same period the previous year, as revenues fell 12.7 per cent to £593m. Passenger numbers for the quarter fell to 14.6m, down 18.3 per cent, after its busiest year on record in 2019 with 81m passengers across the whole year.
The group said that the pandemic and the ongoing appeal in court against it violating the Paris climate agreement has pushed back its ambitions for a third runway at the airport by at least two years.
Heathrow has reduced costs by about 30 per cent, through cutting management pay, renegotiating all contracts and consolidating operations to two terminals and one runway, while capital expenditure has been cut by £650m. The group has sufficient liquidity to survive for 12 months even without any passengers, it said.
FTSE 100 slides nearly 2 per cent
Global stock markets tumbled on Friday as a string of weak corporate earnings undermined investor confidence.
London’s FTSE 100 opened down 1.9 per cent, while futures tied to the S&P 500 on Wall Street were more than 2 per cent lower. Most continental European bourses are closed today for a public holiday.
Markets in Asia fell sharply, with Japan’s benchmark Topix index down 2.1 per cent while Australia’s S&P/ASX 200 tumbled 5 per cent. Markets in mainland China, Hong Kong and South Korea were also closed.
Global equities enjoyed one of their best months on record in April, boosted by central bank intervention and hopes that major economies are on a path to reopening. But overnight warnings from Amazon and Apple, two important companies in a tech sector that has led the US market’s rebound, raised fresh concerns over the corporate impact of the global health crisis.
What you may have missed
Three-fifths of new coronavirus cases in China showed no symptoms of the illness when they were diagnosed, according to data that are likely to complicate moves by governments around the world to lift strict lockdown measures.
Donald Trump said he had seen strong evidence that Covid-19 originated from a scientific laboratory in Wuhan, in an escalation of his attacks on China over its role in the spread of coronavirus.
Brussels’ plans for a further relaxation of its rules on state aid have been caught up in an increasingly hard-fought pan-European debate over whether government bailouts are skewing the single market. Meanwhile, Italy is preparing to join Germany in launching a Covid 19 contact-tracing mobile application that will avoid location tracking and a centralised database.
Gilead expects to receive emergency approval for its potential Covid-19 drug remdesivir soon, as it plans to expand production rapidly.
Three-quarters of restaurant and bar operators in the UK have warned they do not expect their businesses to survive with social distancing measures in place.
India’s largest carmaker, Maruti Suzuki, says it did not make or sell a single car in the country during April, as a national lockdown brought a total halt to the automotive sector.
Malaysia will reopen almost all economic sectors from May 4 as the south-east Asian country eases out of a lockdown that started more than six weeks ago.
Covid-19 daily death toll over 5,000, as US records over 2,000 fatalities
Steve Bernard in London
The worldwide daily death toll rose by 5,801 on Thursday bringing the total to 214,436. This figure is significantly lower than the peak of more than 8,400 on April 17 but the daily rate of increase has held steady at around 3 per cent for the past week.
The global number of newly confirmed Covid-19 cases rose by a further 86,037 yesterday, the total now stands at more than 3.2m.
The US recorded its third consecutive day with more than 2,000 deaths yesterday. A further 2,041 fatalities were registered bringing the total to 57,255, according to data from the Covid Tracking Project. In New York, the worst-affected state, the lowest number of daily deaths in more than a month were recorded as 306 people died on Thursday.
The UK saw a large jump in the number of newly confirmed cases, with 6,032 diagnoses made yesterday. This is the highest daily number in three weeks, as the government attempts to ramp up its testing capacity to 100,000 tests per day. The death toll rose by 674 to 26,771, a figure that includes an additional 3,811 deaths in England reported since the start of the outbreak.
Russia added a record 7,099 daily confirmed cases on Thursday, as the total number of infections surged through 100,000 to stand at 106,498. The death toll passed 1,000 as 101 fatalities were recorded, bringing the total loss of life to 1,073.
The end of the office? Coronavirus may change work for ever
Daniel Thomas and Stephen Morris in London and Andrew Edgecliffe-Johnson in New York
In the world of social distancing, many of the world’s office workers have not seen their desks for weeks. But when coronavirus lockdowns finally ease, there may be fewer desks to return to.
Facing a sudden need to cut costs, chief executives have indicated in recent days that their property portfolios look like good places to start, given the ease with which their companies have adapted to remote set-ups.
Read the full story here on how chief executives predict that offices and working life may change.
Daily cases in Russia rise as PM isolates with the virus
Henry Foy in Moscow
Russia reported a new record daily increase in coronavirus cases on Friday, announcing 7,933 new cases including the country’s prime minister.
The daily addition takes the country’s total case count to 114,431, a figure that has been steadily rising by around 7-8 per cent each day for the past week. The death toll from Covid-19 stands at 1,169, the country’s government said on Friday morning.
Russian prime minister Mikhail Mishustin announced on Thursday evening that he had tested positive for the virus, and would temporarily stand down to place himself in self-isolation.
“What is happening to you now could happen to anyone,” said president Vladimir Putin. Mr Putin this week said he believed the infection in Russia would only peak in mid-May.
French car sales tumbled in April
Peter Campbell, Global Motor Industry Correspondent
French new car sales fell by almost 90 per cent during April as dealerships and factories were shut because of coronavirus.
Sales fell to 20,997, down 89 per cent compared with a year earlier, according to figures from the country’s auto body, the CCFA.
It is the first of the European markets to post figures for the month, but others are expected to show similar declines, after every car plant in the continent closed its doors during March.
In nations with stricter country-wide lockdowns, such as Italy, the decline is expected to be steeper.
Some factories have reopened in France, though the industry remains uncertain about demand levels because of the economic hit from the virus and the lockdown.
Covid-19 mortality rate twice as high in deprived areas of the UK
UK citizens living in deprived areas have experienced mortality rates from coronavirus that are more than double those living in more wealthy areas, new figures from the Office for National Statistics show.
The age-standardised mortality rate of deaths involving Covid-19 in the most deprived areas of England was about 55 deaths per 100,000 population, compared with about 25 deaths per 100,000 population in the wealthiest areas.
London had the highest Covid-19 mortality rate since March with 85.7 deaths per 100,000 persons, double the second highest region. The virus has been involved in four out of 10 deaths in the capital during that period, the statistics showed.
The boroughs of Newham, Brent and Hackney have been hit the hardest, all recording more than 125 deaths related to coronavirus per 100,000 people, as concerns grow about the amplified impact of the virus on economically disadvantaged communities and ethnic minority groups.
Eurozone economy could take 3 years to recover, ECB economist says
Martin Arnold in Frankfurt
The European Central Bank’s chief economist has warned it is likely to take at least three years for the eurozone economy to recover fully from the “extraordinary and severe shock” of the coronavirus pandemic.
Philip Lane said that under the severe scenario modelled by the ECB – entailing a 12 per cent decline in eurozone gross domestic product this year – the economy would still not have returned to last year’s levels before the end of 2022.
A chart published by the ECB indicated that the same outcome would be true for its “medium” scenario that entails an 8 per cent economic contraction this year. The eurozone economy would only fully recover by the middle of next year under its “mild” scenario of a 5 per cent economic shrink this year.
“The scale and duration of the pandemic macroeconomic shock depends on how long the lockdown measures remain in place, their impact across sectors and the speed at which economic activity normalises,” Mr Lane wrote in a blog published on Friday.
Spanish GDP to fall nearly a tenth in 2020 followed by ‘intense’ rebound
Ian Mount in Madrid
The Spanish government expects GDP to fall 9.2 per cent and unemployment to rise to 19 per cent in 2020 due to the coronavirus pandemic, it said in an update to its 2020 stability programme filed with the EU.
After an intense drop in economic activity in the second quarter of the year, Spain’s economy will recover “gradually” during the second half of the year followed by an “intense” recovery in 2021, economy minister Nadia Calviño said on Friday. Spain’s GDP is expected to rebound by 6.8 per cent in 2021.
“Spain’s economy had been growing faster than Europe and all predictions showed a gentle slowdown over the coming years,” Ms Calviño said. “But the pandemic has overturned all economic expectations.”
Spain’s public deficit will rise from 2.8 per cent in 2019 to over 10.3 per cent in 2020, inflated by spending to combat the virus and its economic effects, as well as by a drop in tax income. Treasury minister María Jesús Montero fixed the cost of fighting the pandemic at €138.9bn, including €104.4bn in state-backed credit lines for business.
On Friday, IAG announced that it had turned to this business support scheme to guarantee more than €1bn in loans.
As around 12 per cent of GDP and employment come from the shuttered tourism sector, the Spanish economy has been especially hard-hit by the pandemic and the ensuing lockdown, reporting a 5.2 per cent drop in first quarter GDP on Thursday.
On Friday, Spain’s health ministry announced that 281 people had died from Covid-19 in the previous 24 hours, a slight rise from Thursday’s total of 268, which was the lowest tally since March 20. Spain’s total death toll was 24,824 as of 9pm on Thursday.
Trump’s threat of tariffs on China unnerves investors
Stock markets have opened May with steep declines, as the spectre of a new flare-up in US-China relations adds to concerns over the corporate and economic impact of the coronavirus crisis.
The US president raised the prospect of using tariffs against Beijing at a Covid-19 briefing on Thursday, but denied a US media report that he was considering cancelling US debt held by China.
London’s FTSE 100 was 2.2 per cent lower in late morning trading, while on Wall Street S&P 500 futures were 2 per cent down. Europe’s other major markets and parts of Asia were offline for holidays.
“The last thing the financial markets need now as they grapple with Covid-19 is a renewal of the trade war between the US and China,” said Derek Halpenny, head of European markets research at MUFG.
China’s currency weakened to its lowest level since early April as emerging market currencies sold off, while Australian assets were badly hit in a weak session in Asia. The country’s main equity index fell 5 per cent, while the Australian dollar also fell. China is Canberra’s largest trading partner.
UK and US insurers could pay over $80bn on coronavirus-related claims
Oliver Ralph in London
Insurers in the UK and US could end up paying over $80bn for coronavirus-related claims, according to new forecasts from broker Willis Towers Watson.
The disruption caused by the virus is likely to lead to one of the biggest ever payouts from the industry, but until now there have been few firm estimates of industry-wide losses.
Willis Towers Watson says that in an optimistic scenario losses in the UK and US could be limited to $11bn, but a severe scenario — similar to the scale of the 1918 flu pandemic — would lead to insurers paying out on $80bn of claims.
The broker also modelled an extreme scenario in which social distancing is abandoned and the virus spreads rapidly until there is global herd immunity. That, it says, could cost insurers $140bn.
Alice Underwood, global leader of insurance consulting and technology at Willis Towers Watson, said: “At this point, it appears that the industry-wide level of general insurance loss could exceed that resulting from the 2001 World Trade Centre event.”
Most of the claims are expected to come from business interruption and event cancellation policies. However the impact of those losses will be offset by lower expected claims in areas such as motor insurance, where the lockdown has severely reduced traffic levels.
Undertakers face shortages of body bags and PPE as demand soars
Naomi Rovnick in St Albans and Chris Tighe in Newcastle
English funeral providers fear they are close to running out of body bags and other personal protective equipment needed to handle Covid-19 corpses as they grapple with soaring demand for cremations and burials.
More than four in 10 funeral home directors only have enough PPE to last three days, according to a survey by trade body the Society of Allied and Independent Funeral Directors of its 1,000 members, conducted last week.
“If there is not enough PPE, we won’t work,” said Terry Tennens, chief executive of SAIF.
Funeral directors across the country have warned they are finding it difficult to source goggles, masks and aprons, as well as body bags.
Abe signals Japan will extend state of emergency
By Robin Harding in Tokyo
Japan is set to extend its state of emergency by another month when the current declaration expires on May 6th, prime minister Shinzo Abe signalled after a meeting of his expert advisors.
Addressing reporters on Friday evening, Mr Abe said:
Thanks to the great co-operation from the public, we have been able to escape the explosive increase in infections seen abroad under the current state of emergency, and our experts say it has worked to some extent.
However, hospitals on the front line are still facing tough conditions, and our experts say we need continued co-operation from the public.
Mr Abe is set to make a formal decision on May 4th.
Japan entered the current state of emergency in seven prefectures on April 7th and later extended it nationwide. There is no compulsory lockdown, but the government has requested the closure of numerous businesses, aiming for an 80 per cent reduction in person-to-person contacts.
Q1 earnings scorecard: worst yet to come
It’s half time in earnings season (give or take) and no one seems to be winning.
Around two-thirds of major companies in the US and one third of those in Europe, weighted by market capitalisation, have now reported, according to Goldman Sachs.
As the roll call of earnings reports outline the blow to profits from coronavirus in the first quarter, which reflects just one month of lockdowns in the West, the scale of the damage done is gradually becoming clearer.
Analysts polled by Factset now expect European earnings to be down almost 30 per cent in the three months to March for the Stoxx Europe 600 (based on a calculation of composite earnings per share of companies included in the index). This is in stark contrast to the modest gains forecast at the beginning of the year. Earnings on the S&P 500 are set to slide 16 per cent.
The all-encompassing nature of the lockdowns across Europe and the US mean that no sector has been left untouched. Travel restrictions have thrown airlines into the worst crisis in the sector’s history. Energy producers are reeling from a collapse in the oil price. Banks are preparing for loans to go sour at an unprecedented rate.
But the worst is yet to come. With the brunt of the lockdowns still being felt, profits are set to deteriorate further when companies report their second-quarter results in a few months’ time. Analysts anticipate a near 50 per cent decline in earnings on the Stoxx 600 for the June quarter, while those on the S&P 500 are set for a tumble of more than a third.
As to how long the damage will last, in many ways it is a guessing game, depending on how quickly restrictions can be lifted. UBS strategists reckon European earnings will still be down 16 per cent from 2019 levels by the end of 2021, with a full recovery taking up to five years.
Chevron earnings beat forecasts but oil major announces further spending cuts
Derek Brower in London
Chevron, the US’s second-largest oil supermajor, on Friday reported first quarter earnings of $3.6bn, up from $2.6bn a year earlier, beating analysts’ expectations and bucking a trend of deep losses in a sector hit by the collapse of global oil demand and crude prices in the face of the coronavirus pandemic.
But the company will also reduce capital spending to as low as $14bn this year, a further 12.5 per cent reduction that follows sharp cuts to the capital expenditure programme announced last month.
Total revenue was down to $31.5bn for the quarter, a drop of around 11 per cent, but still marginally above analysts’ expectations. First-quarter diluted earnings per share of $1.93 was almost three times greater than the consensus forecast from analysts and well above $1.39 per share from a year earlier. Cash flow from operations of $4.7bn also beat forecasts.
Mike Wirth, Chevron chief executive, said the deeper capex cuts were consistent with the company’s “longstanding priorities”, including protecting its dividend. Chevron held its dividend for the quarter at $1.29 per share, following an 8.4 per cent increase in payout during the previous quarter.
Read the full article here.
Consumers opt for skincare over make-up in lockdowns, Estée Lauder says
Estée Lauder said that it has seen more resilient demand for skincare and haircare products than make-up and fragrance as consumers locked indoors use the time to take care of themselves.
This trend partly reflects a broader shift over the past few years, particularly among US consumers, towards spending more on skincare products and less on make-up.
The US cosmetics group reported that sales fell 11 per cent to $3.35bn in its third quarter, relative to the same period last year, and that it made a $6m loss, as most of its retail stores have been closed since March.
Estée Lauder forecast a bleak outlook since the majority of its physical stores are expected to remain closed for most of the next quarter. However, it said that it expects to grow its share in a declining market during the crisis with online sales soaring.
“In light of ongoing temporary store closures in many regions, we have begun to adjust our cost structure and have enhanced our liquidity during this challenging time,” Fabrizio Freda, chief executive of Estée Lauder said.
The company cut its costs by $250m during the quarter but operating expenses in the next three months will be reduced by approximately $500m to $600m as employees are furloughed and take temporary leave.
Clorox sales jump on surging demand for cleaning products
Clorox reported a jump in quarterly revenues and boosted its outlook as consumers stocked up on cleaning products like bleach and disinfectant wipes and sprays amid the coronavirus pandemic.
Revenues climbed 15 per cent from a year ago to $1.78bn in the fiscal third quarter ending in March, just ahead of expectations for $1.73bn. Sales of cleaning products, its largest division, climbed by nearly a third to $671m, while sales in lifestyle and household items climbed 10 and 2 per cent respectively.
“Beyond the extraordinary growth in our disinfecting products, we saw broad-based growth across all four segments as our portfolio is uniquely positioned to serve consumers in this unprecedented time,” said Benno Dorer, chief executive.
Net income rose to $241m or $1.89 a share, from $187m or $1.44 a share in the year ago quarter. The company’s gross margin increased by 3.3 percentage points to 46.7 per cent.
Clorox boosted its full-year sales and earnings outlook “driven by the impact of Covid-19”. It forecast organic sales growth of between 6 to 8 per cent, up from previous expectations for growth of as much as 2 per cent. Meanwhile, its EPS outlook was lifted to between $6.70 to $6.90, up from $6.10 to $6.25 previously.
Clorox shares, which are up more than 21 per cent year-to-date, rose 3 per cent in pre-market trade.
Abbvie sales benefit from consumers stockpiling medicine
Donato Paolo Mancini in London
Abbvie sales were buoyed by stockpiling, growing 10 per cent on a reported basis during the coronavirus pandemic.
The drugmaker said net earnings were $3.01bn in the first quarter, up from $2.46bn in the year before, while overall revenues climbed to $8.62bn.
Abbvie is working with global health authorities to investigate its HIV antiviral Kaletra, a combination of lopinavir and ritonavir, for use against coronavirus. Abbvie has dropped global patent protection for that drug, paving the way for lower priced generics to flood the market if it is shown to be effective, the FT reported last month.
It is also testing ibrutinib, a blood cancer drug, in a phase-two trial for Covid-19, the disease caused by coronavirus.
The company said it expected its merger with Allergan to close this month, subject to approval from the US Federal Trade Commission.
Richard Gonzalez, chief executive, said the company’s business remained “strong”. The company has updated its standalone statutory diluted EPS guidance for the year from $7.66-$7.76 to $7.60-$7.70.
Global net sales for Humira, the world’s best-selling drug, increased 5.8 per cent to $4.70bn on a reported basis, with a decrease outside the US due to competition from biosimilars.
Its shares were up 0.9 per cent in pre-market trading.
Exxon takes $2.9bn writedown as oil prices plunge
Derek Brower in London
ExxonMobil, the US’s biggest oil company, on Friday announced a loss of $610m in the first quarter of the year, down from $2.4bn a year earlier, as it took a $2.9bn non-cash charge to reflect the impact of plummeting oil and gas prices on the value of its inventory and assets.
Revenue for the quarter came in at $56bn, Exxon said, below consensus forecasts, and down 12 per cent compared with the same period in 2019. But diluted earnings per share of $0.53 were well above expectations, pleasing equity analysts. Cash flow from operations of $6.3bn was also above expectations.
Exxon announced no new cuts to planned spending in 2020, but reiterated its intent — announced last month — to slash capital expenditures by 30 per cent compared with earlier plans, to $23bn.
“Covid-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” said Darren Woods, Exxon’s chief executive.
Oil prices have fallen by about 70 per cent since the start of the year, but the worst phase of the sell-off in April will only be fully visible in producers’ second-quarter earnings.
More than $1tn has flown into money market funds in 2020
Flows into money market funds ballooned in April, taking total inflows this year past the $1tn mark amid intense financial market turbulence early in 2020.
Money market funds – mutual funds that are considered ultra safe because they only invest in highly liquid near-term instruments – garnered inflows of $91.5bn in April, pushing total year-to-date gains to $1.1tn, according to data collected by EPFR.
Investment into haven assets like high-grade and government bond funds has strengthened since April, according to an analysis by Bank of America of the same data, while investment in “riskier pockets” such as high yield, emerging markets debt and equities have seen net outflows since March.
The municipal bond market has been hit particularly hard, and recorded net outflows for the seventh time in nine weeks.
7% of Fannie Mae-backed mortgages in forbearance as profits fall
Laura Noonan in New York
Around 7 per cent of homeowners whose mortgages are backed by Fannie Mae are already in restructuring agreements, America’s biggest loan guarantor said on Friday, reaching a similar level to the industry average, which has seen mortgages in forbearance double within a month.
Fannie Mae, the biggest of the trio of government-backed mortgage guarantors, posted net income of $461m for the three months ended March 31, versus $2.4bn a year earlier. Its 80 per cent decline in profit was a touch better than the 88 per cent drop in first-quarter earnings reported by fellow mortgage guarantor Freddie Mac on Thursday.
Fannie Mae said that “approximately 7 per cent of loans in its single-family guaranty book of business were in a forbearance plan as of April 30, 2020” based on preliminary reporting by mortgage servicers who collect payments on the loans it backs.
“The company expects the number of loans in forbearance plans will continue to increase,” Fannie Mae added, noting the “economic dislocation” from the coronavirus pandemic and the need to “stabilise the housing finance market” through the crisis.
The 7 per cent forbearance level is higher than the 5 per cent forbearance reported by Bank of America for its mortgage customers, though that figure was as of April 8. The Mortgage Bankers Association said on Monday that the forbearance level had increased from 3.74 per cent to 6.99 per cent within a month. Other banks have not given details of a metric seen as a main indicator on how well households are coping with depleted incomes and layoffs.
The surge in forbearance arrangements and increased likelihood of defaults prompted Fannie Mae to take almost $2.7bn of provisions for credit losses in the first quarter, up from a $650m release of credit provisions a year earlier.
Mark Calabria, who heads Fannie and Freddie’s regulator the Federal Housing Finance Agency, warned last month that both agencies could need a bailout if there was a long period where people were not paying their mortgages.
US stocks fall 2% after US-China coronavirus row intensifies
Philip Georgiadis in London
Wall Street opened sharply lower on Friday joining the sell-off in global stock markets, as the spectre of a new flare-up in US-China relations added to concerns over the corporate and economic impact of the coronavirus crisis.
US equities fell, with the S&P 500 down 2 per cent and the tech-weighted Nasdaq off 2.3 per cent following earnings from Apple and Amazon overnight.
In London the FTSE 100 slid 1.8 per cent while most continental European markets were closed for a public holiday.
Donald Trump escalated his attacks against China at a White House coronavirus briefing on Thursday, saying he had seen strong evidence that Covid-19 originated from a scientific laboratory in Wuhan.
The US president also raised the prospect of using tariffs against Beijing, but denied a US media report that he was considering cancelling US debt held by China.
“The last thing the financial markets need now as they grapple with Covid-19 is a renewal of the trade war between the US and China,” said Derek Halpenny, head of European markets research at MUFG.
Macron warns French that return to normality will be slow
Victor Mallet in Paris
French President Emmanuel Macron has warned that the planned end of the country’s coronavirus lockdown on May 11 will not mean an immediate return to normal life.
“May 11 will of course be an important stage,” he said at the Elysée palace as he met agriculture minister Didier Guillaume and representatives of the French horticulture industry, which produces millions of muguet — lily of the valley — flowers that are normally sold on the streets on May 1 and given as good-luck gifts. But he added that May 11, when a two-month confinement of the population is due to end, “will not mean a switch from the current situation to normal life”.
In a separate message to mark Labour Day, Mr Macron paid tribute France’s workers and trade unionists — who normally stage big May 1 marches — and said he hoped for a quick return to “those happy, if sometimes quarrelsome, May the firsts that make our nation what it is”.
McDonald’s to reopen in UK on delivery-only basis
McDonald’s plans to reopen a handful of its restaurants in the UK from mid-May, but will only provide a delivery service and its menu will be limited.
Social distancing restrictions brought in as a result of the coronavirus pandemic prompted the world’s biggest fast food group to close all of its roughly 1,300 outlets across Britain and Ireland in late March.
But as governments look to reopen their economies slowly, McDonald’s said this afternoon it would reopen 15 UK locations from May 13. It added, however, that it would be working with smaller teams, not serving breakfast and downsizing its menu. The reopening will be done on a delivery-only basis, with food brought to people’s homes by Uber Eats and Just Eat.
Paul Pomroy, chief executive of McDonald’s UK and Ireland, said it would be a gradual process and that things would be “different” as people “adjust to this new normal”.
US manufacturing index hits 11-year low in April
A key measure US manufacturing activity tumbled to the lowest level since the financial crisis as coronavirus lockdowns halted non-essential business and triggered a sharp decline in demand for oil.
The Institute for Supply Management on Friday said its purchasing managers’ index fell to 41.5 last month, down 7.6 points since March. That was the lowest level since April 2009 and compared with economists’ expectations for a drop to 36.9.
The report showed a sharp contraction in new orders, employment, production and export orders as the coronavirus pandemic hit supply chains.
“Comments from the panel were strongly negative… regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and continuing energy market recession,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee.
Mnuchin asks private schools to return PPP loans
James Politi in Washington
Steven Mnuchin, the US Treasury secretary, has asked wealthy private schools to return loans they accessed through a $659bn government scheme to help small businesses. In a tweet on Friday morning, Mr Mnuchin said: “It has come to our attention that some private schools with significant endowments have taken [Paycheck Protection Program] loans. They should return them.”
Mr Mnuchin’s demand came as the US Treasury is struggling to ensure that the billions of dollars of federal money under the programme is directed towards small struggling establishments that have suffered a hit due to coronavirus, rather than larger and wealthier organisations. This week, the US Treasury warned that any loan over $2m under the PPP plan would be subject to a “full review”.
Mr Mnuchin’s comments followed a report in the New York Times this week pointing to Sidwell Friends, a private school in Washington attended by former president Barack Obama’s daughters, and St Andrews Episcopal School, where President Donald Trump’s son is a student, as recipients of PPP loans.
The Los Angeles Times separately reported that The Brentwood School, a private school in the city attended by two of Mr Mnuchin’s children, also received a loan under the programme. Monica Crowley, Mr Mnuchin’s spokeswoman at the Treasury, said in the article that he had “no knowledge” that the school had taken out a government loan.
Richard Branson withdraws National Lottery bid amid airline turmoil
Alice Hancock in London
Richard Branson has withdrawn his bid for the UK’s National Lottery franchise as he battles to save his other companies including the Virgin Atlantic airline from collapse because of the coronavirus crisis.
It was the third time that Sir Richard had put in a bid for the lucrative lottery franchise, which has been run since its inception in 1994 by the Canadian-owned Camelot.
Other bidders that have registered an interest in the licence include Camelot, which is re-bidding, Sir Richard Desmond, owner of the Express newspapers, and the Czech lottery operator Sazka.
“Due to the extreme uncertainty caused by Covid-19, all of our Virgin Group resources are focused on the existing portfolio,” said a spokesman for Sir Richard. “Sadly, this means we cannot continue our not-for-profit bid for the National Lottery at this time.”
Sir Richard is currently seeking new investors to save Virgin Atlantic, in which he holds a 51 per cent stake, after the government refused to support a bailout of the airline.
The competition for the new licence was due to start early this year, according to a draft timeline issued by the Gambling Commission. The current licence is up for renewal in 2023.
Oil traders turn to salt caves and train cars in storage crisis | Free to read
David Sheppard and Neil Hume in London
From salt caverns in Sweden to train cars in Chicago, oil traders spent the past two months stuffing unwanted crude into any available space after demand collapsed in the face of the coronavirus pandemic.
Traders called on locations they usually ignored, including barges on rivers normally used for making relatively small deliveries to inland markets. Rail cars were filled up and so were “frac” tanks, normally used for holding water and chemicals used in the hydraulic fracturing process.
The price of storage has surged in the past two months as crude demand fell globally by as much as 30 per cent because of the coronavirus lockdowns. Brent crude, the international benchmark, fell from about $70 a barrel in early January to an 18-year low below $20 a barrel last week. It took the sub-zero crash in late April to prompt producers to tighten their taps.
Colombia’s biggest guerrila group terminates ceasefire with the state
Gideon Long in Bogotá
Colombia’s biggest guerrilla group, the National Liberation Army (ELN), resumed its conflict with the state on Friday, ending a month-long ceasefire it called to allow the country to tackle coronavirus.
The ELN announced the unilateral ceasefire on March 30 saying it was “a humanitarian gesture” to help people deal with “the devastation of coronavirus”.
The government welcomed the move but repeated its longstanding position that it would only negotiate with the group if it renounced violence and released its hostages.
The group accused the government of intransigence and refused to extend the ceasefire past April 30, despite appeals from the UN and the Catholic church.
The ELN was set up in 1964, the same year as its bigger and better-known relative the Farc, which signed a peace deal with the state in 2016 and has transformed itself into a political party.
Colombia has registered 6,507 cases of coronavirus and 293 deaths so far.
India extends lockdown until May 18 but eases some restrictions
Amy Kazmin in New Delhi
India’s government has extended the nationwide lockdown for another two weeks after May 4, but eased many restrictions, as it seeks to balance its concerns about the spread of coronavirus with the need to limit the damage to the economy.
In guidelines issued Friday night, India’s ministry of home affairs said that all public transport services — including airlines, trains, urban metros and interstate and inter-district bus services — will remain suspended across the country until May 18, except for official purposes specified by the government, such as returning stranded migrant works to their homes.
However, in so-called “green zones” – districts which have had no new confirmed coronavirus cases in the last 21 days – local buses will be able to operate, though at only 50 percent capacity.
Schools and other educational institutions, hotels and restaurants, sports complexes, religious sites and other public gathering spots will remain closed across the country, and interstate movement of cars will also be prohibited across the country.
But authorities are relaxing some restrictions. Shops – except those in shopping malls – would be allowed to reopen, without any distinction as to whether they were selling “essential” or “non-essential” items, the guidelines said.
However, in areas deemed “red zones” — which are most of India’s big cities, e-commerce businesses would only be permitted to only be permitted to deliver essential items — such as food, hygiene and household cleaning products.
The new guidelines permit private offices across the country to resume operations, albeit with just 33 percent staff strength and others working from home. Industrial activities will also be permitted to resume in all areas, provided social distancing requirements are followed.
Cboe exchanges operator to reopen Chicago trading floor on June 1
Philip Stafford in London
Cboe Global Markets, the exchanges operator that owns the Vix volatility index, intends to be ready to reopen its Chicago options trading floor at the start of June.
“We’ll be ready in and around June 1,” chief executive Ed Tilly told analysts as it reported its first quarter earnings on Friday. The exchange’s open outcry options floor has been closed since mid-March because of the coronavirus pandemic. All deals have been executed electronically. Illinois residents are under orders to stay at home until May 31.
Mr Tilly said that some traders had found it hard to execute more complex deals, that have six legs and involve options on the S&P 500 equities benchmark, without the floor.
Since the floor was shut, that type of business has halved from its usual level of around 5.5 per cent of total volume in the S&P 500 options, he said.
Mr Tilly added:
Safety-first is going to be our guideline. We recognise the impact that we potentially can have on the Chicago community if we act too quickly and recklessly.
Norwegian Air fails to get full approval for restructuring
Richard Milne in Oslo
Norwegian Air Shuttle failed to win over all its bondholders for a debt-for-equity swap, complicating its efforts to stave off bankruptcy due to its high debt load and the collapse in demand from coronavirus.
Europe’s third-largest low-cost airline said it had won the backing of three out of four bondholder groups, but in the fourth only 62 per cent supported the plan when a two-thirds majority was needed. It needs to convert the debt to equity to unlock NKr3bn ($290m) in government-backed loan guarantees and has warned otherwise it is weeks from running out of cash.
“Our dialogue with the bondholders continues with the clear goal of reaching a solution. Unfortunately, we were not able to reach an agreement within the deadline. However, the discussion is continuing through the weekend to find a solution,” said Jacob Schram, Norwegian’s chief executive.
Norwegian said it was still planning to hold its extraordinary general meeting on Monday, but would summon a new bondholder meeting for May 18. It added that it had received “strong support” from leasing companies for at least $550m conversion to equity, which would be enough to satisfy the condition set in the proposal for bondholders.
Norwegian added: “The company is however continuing a constructive dialogue with bondholders to assess whether the required majority for approval of the proposal can be reached.”
UK meets its 100,000 tests a day target as coronavirus death toll rises
Sebastian Payne in London
The UK has hit its “audacious” target of carrying out 100,000 coronavirus tests a day by the end of April.
Speaking at today’s Downing Street press conference, health secretary Matt Hancock announced 122,347 tests were deployed yesterday, although that figure includes home testing kits that have yet to return results. 73,191 tests were actually carried out on Thursday.
Mr Hancock said that the “unprecedented expansion in British testing capacity is an incredible achievement”. He added that the increased level of testing would be essential to “help us to unlock the lockdown”.
The UK’s death toll from coronavirus has risen sharply over the past 24 hours by 739 to 27,510.
WHO teams up with European Investment Bank on health systems
Camilla Hodgson in London
The World Health Organization and European Investment Bank have teamed up to bolster global healthcare systems, they announced on Friday.
In a memo of understanding, the two bodies agreed to collaborate on a new EU malaria fund, to support the development of antimicrobial resistance treatments and invest in the healthcare infrastructure of 10 African countries.
To support the fight against Covid-19, the partnership will also scale up financing to help support the transportation of key supplies, such as personal protective equipment, to areas in most urgent need.
Dr Tedros Adhanom Ghebreyesus, WHO director-general, said:
Combining the public health experience of the WHO and the financial expertise of the EIB will contribute to a more effective response to Covid-19 and other pressing health challenges.
The EIB will participate in the EU’s pledging conference on Monday, which aims to raise €7.5bn.
“We need to mobilise private sector financing to reach our objectives,” said Werner Hoyer, president of EIB.
He added that the bank was assessing more than 20 projects in the field of Covid-19 vaccine development, diagnostic and treatment.
United prepares for zero air travel demand into 2021
Claire Bushey in Chicago
United Airlines is preparing for a future where demand for air traffic remains at zero until sometime in 2021, and reducing cash burn is critical to the company’s plan.
Scott Kirby, United’s current president who will take the top job on May 20, told investors on Friday that the airline could lower its cash burn to $20m a day in the fourth quarter.
The airline is burning about $50m in cash per day as the aviation industry struggles to manage an unprecedented drop in demand caused by the coronavirus pandemic. United told investors that figure would fall to beneath $45m in the second quarter, then south of $40m in the third quarter.
“What I’m about to describe, I hope and pray we won’t have to do, but we already have a plan on the shelf … to get our cash burn, at a worst case, down to $20m dollars per day,” Mr Kirby said. “The difference between that third quarter number and that fourth quarter number is really about employees.”
UK government faces possible lockdown legal challenge
Jane Croft in London
An entrepreneur is considering bringing a legal challenge over the UK government’s decision to impose a lockdown during the coronavirus pandemic.
Simon Dolan, who owns an aviation company, has appointed lawyers who have written a letter before legal action to Matt Hancock, health secretary, saying he will bring a judicial review legal challenge unless the lockdown is ended.
He has given the government until next week to respond.
The Department of Health and Social Care said it could not comment on ongoing or potential legal proceedings.
Mr Dolan’s lawyers Wedlake Bell claimed in the letter that the government went beyond its remit in imposing the lockdown and imposed a test for lifting the restrictions that was “over rigid” and failed to consider the effect of the lockdown restrictions on the economy and on non Covid-19 health related illnesses such as cancer cases.
Mr Dolan is crowdfunding for his legal action and claims that the government restrictions will “lead to devastating economic impact”. He also alleges that the government is breaching human rights law in forcing people to stay at home.
The government has said that continuing the lockdown is “vital” to avoid a second peak of coronavirus infections. It is due to review the restrictions on May 7.
New York schools to remain closed for academic year
Schools across the state of New York will remain closed for the remainder of the academic year, governor Andrew Cuomo announced on Friday.
Mr Cuomo said a decision on summer school programmes will be announced by the end of May. The academic year ends in June.
New York schools including those in New York City – the largest school system in the US – have been closed since at least March 18 in response to the coronavirus outbreak. Mr Cuomo and New York City mayor Bill de Blasio butted heads over whether schools would continue distance learning until the end of their year. Mr de Blasio said last month schools in the city would remain closed, while Mr Cuomo insisted the decision was his to make.
There were 973 new hospitalisations in New York in the past 24 hours. While an improvement, “that is still too high a number of new cases to have every day”, Mr Cuomo said. The state’s total number of patients currently hospitalised with Covid-19 dropped by more than 600, versus a decline of 561 a day earlier.
New York registered 289 additional deaths, bringing the total to around 18,600.
JPMorgan nabs $15bn in second round of emergency small business loans
Laura Noonan in New York
JPMorgan Chase has secured another $15bn of small business rescue loans through the Paycheck Protection Program, giving the US’s biggest bank a total of $29bn for its clients and satisfying most of its demand.
The news follows the Small Business Administration’s decision to lock JPMorgan and other big banks out of the loan approval process for eight hours on Wednesday amid fears they would suck up a disproportionate share of the $310bn in the PPP’s second round.
In a statement on Friday morning, JPMorgan said it had pushed 211,000 loans through the second round of the programme. It continues to process applications but is not accepting new ones.
The bank, which facilitated multimillion dollar PPP loans for big companies including Shake Shack in the PPP’s $349bn first round, said that the average PPP loan across its customers was $123,000.
“We know how important capital is to their business, and we are trying to do all we can to help,” said Jamie Dimon, chief executive. Shake Shack, and many other larger public companies, have since returned their grants.
WHO’s emergency committee calls for uniform transmission indicators
Camilla Hodgson in London
The emergency committee that advises the World Health Organization has asked the body to develop indicators to help governments monitor transmission.
In its first advice since the pandemic was declared on January 30, the committee said the WHO should “clarify the testing strategy” and develop qualitative and quantitative indicators that countries can use to assess and monitor Covid-19 transmission.
The committee agreed the crisis remained a public health emergency of international concern, the highest level of risk.
The WHO should also work to support the equitable distribution of diagnostic tests, in light of global shortages, the committee said.
“The pandemic is not finished,” said Professor Didier Houssin, the committee chair.
He said countries should consider whether it is possible to begin restarting international air travel, weighing up the risks, benefits and “unintended consequences”. Many countries rely on air freight for essential supplies, and the lockdown is causing them a “big handicap”.
Majority of US chief executives have not taken pay cuts, research shows
Andrew Edgecliffe-Johnson in New York
US chief executives from United Airlines’ Oscar Munoz to Marriott’s Arne Sorensen have made high-profile pledges to forgo their salaries while employees bear the brunt of coronavirus-induced collapses in their companies’ revenues. But new research suggests that they remain in the minority.
Just 11 per cent of the Russell 3000 companies have so far announced cuts to executives’ base pay, according to the Conference Board, a non-partisan US think-tank that analysed disclosures from March 1 to April 24 with Semler Brossy, an executive pay consultancy, and ESGAUGE Analytics, an ESG data provider.
More than 60 per cent of the 342 companies making such cuts were in the consumer discretionary sector, which includes retailers and hospitality groups, or industrials, which captures the airline industry.
The number of announcements peaked in the week of April 5, but the Conference Board said there may be a second wave in the coming weeks as more disclosures come through and companies continue to assess the impact of the crisis.
Of the companies that cut top executives’ pay, 27 per cent of CEOs had their salaries cut entirely and 19 per cent took a 50 per cent cut. The study did not analyse changes to bonus or share-based incentive programmes, which have typically been left untouched.
PHE refuses to hand over evidence for testing strategy
Camilla Hodgson in London
Public Health England has refused a request for the evidence on which it based its Covid-19 testing strategy, sought as part of a House of Commons inquiry.
On March 30, the House of Commons science and technology committee wrote to the director of the National Infection Service at PHE, Professor Sharon Peacock, requesting publication of the rationale upon which the UK’s testing strategy was based.
In response, Prof Peacock said on Friday:
The Royal Society have agreed to prioritise research that will aim to understand the different approaches to testing and impact on R0 and to identify lessons learned from other countries.
We hope to have a timeline from them shortly and will share this with you on receipt.
Greg Clark, the committee chair, responded to say that he had not asked for “a retrospective analysis conducted now of different countries’ approaches to testing” and asked again for the evidence by May 7.
Prof Peacock had said on March 25 at an inquiry hearing that the evidence would be published “in the next few days”.
Mr Clark said on Friday: “It is important that the bodies responsible for UK policy and practice are transparent about the basis of vital decisions. It is disappointing that Public Health England has still not disclosed the assessment they made which led them to reject the South Korean approach to testing.”
France reports lowest daily death toll in more than 5 weeks
Victor Mallet in Paris
A further 218 coronavirus deaths were reported in French hospitals and old people’s homes in the past 24 hours, the lowest level in more than five weeks, according to data released by the health ministry on Friday.
Jérôme Salomon, director-general of health, said 15,369 Covid-19 patients had died in hospital and 9,225 in old people’s homes and other care homes since March 1, for a total death toll of 24,594.
The number of coronavirus patients in hospital, and the number of those in intensive care for the disease, continued to decline, but the government said the pressure on the health system will have to be further alleviated in parts of France if the lockdown is to be eased across the whole country from May 11 as planned.
“Circulation of the virus remains at a high level,” Dr Salomon said.
US stock losses build after blockbuster month
Wall Street’s sell-off on Friday deepened after earnings from tech giants and a weak US manufacturing survey drew attention to the economic damage caused by the coronavirus pandemic and business shutdowns.
The S&P 500 – fresh off its best month since 1987 – was near its session lows with a decline of 3 per cent in afternoon trading. The tech-heavy Nasdaq Composite fared worse, down 3.5 per cent.
The sell-off also came amid growing tensions between the US and China over the coronavirus crisis. President Donald Trump raised the prospect of using tariffs against Beijing, saying he had seen strong evidence that the outbreak originated from a laboratory in Wuhan.
The energy sector led the S&P 500’s decline, as ExxonMobil fell more than 5 per cent after the company posted its first quarterly loss in three decades.
Brent crude was down 1.2 per cent at $26.16 a barrel. West Texas Intermediate bounced 3.6 per cent higher to $19.52.
The yield on the 10-year Treasury note rose 0.01 percentage points to 0.634 per cent.
Ireland extends lockdown but eases restrictions on movement
Arthur Beesley in Dublin
Leo Varadkar has extended Ireland’s lockdown by a fortnight until May 18, saying the battle against coronavirus is “not yet won”, but slightly easing restrictions that required people above 70 years old to stay indoors for more than a month.
In a televised speech on Friday evening, the prime minister said the easing of the lockdown will proceed in five stages, three weeks apart, with the final phase beginning on August 10. Schools and colleges will not reopen until the start of the new academic year in September/October.
From Tuesday, however, elderly people will be allowed to leave their homes for a walk or drive once they “avoid all contact with other people”. And rules that required all people to stay within 2km of their homes have been loosened to allow them to move 5km for exercise.
As 34 new fatalities on Friday brought the total number of lives lost to 1,265, Mr Varadkar said he remained concerned about the level of hospital and intensive care admissions. “Unfortunately, the risk of a second wave of the virus is ever present,” he said. “So we can only move from one phase to the next if the virus stays under control between each phase — and there is a risk that we’d have to go back a phase if that happens.”
Outdoor work such as construction and landscaping will resume on May 18 and garden centres, hardware stores and repair shops will reopen. Mr Varadkar said some outdoor sporting and fitness activities in small groups will be allowed at that time, and it will be possible to meet “small groups” of friends and family outdoors.
Russia’s construction minister hospitalised for coronavirus
Max Seddon in New York
Russia’s construction minister Vladimir Yakushev has been hospitalised after he and his deputy tested positive for coronavirus.
Mr Yakushev on Friday said he and deputy minister Dmitry Volkov had taken CT scans that confirmed the diagnosis. “I will be treated under medical supervision in hospital,” he said, adding that he remained in touch with his ministry officials.
Prime minister Mikhail Mishustin, who is leading the Kremlin’s response to the pandemic, stepped down temporarily on Thursday after testing positive for the virus.
FDA grants emergency approval for Gilead’s potential coronavirus drug
Hannah Kuchler in New York
The US regulator has issued an emergency approval for Gilead’s potential Covid-19 drug remdesivir, after positive results from a US-led trial were announced earlier this week.
President Donald Trump said the Food and Drug Administration had issued an emergency-use authorisation for the antiviral drug, which the trial showed helped patients recover 31 per cent faster on average than without the drug.
The FDA published guidance for patients taking remdesivir on its website as well as the EUA update.
“Remdesivir is investigational because it is still being studied. There is limited information known about the safety and effectiveness of using remdesivir to treat people in the hospital with Covid-19,” it said. “There are no medicines approved by the FDA as safe and effective to treat people in the hospital who have Covid-19.”
The drug, which was originally developed by the Californian biotech company for Ebola, has not received full FDA approval — or approval from any other regulator. Gilead on Thursday said it would apply for full approval after obtaining the EUA.
Shares in Gilead were down 4.5 per cent after analysts’ downgrades on concerns the company may not profit from the drug.
BofA chief says US consumer spending is starting to rebound
Laura Noonan in New York
US consumer spending has started rebounding from a 30 per cent fall at the peak of the Covid-19 crisis, said Brian Moynihan, Bank of America chief executive, on Friday, citing data on the outgoings of the 66m individuals with BofA chequing accounts and credit cards.
“What we’re seeing very recently, in the last four weeks, is about $50bn in total in cash moving through consumers’ accounts,” Mr Moynihan told CNBC. “That’s about what it was in the fall of 2017.”
Mr Moynihan said that while consumer spending was “starting to grow” across categories including clothing, gasoline and restaurants, it was too early to say that weekly spending had bottomed out after a 30 per cent decline at the peak of the crisis.
“It all depends on what happens next,” the bank boss said, adding that areas such as travel and movies remained weak.
Despite the economic uncertainty, Mr Moynihan said his bank continues to do a “million and a half mortgages a week”.
“Right now they (mortgage rates) are the lowest in history and it’s a good deal for the consumer.,” he said.
Mr Moynihan also said his bank had received approvals for 231,000 loans under the government’s small business rescue programme, and had another 37,000 applications still in process.
Earlier in the day, JPMorgan Chase said it had gotten approvals for 239,000 customers who applied for the scheme.
Wall Street slips as corporate earnings show pandemic’s impact
US stocks dropped on Friday as investors gauged the impact of the coronavirus pandemic on corporate earnings.
The S&P 500 closed 2.8 per cent lower. The Nasdaq Composite lost 3.2 per cent with technology shares coming under pressure following closely watched earnings from Apple and Amazon.
The drop erased the S&P 500’s gains for the week, pushing it to a 0.2 per cent loss. The Nasdaq fell 0.3 per cent. The Dow Jones Industrial Average, which sank 2.6 per cent on Friday, registered a 0.2 per cent weekly decline.
The energy sector was the worst performer in the benchmark S&P 500 on Friday. ExxonMobil fell 7 per cent after reporting its first quarterly loss in three decades.
West Texas Intermediate crude settled at $19.78 a barrel, up nearly 5 per cent, but remains more than 60 per cent lower since the start of the year. Brent, the international marker, ticked down 0.2 per cent to $26.44.
The yield on the 10-year Treasury note was roughly flat at 0.626 per cent.
IMF approves two-year credit line for Colombia
Gideon Long in Bogotá
The IMF has extended a two-year $10.8bn credit line to Colombia as it grapples with the coronavirus pandemic and the impact of the political and humanitarian crisis in neighbouring Venezuela.
Colombia can draw on the money at any time during the period with no conditions attached. It has had a similar arrangement in place since 2009 but it was due to expire.
“In the wake of the pandemic, Colombia’s economy is expected to contract for the first time in two decades,” the IMF said, noting that the country was particularly vulnerable to “a further deterioration of Venezuela’s crisis”.
Colombia has taken in 1.8m Venezuelan migrants in the past five years, many of whom are now out of work because of the coronavirus lockdown.
Colombia has registered 6,507 cases of the virus and 293 deaths.
Trump to block use of foreign electrical components in power grid
James Politi in Washington
Donald Trump has moved to block the use of foreign-made electrical components in the US power grid, through an executive order issued on Friday.
The move comes as the White House and members of Congress have become increasingly concerned about the country’s reliance on international supply chains in a range of areas from medical gear and pharmaceuticals to food. The security of the US electrical network has long been a concern in Washington. Mr Trump said transactions involving “bulk power system electric equipment” directed, controlled, or designed by a “foreign adversary” would be subject to special scrutiny, including a block on imports.
“The bulk-power system is a target of those seeking to commit malicious acts against the United States and its people, including malicious cyber activities,” the president said. “Although maintaining an open investment climate in bulk power system electric equipment, and in the United States economy more generally, is important for the overall growth and prosperity of the United States, such openness must be balanced with the need to protect our nation against a critical national security threat.”
US coronavirus deaths climb above 59,000
The US has recorded more than 59,000 deaths attributed to coronavirus, while testing accelerated to its highest daily rate since the outbreak began.
About 34,580 additional confirmed cases of Covid-19 were confirmed over the past 24 hours, up from 27,944 a day earlier and bringing the total to more than 1.09m, according to data compiled by the Covid Tracking Project. The US completed more than 320,000 new tests, the highest tally so far and an increase of more than 115,000 versus the previous day.
The total number of fatalities rose by 1,793 to 59,059.
Deaths in New York, the hardest-hit state, reached 18,610 today, an increase of 289, while the number of patients hospitalised with Covid-19 continued to decline.
White House blocks Democrats’ request for Fauci to testify
Demetri Sevastopulo in Washington
The White House has blocked Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases and coronavirus task force member, from testifying before Congress, Democrats said on Friday.
The Democratic-controlled House appropriations committee said Mr Fauci, one of the most trusted voices on the response to the pandemic, was requested to appear before Congress. But a top spokesperson for the committee said a Trump administration official told the panel that the White House had vetoed the move.
Mr Fauci is practically the only member of the coronavirus task force who has been willing to contradict Mr Trump publicly, sometimes even as he speaks beside the president at the White House press podium.
The White House rejected the criticism from the Democrats, saying it was not appropriate to have the officials who are instrumental to the US response to the pandemic to be appearing before Congress at this time.
“While the Trump administration continues its whole-of-government response to Covid-19, including safely opening up America again and expediting vaccine development, it is counter-productive to have the very individuals involved in those efforts appearing at Congressional hearings,” the White House said. “We are committed to working with Congress to offer testimony at the appropriate time.”