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Coronavirus: Congress passes $484bn interim stimulus package — as it happened

Harvard to turn down federal financial aid after public pressure

Peter Wells in New York

Harvard University said it would not accept $9m in financial aid allocated to it by the federal government’s Cares Act, bowing to pressure from the public and Donald Trump that it refrain from taking the money.

The elite university said it would not take funds from the Higher Education Emergency Relief Fund, which is part of the government’s programme to cushion the impact of the coronavirus.

“Like most colleges & universities, Harvard has been allocated funds as part of the CARES Act. Harvard did not apply for this support, nor has it requested, received or accessed the funds,” it said in a series of messages posted to Twitter.

Harvard’s move follows that of Ivy League rival Princeton, which earlier on Wednesday afternoon said it would refrain from accepting $2.4m allocated to it in the Cares Act.

Kura Sushi will return $6m payment protection loan

Sujeet Indap in New York

Shake Shack is not the only restaurant chain having second thoughts about a government bailout. Kura Sushi USA on Wednesday said it would return its $6m loan from the Payment Protection Program, the US Treasury’s fund to keep workers on payrolls.

California based Kura has shut down all of its 25 locations due to the coronavirus pandemic. It announced last week that it had secured its loan while still noting its balance sheet had $24m of cash, no debt, and that it had access to a $20m credit line from its listed parent, Kura Sushi Japan.

Outrage has grown from both the general public and Washington politicians in recent days as more public companies have announced they have taken PPP loans from a pool that was thought to be reserved for small-sized American businesses.

An FT analysis shows that Kura, which has a market capitalisation of around $90m, is one of more than 120 listed businesses that had so far taken a piece of the $350bn loan pool that was quickly depleted.

Shake Shack said on Sunday it would return the $10m it had taken because it could access other capital. Congress has since passed a PPP supplement for small businesses worth $310bn.

Asia-Pacific stocks follow Wall Street higher

Asia-Pacific equities rose on Thursday, following gains for Wall Street overnight.

Japan’s Topix gained 0.6 per cent, while in Seoul the Kospi index rose 0.4 per cent. In Australia, the S&P 200/ASX added 1.1 per cent. The S&P 500 closed 2.3 per cent higher.

On Wednesday, Brent crude, the international benchmark, rebounded to trade above $20 a barrel after Donald Trump tweeted that he had ordered the US navy to “shoot and destroy” Iranian ships if they posed a threat.

SK Hynix first quarter net profit plunges more than 40%

Song Jung-a in Seoul

SK Hynix, the world’s second-largest memory chipmaker, has warned of “unprecedented uncertainties” over the global semiconductor market after reporting a fall of more than 40 per cent in first-quarter net profit due to the coronavirus pandemic.

The South Korean chipmaker said net profit plunged 41 per cent year on year to Won649bn ($526m) in the first three months of this year while sales rose 6.3 per cent to Won7.2tn. Operating profit also fell 41 per cent to Won800bn.

The company forecast a decline in global smartphone sales but said demand for IT products and services would rise as a result of a broad shift to working from home, increased use of video conferencing and a boom in digital entertainment prompted by lockdowns in many parts of the world.

But the company warned: “If Covid-19 is prolonged, it will lead to increased demand volatility in global markets and might disrupt production activities.”

The company added it would push ahead with its existing investment plans and respond to stronger demand for high-capacity server D-ram chips although its capital spending would be much lower this year than in 2019.

Vietnam eases lockdown measures in Hanoi and Ho Chi Minh City

John Reed in Bangkok

Vietnam on Thursday began easing a lockdown aimed at fighting the spread of coronavirus, loosening strict social distancing measures in place in Hanoi and Ho Chi Minh City, the country’s two biggest cities.

Prime Minister Nguyen Xuan Phuc announced the measure on Wednesday after a sharp drop-off in reported Covid-19 infections since the beginning of this month in the country, which as of Thursday had reported no new cases for a week.

Mr Phuc warned that the public should “still be wary”, avoid going out, avoid crowds, and wear face masks outdoors.

On Wednesday, Vietnamese authorities put Dong Van, a town in Ha Giang province near the Chinese border where 7,600 people live, under lockdown after a coronavirus infection was reported there.

Since reporting the first case of the disease in January, the country has reported 268 cases of Covid-19 to date and no deaths, the lowest number for any large south-east Asian nation.

South Korean economy suffers biggest contraction since financial crisis

Edward White in Wellington

South Korea’s economy suffered its deepest contraction since the global financial crisis as the coronavirus pandemic battered the country’s massive technology and industrial exporters.

Gross domestic product fell 1.4 per cent in the first three months of the year, the Bank of Korea reported on Thursday, the biggest drop since a 3.3 per cent drop in final three months of 2008. The contraction compares with growth of 1.3 per cent in the fourth quarter of 2019 when hopes were building for a recovery in the country’s critical exports of computer chips and smartphones.

Sweeping lockdowns in China, South Korea’s biggest export market, in January and February led to production disruptions and softer demand for companies like tech giants Samsung, LG and SK Hynix and carmaker Hyundai.

A rapid outbreak of Covid-19 in February in South Korea — which was for a time the worst affected country outside China — saw a further hit to the local demand for smaller businesses.

Despite South Korea’s success in stemming the outbreak, Moon Jae-in, the South Korean president, on Wednesday warned that the economic crisis stemming from coronavirus was only just beginning as he revealed a sharp increase in spending to deal with the fallout of the pandemic to almost $200bn.

Economists cautioned, however, that despite the record spending and low interest rates, the government’s moves might still be insufficient given the exposure of South Korea’s export-dependent economy to a global recession.

Here’s some news you might have missed

Senior members of the UK’s governing Conservative party have called on the government to adopt a tougher stance towards China, citing growing concerns about Beijing’s handling of the coronavirus outbreak.

Delta Air Lines is raising a further $3bn to shore up liquidity as it anticipates a 90 per cent plunge in revenue during the second quarter.

Donald Trump warned Georgia’s Republican governor that he “strongly” disagreed with his decision to reopen the economy from Friday, saying it was “totally egregious” to open spas, beauty salons and tattoo parlours.

Mexico sold $6bn in bonds, with strong appetite from investors, despite the coronavirus pandemic, oil price shocks and downgrades to its sovereign debt and that of the state oil company.

The US death toll from coronavirus rose by more than 2,000 for the second consecutive day, pushing the nation’s total above 42,000.

Pakistan’s prime minister Imran Khan has tested negative for coronavirus, a Pakistani minister said late on Wednesday night, despite coming into contact with the head of a Pakistani charity who was later found to be infected.

A group of Republican senators has pleaded for the US Treasury and the Federal Reserve to change the terms of federal aid to businesses struck by the coronavirus pandemic to make it easier for energy companies to access the money.

France’s director general of health sounded a note of caution about preliminary findings from a Paris hospital this week that smokers were less numerous among hospitalised Covid-19 patients than in the general population, with one theory being that nicotine competes with the virus for access to receptors in the lungs and so protects smokers.

China reports 10 new cases of coronavirus

Health authorities in China reported 10 new cases of the coronavirus to the end of Wednesday.

Six of the infections were in people who had recently returned from overseas, while three came in Heilongjiang, a province in the north-east of the country where fresh lockdown measures have been imposed on fears of a new outbreak.

The total number of confirmed cases in China has now reached 82,798.

China struggles with sharp rise in unemployment

Sun Yu and Christian Shepherd in Beijing

China is struggling to cope with a rise in unemployment in the wake of the coronavirus pandemic, with payment of benefits stalling and questions being raised about the real number of jobless in the country.

The Chinese economy has been pummelled by the health crisis, with gross domestic product falling 6.8 per cent in the first quarter, after a national lockdown brought the country to a standstill.

Beijing has lifted restrictions on most regions in a bid to restart the economy. But some analysts say the country’s social safety net is not supporting the unemployed.

The Ministry of Human Resources and Social Security said last week that 2.3m people received jobless benefits in the first quarter of this year, the same as the previous quarter. Yet the nation’s official unemployment rate rose to 5.9 per cent, or 26m, in March from 5.2 per cent, or 23m, in December.

Read more here

Prada board withdraws dividend recommendation

Primrose Riordan in Hong Kong

The board of Hong Kong-listed Italian fashion house Prada has withdrawn its recommendation to distribute a final dividend for 2019, blaming the coronavirus outbreak and lockdowns imposed by Rome.

“The board has taken into consideration that as there are still uncertainties in assessing the duration of the pandemic and its impact, the withdrawal of its recommendation to distribute a final dividend is made in order to support the Group’s financial strength,” the company said in a filing to the Hong Kong stock exchange.

The company’s board had met on March 18, and decided to recommend a €0.02 per share dividend, but chairman Carlo Mazzi said the further spread of the virus meant they needed to reverse the move.

Prada beat analysts’ estimates last month when it reported a €255m net profit for 2019, up 7.9 per cent on the year before.

Japan’s voluntary policy fails to deliver on social distancing target

Robin Harding in Tokyo

Japan is failing to meet its goal of an 80 per cent reduction in social contacts across wide areas of the country according to mobile phone tracking data that has become a closely watched proxy for the impact of a nationwide state of emergency.

Data released by the mobile phone company NTT Docomo showed reductions in the phone-wielding population of 40-75 per cent around large train stations across the country.

Compared with pre-coronavirus levels, numbers were down by 69.3 per cent around Shinjuku station in Tokyo and 74.5 per cent around Umeda station in Osaka, but only 40.9 per cent around the station in the smaller city of Gifu.

Ministers and public health officials have urged the public to step up their social distancing, warning it is essential to meet the 80 per cent goal in order to bring down the number of Covid-19 cases and avoid a stricter lockdown. Japan’s state of emergency calls for voluntary social distancing and has closed some businesses but not others.

Iron ore and gold shipments drive 30% jump in Australia exports

Primrose Riordan in Hong Kong

Australian shipments of iron ore to China and gold to Hong Kong drove the country’s goods exports up by nearly 30 per cent in March compared with the previous month.

March exports rose to A$36bn (US$23bn) from A$28bn in February’s estimate according to the Australian Bureau of Statistics. The March figures also represented a 16 per cent rise over the same month last year.

“There were increases in exports from the resources sector including strong increases in the value of exports of coal, gas and petroleum and in particular a large increase in the value of exports of iron ore to China,” the ABS said.

“The increase in the value of non-monetary gold was driven by exports to Hong Kong and the United Kingdom.”

Inside Wuhan: China’s struggle to control the virus — and the narrative

In late January, the Chinese city of Wuhan, where the coronavirus originated, was placed under lockdown.

This month, by which time the virus had spread across the world and activity in many other cities had ground to a halt, those measures were eased.

In this report from the newly reopened city, the FT’s Don Weinland explores the Chinese government’s approach to a pandemic that went on to engulf the world.

Read the full story here.

Thailand tourist arrivals shrink to a quarter of last year’s volumes

John Reed in Bangkok

Tourist arrivals to Thailand fell by 76.4 per cent in March from the previous year, the kingdom’s tourism ministry reported on Thursday, indicating the extent to which coronavirus-related lockdowns and flight cancellations are hitting a core industry in south-east Asia’s second largest economy.

Arrivals from China, Thailand’s largest source of foreign tourists last year, dropped by 94.2 per cent, and tourists from South Asia — a growth area for the industry before the Covid-19 pandemic — were down 89 per cent on a year ago.

Tourism accounts for between 10 and 20 per cent of Thai gross domestic product, counting both incomes of people who work in the industry and earnings of those who profit from it indirectly.

Separately Nitinai Sirismatthakarn, the president of Airports of Thailand, said on Thursday, in remarks quoted by The Nation newspaper, that flights and passenger volume at Thailand’s airports would drop by about half during the current fiscal year, and that he expected the volume of flights to return to normal by October 2021.

Dubai is set to ease strict coronavirus lockdown measures

Simeon Kerr in Dubai

Dubai is preparing to ease strict coronavirus lockdown measures, including reopening shopping centres and allowing small gatherings, as the holy fasting month of Ramadan approaches.

In a circular, the economic department outlined protocols including measures to operate at 30 per cent capacity in centres and offices. The document, dated Wednesday, said businesses would be able to reopen once they had complied with the procedures. The official reopening date would be announced shortly, it said.

The guidelines mandate various social distancing procedures and sterilising methods — including the wearing of masks — for public transport, shopping centres, food and beverage outlets, and offices.

Dubai has been under a highly restrictive lockdown for a month, including a lockdown of almost three weeks during which residents were required to obtain a police permit to leave the house for groceries or emergencies.

The new regulations advise leaving home for necessities only, but allow family and close friends to gather privately in groups of no more than 10. Outdoor activities will be allowed once a day.

The United Arab Emirates has reported more than 8,200 cases with 52 deaths.

US stock market flops raise governance concerns

At a time when global stock markets have come under intense pressure from the fallout of the coronavirus, a separate issue has arisen in China.

The scandal around Luckin coffee, which was revealed to have misrepresented its revenues last month, has raised questions over a host of other Chinese companies listed in the US — part of a trend that has proved lucrative for western investment banks.

Shares in the 29 Chinese companies that listed in New York since the start of 2017 are down by an average of 16 per cent, underperforming the wider market significantly.

Read the full story from the FT’s Hudson Lockett here.

Hyundai Motor reports 42% fall in first-quarter net profit

Song Jung-a in Seoul

Hyundai Motor on Thursday reported a 42 per cent drop in first-quarter net profit, hit hard by the worsening global economic downturn caused by the widening coronavirus pandemic.

Net profit at the South Korean carmaker fell to Won553bn ($449m) in the first three months of this year from Won954bn a year earlier. But its operating profit rose 4.7 per cent to Won864bn, helped by a one-off gain of about Won100bn from a transaction with its joint venture with Aptiv, the Dublin-based autonomous driving technology group. Revenues increased 5.6 per cent to Won25tn.

The carmaker has warned of weaker profitability in the second quarter as Covid-19 batters global demand for new cars. Its executives told analysts that a V-shaped recovery would be difficult.

The carmaker last week halted a domestic production line producing Hyundai’s Tucson sports utility vehicles for four days, while affiliate Kia Motors plans to shut down one of its three domestic plants for 10 days. Hyundai and Kia together form the world’s fifth-largest automaker by sales.

Hyundai has suspended factory operations in the US, India and Brazil as the virus upends global supply chains and pummels demand.

The fallout from the outbreak has been cushioned by strong domestic sales encouraged by the fact that South Korea was able to bring the virus under control without imposing drastic measures such as lockdowns. Hyundai’s March sales in South Korea, the company’s biggest market, hit their highest level in more than four years, helped by a consumption tax cut.

Dozens of Indian journalists test positive for coronavirus

Amy Kazmin in New Delhi

Journalists in India have emerged as a vulnerable group for contracting coronavirus, as they report on the hardships facing citizens in one of the world’s biggest and most stringent anti-coronavirus lockdowns.

In the country’s financial capital Mumbai, at least 53 journalists – mostly working for television channels – have tested positive for coronavirus, while in the southern city of Chennai, 27 staff members of a local television station tested positive.

In New Delhi, Arvind Kejriwal, the chief minister, said the local government may set up a special facility for local journalists to be tested for the virus given how it had already spread among media workers elsewhere.

Indian journalists have been classed as essential workers, and have been documenting the lives and challenges facing citizens amid a stringent lockdown imposed with no prior warning or planning, which left millions of migrants stranded and dependent on food handouts to survive.

Taking notice of the surge of cases among reporters, India’s government had admonished the country’s media organisations to ensure that media persons took appropriate precautions while performing their duties.

India is one of the world’s biggest media markets, where newspaper reading has remained popular. But media companies have been hit hard by a collapse in advertising revenue since the coronavirus crisis hit, and many have announced layoffs and temporary pay cuts. Newspaper circulation has also been hit by rumours that coronavirus could be spread through its pages.

Renault warns ‘impossible’ to assess outlook as sales fall sharply

David Keohane in Paris

Renault’s first quarter sales fell by 19.2 per cent as coronavirus brought demand to a standstill and the French carmaker said that it remained “impossible to assess” what the impact of the crisis would be this year.

The group reported sales of €10.2bn in the first quarter, down from €12.5bn in the same period last year. Global sales fell by 25.9 per cent, to 672,962 units in the first quarter, led by Europe that fell by 36 per cent to 321,756 units.

Renault, which had already been rocked by the arrest of former boss Carlos Ghosn over a year ago, had already cancelled its dividend, suspended financial guidance and closed much of its production around the world.

French rival PSA, which saw a 16 per cent decline in first quarter sales, said earlier this week that it expected the auto market to fall this year by 25 per cent in Europe, 10 per cent in China, 25 per cent in Latin America and 20 per cent in Russia.

UK tax receipts show first signs of pandemic’s damage to finances

Chris Giles, Economics Editor

The first signs of the deep damage to the UK’s public finances from coronavirus are evident in official figures for March when the lockdown began to take effect.

Central government cash receipts collected by the exchequer were down 12 per cent compared with data from March 2019, with a particular hit to value added tax receipts from companies who were able to defer payments until the end of the year.

Cash receipts from income tax were also down 3.6 per cent, a highly unusual move and a sign of the pain to come for government finances.

Most of the public finance headline measures were largely unaffected, however, because they are measured on an accruals basis and the effects of the coronavirus pandemic have not yet shown up in the figures.

The Treasury will provide an estimate of the extra finance it thinks it will need later this morning.

Anglo American slashes diamond production forecast

Neil Hume, Natural Resources Editor

Anglo American has slashed guidance for its De Beers diamond business due to coronavirus lockdown measures as it announced plans to cut costs by $500m.

The London-listed miner said De Beers would now produce 25m to 27m carats this year, down from an earlier target of 32m to 34m, to bring supply into line with anticipated demand, which has been hit hard by the virus.

Anglo said in a quarterly trading update:

Lockdown measures have significantly impacted diamond production in southern Africa, manufacturing in India and retail operations in the United States, while consumer demand has returned to the Chinese market.

The company said it had identified cost savings of at least $500m and had started implementing restrictions on spending. In addition Anglo said a re-prioritisation of spending would mean its capital expenditure budget would be $1bn lower than previously flagged at $4bn to $4.5bn.

Tullow to raise cash through $575m sale of stake in Ugandan project

Nathalie Thomas in London

Troubled oil group Tullow is to sell its entire remaining stake in a Ugandan project to France’s Total for a deeply discounted $575m, just six months after a $900m deal involving the same scheme fell apart.

The London-listed but Africa-focused company, which had been in a battle to secure its future long before Brent crude prices slumped to levels not seen since the late 1990s this week, said it had struck a deal with Total over the Lake Albert Development project in Uganda, which would deliver $500m upon completion of the deal. A further $75m would be delivered when the partners in the scheme took a final investment decision.

The Uganda deal will deliver much-needed funds for Tullow, which is aiming to raise more than $1bn through asset sales, but the cover price marks a deep discount compared to a pact the company struck over Lake Albert back in 2017 with Total and Cnooc of China. Tullow had originally planned to reduce its stake in Lake Albert from around 33 per cent to 11 per cent via the previous $900m agreement, which fell apart in August last year following a tax row with Ugandan authorities.

However, the latest arrangement will deliver more cash for Tullow. Under the previous agreement, it would only have received $100m upon completion, $50m when the final investment decision was made and $50m when the first oil was produced. The remainder of the $900m would have funded its own costs towards developing the Lake Albert project.

Unilever prepares for ‘lasting changes in consumer behaviour’

Judith Evans in London

Unilever’s underlying sales growth was flat in the first quarter of 2020 as coronavirus hit its ice cream and food service businesses, but the consumer goods group said it would still pay out an interim dividend.

The maker of Dove soap, Ben & Jerry’s ice cream and Lipton tea said turnover was up 0.2 per cent to €12.4bn during the quarter. Underlying sales growth, a key metric for the sector, was down to 0.0 per cent from 3.1 per cent a year earlier.

Alan Jope, chief executive, said:

As the crisis hits countries around the world, we see upswings in sales of hygiene and in-home food products, combined with some household stocking, and near cessation of out-of-home consumption, which is particularly affecting our food service and ice cream business.

We are adapting to new demand patterns and are preparing for lasting changes in consumer behaviour, in each country, as we move out of the crisis and into recovery.

The Anglo-Dutch group, which is the world’s largest ice cream manufacturer, said underlying sales at its food service division had declined 1.7 per cent. The company will maintain its quarterly dividend at €0.4104 a share but withdrew guidance for the year.

Corporate news round-up

Aston Martin intends to reopen its St Athan manufacturing facility, which employs 750 people in Wales, on May 5. The majority of the company’s workforce is furloughed and company executives have agreed to a voluntary reduction in pay, it said.

Housebuilder Taylor Wimpey will recommence construction on the majority of its sites in England and Wales from May 4 in a phased process that complies with social distancing requirements. It closed all building sites on March 24.

Unilever, the consumer goods company, reported flat sales in the first quarter relative to last year’s performance, as consumers bought more hygiene and in-home food products, while out of home consumption ground to a halt. The group maintains plans to pay out a dividend.

Miner Anglo American will cut costs by $500m and reduce its capital expenditure by $1bn to preserve cash, as it lowered production guidance for De Beers, its diamond mining subsidiary, by about 20 per cent.

Compass Group, the contract foodservice company, said that it was reducing its monthly costs by £450m and it would not recommend paying a dividend, as it reported that 55 per cent of its business was currently closed due to the lockdown.

French luxury brand Hermes said that sales in the second quarter will be significantly impacted by store closures, as it reported €1.5bn in sales in the first quarter, down 6.5 per cent on the previous year.

UK to borrow a further £180bn for coronavirus response

Chris Giles in London

Britain’s Treasury announced on Thursday that it would seek to raise another £180bn in finance in the three months from May to July to tide it over while the coronavirus pandemic curtails economic activity in the UK.

The change in the government’s plans to borrow money are huge. In the Budget on March 11, it planned to raise £156bn over the whole of the 2020-21 financial year, roughly at a rate of £13bn a month.

In its latest revision to its financing remit to the Debt Management Office, it has requested to borrow at a rate of £60bn a month for the next three months, a figure more than four times as high as originally planned.

The Treasury said the immediate needs of financing public spending through the Covid-19 pandemic were likely to be concentrated in the early part of this financial year. “This higher volume of issuance is not expected to be required across the remainder of the financial year,” it added.

Equinor becomes the first oil major to cut its dividend

Anjli Raval in London

Norway’s Equinor will cut its quarterly dividend by two-thirds, marking the first major oil company to do so in response to a collapse in crude demand and prices triggered by the coronavirus outbreak.

The first-quarter cash payout will amount to $0.09 per share, which is a 67 per cent fall from $0.27 in the fourth quarter of 2019, the company said on Thursday.

“Equinor has already taken forceful actions to strengthen our liquidity and financial resilience under the current circumstances. In this extraordinary market situation, we have now also decided to reduce the cash dividend,” said chief executive Eldar Sætre.

Equinor has announced plans to curb capital spending, exploration activities and costs by $3bn in an effort to preserve cash. Last month it said it would suspend its $5bn share buyback plan. The company has also raised $5bn through a bond issuance.

French business sentiment crumbles to historic low

Valentina Romei

France’s business confidence has tumbled to a record low, slipping below even the levels recorded during the depths of the financial crisis as sweeping lockdowns stymie activity across the country.

The business climate index lost more than 30 points and fell to 62 in April, the lowest since the series start in 1998 and below the 69 reached in March 2009, according to data from France’s office for national statistics (INSEE).

The index is compared with a long-time average of 100 and it reflects the trend in the services and manufacturing sector.

France’s data were published the same day as the Munich-based Ifo institute revealed that during the coronavirus crisis, 50 per cent of German companies are using short-time work while 18 per cent plan to cut jobs.

Short-time work is a government scheme that pays 80 per cent of workers’ salary when they are temporarily laid-off or have their working time reduced.

European markets nudge higher

A measure of calm has returned to global markets, following a spike in volatility caused by a crash in the price of oil.

European stocks nudged higher in opening trading, with London’s FTSE 100 up less than 0.1 per cent and the continent-wide Stoxx 600 index 0.4 per cent higher.

Stocks across Asia gained, while futures tied to the S&P 500 on Wall Street were 0.4 per cent higher.

The price of oil also stabilised. Brent crude rose 4 per cent to above $21, supported in part by bellicose comments from President Trump that have fanned concerns of fresh tensions in the Middle East.

Among the key individual movers on a busy day for corporate earnings, shares in consumer goods giant Unilever fell 4.3 per cent after it pulled guidance and said sales growth was flat in the first quarter.

Housebuilders prepare to return to work

George Hammond in London

Taylor Wimpey, one of the UK’s biggest housebuilders, has said it will restart work on its building sites from May 4, signalling that construction projects might resume even while much of the country is in lockdown.

Vistry Group, another housebuilder formerly known as Bovis Homes, also announced on Thursday morning that it would re-open sites. Vistry aims to restart work even sooner, on April 27.

The two builders are the first of their listed peers planning to return to work after the government’s social distancing measures and the failure of vital supply chains stalled the vast majority of construction in late March.

The government has stopped short of mandating site closures, but housebuilders and their subcontractors had decided that work could not continue safely.

“The past few weeks have been unlike anything we have seen before, presenting huge challenges for businesses and individuals,” said Pete Redfern, Taylor Wimpey’s chief executive. “We are now confident that we have clear plans and processes in place so we can safely start back on site in a phased way beginning on 4 May,” he added.

Daimler expects steep fall in profits due to Covid-19

Joe Miller in Frankfurt

Daimler expects its pre-tax profits for the first three months of the year to fall by almost 80 per cent, as it warned that the full effects of the coronavirus outbreak could not yet be assessed.

Earnings before interest and tax at the Mercedes-Benz owner fell to €617m, down from €2.8bn in the same period last year.

The German carmaker’s mobility division, which includes its ride-hailing and car-sharing businesses, saw its profits fall by 95 per cent, to €58m, from €1.2bn in the first three months of 2019.

Earlier this month, Daimler secured a €12bn credit line with four leading banks, on top of an existing €11bn facility.

On Thursday, the company said: “Having implemented a comprehensive set of cash protection measures and having increased our financial flexibility, we are confident that we are well positioned to manage the business, both during and after the COVID-19 pandemic.”

LG Display losses widen as virus hits demand for electrics

Song Jung-a in Seoul

Net losses at LG Display, the world’s second-largest maker of electronic displays, more than tripled in the first quarter as the economic fallout from the coronavirus pandemic batters global demand for consumer electronics.

The Apple supplier on Thursday reported a net loss of Won199bn ($161m) in the first three months of this year, compared with a Won63bn loss a year earlier, extending its losing streak for a fifth consecutive quarter.

“We expect volatility in demand to increase down the road, as industry sectors are impacted by the Covid-19 outbreak,” said Suh Dong-hee, the company’s chief financial officer. “The difficult situation will inevitably linger, although it is expected that demand in IT products will grow due to stay-at-home orders and consequent surge in online activities.”

The South Korean company has been undergoing a tough restructuring process to cut costs after replacing its long-time chief executive last year and starting a voluntary redundancy programme as it grapples with a global supply glut in liquid crystal displays (LCDs). Its bigger rival Samsung Display said last month it would stop production of all LCD screens by the end of this year.

French business activity collapses to record low

Valentina Romei

France’s business activity plunged to the lowest on record as the government has locked down large swaths of the economy to stem the spread of Covid-19.

The IHS Markit flash purchasing managers’ index for services tumbled to 10.4 in April from 27.4 in March, the lowest since the series began more than 22 years ago.

The index indicates how activity has changed compared with the previous month with a reading below 50 indicating a majority of businesses reporting a deterioration.

Services is the dominant sector in France and dragged the composite index, an average of services and manufacturing, to 11.2 in April, down from 28.9 in the previous month.

France’s manufacturing industry reported a marginally less severe contraction with the corresponding index falling to 31.5 in April from 43.2 in March.

The rate of workforce contraction accelerated from March and was the fastest since data collection began. Flash estimates are published one week before the final results and are based on about 85 per cent of the typical responses.

Recoveries suggest pressure on German hospital is easing

Tobias Buck in Berlin

Germany reported 2,352 new coronavirus cases on Thursday, an increase of 2 per cent compared with the previous day, as the number of deaths related to Covid-19 rose beyond 5,000.

According to official data from the Robert Koch Institute in Berlin, the total number of detected infections in Germany now stands at 148,046. The number of deaths recorded over the past 24 hours rose by 215 to 5,094.

More than 103,000 Covid-19 patients have recovered from the disease so far. As in previous days, the number of recoveries reported on Thursday exceeded the number of new infections, suggesting the pressure on Germany’s hospitals and health services is easing day by day.

According to a separate report by the Robert Koch Institute released late on Wednesday, German laboratories carried out 323,449 coronavirus tests in the week ending Sunday, taking the total number of tests conducted since the start of the crisis to 2.07m. The latest weekly test numbers were notably lower than in previous weeks, possibly reflecting the public holiday on Easter Monday.

Aston Martin to reopen Welsh car plant in early May

Peter Campbell in London

Aston Martin will reopen its St Athan factory at the start of May to produce the DBX vehicle that is critical to the brand’s future, as it also announced a 35 per cent pay cut for its chief executive, and wage cuts across the company.

The Welsh plant will be the first UK car factory to restart production following last month’s shutdown across the entire country. Bentley is due to reopen at Crewe on May 11.

The announcement comes days after Aston’s new chairman Lawrence Stroll called for the business to fire up its plants as soon as possible.

Several of Europe’s plants have restarted, with companies seeking to protect staff who go back to work.

Staff will return to work at St Athan on May 4, with the company ramping up to the site’s full quota of 550 people in the coming weeks. The facility is preparing to produce DBX, the company’s first sports utility vehicle, which is expected to start customer deliveries in the summer. Gaydon, Aston’s main factory, does not yet have a restart date.

On Thursday, Aston also announced a number of cost measures, including reducing the pay of chief executive Andy Palmer by 35 per cent, and cutting pay for most staff by 20 per cent.

France hopes most businesses will reopen on May 11

Victor Mallet in Paris

French finance minister Bruno Le Maire has said he wants all businesses to be able to reopen when the country’s nationwide coronavirus lockdown is due to end on May 11, although bars and restaurants will remain closed.

More than 10m employees — half the private sector workforce — are currently in France’s “partial unemployment” scheme, through which people retain their jobs even when not working but have most of their salaries paid with the help of state subsidies to employers.

The extended rollout of the scheme during the coronavirus pandemic is expected to cost the state at least €24bn.

“We want all businesses to be able to reopen on May 11,” Mr Le Maire told Franceinfo radio on Thursday, although he said startup dates might vary by region depending on the health situation. He declined to confirm that restaurants and bars would be allowed to reopen in mid-June.

Business activity slumps to record low in Germany

Valentina Romei in London

Business in Germany crashed this month, as the eurozone’s economic powerhouse followed France in recording its lowest readings of services and manufacturing activity on record.

The IHS Markit flash purchasing managers’ index for services fell to 15.9 in April from 31.9 in March, the lowest since record began more than 22 years ago as about three-quarters of companies reported a fall in activity.

The index indicates how business activity has changed compared with the previous month, with a reading below 50 indicating a majority of companies reporting a deterioration.

The index for manufacturing output also dropped to a record low at 19.4 in April, from 41 in the previous month. The IHS composite index, an average of services and manufacturing fell to 17.1 in April, also a record low.

April’s PMI surveys show “business activity across manufacturing and services falling at a rate unlike anything that has come before,” said Phil Smith, principal economist at IHS Markit.

What you may have missed

Britain’s Treasury announced that it would seek to raise another £180bn in finance in the three months from May to July — quadruple its original borrowing plans — to tide it over while the coronavirus pandemic curtails economic activity in the UK. It also said that tax receipts collected were down 12 per cent.

There are signs of a gradual return to economic activity in the UK as housebuilder Taylor Wimpey and car manufacturer Aston Martin said they would resume activity in early May. France is hoping for all businesses to be able to reopen when the country’s nationwide coronavirus lockdown is due to end on May 11. Dubai has also said that it is preparing to ease strict coronavirus lockdown measures.

The UK’s competition watchdog has cleared the £6bn merger of Just Eat and Takeaway.com, just days after giving provisional approval to Amazon’s investment in rival food delivery app Deliveroo.

Donald Trump followed through on a threat to suspend immigration into the US by signing an order that will prevent people from applying for green cards for 60 days and possibly longer.

The former head of a US government biomedical research agency accused the Trump administration of demoting him after he resisted efforts to fund potential Covid-19 treatments touted by Donald Trump.

China is struggling to cope with a rise in unemployment in the wake of coronavirus, with payment of benefits stalling and questions being raised about the real number of jobless in the country.

South Korea’s economy suffered its deepest contraction since the global financial crisis as the pandemic battered the country’s massive technology and industrial exporters.

UK government to encourage use of cloth masks in offices and Tube

Jim Pickard and Clive Cookson in London

The UK government is set to recommend that the use of scarves or homemade cloth coverings could prevent the spread of coronavirus in some circumstances but will stop short of forcing people to use them in public.

Ministers will continue to discourage the general population from using medical face masks because they do not want to jeopardise the supplies of professional equipment to frontline health workers.

Scientists on the Sage panel of government advisers met on Tuesday and their advice is set to be presented to ministers on Thursday, with an announcement expected before the weekend.

Read the full story here.

Russia’s infection rate continues its decline after a month of lockdown

Henry Foy in Moscow

Russia’s rate of new coronavirus infections continued to slow on Thursday, raising hopes that the outbreak could be tempering after almost a month of national shutdown.

Russia recorded 4,774 new cases on Thursday, the lowest daily increase for six days. The 8 per cent rise in cases follows a 10 per cent increase on Wednesday and a 12 per cent rise on Tuesday.

The country’s total case count now stands at 62,773, with 555 deaths, after 42 new deaths from Covid-19 were recorded overnight.

President Vladimir Putin has continued to stress that the situation remains “under total control” despite a more than doubling of cases and deaths over the past week, and signs that the economic situation in the country is sharply deteriorating.

PMI surveys reveal depth of European downturn

A series of closely watched surveys have illustrated the severity of the crash in economic activity across Europe, as lockdowns stifle businesses from Paris to Frankfurt.

Overall, the eurozone composite purchasing manager’s index – which monitors manufacturing and services activity – fell to 13.5 in April, from 29.7 in the previous month, a record low in more than 22 years of the history of the survey.

Earlier, French and German business activity also fell to record lows, in readings that suggest the region faces a major economic downturn.

Swiss National Bank reports worst ever quarterly loss

Sam Jones in Zurich

The Swiss National Bank has suffered its worst quarterly loss since its foundation in 1907, after the impact of the coronavirus pandemic on global markets wiped SFr38.2bn from the value of its reserves in the first three months of the year.

The SNB’s huge foreign currency holdings — which have swelled significantly in recent years as part of targeted market interventions to hold down the value of the Swiss franc — dropped by SFr41.2bn in value in the three months to the end of March, the bank said in a statement on Thursday.

Losses were mitigated only by the bank’s huge gold pile, which rose in value by SFr2.8bn, as market panic drove the price of the safe haven precious metal up.

The SNB’s SFr800bn portfolio makes it one of the world’s single largest institutional investors. Its holdings include major stakes in US bluechip companies. At one point the bank owned more of Facebook than the company’s founder, Mark Zuckerberg.

The SNB does not seek to make a profit on its holdings. Instead they are a key part of its unorthodox monetary policy to maintain competitiveness for the Swiss domestic economy. Alongside a policy of negative interest rates, the SNB regularly sells francs in international markets and acquires assets denominated in foreign currencies instead. Both policies are intended to curb appreciative pressure on the franc.

Global death toll continues to slow

Steve Bernard in London

The worldwide death toll rose by 6,607 yesterday, down slightly from the day before, to stand at 170,648.

This represents a four per cent daily increase, far lower than the peak of 15 per cent in late March, according to data from Worldometers.

New cases of Covid-19 rose by 79,956 on Wednesday, bringing the total to 2.49m.

The US registered its second consecutive day of 2,000 or more deaths. 2,108 people lost their lives on Wednesday according to data from The Covid Tracking Project, pushing the death toll to 42,103.

Spain’s daily number of deaths has increased steadily for the past seven days, prompting the government to extend its lockdown to May 9. Yesterday’s figure of 435 however, is much lower than the peak in early April of 961 deaths.

The UK’s death toll remained high yesterday with a further 763 losing their lives. The number of new cases has been below 5,000 for three days running, however, with 4,451 new diagnoses on Wednesday.

The number of global recovered cases rose by 27,218 yesterday, leaving a total of 717,444 free from the virus.

EmoticonUK business activity slumps at fastest pace on record

Valentina Romei in London

Manufacturing and services activity in the UK has contracted at a rate “vastly exceeding that seen even during the global financial crisis,” as a large portion of the economy has been shut down due to the coronavirus pandemic.

The latest IHS Markit/CIPS flash composite purchasing managers’ index for the UK signalled by far the fastest decline in business activity since comparable figures were first compiled over two decades ago, with a reading dropping to 12.9 in April from 36 in March.

Chris Williamson, chief business economist at IHS Markit, said:

Business closures and social distancing measures have caused business activity to collapse at a rate vastly exceeding that seen even during the global financial crisis, confirming fears that GDP will slump to a degree previously thought unimaginable in the second quarter due to measures taken to contain the spread of the virus.

Economists at Markit said that the reading is consistent with a quarterly fall in GDP of 7 per cent, but that the actual decline could be even greater, partially because the PMI excludes the vast majority of the self-employed and the retail sector, which have both been especially hard-hit by the Covid-19 containment measures.

Quarter of UK businesses have halted operations, says ONS

Delphine Strauss in London

A quarter of UK businesses had temporarily closed or paused trading by early April and two-thirds of the remainder reported financial performance outside their normal range, the Office for National Statistics said on Thursday.

Twenty-seven per cent of the workforce has already been furloughed while less than 1 per cent has been made redundant, from among 6,150 businesses in the period from March 23 to April 5, revealed the ONS’s fortnightly survey of the impact shutdown measures are having on the UK economy.

Four-fifths of all respondents said they were considering using the government’s job retention scheme, which allows employers to furlough staff and pays 80 per cent of their wages up to £2,500 a month.

The ONS also set out its latest findings on the toll the coronavirus shutdown is taking on individuals, with a separate survey showing that half of adults who are now homeschooling feel it is affecting their children’s wellbeing.

Four-fifths of adults responding to the survey, conducted between April 3 and 13, said they were very or somewhat worried about the impact coronavirus was having on their life, with more than half saying this was because of their inability to make plans.

China to donate an additional $30m to the WHO to tackle Covid-19

Tom Mitchell in Singapore

China will give the World Health Organization an additional $30m to support its efforts in combating the global coronavirus pandemic, the country’s foreign ministry announced on Thursday.

Hua Chunying, the foreign ministry’s chief spokesperson, said the donation was in addition to $20m donated last month to the WHO’s coronavirus prevention efforts, according to Reuters.

The move comes a week after US President Donald Trump said he would suspend US funding of the global health organization, which he accused of “severely mismanaging” the coronavirus pandemic. American allies were harshly critical of the decision.

The US gives more than $500m to the WHO each year, making it the organisation’s largest donor.

The Chinese government has been on the defensive over recent weeks as increasing numbers of politicians in the US, Europe and Australia call for a full official investigation into the origins of the coronavirus.

On Wednesday, Mike Pompeo, US Secretary of State, accused Chinese officials of destroying coronavirus samples at the outset of the epidemic there and failing to report how rapidly it could spread until it was too late to contain the outbreak.

Markets ‘almost immune’ to data

Markets have taken another historically poor set of data in their stride, continuing a pattern that has seen investors look past the churn of current economic figures and instead focus on the nature of a future recovery.

The pound was 0.2 per cent higher against the US dollar at $1.2350 following the UK’s fastest decline in business activity on record, while the euro slipped slightly – by 0.3 per cent – following the eurozone’s similarly grim numbers.

European stocks gave up some of their earlier fragile gains, with the benchmark Stoxx Europe 600 index flat, having opened up 0.4 per cent.

Olivier Konzeoue, forex sales trader at Saxo Markets, said markets “are almost immune to data at the moment”.

“The focus is instead going to be on the various exit strategies as well as the stimulus initiatives put in place by governments and central banks to counter the negative effect of coronavirus,” he added.

UK government has lent £3bn to businesses in contentious scheme

Daniel Thomas in London

Almost £3bn has been lent to struggling small businesses under the much criticised government-backed loan scheme as officials continue to come under pressure to expand state guarantees.

More than 16,600 companies have received loans under the Coronavirus Business Interruption Loan Scheme (CBILS), according to data released on Thursday morning, doubling the total from last week. Officials now say that more than £300m is being lent every day on average to businesses hard hit by the pandemic lockdown.

Lenders have received more than 36,000 completed applications so far, which means that almost half have been approved to date. Others are still being processed and may be approved over the coming days, although the figure also includes those that have been rejected.

But despite over half the total number of loans provided through CBILS being approved in the past eight days alone, taking the total to more than £2.8bn, many companies are still critical of the government bailout programme.

The scheme has faced questions from company bosses and MPs after businesses were turned away as they did not meet the tough criteria to access the loans, which includes proof of future viability despite the economic uncertainty caused by the coronavirus outbreak. Others have been frustrated by long delays or mixed messages from their branches as they fast ran out of cash.

UK Treasury to subsidise wages of nearly 3m workers via furlough scheme

Jim Pickard in London

Alok Sharma, UK business secretary, has revealed that 2.8m workers from 387,000 companies are to be paid subsidised wages through the Treasury’s furlough scheme — which was only set up two days ago.

Nearly half a million small companies had received grants of up to £25,000 amounting to some £6bn, Mr Sharma also told the business select committee.

The Treasury has vowed to guarantee up to £330bn of loans provided by banks to struggling businesses. Mr Sharma said £11.2bn has so far been agreed through the “corporate loan facility” for large investment-grade companies.

Another £2.8bn has been committed as loans to small companies through the Coronavirus Business Interruption Loan Scheme, with 16,600 acceptances out of 38,000 applications. Mr Sharma insisted the government was right to guarantee only 80 per cent of each loan — compared with 100 per cent in some countries — on the basis that the UK government was providing a wider array of support to business.

The business secretary added that he had heard calls for longer shopping hours on Sundays from 40 MPs and some UK retailers — an idea opposed by the shop workers union Usdaw.

Analysis: UK will not struggle to find buyers for £225bn debt issuance

Tommy Stubbington in London

The UK government will borrow £180bn in just three months to fund its response to the coronavirus crisis, putting debt issuance on course for by far the biggest annual total in history.

Analysts say the UK should have little trouble finding buyers for the bonds, thanks to the Bank of England’s asset purchase programme. The BoE announced £200bn of bond buying in mid-March, helping to calm a rapid sell-off in the gilt market and ensuring the government can fund itself cheaply. Since then, the BoE’s buying has outstripped the volume of new UK government bonds hitting the market and more than made up for reduced demand from other traditional buyers, according to Daniela Russell, HSBC’s head of UK rates strategy.

“Right now the Bank of England is buying all the new gilts, and they have signalled they stand ready to do more” she said. “Given the increased strains pension schemes are facing it’s a very good job the BoE is hoovering up the supply.”

The update to the UK’s borrowing plans, announced on Thursday by the Debt Management Office, means bond sales will hit £225bn in the first four months of the current financial year.

Belgium shows signs of passing the peak of virus

Jim Brunsden in Brussels

Fewer than 1,000 coronavirus patients are in intensive care in Belgium for the first time since March 29, in a sign of how the country may have passed the peak of the pandemic.

The overall number of people in hospital with Covid-19 is also steadily falling. The number of patients has been below 5,000 since April 18 and stood at 4,527 on Wednesday, according to the latest data presented by the Belgian government’s crisis centre. Of those, 993 were in intensive care.

“The number of new hospitalisations is stabilising and the peak in the number of [new] deaths seems to be behind us,” the Belgian health ministry said in a statement.

Belgium’s death toll of 6,490 is relatively high compared with many other European countries because the country includes deaths in care homes that are suspected, but not proven, to have been caused by Covid-19.

The health ministry said that 53 per cent of Belgium’s casualties died in care homes or rest homes. Of those, only 5 per cent were confirmed cases.

Scotland faces budget challenge, warns watchdog

Mure Dickie in Edinburgh

Scotland’s independent fiscal watchdog has warned the Scottish government could struggle to balance its budget this year because of uncertainty created by the coronavirus crisis on spending needs and UK funding.

A report published on Thursday by the Scottish Fiscal Commission underlined the complexity of the devolved Scottish government’s budget process and the strains created by an “unprecedented combination of a supply-side shock, a demand-side shock and potentially a financial system shock”.

The Scottish government, which is required to broadly balance its budget and has limited borrowing powers, is expected to receive £3.5bn in extra funding to deal with the coronavirus crisis in 2020-21 as a result of increased spending by the UK government. But the SFC said it remained unclear how much money would be available or whether the epidemic would affect Scotland differently from the rest of the UK.

“With uncertainty about the level of funding received from the UK government as well as the level of spending required in Scotland, it may be difficult for the Scottish government to balance spending against available funding within the financial year,” the commission said.

Differences may be difficult to manage if the effects of Covid-19 and the policy responses are materially different between Scotland and the rest of the UK.

Singapore traders scramble to reassure nervous clients

Neil Hume in London

Energy traders in Singapore are scrambling to reassure nervous clients that they have no exposure to crisis hit rival Hin Leong, and can survive the slump in demand caused by coronavirus lockdowns.

The downfall of Hin Leong, which has collapsed under debts of almost $4bn and admitted to $800m of undisclosed losses, has sent shockwaves through Singapore’s tight-knit trading community.

Winson Group urged clients to ignore rumours that it had “run into financial difficulties, declaring “financial position remains healthy and liquid.”

“We have been able to meet all our obligations with both our banks and suppliers,” it said in a letter, seen by the Financial Times. Winson added that it did not have “open account receivables” with Hin Leong or related companies.

Meanwhile, Zen-Rock Group told its customers that it had “ability and experience” to work “profitably” through challenges presented by Covid-19. “We assure you that we do not have any open account sale to Hin Leong and/or any of its associated or related entities,” it also said in a letter. “We also assure you that we are not under statutory restructuring /insolvency protection.”

However, banks have stopped providing finance for any oil cargoes that have not been sold, making life tough for traders.

UK coronavirus study to test 300,000 people for infection and immunity

Clive Cookson in London

The UK is to test 300,000 people over the next 12 months to discover levels of coronavirus infection and immunity in the population.

Twenty thousand households are already being contacted in the first wave of the study, which aims to cover a representative sample of people living in the UK by geography and age.

“Understanding more about the rate of Covid-19 infection in the general population, and the longer-term prevalence of antibodies, is a vital part of our ongoing response to this virus,” Matt Hancock, health secretary, said when announcing the study on Thursday morning. Together, these results will help us better understand the spread of the virus to date, predict the future trajectory and inform future action we take, including crucially the development of groundbreaking new tests and treatments.”

Read the full story here

Spain’s coronavirus cases rise by 2% a day

Daniel Dombey in Madrid

The increase in documented coronavirus cases in Spain has settled at around 2 per cent a day, and the daily death toll at between 399 and 440, according to the latest government figures.

The ministry of health said on Thursday there had been 213,024 known cases as of 9pm the previous day – 2 per cent more than 24 hours before. This includes 34,355 medical professionals.

The death toll in the 24 hour period stood at 440, five more than the previous day, but broadly in line with the levels of 399 and above recorded throughout this week. This compares with death tolls of more than 500 each day last week and an April 2 peak of 950 deaths. According to the official figures, the accumulated death toll is 22,157 while 89,250 people have recovered.

Spain is planning to begin relaxing its almost six week long lockdown next month. As an anticipatory measure, from Sunday children will be able to go outside for an hour a day for accompanied walks, as long as they do not travel more than 1km from their homes. Initially, the government had planned to allow children out only to accompany adults on visits such as to the shops or the bank. But it backtracked after widespread criticism that it made little sense to encourage visits to enclosed spaces where the risk of contagion is higher.

The Independent cuts staff pay by 20 per cent

Mark Di Stefano, Media and Technology reporter

The UK’s Independent will cut the pay of its journalists and staff, while some will be transferred to the government’s furlough scheme, blaming an “extreme” decline in digital advertising revenue brought on by the coronavirus outbreak.

The left-of-centre, digital-only outlet, part-owned by Russian-British proprietor Evgeny Lebedev, said all staff earning over £37,500 a year would have their pay cut by 20 per cent, while some would be placed on paid leave.

Independent chief executive Zach Leonard said the website had faced advertising declines between 30-50 per cent despite record traffic numbers, according to people on the call.

“We are seeing hundreds of thousands of pounds washing away,” Mr Leonard said.

The Independent was the first major UK outlet to turn off its printing presses, shifting to a mass-market, non-paywalled business model in 2016, which is heavily reliant on digital advertising revenue.

Angela Merkel warns against lifting lockdown too quickly

Guy Chazan in Berlin

Angela Merkel has warned that Germany risks “gambling away” its success in containing the spread of coronavirus if it moves too quickly to lift its lockdown measures.

Amid fears that people believe the worst of the crisis is over and that they can ease social distancing rules, Ms Merkel said on Thursday that the pandemic was only just beginning and that Germans needed to show endurance and discipline.

The federal government and leaders of the country’s 16 regions agreed last week that shops with retail space of up to 800 sq m could reopen from Monday, and that some children could start going back to school from May 4, with priority given to final-year students.

“It seems at times very quick, or even too quick,” she said in a speech to the Bundestag.

Read the full article here.

MPs demand roadmap for reopening economy as unease grows

Jim Pickard in London

Tory MPs are growing increasingly fearful about the economic consequences of the lockdown and urging Number 10 to produce a clear roadmap to reopening the economy – before thousands of companies go bust. The issue came to the fore at a meeting of the backbench “1922” committee on Wednesday evening.

On Thursday, Richard Fuller, a Tory member of the business select committee, told business secretary Alok Sharma that his answers about the road to economic recovery were too vague to reassure people.

The government shut down the economy after looking at the medical evidence but without having studied the full countervailing economic costs that would ensue, he claimed. Mr Sharma added that he had a daily dialogue with businesses and they appreciated the government’s difficult position.

Nusrat Ghani, another Tory member, said:

Many businesses feel that they are on the verge of bankruptcy…people talk about the economic and social impacts but they are both the same.

Anxiety about the lockdown is not confined to Tory MPs. One Labour politician said that he was uneasy about the “sense of religion, almost like a cult”, around the government’s focus on protecting the NHS.

There are so many other things going wrong, people unable to get cancer treatment, vulnerable children being abused at home, domestic violence, the economic car crash that is heading our way….I can’t say this in public but this can’t keep going much longer.

Greece to ease lockdown from May 4 as new Covid-19 cases decline

Kerin Hope in Athens

Greece is extending its lockdown until May 4 after which some small businesses will be allowed to reopen, a government spokesperson said on Thursday.

But he warned: “the return to normality will be slow and will happen step by step during May and June”.

“At each stage the impact on public health will be assessed. We’re going to take it week by week,” he added. A detailed timetable for restarting the economy will be announced next week.

Greece has seen a steady decline in new cases of coronavirus in the past two weeks, with the daily number falling to single digits over the past six days. The total number of cases stood at 2,408 on Wednesday.

Fears that social distancing and travel restrictions would be disrupted during last weekend’s Orthodox Easter holiday, the country’s biggest festivity, proved unfounded, with relatively few violations reported by police. As a result the government moved ahead on Monday with detailed planning to end the full lockdown imposed on March 16.

Free to read

Inside Wuhan: China’s struggle to control the virus — and the narrative

The city of Wuhan has gained international notoriety as ‘ground zero’ of the coronavirus pandemic that has swept across the world over recent months, infecting 2.5m people.

As the city’s 11m residents return to their day-to-day lives following a lengthy quarantine and 3,800 deaths, Don Weinland investigates what happened at the outset of the outbreak in the virus’s epicentre.

Read Don’s full magazine piece here

Bank of England fights back against hyperinflation critics

Delphine Strauss in London

The Bank of England is not setting the UK on a path to hyperinflation through the exceptional measures it has taken to limit the economic impact of the coronavirus crisis, a senior policymaker asserted on Thursday.

In a speech delivered online, Gertjan Vlieghe, an external member of the BoE’s Monetary Policy Committee, defended the central bank against charges that its stimulus policies – ranging from rate cuts and fresh quantitative easing, to the direct financing of state spending – compromised its independence and could unleash Weimar Republic levels of hyperinflation.

Debating whether the BoE’s actions constituted monetary finance was “not useful”, he said. Central banks were always financing fiscal spending to some extent, he argued, but the government would eventually carry the cost.

“The MPC has decided to expand the Bank of England’s balance sheet, because we believe that if we do not, the economy will weaken further such that we would fall short of our inflation target,” Mr Vlieghe said.

The decision to allow the government to run a bigger overdraft with the central bank, to ensure it could meet its immediate cashflow needs, did not affect the MPC’s ability to hit its inflation target, he said, because it was a strictly short-term arrangement.

If we were the central bank of the Weimar Republic or Zimbabwe, the mechanical transactions on our balance sheet would be similar to what is actually happening in the UK right now. That is not where you would find the smoking gun. The difference would be that government would be telling the central bank what to do…in order to achieve fiscal objectives.

Mr Vlieghe also said in the speech that: “We are experiencing an economic contraction that is faster and deeper than anything we have seen in the past century, or possibly several centuries.”

Scotland highlights ‘limited scope’ to ease lockdown restrictions

Mure Dickie reports from Edinburgh

The Scottish government does not identify “much scope” to ease social distancing restrictions, intended to prevent coronavirus infections, while loosening of controls will be cautious and could be reversed.

A framework document published by the Scottish government on Thursday set out principles for easing the coronavirus, including that any moves should be safe and evidence-based. It was also careful not to fuel public hopes for quick progress.

The government’s “best estimate” is that each person infected with Covid-19 is now infecting less than one other person, but that this has only been achieved with a wide range of restrictive policies.

“That does not leave us much scope to ease restrictions” it said.

If, after easing any restrictions, the evidence tells us we are unable to contain the transmission of the virus then we will have to re-impose them, possibly returning to lockdown with little notice.

Invesco reduces dividend to strengthen against persistent outflows

Richard Henderson in New York

Invesco has reduced its dividend to fortify its balance sheet, taking the rare step to combat the coronavirus-driven drop in global markets, persistent outflows and the cost of a recent acquisition, which have weighed heavily on the US fund manager.

Atlanta-based Invesco dropped its quarterly dividend to $0.15 from $0.31, the first reduction since at least 2009, according to Bloomberg data. Companies are loath to reduce the dividends they pay shareholders, who use the sum as a sign of financial stability.

The company announced the dividend reduction in its quarterly earnings on Thursday. The group decreased its earnings per share by 40 per cent from a year ago to $0.34, falling far short of the $0.52 anticipated by analysts.

The group’s assets under management fell 14 per cent to $1.05tn after the coronavirus pandemic sent global markets tumbling in the quarter. A drop in assets reduces fund managers’ revenues because they charge fees as a proportion of the assets they oversee.

Nissan starts production on aprons for the NHS

Chris Tighe in Newcastle

Nissan’s Sunderland auto plant will add plastic aprons to its output of protective equipment for NHS workers, as UK manufacturers rush to switch production to supply hard-pressed hospitals.

The UK’s biggest car-making site has started manufacturing non-sterile grade aprons made of tear resistant polythene. The plant plans to raise production from 18,000 aprons per week at present to 70,000. Local NHS trusts have ordered 47,000 aprons so far.

Nissan is already making up to 100,000 face-protection visors a week for NHS workers.

Ukraine’s central bank slashes its benchmark rate to shore up the economy

Roman Olearchyk in Kyiv

Ukraine’s central bank cut the country’s benchmark lending rate from 10 per cent to 8 per cent as expectations of a deep recession heighten due to the Covid-19 pandemic.

“This will give the economy stimulus in these difficult times,” said Yakiv Smolii, head of the National Bank of Ukraine.

The central bank’s seventh consecutive rate-cut cumulatively brings lending rates down by 9.5 per cent since last July. Ukraine’s economy has grown at around 3 per cent in the past four years, after a 16.4 per cent plunge in 2014-15 following Russia’s annexation of Crimea.

“The economy of Ukraine will contract by 5 per cent in 2020 in the wake of the quarantine imposed to overcome the pandemic and due to the global crisis. However, it will resume growth at round 4 per cent in the following years,” the central bank said in a statement.

“Fiscal and monetary policy measures that are aimed to support businesses and households will partially offset the decline in consumer demand,” the bank said. It added that it expected inflation to remain within the target range of 4-6 per cent.

Ukraine’s parliament is expected to adopt banking legislation in the coming weeks required to unlock an $8bn IMF loan and billions of dollars of additional financial assistance from the EU, the World Bank and other financial institutions.

Lockdowns lower personal hygiene standards, says Unilever

First-quarter results from Unilever contained some interesting hints about how people’s habits are changing during lockdowns.

The Anglo-Dutch group — which makes household brands like Dove soap, Lynx and Sure deodorants and Toni & Guy haircare — said homeworking was leading to a decline in demand for products including razors, shampoo and deodorant. Cooking and household cleaning products were surging, the company said.

Read the full story from the FT’s Judith Evans

US: what you might have missed

China will give the World Health Organization an additional $30m to support its efforts in combating the global coronavirus pandemic. Hua Chunying, the foreign ministry’s chief spokesperson, said the donation was in addition to $20m donated last month to the WHO’s coronavirus prevention efforts, according to Reuters.

Manufacturing and services activity in the UK has contracted at a rate “vastly exceeding that seen even during the global financial crisis,” as a large portion of the economy has been shut down due to the coronavirus pandemic.

PMI surveys also revealed the depth of the European downturn, as lockdowns stifle businesses from Paris to Frankfurt. French and German business activity fell to record lows, in readings that suggest the region faces a major economic downturn.

– The global death toll continued to slow, rising by 6,607 yesterday, down slightly from the day before. This represents a 4 per cent daily increase, far lower than the peak of 15 per cent in late March, according to data from Worldometers.

Greece is extending its lockdown until May 4 after which some small businesses will be allowed to reopen. The return to normality will be slow, the government said.

– The increase in documented coronavirus cases in Spain has settled at around 2 per cent a day, and the daily death toll at between 399 and 440, according to the latest government figures.

Switzerland faces sharpest economic contraction since 1974

Sam Jones in Zurich

Switzerland’s economy is on course to experience its most severe contraction since the 1974 oil price shock, according to the latest official forecast from the country’s finance ministry.

The State Secretariat for Economic Affairs said it expects the Swiss economy to contract by 6.7 per cent in 2020 – the more benign of two scenarios it has modelled.

A worst-case scenario – which for now has been ruled out – anticipated a 10 per cent decline, with a sluggish “L-shaped” recovery dragging out into 2021.

The small, wealthy alpine state – the seventh largest economy in Europe, with a nominal GDP of $715bn – is set to begin easing its lockdown measures against the coronavirus pandemic on Monday, when a range of small shops will be permitted to open again.

The country has been seen as an outlier in Europe for the speed and efficiency of economic stimulus it has put in place to safeguard businesses and livelihoods. A second phase of easing, when all shops will be permitted to resume trading, will occur on May 11.

Switzerland has also been one of the most effective western countries in managing the spread of the virus: on Thursday it reported just 94 new cases of Covid-19, the lowest daily increase since March 10.


US job gains since financial crisis wiped out as millions file for unemployment

Mamta Badkar in New York

More than 4m Americans filed for first time unemployment benefits in the fifth week since nationwide lockdowns began, wiping out the job gains in the years following the 2008-09 financial crisis.

Initial jobless claims totalled 4.4m in the week ended April 18, the labour department said on Thursday, a decrease of 810,000 from the previous week. That compared with economists’ expectations for 4.5m.

The cumulative total since the lockdowns began in mid-March has now surpassed 26m, erasing the number of jobs created in the US since the financial crisis.

Domino’s boosted by surge in US pizza deliveries

Alistair Gray, US Retail Correspondent

Americans under lockdown are ordering more Domino’s Pizza takeaways, boosting the company’s US business since movement restrictions took effect, but its sales overseas have declined.

The world’s largest pizza company by retail sales, whose shares are trading near all-time highs, released initial figures on Thursday showing like-for-like US sales leapt 7 per cent in the first four weeks of its second quarter, which began on March 23.

It marks an acceleration from the 1.6 per cent year-on-year US growth in the three months to March 22 for the company, which is focused on delivery and carryout franchises.

Outside the US, however, same store sales so far in the second quarter have dipped 3.2 per cent on a constant currency basis. Domino’s also withdrew its two-to-three-year outlook, citing uncertainty over the impact of Covid-19.

Most UK parents fear for children’s wellbeing in lockdown, says survey

Valentina Romei in London

Most British parents think homeschooling is negatively affecting their children’s wellbeing while putting a strain on their jobs and relationships, according to an official survey.

The majority of the UK population are worried about the overall effect coronavirus is having on their life, according to the Opinions and Lifestyle survey by the Office for National Statistics taken between April 3 and 13.

While more than two-thirds of those polled believed their children were continuing to learn during the lockdown, most did not feel confident in their ability to provide adequate home schooling.

The majority of parents thought homeschooling was negatively affecting the wellbeing of children, while more than 40 per cent said it was putting a strain on their relationship and on their jobs.

The burden of home education has fallen disproportionately on women with more than 74 per cent of mothers taking charge of homeschooling, compared with 66 per cent of men, revealed the data.

Jaguar Land Rover to restart factories in mid-May

Peter Campbell in London

Jaguar Land Rover will restart production plants in Solihull in the UK, Slovakia and Austria from May 18, becoming the first large-scale car producer in Britain to announce it will fire up its sites following the coronavirus shutdown.

The carmaker will produce limited numbers of its most lucrative models, such as Range Rover and Range Rover Sport, to be sold to buyers in China, who are returning to dealerships as the world’s largest car market comes out of lockdown.

JLR’s other UK engine site at Wolverhampton will reopen at the same time, while assembly plants in Halewood and Castle Bromwich will remain closed until demand in Europe and North America recovers.

“In China, we are beginning to see recovery in vehicle sales and customers are returning to our showrooms,” the company said. “Our joint venture plant in Changshu has been in operation since the middle of February.”

The group’s Chinese plants already produce some of its lower end models, such as Jaguar saloons and its smaller sports utility vehicles.

The most expensive cars sold in China are made in the UK, or in its new factory in Slovakia.

From May 18, Solihull will run on a single shift producing Range Rover, Range Rover Sport, Range Rover Velar and Jaguar F-Pace. Slovakia will make the Land Rover Discovery and the new Land Rover Defender, while JLR’s contract manufacturing operation at Magna Steyr in Austria will begin making the Jaguar E-Pace and electric Jaguar I-Pace again.

Earlier on Thursday, Aston Martin announced it would restart production at its St Athan plant on May 4, as it prepared to begin deliveries of the new DBX sports utility vehicle.

UK testing capacity remains at only half of Downing Street target

Laura Hughes

Downing Street has said coronavirus testing capacity is now at 48,273, as ministers scramble to ramp up screening in the UK to meet their target of 100,000 a day by the end of April.

Although capacity continues to increase, the government is struggling to increase the numbers of those taking the tests, with just 22,814 carried out on 13,522 people in the 24 hours up to 9am on Wednesday.

The prime minister’s spokesman acknowledged there was a “great deal more to do” to make up the shortfall.

“The number of people we’ve tested has increased in the most recent 24 hours we’ve got figures for and the gap between the number of people tested and the number of people we’ve tested has closed slightly,” he said.

“But that doesn’t distract from the fact that there’s a great deal more to do if we’re to be able to say we’re making the full use of the capacity we have.”

Meanwhile No 10 said the government’s Sage scientific expert committee has “finalised their advice” on the wearing of face masks by the public.

“Ministers will now be reviewing this to decide on any further action that might be needed,” it said.

It added that Boris Johnson, who is still recovering from coronavirus, had spoken with the Queen.

“He spoke with the First Secretary of State [Dominic Raab] yesterday and he had an audience of Her Majesty the Queen by telephone last night,” it said.

Target’s sales surge fades as crisis drags on

Alistair Gray, US Consumer Correspondent

Target has warned its profitability is under pressure after an initial sales surge ahead of the coronavirus lockdown faded, disappointing investors who believe the big box US retailer will emerge as a winner from the crisis.

While ecommerce revenues have jumped more than 275 per cent so far this month, and demand for its groceries remains robust, the company said like-for-like store sales had declined “in the mid-teens” percentage range.

Shares dropped 5.7 per cent at the open in New York after Brian Cornell, chief executive, said the crisis would put “near-term pressure on our profitability”. Target put Wall Street on notice that its first quarter operating margin would decline more than 5 percentage points.

Like its peer Walmart, Target stocks a wide range of goods, from groceries and toiletries to clothing and electronics. Its mix of convenience and product line-up have allowed it to avoid the troubles that have afflicted other retailers.

Stockpiling initially boosted Target’s sales, but while sales have since been strong online and in groceries, they have been weak in some other categories.

In March, like-for-like food sales jumped about 40 per cent, but they declined by a “low single digit” percentage in homewares and more than 30 per cent in apparel and accessories.

Michael Fiddelke, chief financial officer, said that despite the immediate pressures “we expect to have the financial capacity to emerge from this crisis in a position of strength”.

Siemens Healthineers develops new coronavirus antibody test

Joe Miller in Frankfurt

Siemens Healthineers, the medical equipment company majority owned by Germany’s Siemens group, has developed a Covid-19 antibody test that it claims can deliver a result in 14 minutes.

The Erlangen-based company said it would be able to produce more than 25m of the tests per month, starting in June, by utilising its manufacturing facility in Massachusetts.

“With a proven sensitivity and specificity of more than 99 per cent, the test is expected to exceed strict FDA quality guidelines,” the company said.

The test will detect both IgM and IgG antibodies, it added. The antibody test is yet to receive regulatory approval but Siemens Healthineers is making applications to regulators in Europe and the US to approve it.

Hundreds of antibody tests have been developed since the outbreak of Covid-19, but authorities in China, the US and Europe have expressed concern about their accuracy. Earlier this week, researchers in Oxford found that nine prototypes being considered by the UK government performed inadequately.

Video: Mexico and Brazil leaders challenge lockdowns in Latin America

Jude Webber and Andres Schipani report from Mexico City and São Paulo on the approach of presidents Andrés Manuel López Obrador and Jair Bolsonaro to coronavirus. They have both been heavily criticised for their laid-back response to the pandemic, compared to neighbours Argentina, El Salvador and other Latin American countries

Free to read: Lockdowns lower personal grooming standards, says Unilever

Judith Evans, Property Correspondent

It did not take long for standards to slip. Weeks into lockdown, the coronavirus pandemic is starting to lay waste to basic personal hygiene and grooming routines, according to consumer goods group Unilever.

As large numbers of people work from home, they are washing their hair less often, putting off shaving and even abandoning deodorant.

Graham Pitkethly, Unilever’s chief financial officer, said about a quarter of personal care — such as hair washing, hairstyling and use of skincare products and deodorants — related to people preparing to go to work or school. Homeworking was leading to a decline in demand for products including razors, shampoo and deodorant.

Unilever’s report sent shares in the company down 5 per cent to £40.28 in early trading.

Read the full story here.

US stocks rise after jobless claims top 26m

Wall Street aimed for a second straight day of gains as investors weighed a recovery in oil prices against more than 4m new US jobless claims.

The S&P 500 gained 0.9 per cent in early morning trading in New York. The tech-heavy Nasdaq Composite was up 1 per cent.

Energy shares led the benchmark S&P 500 higher, with West Texas Intermediate crude rising more than 23 per cent to $17.01 a barrel. Brent, the international marker, was up more than 7 per cent at $21.97.

Gains in US equities came after data showed that more than 26m Americans had filed for unemployment benefits amid coronavirus-related business shutdowns. The US labour department on Thursday said there were 4.4m jobless claims last week, higher than the 4.2m that economists expected but down from 5.2m in the prior week.

The yield on the 10-year Treasury note was down 0.01 percentage points at 0.61 per cent.

Government to crack down on aggressive rent collection to protect high street stores

Daniel Thomas in London

The government is expected to announce additional help for British retailers and restaurateurs struggling to stay afloat during the coronavirus lockdown, with a crackdown on aggressive rent collection and court orders.

This has emerged as a problem for high street chains, which have been threatened with administration by landlords if they failed to pay rent on stores that they have closed owing to the coronavirus lockdown.

Vietnamese noodle chain Pho and Caffè Concerto are among those that have been threatened with action, including winding-up petitions – court orders that force insolvent companies into compulsory liquidation. The government has already brought in a moratorium on eviction for non-payment of rents for three months.

Pret A Manger to raise €100m in emergency bank funding

Arash Massoudi and Alice Hancock in London

Pret A Manger is in talks to raise a €100m emergency loan from global banks as the UK fast-food chain owned by JAB Holding attempts to restart and transform its business after an extended period of closure, according to three people with direct knowledge of the funding. 

“As a business coming out of this, we might look different, possibly smaller. I wish I could tell you in six months what size Pret will be. What I can tell you is that Pret will still be there,” Pret chief executive Pano Christou said in an interview.

Mr Christou said that the company, which operates more than 500 sites in the UK, had enough cash to see it through the current lockdown but that it needed funding for a “test and learn stage” to develop new systems and products for after the virus. He added that Pret had not attempted to access any government loan schemes.

Read more on this story here.


UK coronavirus death toll rises to 18,738

The number of people to have died from coronavirus in UK hospitals has risen by 638 over the latest 24-hour reporting period, showing a two-day decline in fatalities, according to the Department of Health.

The total number of those hospitalised to have died of coronavirus rose to 18,738, as of 5pm on April 22, up from 18,100 the previous day.

This increase in overnight deaths was down from 763 yesterday.

As of 9am on April 23, 425,821 people had been tested for Covid-19, of whom 138,078 were found positive.

Public health experts have warned that the daily fluctuations should be treated with caution, with the trend over a number of days more likely to offer an accurate snapshot of the state of the pandemic in the country.

Russia’s Aeroflot cuts executive salaries

Max Seddon

Russian flag carrier Aeroflot said it has cut executive salaries by 40 per cent as it seeks to cut costs during the coronavirus pandemic.

The airline told Russian media that it had cancelled all tenders except for those related to its production capacity, salary optimisation, and security. Aeroflot also cancelled all its advertising contracts and automotive purchases.

Aeroflot gave its executives a 38 per cent pay increase in 2019 to Rbs2.1bn ($28m), the airline said in its yearly financial report in March.

Vaccine will be available in US in June 2021, forecasts Morgan Stanley

A vaccine is only likely to be available to the US public by June 2021, according to forecasts by Morgan Stanley.

The Wall Street bank’s roadmap shows a peak in new cases in mid-April, and the majority of workers returning to workplaces in June, around the time that the first data come in on the efficacy of an initial vaccine.

A second wave of the virus may well come in mid-July, followed by a third and more severe bout in mid-November, said the bank.

In July, the bank forecasts testing capacity will be at 1m a day in the US. Schools will reopen in early September, while a vaccine for healthcare workers may be ready to roll out the following month.

That vaccine is only likely to be accessed by the American public by June of next year, according to the latest modelling.

Gap warns of its deteriorating cash position

Alistair Gray, US consumer correspondent

Gap, the US clothing chain, has warned that its cash position is deteriorating even as it suspends rent payments to landlords as part of wide-ranging efforts to shore up its finances.

In the latest sign of the distress in the US retail sector caused by the coronavirus shutdown, Gap said in a filing that the cash it expects to generate internally “may not be sufficient” to fund its operations.

The warning came even though Gap said it had suspended dividends and share buybacks, drawn down all of the $500m available on its revolving credit facility and reduced $300m worth of capital expenditure it had planned this year. All operating expenses are being reviewed for possible cuts.

Gap said it expected to have between $750m and $850m in cash and cash equivalents left by the start of May, down from $1.7bn three months earlier.

In the filing, the retailer warned it was likely to have to take further steps to shore up its balance sheet, including potentially raising new debt or other short-term credit.

Malaysia extends lockdown for third time

Stefania Palma in Singapore

Malaysia has extended its national lockdown for a third time as it continues its fight against coronavirus.

“While the figures show a positive trend, the steps we take must continue to a point where we believe the Covid-19 outbreak can be fully contained,” said Muhyiddin Yassin, Malaysia’s prime minister, during a national address.

The lockdown, which was due to end on April 28, will now run until May 12.

Under the lockdown, the public may only leave their homes for essential services such as grocery shopping and healthcare. But the government is considering granting “a bit of relaxation” including issuing travel permits to healthy individuals who have been stranded throughout the lockdown. Authorities will also open up some economic sectors subject to strict requirements, said Mr Muhyiddin.

Malaysia has slowed the rate of infection, reporting daily numbers in the double digits for the past week, down from triple digit jumps the week before. The number of patients discharged from hospital account for about 60 per cent of Malaysia’s overall 5,603 cases. The country counts 95 Covid-19 related deaths in total.

US new home sales post steepest fall since 2013

Sales of new single-family homes in the US slipped the most in over six years in March amid the fallout from coronavirus-related business shutdowns and stay-at-home orders.

New-home sales dropped 15.4 per cent to a seasonally adjusted annual rate of 627,000 units, the steepest month-to-month fall since July 2013. Economists had expected a slightly smaller decline to 645,000. The pace of sales in February stood at 741,000 homes, after the commerce department revised that month’s figure from a previously reported 765,000 units.

Joshua Shapiro, chief US economist at MFR, noted that while the housing market has received a boost from low mortgage rates, “softening of the data would be likely as the boost from unusually mild weather [in the winter] fades”.

“However, that will be small potatoes compared to the impact on housing of the economic dislocations caused by the coronavirus pandemic,” he added.

The shutdown of businesses deemed non-essential has put millions of Americans out of work with more than 26m applications for unemployment benefits in the past five weeks, according to the US labour department.

Executives at PulteGroup on Thursday said the homebuilder has seen minimal cancellations from buyers, but orders in March fell 11 per cent compared with the same month a year ago. For the entire first quarter, net new orders were up 16 per cent. Chief executive Ryan Marshall called the sudden drop last month “unlike anything we have experienced before”.

“Buyer desire to own a home seems to be holding pretty strong and pretty steady,” Mr Marshall said during an earnings call. “The ultimate question, I think, is going to be when does the economy start to reopen and how deep and prolonged are the job losses.”

Poland to block non-EU investors from buying the nation’s companies

James Shotter in Warsaw

Poland is planning new takeover rules that will broaden the government’s powers to block attempts by non-EU investors to buy up Polish companies.

The move, which follows a similar tightening of takeover rules in neighbouring Germany, is designed to stop Polish companies weakened by the consequences of the coronavirus pandemic from being snapped up cheaply by foreign bidders.
“We are saying clearly: Poland is not for sale in this crisis situation,” Poland’s deputy prime minister and development minister Jadwiga Emilewicz told Polish radio.

Polish companies, often family-owned, which over the last 20 to 30 years have painstakingly built up their brand, their reputation and contributed to the strength of the Polish economy, cannot today become cheap booty for funds, especially from outside the EU.

Ms Emilewicz said that she hoped that the bill introducing the new protections, which is based on existing legislation allowing the government to protect businesses in strategically significant industries, would be adopted by the government, and possibly also parliament next week.

UN calls for a global authority to ease developing country debt

Jonathan Wheatley in London

The UN has called for the creation of an international agency to oversee sovereign debt relief programmes for developing countries, which it said face unsustainable debt repayments of $2.6tn this year and $3.4tn in 2021.

Unctad, the UN trade and development body, said a long and comprehensive debt standstill was needed to enable an effective response to the Covid-19 shock, which is expected to cause steep contractions in economic activity across much of the developing world this year.

It praised recent initiatives by the IMF and the G20 to cancel or freeze debt repayments by the poorest countries but said “more systematic, transparent and co-ordinated measures towards writing off developing country debt across the board are urgently needed”.

It called for the creation of an International Developing Country Debt Relief Authority to prepare a permanent international framework to guide sovereign debt restructurings in future.

Lufthansa warns it will run out of cash within weeks without government aid

Joe Miller in Frankfurt

Lufthansa has reported losses of around €1.2bn for the first three months of 2020, as it warned that it would run out of cash within weeks unless it received government aid.

The German group, which has applied for assistance from Germany, Austria, Belgium and Switzerland, said it expected a “considerably higher operating loss” in the second quarter of the year, as Covid-19-related impairment charges on its assets came through.

The company, which has €4.4bn in remaining liquidity, added that costs including refunds to customers whose flights had been cancelled amounted to “multibillion” euros.

“The group does not expect to be able to cover the resulting capital requirements with further borrowings on the market,” it said in a statement.

Expedia raises $3.2bn of fresh capital in fight to survive

Miles Kruppa in San Francisco, James Fontanella-Khan in New York and Alice Hancock in London

Expedia, the online travel booking company, has raised $3.2bn in fresh capital, including $1.2bn from the private equity firms Apollo Global Management and Silver Lake, to bolster its balance sheet amid a shutdown in global travel because of the coronavirus outbreak.

The group also announced the appointment of a new chief executive and chief financial officer. The previous management were forced out following disagreements over Expedia’s strategy in December.

Neither of the new appointees nor any other member of the board will take a salary this year, the company said. “We have one mandate — to conserve cash, survive, and use this time to reconstruct a stronger enterprise,” said Barry Diller, Expedia’s chairman.

Read the full article here.

Canada death toll passes 2,000 as it plans ‘exit strategies’

More than 2,000 people have died in Canada after contracting Covid-19, according to official statistics.

Health Canada reported 2,028 total fatalities, with 140 new deaths yesterday. The number of confirmed cases breached 40,000 yesterday to stand at 40,813.

Parts of the country have begun to plan for easing their lockdowns, which are managed by each of Canada’s 10 provincial governments. Leaders in the largest provinces, Quebec and Ontario, have said they are developing exit plans.

The national government will co-ordinate some aspects of the reopening, including the US-Canada border, which Prime Minister Justin Trudeau has said will remain closed for at least another month.

Mr Trudeau today announced C$1.1bn ($790m) to fund a national medical and research strategy focused on vaccines, clinical trials, testing, and modelling. The government plans to test 1m Canadians over the two years as part of the strategy.

The prime minister also said the country is “failing” to care for the elderly in long-term care facilities hard hit by the virus. He said Canada will send the military to help care home staff in Ontario and Quebec, which yesterday asked for 1,000 military personnel.

UK testing capacity expanded as 100,000 a day target looms

Robert Shrimsley in London

Coronavirus testing capacity is up to 51,000 a day, Matt Hancock, health secretary, announced today, although the number of tests administered was still well short yesterday at 23,560. John Newton, the man in charge of the testing programme, said the government was still on track to reach its target capacity of 100,000 tests a day.

He added that working with the army, there would be 48 pop-up mobile testing facilities to get tests to where they were most needed. Mr Hancock also announced that employees of key workers or their staff could now request a test online.

Setting out the plans for testing, tracking and tracing that will be necessary once lockdown is eased if the virus is to stay suppressed, Mr Hancock also set out plans to recruit 18,000 people to run the tracing programme. Up to 3,000 of them will be clinicians and public health specialists.

Cuomo slams McConnell’s state bankruptcy idea as ‘really dumb’

Joshua Chaffin in New York

Governor Andrew Cuomo blasted Senate majority leader Mitch McConnell for his suggestion that New York and other Democratic-leaning states stricken by Coronavirus declare bankruptcy, calling it “one of the really dumb ideas of all time”.

Mr Cuomo noted that New York was a net-contributor to the federal budget — to the tune of $116bn a year — while Mr McConnell’s state, Kentucky, was a net recipient. “It’s your state that is living on the money we generate. Your state is getting bailed out — not mine!” he argued, in an example of the deepening rancour and partisan divide being pried open by the nation’s response to the pandemic.

Mr Cuomo also warned that bankruptcies in states like New York and Michigan would cause profound damage across the country, saying: “You will see a collapse of this national economy.”

Meanwhile, Mr Cuomo announced that New York’s attorney-general would open an investigation into nursing homes, and whether they had met their obligations in the crisis.

Nursing homes have emerged as one of the worst sources of casualties, both for patients and staff, in recent weeks. Discoveries of dead bodies piled up at nursing homes have prompted shock and outrage.

The governor also revealed the first results of New York’s antibody testing programme. Based on a preliminary sample, it found that 13.9 per cent of New Yorkers had coronavirus antibodies, suggesting they had already been exposed to the virus. The highest proportion of those, 21.2 per cent, were in New York City, while upstate regions accounted for just 3.6 per cent.

EXCLUSIVE: Gilead antiviral drug remdesivir flops in first trial

Donato Paolo Mancini in London and Hannah Kuchler in New York

A potential antiviral drug for coronavirus has flopped in its first randomised clinical trial, disappointing scientists and investors who had high hopes for remdesivir, according to draft documents published accidentally by the World Health Organization and seen by the Financial Times.

The Chinese trial showed remdesivir, developed by California-based Gilead Sciences, did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream. Researchers studied 237 patients, giving the drug to 158 and comparing their progress with the remaining 79. The drug also showed significant side effects in some, which meant 18 patients were taken off it.

The WHO said the draft document, which is undergoing peer review, was published early in error. “In response to WHO asking for information and studies to be shared early, a draft document was provided by the authors to WHO and inadvertently posted on the website and taken down as soon as the mistake was noticed,” it said. 

Gilead warned that the post included “inappropriate characterisations of the study”. 

Wall Street gave up its gains on the news.

Read the full story here.

Wall St trims gains after potential coronavirus drug flops in first trial

US stocks traded choppily on Thursday after a potential antiviral drug for coronavirus flopped in its first randomised clinical trial.

The S&P 500, which had climbed as much as 1.6 per cent earlier in the session, briefly turned negative. But it was back up 0.8 per cent at pixel time. Meanwhile, the Nasdaq Composite was up 1 per cent.

The moves came after a Chinese trial showed remdesivir, developed by California-based Gilead Sciences, did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream, according to draft documents published accidentally by the World Health Organization and seen by the Financial Times.

Epidemic continues slow decline in France

Victor Mallet in Paris

France’s coronavirus epidemic has continued its slow but steady decline after more than five weeks of national lockdown, with the number of hospitalisations and intensive care beds occupied by Covid-19 patients falling further in the past 24 hours, the health ministry said.

A further 311 deaths were reported in hospitals and 205 in old people’s homes and other care institutions. The total official death toll since March 1 reached 21,856, of which 13,547 were in hospitals and 8,309 in care homes.

The number of infections in France confirmed by tests rose to 120,804.

The lockdown has sharply reduced the spread of the disease, which hit hardest in eastern France and the Paris region. The confinement of the population is due to be eased from May 11.

However a shortage of face masks and tests means that officials and doctors fear a resurgence unless the end of the lockdown is carefully managed. In the past day, 1,410 new Covid-19 patients were hospitalised, although the departure of those recovering meant there was a net decline in the number of those being treated in hospital to 29,219.

EU leaders agree to establish recovery fund to rebuild bloc’s economy

Jim Brunsden in Brussels

EU leaders have agreed to work on creating a “recovery fund” to rebuild Europe’s economy after the coronavirus pandemic, tasking the European Commission with drafting detailed proposals.

European Council president Charles Michel said the EU leaders backed the move during a videoconference this afternoon.

“[It] should be of a sufficient magnitude, targeted towards sectors and geographical parts of Europe most affected,” Mr Michel said. “We have tasked the commission to analyse the exact needs and to urgently come up with proposal that is commensurate with the challenge we are facing.”

Diplomats said the summit discussions laid bare gaping divisions between EU nations over how to raise and spend the money. France and southern European countries pushed for a programme based around grants, running up against opposition from northern member states that insisted on loans.

When asked about the size of the financial needs, Ursula von der Leyen, European Commission president, said: “We are not talking about billion, we are talking about trillion.”

Ms von der Leyen said there were a “variety of views” about grants and loans, and that Brussels’ plans included “a mixture” of both.

She said Brussels’ proposals would centre on increasing the buffer of unallocated funds in the EU budget, and using that money as a guarantee to borrow on the financial markets. That money would then be allocated to priority EU programmes.

“Some countries are certainly hit harder than others and unless we act decisively and collectively the recovery will not be symmetric and divergences between member states will increase,” Ms von der Leyen said.


Fed to disclose names of all beneficiaries of stimulus lending

James Politi in Washington

The Federal Reserve said it would provide names and details of every beneficiary of its lending under the $2.2tn economic stimulus package, as the US central bank ramps up its efforts at transparency as it leads a large-scale rescue operation for businesses across America.

The Fed on Thursday said it would supply the identity of companies receiving federal aid through its facilities on a monthly basis, along with other information including amounts borrowed, interest charged, and overall “costs, revenues and fees” for each facility.

“The Federal Reserve is committed to transparency and accountability by providing the public and Congress detailed information about our actions to support the economy during this difficult time,” Jay Powell, the Fed chairman said.

The $2.2tn stimulus package passed last month by Congress put the Fed in charge of $454bn in funds to help distressed sectors of the US economy, in collaboration with the US Treasury. The central bank has moved to set up facilities that will invest in corporate debt, loans to troubled businesses, and prop up municipal debt markets, but has faced criticism from Bharat Ramamurti, a member of the congressional oversight commission set up to monitor the bailout fund, for failing to pledge timely information on the details of its crisis lending.

Greece reports new coronavirus cases at two private clinics

Kerin Hope in Athens

Greece reported three deaths and more than 30 confirmed cases of coronavirus among patients and staff at two private clinics in different suburbs of Athens.

The public health organisation EODY on Thursday placed both clinics in quarantine for 14 days. The Athens public prosecutor ordered an immediate investigation on grounds of possible negligence by managers and medical staff.

One new case of coronavirus was confirmed on Thursday at a camp for asylum seekers at Malakasa, 40km north of the capital. A male Afghan resident tested positive for the virus, four days after the camp came out of quarantine over an earlier case of Covid-19.

The overall number of confirmed coronavirus cases jumped by 55 on Thursday to reach 2,463. Four deaths were recorded, bringing the total to 125.

Czech Republic accelerates timeline to ease lockdowns

James Shotter in Warsaw

The Czech Republic is to accelerate its re-opening of its economy, as officials become increasingly confident that the worst of the pandemic is behind the central European country.

Karel Havlíček, the industry minister, on Thursday said shops, hotels and restaurants would be reopen by May 25, two weeks earlier than envisaged, as the number of new cases continues to fall.

Shops of up to 2,500 square metres with their own entrances will be able to open from Monday, as will gyms, libraries and driving schools. From May 11, bigger shops and stores in shopping centres will be able to reopen, as will hairdressers and museums. And from May 25, restaurants and hotels could reopen.

“We evaluated Easter, and the good news is that it turned out very well,” Mr Havlíček said. “We confirmed that the Czech Republic can cope well with the virus and that we can ease restrictions more easily.”

The Czech Republic was one of the first EU countries to close its borders, shut non-essential shops and ban public gatherings in an effort to stop the spread of the novel virus, and has also introduced strict rules requiring people to wear masks outside.

The country has recorded 7,138 cases of Covid-19 and 210 deaths. According to health ministry figures, on average each sick person is now infecting 0.74 others — a figure that, if maintained, would mean the number of new cases would continue to fall.

Meat processing plants close as US industry infections run into the thousands

Aime Williams in Washington

About 5,000 US meat and food-processing workers have been infected or exposed to coronavirus, and ten have died, according to estimates from the United Food and Commercial Workers Union.

The union, which represents about 1.3 million workers, including 250,000 in the meatpacking and food processing sector, called on Congress, local elected leaders and public health officials, to do more to protect workers with more readily available personal protective equipment and widespread testing.

“Every day that goes by, and the more that is not done to protect these workers, the more that these workers and the nation’s food supply is in jeopardy,” said Mark Lauritsen, vice-president for meatpacking.

Several major pork and beef processing plants across the US have been forced to temporarily or indefinitely close following outbreaks of coronavirus among employees working in close proximity with each other.

The closures have raised fears over the ability of farmers to continue getting their products to supermarkets.

US stocks stall after promising coronavirus drug disappoints in first test

US stocks eased on Thursday after it was revealed a promising antiviral drug to treat coronavirus flopped in its first clinical trial.

The S&P 500 closed 0.1 per cent lower in a choppy session of trading. The benchmark index had been up as much as 1.6 per cent earlier in the day, but trimmed its gains after it was reported a Chinese trial of remdesivir, developed by California’s Gilead Sciences, did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream, according to draft documents published accidentally by the World Health Organization and seen by the Financial Times.

The Nasdaq Composite closed fractionally lower. Government bonds were firmer, with yields declining. The yield on the benchmark 10-year US Treasury was down 0.02 percentage points at 0.60 per cent.

Doctors launch legal challenge over UK government’s PPE guidance

Jane Croft in London

Two British doctors have launched a legal challenge over the UK government’s guidance on personal protective equipment (PPE) and how it should be used in hospitals.

Dr Meenal Viz, a clinical fellow in medicine and Dr Nishant Joshi, a GP trainee, say they have taken the action because of their concerns that government guidance and the availability of PPE is inadequate to protect them from the risks of Covid-19.

The UK government is facing increasing criticism about whether the National Health Service has adequate supplies of protective gear for medical staff.

The doctors, who are married and expecting a child, are challenging the government guidance on several grounds.

These include claims that it is not in line with international standards set by the World Health Organization (WHO) or domestic legislation regarding safety at work, according to a statement issued by their law firm Bindmans. The couple also claim the guidance is unclear and has resulted in inconsistent practices across NHS trusts.

The law firm issued a pre action letter, which is the first step ahead of launching a full legal judicial review challenge.

The couple are seeking an urgent review of the PPE guidance and have asked the health secretary Matt Hancock to confirm he is taking appropriate steps to source enough protective equipment.

Basmah Sahib, Bindmans solicitor for the two doctors, said in a statement: “We hope the guidance will be brought up to the standards of the WHO and that hospitals will update their practices accordingly.”

The Department of Health and Public Health England have been contacted for comment.

Dubai to ease lockdown restrictions from Friday

Simeon Kerr in Dubai

Dubai has confirmed plans to ease its strict lockdown from Friday morning, allowing residents to leave their homes without a police permit for the first time in almost three weeks.

On the eve of the holy fasting month of Ramadan, the government on Thursday said allowing freedom of movement would also require strict preventative measures to curtail the spread of coronavirus, including wearing face masks whenever leaving home.

Public transportation, retail, restaurants, hotels and offices will be able to operate at a reduced capacity while enforcing social distancing protocols.

The emirate has been under the tightest restrictions in the Gulf over the past month, including a 24-hour curfew, as the authorities rolled out a massive testing campaign for Covid-19. Residents will now be able to leave their homes without a permit between 6am and 10pm.

People will be allowed to visit family members, but private gatherings remain banned. The public will be able to exercise outside for up to two hours a day in groups of no more than three people.

Ruth’s Chris Steak House to return $20m in small business loans

Laura Noonan in New York

Ruth’s Chris Steak House is handing back the $20m it got from the US small business rescue scheme after a massive public backlash against big companies winning money from the programme while smaller companies got nothing.

A spokeswoman for the chain said Ruth’s Chris was “eligible for the assistance” and intended to use it to “keep as many of our team members working for as long as possible”.

“As we learned more about the funding limitations of the programme and the unintended impact, we have decided to accelerate that repayment,” she added.
“It is our hope that these funds are loaned to another company to protect their employees, just as we intended.”

Earlier this week the FT reported that more than 80 listed companies successfully tapped the $350bn rescue scheme for money, while smaller businesses missed out.

Congress is hammering out the final details of a $300bn expansion to the scheme, which ran out of funds last week.

Intel revenue jumps as consumers shift to working from home

Richard Waters in San Francisco

Intel’s revenue jumped 23 per cent in the first three months of the year as the new demands of working from home drove up sales of PCs and put more strain on cloud data centres that rely on the company’s chips.

However, Intel’s shares dropped 5 per cent in after-market trading as it issued a disappointing second-quarter forecast and withdrew full-year guidance.

Bob Swan, chief executive, also warned that, after a bounce in demand in the first six months of this year, the second half was set to be “more uncertain”.

Chip analyst Patrick Moorhead called the first-quarter figures “stellar”, with particular strength in the data centre division, where revenue jumped 43 per cent. The figures showed “the role technology plays in the world is more essential now than it has ever been,” Mr Swan said.

The strong first-quarter growth came despite disruption caused by manufacturing shutdowns in China caused by coronavirus. Revenue climbed to $19.8bn, with earnings per shares jumping 51 per cent, to $1.31.

For the second quarter, Intel forecast revenue growth of 12 per cent, to $18.5bn, and earnings of $1.04 a share. Wall Street had been expecting revenue of about $18bn and earnings per share of $1.12.

US death toll tops 44,000

More than 1,900 people died in the US over the past 24 hours, taking the nation’s total number of fatalities since the outbreak began to more than 44,000.

A further 1,911 people died over the past day, according to data on Thursday compiled by the Covid Tracking Project, taking the national total to 44,014.

New deaths in New York, the hardest-hit state, eased to 438, the lowest daily rate since April 2, and 15,740 overall. New Jersey and Michigan, the next hardest-hit states overall, had daily death rates of 305 and 164, respectively, but both are down from record daily increases on Tuesday.

Massachusetts saw the biggest daily increase in deaths, 178, after New York and New Jersey as of Thursday. The state is the fourth-hardest hit overall.

Unlike the Covid Tracking Project, Johns Hopkins University counts co-called presumptive deaths in New York City, which puts its total death count at a higher 47,272.

Archer Daniels Midland shuts ethanol refineries amid low petrol demand

Gregory Meyer in New York

The disappearance of petrol demand because of coronavirus lockdowns has claimed two of the world’s largest ethanol refineries, which process farmers’ corn into biofuel in the US Midwest.

Archer Daniels Midland, a crop processor and biofuels pioneer, on Thursday said it would halt ethanol output at two corn mills in Cedar Rapids, Iowa and in Columbus, Nebraska. About 90 employees in each plant will be furloughed.

Ethanol is blended in most petrol sold in the country. US petrol demand has fallen more than 40 per cent from a year ago, hitting ethanol sales in turn.

US ethanol production dropped to about 560,000 barrels a day last week, compared to normal rates of more than 1m b/d, according to the Energy Information Administration.

The ethanol crisis is inflicting damage on the rural US economy, where more than a third of the corn grown is sold to the biofuels industry. Corn futures have slid to $3.20 a bushel in Chicago, down from almost $4 in early 2020.

“These are very difficult decisions in a very challenging time, and unfortunately, the current market conditions and the low consumer demand for gasoline at this time have greatly impacted the entire ethanol industry,” said Chris Cuddy, president of ADM’s carbohydrate solutions division.

The Columbus and Cedar Rapids mills, opened in 2010, are two of the highest-volume ethanol refineries in the US.

But ADM has been exploring their sale for the past four years as poor refining margins weigh on its business. They now belong to a subsidiary called Vantage Corn Processors set up last year to pave the way for a transaction.

ADM said the strategic process has “slowed somewhat as we work through the current economic environment”.

Congress passes $484bn interim stimulus package

Courtney Weaver in Washington

Congress has passed a $484bn interim stimulus package for small businesses, hospitals and coronavirus testing, paving the way for the bill to be signed by President Donald Trump.

The US House of Representatives voted for the measure by a vote of 388-5, with overwhelming support from both parties. On Tuesday, the bill passed the US Senate with a “voice vote” — of ‘yay’ or ‘nay’ — a move that allowed only a small number of senators to be present during voting.

The bill allocates an additional $320bn for the Personal Paycheck Protection Program — a rescue fund for small businesses — after the programme’s initial $350bn in funding ran out in record time.

The legislation will also allocate $75bn for hospitals and $25bn for additional coronavirus testing.

“I’ll be signing it probably tonight,” Mr Trump at his daily news conference on Thursday.

Trump brands report Kim Jong Un was seriously ill as ‘incorrect’

Demetri Sevastopulo in Washington

Donald Trump said a CNN report that Kim Jong Un was seriously ill following an operation was “incorrect”, in comments that follow days of speculation about the health of the young North Korean dictator.

“I think the report was incorrect,” Mr Trump said at a White House news conference. “I’m hearing that they used old documents.”

Pressed on whether he had had any contact with North Korea in the wake of the report earlier this week, Mr Trump replied: “I don’t want to say … I think it was a fake report, done by CNN.”

Mr Kim’s failure to attend a very important ceremony on April 15 to mark the birth of his grandfather, Kim Il Sung, fuelled speculation about his health. CNN earlier this week reported that the leader was very ill following a report from Daily NK, a South Korea-based online publication, which claimed that the 36-year old had heart surgery.

When asked about the speculation earlier this week, Mr Trump said he did not know whether the reports were accurate, while casting aspersion on the accuracy of the report from CNN, which he calls “fake news”.

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