Democratic senators call for protections for food supply workers
Aime Williams in Washington
Democratic senators are calling for extra protections for workers in meat processing plants, farms and grocery stores as concerns over the impact of coronavirus on the US food supply chain grow.
In a letter to vice-president Mike Pence, 36 senators including Debbie Stabenow, the top Democrat on the senate committee for agriculture, and recent presidential candidates Bernie Sanders, Kamala Harris and Amy Klobuchar, called for greater coordination between state governments and the private sector to get adequate protective equipment to workers.
The senators wrote that “severe shortages of adequate Covid-19 testing capability and personal protective equipment” were “exacerbating” risks faced by employees who worked in close proximity to each other.
“Lack of access to tests and personal protective equipment leaves essential food supply workers at even higher risk and makes the virus more likely to spread, harming more workers and further damaging our food supply chain.”
IBM software sales hit by pandemic, withdraws guidance
Richard Waters in San Francisco
IBM withdrew financial guidance for the rest of the year as it revealed that the coronavirus crisis had taken a bite out of its software sales at the end of March, pushing revenue down by 3 per in the first quarter.
The decline, to $17.57bn, was in line with Wall Street’s reduced expectations for the company, while pro-forma earnings per share, at $1.84, were five cents ahead of forecasts.
Jim Kavanaugh, chief financial officer, said the figures — including a 1.5 percentage point improvement to IBM’s gross profit margin — showed the US computer maker had made headway on its strategy, despite the crisis. Speaking in an interview with the FT, he also said it had stress-tested its business model based on various assumptions about the length and depth of the crisis, and that under every scenario it would be able to “continue to invest in the business and secure the dividend.”
IBM generates around 60 per cent of its revenue from annuity-like sources, giving it some protection from the immediate impact of the downturn. But Mr Kavanaugh said customers had cut back spending to protect their own operations in the crisis, hitting software sales, as well as work in IBM’s global business services division geared to new application development.
Net income fell by 26 per cent to $1.18bn, or $1.31 a share, compared with $1.78 a share the year before, based on formal accounting principles.
IBM said revenue at Red Hat — the open source company it bought last year and a key part of its new strategy — had grown by 20 per cent in the latest quarter. As a result, revenue from its cloud and cognitive software segment rose 5 per cent, to $5.2bn — though without the inclusion of Red Hat, which became part of IBM last July, the segment would have declined around 10 per cent.
The major credit rating agencies cut IBM’s rating by a notch to the mid-single A range as it took on more debt last year to buy Red Hat.
US stocks close lower as plunge in US crude price weighs on energy
A historic drop in the price of US crude – which sent prices negative for the first time on record – dominated Monday’s session on Wall Street and weighed on energy stocks.
West Texas Intermediate, the US oil benchmark, settled at minus $37.63 a barrel, a 306 per cent drop from its close on Friday of $18.27 as investors braced for a collapse in demand because of the coronavirus pandemic. In late afternoon trading in New York, the price of the Brent crude, the global benchmark, was down 7.2 per cent at $26.18 a barrel.
The S&P 500’s energy sector fell 3 per cent in response, with only utilities faring worse with a 3.7 per cent decline. The overall benchmark dropped 1.8 per cent.
The tech-heavy Nasdaq Composite fared better and closed 1 per cent lower.
Government bonds were firmer, with yields declining. The yield on the benchmark 10-year US Treasury was 0.04 percentage points lower at 0.62 per cent.
Hundreds protest lockdown measures in Harrisburg, Pennsylvania
Demetri Sevastopulo in Washington
Several hundred people protested outside the Pennsylvania state capitol building in Harrisburg on Monday, in the latest example of demonstrations across the US against the lockdown measures introduced by governors to curb the spread of Covid-19.
Cars and trucks honked their horns as protesters – some of whom held placards backing Donald Trump – waved American flags and called on Tom Wolf, the Democratic governor, to ease stay-at-home restrictions.
Pennsylvania has been one of the hardest hit states economically partly because Mr Wolf moved earlier than most governors to order the closure of non-essential business to curb the spread of coronavirus. It has recorded more than 33,000 cases of Covid-19, the fourth-highest total in the country. The number of people who have died has hit 1,339, giving the rust-belt state the fifth-highest death toll in the US.
Small protests have erupted sporadically in recent days as a combination of far-right groups and Trump supporters have targeted the – mainly Democratic – governors of states with some of the more severe lockdowns. Some of the protesters have been emboldened by Mr Trump, who last week urged followers in a tweet to “liberate” Michigan, Minnesota and Virginia — states with Democratic governors.
Larry Hogan, the Republican governor of Maryland who chairs the National Governors Association, questioned why Mr Trump was encouraging dangerous behaviour against the advice of his health experts.
“To encourage people to go protest the plan that you just made recommendations on Thursday … just doesn’t make any sense,” Mr Hogan told CNN. “We’re sending completely conflicting messages out to the governors and to the people, as if we should ignore federal policy and federal recommendations.”
Here’s a look at protests in Harrisburg:
Ireland considers new travel restrictions at ports and airports
Arthur Beesley in Dublin
Ireland reported a record 77 coronavirus deaths as Leo Varadkar, the prime minister, considered new travel restrictions at ports and airports in a bid to hold back the disease.
The death toll now stands at 687, with 15,652 Covid-19 infections.
The question of new travel restrictions has come to the fore after one Dublin company was criticised for chartering a Ryanair plane last week to bring in 189 seasonal workers from Bulgaria to pick fruit.
The company — Keelings — said it and Ryanair followed official guidelines, adding that it received only 40 local applications for some 900 seasonal vacancies. The workers “had been health screened by a doctor before they travelled to Sofia airport where they were temperature checked before entry,” Keelings said.
But Mr Varadkar has suggested the rules may now be changed, saying workers coming from other EU countries may face “very defined and monitored quarantine arrangements” to prevent new virus clusters. “When we deemed agricultural workers to be essential workers I hadn’t envisaged hundreds of agricultural workers coming in from outside the country,” he said.
Although ports and airports remain open, the Covid-19 subcommittee of Mr Varadkar’s cabinet “discussed options” to tighten restrictions at a special meeting on Monday.
The government said: “Ireland needs to find a balance which allows the airports and ports to stay open, in order to allow the movement of supplies, essential workers, and for Irish citizens to be able to return home, but which also minimises the risk of transmission of the virus, including the requirement for people arriving into Ireland to self-restrict their movements for 14 days.”
Dublin said it will discuss the matter with the Northern Ireland authorities before the “final decision” is made.
France becomes fourth country to record more than 20,000 deaths
David Keohane in Paris
France has now recorded more than 20,000 deaths from Covid-19, becoming the fourth country to pass that threshold after Spain, Italy and the United States.
20,265 have now died of the virus in France, with another 444 dying in French hospitals over the past day, according to Jérôme Salomon, director-general of the French health department.
12,513 people have died in French hospitals with the remainder of the deaths in the country coming in other institutions, the majority in nursing homes, including another 103 over the past day.
However, the number of people needing intensive care beds in France also fell for the twelfth consecutive day, by 61 people to 5,683, while the overall number of people in hospital with the virus fell for the 6th day in a row, by 26 to 30,584.
US crude oil settles at record low minus $37.63 a barrel
The wild ride came to an end, with futures for front-month West Texas Intermediate closing at a record minus $37.63 a barrel.
That equates to a drop of 306 per cent from Friday’s close of $18.27. At Monday’s intraday low of minus $40.32, the decline was as much as minus 320.7 per cent.
Greece to maintain lockdown until at least April 27
Kerin Hope in Athens
Greece will keep its lockdown in place at least until April 27 while the government finalises plans for gradually re-opening shops, small businesses and schools from early next month.
Sotiris Tsiodras, the expert leading the country’s campaign to curb Covid-19, said Greek scientists “are following the measures being taken in other countries concerning the lifting of lockdowns while taking into consideration the specific conditions here in Greece. We will move step-by- step towards lifting restrictions, just as we imposed them gradually.”
Health authorities on Monday reported 11 new coronavirus cases, including three at a hotel in southern Greece where 469 asylum-seekers, mainly from African countries, have been placed in quarantine. Three officials from the International Organisation for Migration working at the facility were also quarantined.
The death toll from Covid-19 over the Orthodox Easter weekend rose from 110 to 116. The total number of confirmed cases stood at 2,235.
Alexandria Ocasio-Cortez signals she won’t vote for interim stimulus deal
Lauren Fedor in Washington
Alexandria Ocasio-Cortez, the progressive congresswoman from New York, said on Monday she was unlikely to vote for the interim stimulus package being hammered out by congressional leadership, raising questions about when more federal money will be released to support a US economy devastated by the Covid-19 pandemic.
The White House on Sunday said it was close to reaching a deal with Congress to provide another $300bn in loans for small businesses that have been hit by the pandemic, after a stalemate last week over whether an interim funding package should also include more money for hospitals and state and local governments.
But Ms Ocasio-Cortez, a Democrat whose district includes some of the neighbourhoods hardest hit by the coronavirus in New York City, told reporters on Monday that while she had not seen the “final text” of what congressional leadership were negotiating with the White House, she was unlikely to back the proposals based on what she had seen reported in US media, calling them “incremental” and likening them to a $5 bill.
“It is insulting to think that we can pass such a small amount of money in the context of not knowing when Congress is even going to reconvene, and pass such a small amount of money, pat ourselves on the back and then leave town again,” Ms Ocasio-Cortez said. “I am not here to support that.”
The congresswoman, who has called for recurring monthly payments from the federal government of $2,000 for adults and $1,000 for children, told reporters that the current proposals were “not going to help our communities, and we have to make sure that we demand meaningful change in meaningful assistance for working families”.
US crude oil price falls into negative territory
The price of US crude oil traded below zero for the first time on record, capping a volatile day of trading.
West Texas Intermediate fell as low as minus $2.80 a barrel in afternoon trade in New York, according to Refinitiv data, more than wiping out the contract’s entire value.
WTI closed at $18.30 on Friday.
US crude price crashes below $1 a barrel in record one-day drop
The price of benchmark US crude oil hit a historic low below $1 a barrel, taking declines for the day to more than 95 per cent.
West Texas Intermediate fell as low as 90 cents a barrel, the lowest level since the contract was launched in 1983, according to Refinitiv data. At the intraday low, oil was on track for a record one-day drop of as much 95.1 per cent.
In a day of volatile trading, the price was most recently at $1.19 a barrel, as investors considered the potential collapse in demand stemming from the coronavirus pandemic.
US oil price crashes to record low
David Sheppard, Myles McCormick and Derek Brower in London
US oil prices crashed below $5 a barrel on Monday, hitting the lowest level since the contract launched in 1983, as the collapse in demand triggered by the coronavirus pandemic leaves the world awash with crude that it is struggling to store.
West Texas Intermediate, the US marker, lost 74 per cent on Monday, sinking to a low of $4.04 a barrel, on warnings that storage could fill up within weeks — including at the benchmark’s delivery hub of Cushing, Oklahoma.
Lockdowns imposed in many of the world’s major economies have sent crude demand tumbling by as much as a third, leaving the industry facing what Jefferies analyst Jason Gammel called perhaps “the bleakest oil macro outlook” he had ever seen.
Read the full story here.
Kate Spade parent to cut 2,100 part time jobs, expects furloughs if stores don’t reopen
Tapestry, the luxury accessories company, said it is cutting more than 2,000 part-time roles and expects to furlough most in-store staff in North America by May 30 if stores have not reopened by then as it seeks to lower costs.
The New York-based company behind Coach and Kate Spade said it will let go of about 2,100 part-time store associates effective April 25 and these employees will receive a one-time $1,000 payment.
Tapestry also said it would provide salary and benefits to “the vast majority of its North America retail team” through the end of May, but beyond that expects to furlough most assistant store managers and sales associates where stores have not reopened.
At the start of fiscal year 2021, which begins June 28, Tapestry’s chairman and chief executive Jide Zeitlin will take a 50 per cent pay cut, while the board will also see a 50 per cent reduction in cash compensation. The company also expects salary cuts of between 5 to 20 per cent for all North American corporate employees depending on their salary level. The actions are expected to stay in place for up to 12 months “unless otherwise noted”.
Tapestry, which is applying for payroll subsidy programs in various countries, said it will reopen stores on a location by location basis globally and that it has opened all its stores in mainland China.
Slovakia poised to relax restrictions and restart economy
James Shotter in Warsaw
Slovakia is to allow some businesses to reopen as the country becomes the latest EU member state to ease the restrictions put in place to slow the spread of the coronavirus pandemic.
From Wednesday, restaurants will be able to sell takeaways while car dealerships, shops of less than 300 square metres and outdoor sports facilities will be able to reopen, said Igor Matovic, who took office as prime minister last month.
The decision, which will be reassessed in two weeks’ time, follows similar moves in neighbouring Austria and the Czech Republic, which have in recent days set out timetables for allowing a resumption of some types of business.
The prime minister on Monday set out three more phases of re-opening the economy, with the second including taxi services and hairdressers, the third some shops of up to 1,000 sq m, and the fourth including cinemas and theatres.
However, Mr Matovic set no dates for these staged re-openings and said restrictions could be reintroduced if cases increased.
Slovakia, which was one of the quickest EU states to close its borders and non-essential shops in response to the outbreak, has recorded 1,173 Covid-19 cases and 13 deaths.
Mexico not in imminent danger of losing investment grade rating – Moody’s
Jude Webber in Mexico City
Mexico is not in imminent danger of losing its investment grade status but could yet suffer further sovereign downgrades, Moody’s Investestors Service said, after it cut ratings both of the sovereign and state oil company Pemex last Friday amid the coronavirus economic shock and Mexico’s policy response.
“The outlook is negative – that means the rating can go down a bit more. As of today, we don’t think Mexico will lose investment grade – it’s not on the main horizon,” Ariane Ortiz-Bollin told a news conference. That was because Mexico has manageable debt levels, a large and diversified economy and no major fiscal imbalances.
Moody’s cut Pemex by two notches to Ba2 – a junk rating – and trimmed the sovereign to Baa1 from A3, a level which remains three notches above speculative grade.
Pemex, on the other hand, could take three or four years to return to investment grade because of its high level of debt and its business plan, which did not necessarily focus on profit-making activities, Pemex analyst Nymia Almeida added.
Fitch Ratings also cut Pemex deeper into junk last week and cut its rating for the sovereign. It has Mexico just one notch above junk but the outlook is stable, suggesting no imminent cut on the horizon.
UK’s small business pandemic scheme doubles loans in a week
Jim Pickard in London
The UK chancellor has said that 12,000 loans have gone out to small businesses under the government’s pandemic scheme – double a week ago – and that banks are approving 80-90 per cent of applications.
The coronavirus business interruption loan scheme, which has been criticised for its slow progress, involves the UK government underwriting loans from banks to companies struggling because of the pandemic.
Rishi Sunak rejected the idea of changing the state guarantee from 80 per cent to 100 per cent of each loan.
“I am not persuaded that moving to a 100 per cent is the right thing to do,” he said during Monday’s Downing St news briefing.
While other countries have offered a full guarantee on similar schemes, he argued, the UK has gone further in its provision of alternative support programmes for struggling companies.
As many as 140,000 companies have applied, as of 4pm, to the government for wage subsidies through the furlough scheme, which began this morning. “We’ve never seen an economic crisis like this one,” Mr Sunak said. “Times like this demand that we put aside ideology and orthodoxy.”
He refused to say how much the scheme, which has been extended to the end of June, is likely to cost.
Meanwhile Mr Sunak said the government is working hard to resolve delays to a Turkish shipment of personal protective equipment and says the UK received 140,000 gowns from Myanmar on Monday.
In total, 1bn items of protective kit have been delivered since the start of the crisis in a “challenging international context”, he says.
WHO rebuts Trump’s accusation it covered up severity of coronavirus
Camilla Hodgson in London
The World Health Organisation has hit back at US president Donald Trump’s accusation that it covered up the severity of Covid-19 and China’s inability to contain the virus.
A report in the Washington Post last week outlined that, in contrast to Mr Trump’s statements, Americans working in the WHO communicated real-time information about the unfolding of the crisis as far back as December to the US administration.
On Monday, Dr Tedros Adhanom Ghebreyesus, director general of the World Health Organisation, confirmed that American citizens who were staff members of the US Centers for Disease Control and Prevention were working with WHO teams on the pandemic.
“These are Americans who are working with us,” he said. “Having CDC staff [working in the WHO] means there is nothing hidden from the US. From day one.” He said the two organisations had a “long standing” relationship”.
Becoming emotional, he implored countries to work together to contain the virus and stem the rising death toll.
“I know war. I know how people suffer,” he said. “These are real people.”
Cuomo urges federal government to pay hazard bonus to frontline workers
Joshua Chaffin in New York
Frontline workers who have braved coronavirus should receive a 50 per cent “hazardous pay” bonus from the federal government, New York governor Andrew Cuomo proposed on Monday.
Mr Cuomo observed that healthcare, public transit workers and delivery personnel were largely people of colour, many of them poor, and had shouldered the heaviest burden to carry the nation through the pandemic.
“Thanks is nice, but also recognition of their efforts and sacrifice is also appropriate. They are the ones carrying us through this crisis,” Mr Cuomo said, framing his proposal as a matter of social justice. “Pay them what they deserve,” he added.
New York’s coronavirus deaths continued to fall, totaling 478 over the past 24 hours. That was the first time fatalities have gone below 500 in several days. Hospitalisations and other measures of strain on the healthcare system have also continued to ease, leading Mr Cuomo to conclude that New York, the US epicentre of the pandemic, had passed the peak of the crisis and was now on an uncertain descent.
The state will today begin a new effort to test thousands of residents for coronvairus antibodies – a step Mr Cuomo has described as a prerequisite for eventually reopening the economy. Still, the governor restated his warning that New York’s progress against coronavirus was fragile and could easily be reversed. He also issued another plea for financial support from the federal government.
US stocks trim losses, Nasdaq turns positive
Wall Street trimmed its losses by midday and the Nasdaq Composite turned positive as crude prices tumbled and investors eyed the latest coronavirus developments and earnings.
The S&P 500, which fell as much as 1.6 per cent, clipped its losses and is down 0.3 per cent at pixel time. The Nasdaq Composite reversed losses of as much as 1.1 per cent to trade 0.3 per cent higher.
Investors began the day in a dour mood as US oil prices plunged to a 20-year low. However, stocks appeared to gain their footing with Amazon and Netflix among the big gainers, up 2 and 4.2 per cent respectively. Netflix is among the companies slated to report results this week.
Also mitigating the Wall Street sell-off was news that the White House is close to reaching a deal with Congress to provide another $300bn in loans for small businesses.
Elsewhere in markets, the yield on the US 10-year was little changed at 0.6399 per cent. While the dollar index, a gauge of the buck against a weighted basket of peers, was flat at 99.82.
WHO orders more than 30m tests for countries that most need them
Camilla Hodgson in London
The World Health Organization has ordered more than 30m Covid-19 tests for countries in desperate need of them.
The diagnostic tests, ordered from five companies, will be delivered over the next four months to “countries that need them the most”, said Dr Tedros Adhanom Ghebreyesus, WHO director-general at a news conference on Monday.
The first shipment will begin next week, via a supply chain being coordinated by the UN’s World Food Programme. Dr Tedros said the WHO had worked with Unicef and other partners to identify accurate coronavirus tests that could be manufactured in large quantities.
The WFP is coordinating the delivering of key supplies such as gloves and masks to more than 100 “priority countries”.
Only 3% of people in infected areas have Covid-19, data suggest
Camilla Hodgson in London
No more than 3 per cent of people have been infected with coronavirus in affected areas, even in badly hit regions, preliminary data has revealed.
Early studies using Covid-19 antibody tests indicate that only a “relatively small percentage of the population” appear to have been infected, said Dr Tedros Adhanom Ghebreyesus, director general of the World Health Organisation, at a press conference on Monday.
Even in “heavily affected areas” the early data suggest that “not more than 2-3 per cent” of a population had been infected with the virus.
Antibody tests screen for whether someone has recovered from the disease. However, since the disease is so new, it is not yet clear whether previously infected people will be immune from future infection.
Antibody tests will help improve our “understanding of the extent of the virus” in a population, said Dr Tedros, but diagnostic tests are the “core tool” for diagnosis and treatment.
Virus claims nearly 450 lives in UK in latest 24-hour period
The UK has recorded another 449 coronavirus patients have died in hospital over the latest 24-hour period, the lowest daily count in a fortnight.
The figures, taken as of 5pm on Sunday, bring the total of those who have died of Covid-19 in UK hospitals to 16,509, the health department said. Monday’s number is much lower than last week’s average tally – from Monday to Sunday – of 778.
As of 9am on Monday, 501,379 tests have been completed in the UK, including 19,316 on 19 April.
The most deaths, as usual, were in England, where another 429 coronavirus patients died in hospitals in England over the most recent 24-hour period, down from 482 the day before. The total as of 5pm on Sunday came to 14,829.
US oil price hits lowest since 1986
A sell-off in US oil has triggered a fall in price to levels not seen since 1986 as the impact of the coronavirus pandemic smashes through demand.
West Texas Intermediate, the US crude benchmark, extended a slide to fall more than 45 per cent during the session to a low of $10.01, below the nadir of $10.35 reached during the Asian financial crisis of 1998.
The price reflects the WTI contract for May delivery, which expires tomorrow, exacerbating the size of the drop off as trading volumes are low. The contract for June was off 10 per cent at $22.63 a barrel.
Physical grades in many North American regions have fallen into the low single digits — with some contracts changing hands for as little as $2 a barrel — reflecting a dearth of buyers able to take delivery, even as future prices have held up marginally better due to some investors betting on an eventual rebound.
Brent crude, the international oil benchmark, was down 6 per cent at $26.50 a barrel.
Scotland opens £43m temporary coronavirus hospital
Mure Dickie in Edinburgh
Scotland on Monday opened a £43m temporary hospital for coronavirus patients that officials remain hopeful will never be needed, Mure Dickie reports from Edinburgh.
The NHS Louisa Jordan hospital at Glasgow’s Scottish Events Campus has initial capacity of 300 beds — expandable to more than 1,000 — all supplied with oxygen.
Jill Young, the facility’s chief executive, said it was designed to cater for adult coronavirus patients who did not require intensive care. She added that standard hospitals have, for now, enough beds for those infected.
“The numbers are not increasing as fast as we imagined they would,” Ms Young told a briefing. “But it is far too early to make any final predictions on that, so we have to stand ready.”
She said that, if needed, the facility would be opened 40 beds at a time with pre-trained staff drawn in from other roles as needed.
Ms Young said she did not have a breakdown of the cost of the hospital, but that the previously announced £43m covered its design and construction and some decommissioning, but not operating costs. Construction companies had built it on a zero-profit basis and other companies had donated cement and steelwork, she said.
New York cancels Pride as case count slows
New York City will extend its ban on large-scale public events until the end of June, the city’s mayor Bill de Blasio said in his daily press briefing.
City permits will be revoked for three main events: the Salute to Israel parade, National Puerto Rico Day and NYC Pride, said the mayor.
“A lot of these events are being postponed but the event organisers are looking at doing something later in the year, and we are working with them on that,” said Mr de Blasio. “The bottom line is to think about safety, saving lives and protecting people’s health.”
This is the 50th year of Pride, an international event celebrating the LGBTQ community, which in New York draws thousands of participants and millions of spectators each year.
“This year in particular was going to be a historic moment,” he said.
The number of people in the city’s intensive care units suffering from Covid-19 went up slightly from 849 to 853, said the mayor, adding that in general, “we are seeing day after day progress in all the categories”.
IMF should be ready to help poorer nations, its chief says
James Politi in Washington
Kristalina Georgieva, the managing director of the IMF, said the multilateral lender needed to prepare to do “much more” to tackle the economic fallout from the coronavirus pandemic, including venturing out of its “comfort zone” to help troubled emerging markets.
Ms Georgieva said in a blog post on Monday that the fund had agreed on some actions during its virtual spring meetings last week, but she remained “particularly concerned” about emerging markets and developing economies, which have experienced huge capital outflows in recent weeks.
“We need to think hard about where this crisis is headed and how we can be ready to help our member countries, being mindful of both risks and opportunities,” she said.
“Just as we responded strongly in the initial phase of the crisis to avoid lasting scars for the global economy, we will be relentless in our efforts to avoid a painful, protracted recession,” she said.
Last week, the IMF backed a temporary debt relief package for poorer nations, an expansion of its emergency financing facilities, the establishment of a short-term liquidity scheme, and a boost to concessional loans for low-income countries.
However, it failed to agree on the broad allocation of new international reserve assets – known as special drawing rights – to prop up low-income nations, amid US opposition, despite the support of many European and African leaders. This has prompted criticism that the global economic response has not been as comprehensive as it should be.
In her blog, Ms Georgieva said the fund would likely need to deploy all of its lending capacity and “mobilise all layers of the global financial safety net”, including SDRs if necessary, and offer more concessional financing to poor countries. But she also warned that more lending may be unsustainable for some countries, which would require different solutions and creativity from the Fund.
“We therefore need to contemplate new approaches, working closely with other international institutions, as well as the private sector, to help countries steer through this crisis and emerge more resilient,” Ms Georgieva said.
“And the IMF, like our member countries, may need to venture even further outside our comfort zone to consider whether exceptional measures might be needed in this exceptional crisis.”
Vestas cuts 400 jobs and halts projects
Vestas, the wind turbine manufacturer, said it planned to lay off 400 employees, most of them in Denmark, and halt some projects due to the impact of coronavirus.
The company said it had decided to focus on delivering projects this year and reduce its workforce that did not directly support the execution of these near-term projects. Following the job cuts, the group’s headcount will be reduced to about 25,500 people.
“We’re in a period of high uncertainty and by making a strategic decision on our product portfolio and reducing complexity, we sustain our competitiveness in the future and ensure we can adjust quickly to Covid-19 challenges,” said Henrik Andersen, president and chief executive of Vestas.
The move follows the company’s decision to suspend its financial guidance for 2020.
The wind power supply chain has been disrupted by the measures taken to prevent the spread of coronavirus. Wood Mackenzie, a consultancy, has estimated that almost 5 gigawatts of wind power installations will be delayed globally this year.
United Airlines reports $2bn pre-tax loss amid plummeting demand
Claire Bushey in Chicago
United Airlines recorded a $2.1bn pre-tax loss in the first quarter as revenue plummeted because of the coronavirus pandemic.
The Chicago company’s revenue declined 17 per cent compared with the same period a year earlier, to $8bn, according to a filing with the Securities and Exchange Commission. The airline industry has been rocked by an unprecedented drop in demand as consumers stay home, both to avoid infection and because of government travel restrictions meant to curb the disease’s spread.
United has also reached a deal with an Asian aircraft lessor to do a sale-leaseback transaction on 22 planes. Sale-leasebacks allow airlines to conserve cash while continuing to operate.
The US government authorised a $50bn bailout for passenger airlines as part of a $2tn stimulus package. United will receive $5bn from the first half of that pot, meant to support payroll, while issuing warrants equal to 1.9 per cent of the airline’s outstanding shares. The government is offering $3.5bn as a grant, and $1.5bn as a 10-year loan. The loan, which is consistent for all the airlines, has an interest rate of 1 per cent for the first five years and then floats at the Secured Overnight Finance Rate plus 200 basis points.
United has applied for a $4.5bn government loan from the second half of the bailout funds. It can tap the funds until September 30, but if it does it will need to issue another 14.2m in warrants to the government. That would take taxpayers’ share of the airline to 7.6 per cent.
Chief executive Oscar Munoz and president Scott Kirby have told employees their jobs are protected only until September 30.
Wall Street slides as oil plunges to 20-year low
US stocks opened lower on Monday as the collapse in oil prices weighed on global markets and investors looked ahead to the next slate of earnings from corporate America.
The S&P 500 opened 1.6 per cent lower while the Nasdaq Composite fell 1.1 per cent.
The energy sector was the biggest decliner on the benchmark S&P 500, down more than 5 per cent, after West Texas Intermediate, the US crude marker, fell to it lowest level in more than two decades amid a collapse in demand and a volatility tied to contract expiration. Financials also lagged with a 2.8 per cent drop.
The decline on Wall Street followed the first back-to-back weekly gains for US stocks since February on hopes of medical breakthroughs and that the US and European economies were on a path to gradually reopening.
Elsewhere in markets, the dollar index, a gauge of the buck against a weighted basket of peers, rose 0.2 per cent to 99.97. The yield on the US 10-year slid 0.03 percentage points to 0.6242 per cent.
US oil prices drop below $11 a barrel
The collapse in oil prices has gathered pace, with US crude tumbling more than 40 per cent today towards $10 a barrel as the impact of the pandemic rips through demand leaving a glut of crude without sufficient storage space to accommodate it.
West Texas Intermediate, the US marker, crashed to levels not seen since the Asian financial crisis in 1998 as warnings mount that storage could fill up within weeks — including at the benchmark’s delivery hub of Cushing, Oklahoma.
The WTI contract for May delivery was down 40.5 per cent at $10.80 a barrel by mid-afternoon in Europe. The May contract expires on Tuesday, and has come under extreme pressure in the past two sessions with traders seemingly nervous about taking deliveries of barrels without easy access to storage.
WTI for June delivery was down 13 per cent at $21.70, while Brent crude, the international marker, dropped 7.2 per cent to $26.05.
Scottish cancer referrals plunge as people avoid hospitals
Mure Dickie in Edinburgh
The number of urgent referrals for suspected cancer in Scotland has plunged more than 70 per cent as people avoid seeking medical attention amid the coronavirus pandemic.
Scottish interim chief medical officer Gregor Smith told a briefing on Monday that around 2,700 patients with potential cancer symptoms would be urgently referred by doctors for tests, but that this had fallen to just 744 by last week.
The fall in cancer referrals will fuel fears in Scotland and elsewhere that the pandemic is having health consequences for people beyond those made ill by the virus. Official data suggests an increase in deaths across the UK not fully accounted for by coronavirus infection. Dr Smith has previously described parts of the Scottish National Health Service that are not dealing with coronavirus as “eerily quiet”.
“[General practitioners] are telling me…that people are just not approaching practices just now with these kinds of symptoms,” Dr Smith said, adding that the public should not “sit on” potentially important symptoms.
“If it was urgent before Covid-19 came along, it is urgent now,” he said.
Indian outsourcers Infosys suspends guidance
Benjamin Parkin in New Delhi
Indian outsourcing group Infosys suspended its revenue guidance for the coming year on uncertainty about the coronavirus pandemic, reflecting the lack of clarity about the health of its client companies in North America and Europe.
India’s IT companies, who outsource business from western companies, stand to be hit hard by the impact of Covid-19. Clients in industries such as travel and tourism may not survive the disruption caused by the effects of the pandemic, while others may opt to cut back on outsourcing contracts in their attempt at conserving costs.
In its earnings for the quarter ended March, Infosys reported revenues of $3.2bn, up 5 per cent from a year earlier. But the company said it was unable to forecast its fortunes for the financial year that started this month.
Considering the business uncertainty emanating from Covid-19, the company is unable to provide guidance on revenues and margins … The company will provide guidance after visibility improves.
Tata Consultancy Services, another Indian outsourcer that reported its earnings last week, said that “pandemic completely reversed the positive momentum that we had started seeing”.
Denmark sets example for UK over aid to tax havens, campaigners say
Emma Agyemang in London
The UK should follow the example of Denmark and Poland by refusing companies registered in offshore tax havens access to financial aid from its coronavirus bailout packages, a campaign group has said.
Denmark said on Saturday that companies registered in tax havens will not be eligible for any of its rescue packages.
The ban applies to countries the EU considers tax havens, including American Samoa, the Cayman Islands, Fiji, Guam, Oman, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.
Poland made a similar decision on April 8.
Tax Justice UK, a pressure group that “champions the role of tax in building a better society”, said the British government should consider a company’s tax behaviour when handing out rescue money.
“Companies that seek to dodge their obligations to society by cutting their tax bills shouldn’t expect a bailout when things go wrong,” said Robert Palmer, executive director. “The UK should ensure that all bailouts come with conditions to ensure good business behaviour.”
Mr Palmer added: “After the crisis we need a new deal between business and government to ensure that all companies contribute properly, including by paying their fair share of tax.”
Halliburton reports $1bn quarterly loss
Derek Brower in London
Halliburton, the US oil field services company, on Monday posted a $1bn loss for the first quarter of 2020 and announced a sharp drop in planned capital expenditures as plummeting activity in North America’s energy sector hit the company’s business. That compared to net income in the first quarter of 2019 was $152m.
The company said it had taken a $1.1bn pre-tax impairment, reflecting the deterioration of the business environment amid an oil-price crash driven by the coronavirus-led collapse of global oil demand.
Halliburton said spending would fall by $1bn, including $800m of capital expenditures, making it the latest oil field services company to reduce overheads in the face of collapsing upstream activity in the US oil and gas business. “We will take further actions as necessary to adjust to evolving market conditions,” said Jeff Miller, its chief executive.
“Our industry is facing the dual shock of a massive drop in global oil demand coupled with a resulting oversupply,” Mr Miller added.
Activity in North America would “sharply decline during the second quarter and remain depressed through year-end, impacting all basins”, he said.
Netherlands’ daily Covid-19 death toll falls sharply
Mehreen Khan in Brussels
The Netherlands has reported a sharp drop in the rate of daily deaths from coronavirus to its lowest in nearly a month.
The Dutch public health authority on Monday said there were 67 reported fatalities from the virus over the past 24 hours, decreasing from 110 the previous day and the lowest daily figure since March 24.
The Netherlands has banned all meetings in the country until June 1 and imposed tough penalties against individuals and companies that flout the country’s social distancing rules. Despite the falling death rate, the government has not yet sketched out an “exit plan” to restart the economy.
The total number of deaths from Covid-19 in the country has hit 3,751 with total cases at 33,405.
Fitch cuts Hong Kong’s rating citing pandemic pressures
Hudson Lockett and Nicolle Liu in Hong Kong
Fitch downgraded Hong Kong’s sovereign credit rating for the second time in less than a year, warning that pressure from the coronavirus pandemic has exacerbated negative trends already weighing on the Asian financial hub’s status.
Fitch lowered the city’s rating from AA to AA-, with a “stable” outlook on Monday. The move marked the second downgrade from Fitch within less than a year. In September, the rating agency downgraded Hong Kong as clashes between police and protesters over an anti-extradition bill grew more heated.
Fitch said the virus’s spread had led to economic contraction and a rise in unemployment that had prompted policymakers to announce the “most expansionary budget in the territory’s history”.
In the three months ending March, the territory’s unemployment rose to 4.2 per cent from 3.7 per cent. The increase was driven by construction, education, transportation and retail and food.
The agency forecast the budget deficit to rise to 11 per cent of GDP for the 2020 financial year. “As a result, fiscal reserves will fall to 30% of GDP… and are likely to decline further over the medium term in the absence of off-setting tax measures.”
Fitch also said Hong Kong’s downgrade reflected its closer integration with mainland China — the key driver of last year’s unprecedented protests.
“These established trends are exemplified by the central authorities taking a more vocal role in Hong Kong affairs than at any time since the 1997 handover,” it added.
EU should issue ‘perpetual bonds’ to fund recovery, Soros says
The EU should raise the money needed for a recovery fund by issuing ‘perpetual bonds’ where money invested does not have to be repaid, said George Soros in an opinion piece on Monday, adding that this should be the top priority of the European Council summit on April 24.
As perpetual bonds never have to be repaid, they would impose a “surprisingly light fiscal burden” on the bloc, he argued in Project Syndicate, a non-profit media organisation.
The Hungarian-born investor added that the EU would not have to refinance them when they came due, make amortisation payments or even set aside money for their eventual repayment.
The EU would be obligated to make regular interest payments on these bonds. A €1tn perpetual bond with a 0.5 per cent coupon would cost the EU budget €5bn a year, he suggested, less than 3 per cent of this year’s budget.
He noted that governments have issued perpetual bonds in the past, for example, when Britain issued consolidated bonds to finance the Napoleonic Wars and war bonds during the first world war.
He said:
The EU is facing a once-in-a-lifetime war against a virus that is threatening not only people’s lives, but also the very survival of the Union. Europe needs to resort to extraordinary measures to deal with an extraordinary situation that is hitting all of the EU’s members.
UK faces new PPE delays
George Parker, Political Editor
Downing St has admitted that it does not know when 84 tons of personal protective equipment would arrive from Turkey, saying only that the RAF was on standby to collect it “as soon as possible”.
Robert Jenrick, communities secretary, announced the consignment of much-needed protective kit would arrive on Sunday but Downing St said on Monday: “We are working to ensure that shipment is delivered as soon as it is ready.”
Boris Johnson’s spokesman said there had been some “unexpected delays” but declined to say what they were. In the meantime he said UK and other global suppliers were continuing to deliver new PPE to hospitals.
Meanwhile Downing St said that the latest daily figures for coronavirus tests stood at 24,626, well below the capacity of 36,000, and less than a quarter of the 100,000 daily tests promised by the government by the end of April.
Wall Street set for losses
Shares on Wall Street were on course for chunky losses at the opening bell, while European markets also turned lower as the US oil price plunged.
Futures tied to the S&P 500 fell nearly 2 per cent ahead of a key week of corporate earnings that will see around a fifth of the index’s companies report.
JP Morgan’s equity strategists had a warning in a note to clients this morning:
As stocks enjoyed a strong relief rally into this reporting season, they are not entering it from oversold levels, and the expectation that investors will be able to look through the profit warnings might prove too optimistic.
In Europe, markets reversed earlier gains to trade lower. The composite Stoxx Europe 600 was down 1 per cent, while in London the FTSE 100 was 1.1 per cent lower.
A collapse in the price of US oil weighed on sentiment. West Texas Intermediate, the US marker, dropped more than 30 per cent on concerns storage facilities might be overwhelmed by a glut of crude.
The contract for May delivery was down 31.4 per cent at $12.53 a barrel by early afternoon in Europe. The May contract expires on Tuesday, and has come under extreme pressure in the last two sessions with traders seemingly nervous about taking deliveries of barrels without easy access to storage.
Nearly 5,000 jobs at risk as Norwegian’s units file for bankruptcy
Norwegian’s Swedish and Danish air crew subsidiaries have filed for bankruptcy, affecting more than 4,700 jobs in Scandinavia, as the low-cost airline struggles in the face of cancelled flights and staff costs during the coronavirus pandemic.
The four boards of the units, a pilot services group based in Sweden and three pilot, cabin crew and resources in Denmark, were “left with no choice” and filed on Monday for bankruptcy, said the airline, which introduced low-cost long-haul flights to the UK.
While almost all of the group’s flights have been cancelled, it still has to pay the costs for its pilots and cabin crew, it said. In total, 1,571 pilots and 3,134 cabin crew will be affected. About 700 pilots and 1,300 cabin crew based in Norway, France and Italy will not be, Norwegian said.
“We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark,” the Norwegian chief executive said.
“We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible,” Jacob Schram said.
Norway’s government furlough scheme means it can pay all salary-related costs during the period but Sweden and Denmark do not offer equivalent coverage.
Norwegian has also notified OSM Aviation that it has cancelled the crew provision agreements with several of its jointly owned OSM Aviation subsidiaries. These companies have crew based in Spain, UK, Finland, Sweden and the US.
Royal Philips says adult ICU beds globally need to double
Michael Pooler in London
The healthcare technology company Royal Philips has said that the number of adult intensive care beds globally will have to at least double in order to deal with the coronavirus crisis.
“That’s based on insights in the various countries that have been coping with the pandemic and have typically expanded adult ICU beds by that factor,” said chief executive Frans van Houten, describing the estimate as “conservative”.
“If the pandemic spreads faster you would need more [as] this assumes a contained level of spread,” he told the Financial Times.
Philips is investing €100m to increase production of medical equipment, including a quadrupling of hospital ventilators used for treating patients with the respiratory difficulties that occur in severe cases of Covid-19.
The impact of the viral outbreak led the Netherlands-based group to report a 2 per cent drop in comparable sales in the first quarter of 2020 to €4.16bn, with net income slumping by three-quarters to €39m compared to the same period a year ago.
But the company’s shares climbed by 4.2 per cent after management revealed it was nevertheless aiming for “modest” revenue growth and an improved adjusted earnings margin this year.
Spanish death toll drops to one-month low
Daniel Dombey in Madrid
The death toll in Spain has fallen for the second day in succession, reaching a new month-long low, according to government figures issued on Monday.
The ministry of health said that in the most recent 24 hour period — until 9pm on Sunday night — 399 people had died after testing positive for coronavirus. This is the lowest figure since March 22.
It compares with 410 deaths in the previous 24 hour period, levels of around 500 to 600 for much of the past ten days, and a peak daily death toll of 950 people at the start of the month.
Overall, the government says there have been 20,852 coronavirus deaths to date and the number of documented cases has risen to 200,210, or 2 per cent more than the previous day’s tally. Health workers represent around 15 per cent of infections, at 31,053.
Pedro Sánchez, prime minister, told the nation over the weekend that Spain would slowly start lifting the five-week lockdown during the month of May. But the country has been one of the worst affected in the world in terms of deaths per capita and economic damage.
The Bank of Spain warned on Monday of the likelihood of “reductions in Spanish GDP in 2020 unprecedented in recent history”. It said that if the lockdown lasted eight weeks, output could fall between 6.6 per cent and 8.7 per cent whereas if it was prolonged for a total of 12 weeks and only slowly relaxed afterwards, GDP could contract by as much as 13.6 per cent.
US crude drops below $13 a barrel
US oil prices have dropped below $13 a barrel, hitting their lowest levels in more than 20 years, as a collapse in demand triggered by the coronavirus pandemic has raised concerns the world is becoming awash with crude that it does not have enough room to store.
West Texas Intermediate, the US marker extended a fall in Asian trading to hit its lowest level since 1999 as warnings mount that storage could fill up within weeks — including at the benchmark’s delivery hub of Cushing, Oklahoma.
The WTI contract for May delivery was recently down 29.1 per cent at $12.96. The May contract expires on Tuesday, and has come under extreme pressure in the last two sessions with traders seemingly nervous about taking deliveries of barrels without easy access to storage.
WTI for June delivery was down 8.8 per cent at $22.81, while Brent crude, the international marker, dropped 3.8 per cent to $27.01.
Olivier Jakob at the consultancy Petromatrix said:
The May contract expires tomorrow so volume on it is going to be very light. The June contract is more reflective of the changes. That being said, oil is very weak . . . The big thing right now is destruction of demand due to the virus.”
Free to read: NHS staff still face shortages of antivirus kit
Sarah Neville and Nikou Asgari in London
As the number of National Health Service staff who have died of Covid-19 mounts, the UK is facing tougher questions as to how and why the service went into the biggest public health emergency in a century apparently without adequate supplies of personal protective equipment for the front line.
A story is emerging of initial underestimates of the volume of PPE that would be needed, and the logistical difficulties of distributing it, plus an over-reliance on a pandemic stockpile tailored to a flu outbreak.
The result has been a crushing mismatch between public assurances from government ministers and NHS leaders that PPE problems have been resolved, and the reality of insufficient specialist kit on hospital wards and in general practitioners’ surgeries across the UK.
Read the full article here.
Virgin Australia on brink of collapse as Branson issues rescue plea
Jamie Smyth in Sydney and Nikou Asgari in Reading
Australia’s second biggest airline Virgin Australia is on the brink of collapse following its failure to secure a bailout from the government and the grounding of most of its planes due to the coronavirus crisis.
The airline’s near collapse comes after Virgin Group founder Sir Richard Branson defended seeking state aid and said Virgin Atlantic “will need government support” to stay afloat.
Virgin Australia’s board of directors held an emergency board meeting on Monday to discuss the airline’s precarious financial situation and a person close to the negotiations told the Financial Times it had lined up Deloitte to act as an administrator.
Paul Scurrah, chief executive of Virgin Australia, is scheduled to talk to the airline’s 16,000 workers on Tuesday morning when the company is expected to make an announcement about its future.
The airline has spent the past week in talks with the government to secure a A$1.4bn loan and parallel talks with private investors about securing a financial lifeline.
Virgin’s existing shareholders, Singapore Airlines, Richard Branson’s Virgin Group, Etihad, HNA and China’s Nanshan Group have all balked at putting more cash into the struggling airline, which is loss-making and has net debt of almost A$5bn. Sir Richard’s Virgin Atlantic is also seeking a £500m coronavirus bailout package of commercial loans and guarantees from the UK government.
The businessman hit back at critics who have questioned why a group run by a billionaire is asking for state aid.
He said his net worth “is not sitting as cash in a bank account” and that a government loan “wouldn’t be free money and the airline would pay it back”.
Sir Richard also defended criticism of his tax status, saying he did not leave Britain for tax reasons but for his “love of the beautiful Virgin Islands”.
Free to read: Graves hold truth of Latin America’s virus toll
Andres Schipani in São Paulo and Jude Webber in Mexico
Three grave diggers, one dressed in a white protective smock, quickly buried Vítor Batista’s wooden coffin. Two weeks ago the 96-year-old was hospitalised with pneumonia, but like others filling graves in Brazil’s biggest cemetery he died before receiving the results of a coronavirus test.
“I am sure he had corona,” said Ulisses Frutuoso, the dead man’s nephew.“I feel we don’t know the real extent of this tragedy.”
Workers at the cemetery of Vila Formosa in São Paulo are similarly convinced that the virus has claimed more casualties than official statistics suggest.
As of Sunday, Mexico had 8,261 confirmed cases and 686 deaths. But Hugo López-Gatell, the health under-secretary who is the country’s coronavirus tsar, has admitted that the true infection level is at least eight times higher.
Read the full article here.
Ghana first Sub-Saharan African country to relax social distancing
Neil Munshi, West Africa correspondent
Ghana has become the first country in sub-Saharan Africa to ease some social distancing measures after the nation ramped up testing during a 21-day lockdown of its biggest cities.
People in the capital Accra and other major cities will be allowed to return to work on Monday, while the use of masks will be encouraged, President Nana Akufo-Addo announced in a televised address on Sunday night. Schools will remain closed and large gatherings including sporting and religious events will still be banned.
In his address Mr Akufo-Addo noted how lockdowns can be particularly punishing for the country’s poor, highlighting the debate over whether approaches that work in the west should be applied to developing and low-income countries.
“The decision to restrict movement has occasioned a number of severe difficulties for all of us across the country, especially for the poor and vulnerable,” Mr Akufo-Addo said. “We’ll tailor our solution to our unique social economic and cultural condition – there’s no one-size-fits-all approach.”
In contrast to many African countries, Ghana has significantly increased its testing capacity, conducting 68,000 so far for a population of around 30m. By comparison, Nigeria, a country of 200m has conducted less than 10,000 tests.
Ghana has recorded just over 1,000 confirmed cases and nine deaths. But the pandemic has brought what was until recently the world’s fastest-growing economy to a screeching halt. The finance ministry said growth could fall to 1.5 per cent this year, down from over 6 per cent in the past three years.
Iran starts to lift lockdown in retail sector
Najmeh Bozorgmehr in Tehran
Iran’s shopping malls and traditional bazaars reopened today after more than one month of closure, as the government of Hassan Rouhani responded to concerns over the economic consequences of coronavirus.
The reopening did not include businesses and offices that are categorised as at high risk of Covid-19 exposure, such as gyms and beauty salons. Meanwhile, schools, universities, seminaries, mosques, shrines and parks will stay shut until further notice.
Authorities warned people that the relaxation of social distancing did not mean the coronavirus threat was over, even though the number of Covid-19-related deaths had declined in recent days.
Iran’s health minister, Saeed Namaki, likened the battle to a wrestling match that had to be fought to the last second. Any under-estimation of the threat from coronavirus could result in disastrous failure, he said.
The death toll reached 5,209 on Monday up from 5,118 one day ago, out of 83,505 individuals who have tested positive for Covid-19.
Americas: your early morning highlights from Asia and Europe
Switzerland’s Novartis is to supply a US Food and Drug Administration randomised phase three trial on coronavirus with hydroxycholoroquine, the drug US President Donald Trump has been pushing as a miracle cure for the virus despite a lack of evidence. Donato Paolo Mancini from London
The number of French employees benefiting from the “temporary unemployment” scheme to save jobs hit by the coronavirus pandemic has risen to 9.6m, almost half of all private sector workers, labour minister Muriel Pénicaud said. Victor Mallet in Paris
Danske Bank became the latest large European lender to abandon plans to pay a dividend for last year but insisted it was sticking by its payout policy for the future. Richard Milne in Oslo
Hong Kong reported the first day of zero infections in almost two months on Monday after the government imposed stricter social distancing measures amid a second wave of the outbreak. Nicolle Liu in Hong Kong
ANA Holdings, Japan’s largest carrier, has warned that it expects a fourth-quarter net loss of $550m following a shutdown of international and domestic travel caused by the coronavirus crisis, reports Kana Inagaki in Tokyo
A morning news round-up from London
Boris Johnson has told senior colleagues that any “modification” of lockdown measures must not risk another damaging peak in the coronavirus as cabinet tension intensifies on when to lift restrictions. George Parker reports
The UK government’s furlough scheme received almost 70,000 applications in the first half hour from businesses desperate for cash to cover the wages of temporarily laid off workers. Businesses and officials had been worried that the portal to handle applications would crash this morning. Daniel Thomas is following – more from him and Tim Bradshaw
Leading figures from the UK’s financial services sector have written an open letter to the boards and management teams of UK-listed companies, calling on them to respect the rights of retail shareholders in future equity fundraisings. Peter Smith, Asset Management Editor
US restaurant chain Shake Shack is giving back the $10m it accessed from a government funding scheme to keep workers on the payroll, writes Naomi Rovnick
India takes first steps to restart economy
Amy Kazmin in New Delhi
India took its first tentative steps towards restarting its stalled economy on Monday, as it relaxed its strict national lockdown to permit the limited resumption of industrial activities.
But industry groups said uncertainty about supply chains and the strict conditions imposed on companies — including a requirement for workers to be housed in their industrial compounds and the inability to recall labourers who may have left — had made it tough for many businesses to resume production.
The government’s decision to allow certain sectors to restart operations is intended to help alleviate a potential economic and humanitarian crisis. Nearly all the country’s economic activity has been suspended since March 22 and is set to continue to at least May 3 — a brutal blow to millions of workers who are now dependent on food handouts to survive.
You can read more from New Delhi here.
Thailand’s SCB to set aside $300m to cover loans
John Reed in Bangkok
Siam Commercial Bank, one of Thailand’s largest financial institutions, is to set aside provisions worth Bt9.7bn ($299m) to cover nonperforming loans and to comply with new accounting standards on impairment of assets during an economic downturn.
The bank, which is 23.4 per cent owned by Thailand’s King Maha Vajiralongkorn, plans to cancel a Bt16bn buyback programme “in order to best help the bank’s customers get through this unprecedented crisis”, it said on Monday.
SCB made the announcement as it reported first-quarter net profit of Bt9.3bn, up 1 per cent on the same quarter a year ago. It generated sharply higher income from wealth management fees and its bancassurance business, which it said outweighed the reduction of banking activity caused by the Covid-19 outbreak.
Thailand was the first country to report cases of the disease outside China on January 13. To date the kingdom has confirmed 2,792 cases and 47 deaths from coronavirus, which has taken a heavy toll on its tourism and export-reliant economy.
French foreign minister lambasts China over EU criticism
Victor Mallet in Paris
French foreign minister Jean-Yves Le Drian has sharply criticised China’s propaganda campaign over the coronavirus pandemic and has accused Beijing of sometimes seeking to deepen divisions within the EU.
Mr Le Drian, who summoned Chinese ambassador Lu Shaye last week to protest against his embassy’s statements, said in a telephone interview with Le Monde that he could not accept “calumnies” against French healthcare workers in old people’s homes.
As part of a global Chinese campaign glorifying Beijing’s response to the Covid-19 pandemic and vilifying the reactions of western democracies, the Chinese embassy published a vitriolic letter purportedly written by an unnamed “Chinese diplomat in Paris”. Among other accusations it said carers in old people’s homes had abandoned their posts and left old people to die of hunger or disease.
Despite French protests, the letter remains on the Chinese embassy website, although a footnote has been added to assert that the author did not mean to refer specifically to France’s old people’s homes.
France is seeking to maintain a civil relationship with China, not least because it has ordered more than 1bn urgently needed face masks and other protective equipment from Chinese factories for its hospitals.
Mr Le Drian recalled that the European Commission had said more than a year ago that China was both a partner and a systemic rival.
He said:
That doesn’t stop us having a working relationship, collaboration. I’m thinking for example of the Paris climate accord. That can only work if China respects the EU as such, which is not always the case. Sometimes, Beijing plays on divisions in the EU.
Asked if Beijing was trying to take the place of Washington in the ranks of world powers, Mr Le Drian replied that people were saying the world after coronavirus would be completely changed from before. “My fear is rather that the world afterwards will look extraordinarily similar to the world before, only worse,” he said.
Antivirus fight takes a dreadful toll on jobs
The Editorial Board
The Black Death is often credited with transforming labour relations in Europe. Peasants, now scarce, could bargain for better terms and conditions; wages started to rise as feudal lords competed for workers. Thankfully, a much lower mortality rate means such a transformation is unlikely to follow coronavirus. Instead, policymakers must prevent a stunning rise in unemployment from scarring a generation with lower living standards.
Recent figures on job losses are truly eye-popping. In the US, joblessness caused by the lockdown has probably wiped out a decade of employment growth. Economists estimate the 22m rise in unemployment claims in the past month represents job losses equivalent to the increase in employment since the global recession of 2009. The US is not alone: Spain has shed at least 900,000 jobs; applications for Britain’s universal credit have jumped by 1.4m.
Indian efforts to curb ‘opportunistic takeovers’ riles China
Benjamin Parkin in New Delhi
Chinese officials branded India’s decision to restrict foreign direct investment from China as “discriminatory”, accusing it of violating World Trade Organization principles.
India’s commerce ministry on Saturday changed its foreign investment policy to require companies from or affiliated with bordering countries to require government approval before investing, a move that overwhelmingly affects China. The ministry said the change was designed to curb “opportunistic takeovers” of Indian companies weakened by the Covid-19 pandemic.
Ji Rong, spokesperson of China’s embassy in India, denounced the decision on Monday. “The impact of the policy on Chinese investors is clear,” she said. “The additional barriers set by [the] Indian side for investors from specific countries violate WTO’s principle of non-discrimination…We hope India would revise relevant discriminatory practices, [and] treat investments from different countries equally.”
Chinese investors have played a growing role in India in recent years, a trend that has been met in some quarters with unease due to historically tense relations between the two nations.
Danske Bank ditches plans to pay dividend for last year
Richard Milne in Oslo
Danske Bank became the latest large European lender to abandon plans to pay a dividend for last year but insisted it was sticking by its payout policy for the future.
Denmark’s biggest bank said on Monday that due to “initiatives aimed at minimising the economic consequences of the coronavirus pandemic” it had dropped the proposal to pay DKr8.5 ($1.24) per share, or 49 per cent of 2019’s net profit.
It added though that its dividend policy of seeking to pay out between 40 and 60 per cent of net profits remained.
“The board of directors monitors the situation closely and remains committed to returning excess capital to shareholders when the economic impact of the pandemic is clear,” it said in a statement.
UK citizens report biggest fall in financial wellbeing on record
Valentina Romei in London
Financial wellbeing plummeted in the UK in April in the largest monthly drop since records began, as households reported falling income and a sharp drop in job security despite unprecedented government support during the coronavirus crisis.
The IHS Markit UK Household Finance Index – which measures households’ overall perceptions of financial wellbeing – plummeted to 34.9 in April, from 42.5 in March, marking the largest monthly drop since the survey began in 2009.
UK households reported a decrease in earnings from employment in April, the first drop of this kind since October 2017 and the largest fall since records began.
“Around one-in three UK households reported a decline in income from employment during April, which was by far the largest number since the survey began in 2009,” said Joe Hayes, an eonomist at IHS Markit.
Despite unprecedented support from the government to support businesses and their employees, the IHS index measuring perceptions of job security plummeted in April to the lowest on record. Those working in education, health and social care were the least downbeat, while households employed in media, culture and entertainment were the most concerned.
However, debt levels held broadly stable when compared to March, possibly because of lower spending during the lockdown.
The index is based on a survey of 1,500 adults across Great Britain and was conducted online between April 2 and 5.
UK job vacancies fall to lowest since financial crisis, says study
Job vacancies in the UK have fallen to their lowest levels in 20 years as coronavirus continues to constrict the job market across all sectors of the economy, according to analysis from the independent research group Institute for Employment Studies.
Job adverts have fallen by 42 per cent since the lockdown began in mid-March, found the study funded by the Joseph Rowntree Foundation, a non-profit organisation specialising in social policy.
The analysis used data from Adzuna, an online posting board, and found the number of listings fell from 820,000 to 475,000 between March 15 and April 12. This represented a fall two and half times larger than the last steepest single monthly fall in November 2008, when the country was in recession.
Job openings in hospitality and catering were hit hardest, down 70 per cent, while those in sales, administration, public relations, consulting, human resources and recruitment, energy and charity work fell by 60 per cent. Vacancies in healthcare fell only slightly, while those in social work and cleaning rose, reflecting rising demand for these services during the current health crisis.
“Vacancies have fallen steeply across whole swathes of the economy and not just in sectors that were ‘shut down’ last month,” the report authors said.
Areas in the north west of England were impacted most, despite the highest concentration of Covid-19 cases being reported in London. Blackpool had the largest monthly fall of 69 per cent, followed by Trafford in Greater Manchester with 51 per cent.
No new coronavirus cases reported in Hong Kong
Nicolle Liu in Hong Kong
Hong Kong reported the first day of zero infections in almost two months on Monday after the government imposed stricter social distancing measures amid the second wave of outbreak mainly driven by imported cases and local transmission.
It was the first time since March 5 that no new confirmed cases of Covid-19 have been recorded. The territory had seen single-digit growth in the past eight days.
However, the Centre for Health Protection still urged members of the public to maintain an appropriate social distance with other people as far as possible in their daily lives to minimise the risk of infection.
Hong Kong officials in recent days have ordered temporary closures of bars, gyms and restrictions on restaurants, also limited public gatherings to at most four people.
The total number of cases in Hong Kong remains at 1,025 with four fatalities.
Rush of applications for UK government’s furlough scheme
Daniel Thomas in London
The UK government’s furlough scheme received almost 70,000 applications in the first half an hour from businesses desperate for cash to cover the wages of temporarily laid off workers.
Businesses and officials had been worried that the portal to handle applications would crash this morning given the millions of workers expected to be furloughed under the scheme.
But, talking to the Today programme, Jim Harra, head of HMRC, said that the website was working, with about 67,000 claims from employers before 8.30am.
He said:
We have scaled our IT system to cope with the maximum number of claims. There are over 2m PAYE schemes and our system is big enough to handle a claim from every one of those.
The scheme is expected to cover more than 9m employees, according to estimates from the Office for Budget Responsibility, and could cost the taxpayer more than £50bn. The government will cover 80 per cent of wages up to £2,500 a month for workers put on temporary leave owing to the impact of coronavirus on their businesses.
Companies are still worried that the money may not come through fast enough, with many due to pay wages at the end of this week. The government has said that it will pay out at the latest by the end of the month, and in most cases sooner, but this could still be days too late.
The government wage subsidies are seen as essential for keeping thousands of businesses afloat through the crisis, and in particular in the hospitality and retail sectors.
Novartis to provide drug to US regulator for trial against coronavirus
Donato Paolo Mancini in London
Switzerland’s Novartis is to supply a US Food and Drug Administration randomised phase three trial on coronavirus with hydroxycholoroquine, the drug US President Donald Trump has been pushing as a miracle cure for the virus despite a lack of evidence.
The company’s generics division, Sandoz, will supply drugs for about 440 patients for use in more than a dozen sites in the US. Novartis will make its intellectual property on the drug most commonly used to treat malaria, which is available as a generic, available through a number of means, it said.
The trial will consist of three groups: one will receive hydroxycholoroquine, the second will receive the drug along with azithromycin, and the third will receive a placebo.
The effort is part of Novartis’s move to donate up to 130m doses of the drug in a bid to help study treatments for the novel coronavirus.
UK companies urged to include retail investors in fundraisings
Peter Smith, Asset Management Editor
Leading figures from the UK’s financial services sector have written an open letter to the boards and management teams of UK-listed companies, calling on them to respect the rights of retail shareholders in future equity fundraisings.
“Covid-19 is leading to a large wave of recapitalisations for UK PLCs. We are concerned that UK retail investors are not receiving their entitlements to participate in these often discounted fundraisings,” the letter states.
More than two dozen senior executives signed the letter including Anne Richards, CEO of Fidelity International, Hargreaves Lansdown founder Peter Hargreaves, and Andy Bell, chief executive of AJ Bell.
An estimated £2.7bn has been raised for UK companies on deeply discounted terms in response to coronavirus since March 2020, with retail investors largely excluded from participating.
The letter added:
We encourage UK PLCs and their boards to protect individual shareholders and employees by respecting their rights to participate alongside the institutional investors, management teams and board members.
It recommends companies offer retail tranches as part of any fundraising and deal advisors factor in smaller investors when structuring equity offerings.
Britain’s financial regulator earlier this month relaxed rules to allow companies to raise emergency funds from shareholders, including measures to speed up equity fundraisings. The change came after investors and intermediaries agreed to lift the limit on share issuance without giving existing investors first refusal, from 5 to 20 per cent of a company’s share capital.
Russia’s daily case count shows signs of falling
Henry Foy in Moscow
Russia recorded 4,268 new coronavirus cases on Monday, breaking an eight-day streak of record daily increases.
The 10 per cent rise is the lowest daily increase in percentage terms for five weeks, and takes the country’s total number of cases to 47,121, according to official government data.
At the same time, the number of new deaths rose by 44 people overnight to take the total death toll to 405.
President Vladimir Putin has warned that the peak of the outbreak will only be seen around the end of April, but Monday’s data may raise hopes that a more than three-week long national lockdown could be curbing the spread of the virus.
Global coronavirus cases increase by 75,000 to reach 2.35m in total
Steve Bernard in London
Global new daily cases of Covid-19 rose by 75,804 on Sunday, bringing the total to 2.35m. Yesterday’s rise was slightly higher than the previous Sunday.
The death toll increased by 4,894 yesterday, which is the lowest daily rise in two weeks according to data from Worldometers. Caution should be taken however, as weekend figures tend to be lower due to delays in cases and deaths being recorded.
Russia replaced the UK as the worst-affected country outside of the US by number of daily confirmed cases, adding 6,060 on Sunday. This brings the total to 42,853, double the mark from just five days earlier.
The UK saw a significant drop in the number of deaths recorded yesterday at 596, bringing the death toll to 16,060. The number of diagnoses of Covid-19 inpatients has remained consistently high at around 5,000 per day for the past 10 days. The total number of confirmed cases now stands at 120,067.
Germany recorded it’s lowest number of newly confirmed cases in more than a month on Sunday, as the country’s strict testing regime appears to be having the desired effect.
The number of global recovered cases rose by 28,616 yesterday, leaving a total of 625,098 having shaken off the virus.
French ‘temporary unemployment’ plan helps 9.6m workers
Victor Mallet in Paris
The number of French employees benefiting from the country’s “temporary unemployment” scheme to save jobs hit by the coronavirus pandemic has risen to 9.6m, almost half of all private sector workers, labour minister Muriel Pénicaud said.
She told RTL radio that the situation was “completely abnormal and unprecedented in France”.
The scheme, which is expected to cost €24bn out of a government economic rescue programme budgeted at €110bn, would remain in place after the lockdown was eased on May 11 to avoid “catastrophes”, she said. However, she expected support to be gradually withdrawn as companies restarted operations.
Under the scheme, similar to ones implemented in other European economies such as Germany, companies that temporarily lay off their employees maintain their job contracts and pay them most of their salaries with government financial support. The idea is to stave off mass business bankruptcies and the kind of unemployment surge seen in the US.
Germany’s new case count lowest in almost a month
By Tobias Buck in Berlin
Germany reported 1,775 new coronavirus cases on Monday, the lowest daily number in almost a month and fresh evidence that the country’s lockdown measures have helped slow the spread of the disease.
According to official data from the Robert Koch Institute, the number of daily fatalities related to Covid-19 also fell sharply, to just 110. That was the lowest number of deaths in 15 days.
Monday’s numbers are likely to reflect at least in part reporting delays over the weekend, but they were also lower than the case and fatality data from Monday last week. The government announced last week that it would ease some of the lockdown measures starting today, with small and medium-sized shops allowed to reopen and some students returning to class.
Germany has registered 141,672 coronavirus cases in total so far, with 4,404 deaths.
Johnson urges caution on easing UK lockdown
George Parker in London
Boris Johnson has told senior colleagues that any “modification” of lockdown measures must not risk another damaging peak in the coronavirus, amid growing cabinet tensions on when to lift restrictions.
The prime minister, recovering from coronavirus, has warned that a second surge in the virus “will do the most damage to health and the most damage to the economy,” government officials said.
Mr Johnson’s cautious approach comes amid growing concern in the Treasury that a long lockdown could cause a “U-shaped” recession, with serious prolonged economic damage.
The Office for Budget Responsibility this month modelled for a scenario with a “V-shaped” recession, with a 35 per cent drop in GDP followed by a sharp rebound.
Mr Johnson relayed his cautious message to senior colleagues during a two hour meeting on Friday. The meeting, first reported by The Times, took place at Chequers; some officials joined via a video link.
Daily record for new coronavirus cases in Singapore
Stefania Palma in Singapore
Singapore has set yet another daily record for coronavirus cases on Monday, reporting 1,426 preliminary infections as it fights an outbreak among its migrant worker community.
The health ministry said the “vast majority” of patients reside in foreign worker dormitories, where the risk of contagion is high as individuals tend to live in tightly packed quarters.
Only 16 cases were either permanent residents or Singaporean citizens.
Monday’s patients would take the country’s total to 8,014, up from 1,375 a mere fortnight ago.
Trump exempts coronavirus-hit businesses from import tariffs
James Politi in Washington
Donald Trump will allow US businesses hit hard by the coronavirus pandemic to defer payments on a limited range of import tariffs, as his administration eased its hardline posture on trade to support the economy.
Steven Mnuchin, the US Treasury secretary, and Chad Wolf, the acting secretary of homeland security, announced the move late on Sunday. “By postponing the deadline to deposit certain duties, taxes, and fees for 90 days, we are providing much needed relief to affected businesses,” said Mr Mnuchin. “This will protect American jobs and help these businesses get through this time.”
Read the full article here.
UK job retention scheme launches
The UK’s job retention programme went live in the last few minutes, at 8am UK time.
As Dan Thomas reports, the programme will determine whether Rishi Sunak’s package of support through the coronavirus crisis is remembered as a triumph or disaster.
Officials are nervous. The scheme is ambitious and generous by international standards. It aims to compensate employers for all of the labour costs of employees who cannot work through the crisis at close to their normal pay. But it is completely untried and barely tested.
Separately, the chancellor is to launch a £500m co-investment fund for high-growth companies hit by the crisis with their venture capital backers, matching private sector money with state-backed loans that can convert into equity stakes.
Shake Shack to return $10m in government support
Naomi Rovnick in London
US restaurant chain Shake Shack is giving back the $10m it accessed from a government funding scheme to keep workers on the payroll.
Shake Shack is one of a group of large, publicly listed companies that managed to access funds from the Paycheck Protection Programme before it ran dry, prompting an outcry among small businesses that failed to secure the funding.
In a letter published on his Linkedin account, Shake Shack chief executive Randy Garutti said:
Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long term stability through an equity transaction in the public markets.
We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA (Small Business Administration) so that those restaurants who need it most can get it now.
Japan’s largest airline warns of $550m net loss in fourth quarter
By Kana Inagaki in Tokyo
ANA Holdings, Japan’s largest carrier, has warned that it expects a fourth-quarter net loss of $550m following a shutdown of international and domestic travel caused by the coronavirus crisis.
The company expects a net profit of ¥27bn ($250m) compared with its earlier forecast of a ¥94bn profit for the fiscal year that ended in March. That would put its quarterly loss at ¥59.4bn for the final three months of the fiscal year.
ANA’s profit warning on Monday came as the carrier sought a credit line of ¥100bn from banks, according to people close to the company.
Japan’s airline industry recently warned that it faces a revenue loss of around ¥2tn if the outbreak continues to impact travel for about a year.
As part of emergency economic measures, the Japanese government has said it would support the industry by allowing payment delays to airport use, and other fees, as well as giving carriers access to crisis management loans by the state-backed Development Bank of Japan.
But industry officials have called for a bailout package of ¥2.5tn to weather the crisis, according to people with knowledge of the talks.
Europe: what you might have missed
• US crude oil prices fell more than 20 per cent overnight, crashing below $15 a barrel for the first time since 1999. The latest slump comes as the coronavirus pandemic has slashed global demand by as much as a third.
• The UK government will invest £1.25bn in struggling start-ups as part of a bailout plan to support venture capital-backed businesses during the coronavirus lockdown.
• New Zealand will maintain its strict lockdown for another week despite making a “quantum leap” forward in achieving its goal to eliminate coronavirus, prime minister Jacinda Ardern said.
• Chinese lenders have cut the country’s benchmark lending rate in the latest bid to prop up the country’s coronavirus-hit economy. The one-year loan prime rate was lowered by 0.2 percentage points to 3.85 per cent.
• Japan’s exports fell by 11.7 per cent in March compared with a year earlier, but imports fell by only 5 per cent, showing exporters’ exposure to the slow-down in global demand.
• Vietnam reported no new Covid-19 cases on Monday for the fourth day running, raising hopes that the worst of the outbreak there may have passed.
Oil prices fall after US benchmark hits 20-year low
West Texas Intermediate, the US benchmark for oil prices, fell almost 19 per cent to $14.81 per barrel, after plummeting as much as 21 per cent to $14.47 per barrel – its lowest level since 1999 – in early Asia trading.
The hit to global oil demand from the coronavirus pandemic has led to crude supplies vastly outstripping consumption levels, as storage for further excess output comes close to running out. Oil traders estimate that as much as a third of demand has been wiped out by lockdowns and other measures to stop the spread of the virus.
The crash in oil prices in the past weeks has come despite agreement to remove almost 10 per cent of global supply by the Opec+ group, with backing from the US and G20, which amounts to the largest coordinated oil supply cut on record.
Monday’s earlier fall was driven by the imminent expiration of the WTI futures contract for May delivery, as traders were becoming seemingly nervous about taking deliveries of barrels next month without easy access to storage.
Brent crude, the international benchmark, dropped 2.81 per cent to $27.33 per barrel.
European stocks set to open higher
European stocks were on course for a positive start to the week, with earnings season set to step up and give investors a clearer picture of corporate health.
Futures trade pointed to gains of around 1 per cent at the open for Europe’s major bourses, following a muted session in Asia.
The regional benchmark Stoxx 600 index rose for the second week in a row for the first time since February last week, as risk sentiment rippled through the market on central bank intervention, and hopes that infection rates were easing and there was a pathway out of economic lockdown.
President Trump suggested over the weekend that the US had enough testing capacity for a gradual reopening of the economy, although state leaders said more needed to be done.
Oil majors will be in focus, after the US oil price plunged to 20-year low overnight.
UK corporate news roundup
Homeware retailer DFS Furniture said it was seeking extra financing to help it ride out the lockdown in the UK until it can begin delivering sofas again. The group is in the “advanced stages” of negotiating an additional debt facility of £60m-£70m with its banks, on top of an existing £250m facility.
It is also preparing for an equity raise of up to 19.9 per cent of existing share capital. It said the two moves, combined with efforts to cut costs, should allow it “to see through an extended lockdown”.
UK pub and brewing group Marston’s said it had secured a waiver against any breach of its funding agreements that might occur as a result of it having to close its premises.
Premier Foods – the group behind Mr Kipling cakes and Bisto gravy – has benefitted from a jump in demand for its products as people stay at home. The company said sales were up 10.5 per cent in March compared with last year and that full-year trading would be at the “top end” of what the market was expecting.
Dubai’s largest lender increases loan provisions to $708m
Simeon Kerr in Dubai
Dubai’s Emirates NBD has increased provisions for impaired loans to Dh2.6bn ($708m) as it prepares for the impact of coronavirus on the emirate’s economy.
Dubai’s largest lender said these extra impairment allowances drove year-on-year net profit down 24 per cent in the first quarter, while profit was up 3 per cent compared with the previous quarter.
“The group took additional impairment allowances to increase coverage in anticipation of a deterioration in credit quality in subsequent quarters,” said Patrick Sullivan, chief financial officer, in a statement.
The UAE central bank on Sunday called on lenders to pass on more of the Dh50bn in liquidity provided to them to assist customers with debt rescheduling through 2020.
Banks have utilised 30 per cent of the support package, which was unveiled last month. In total, the central bank has provided Dh256bn in relief measures.
New Zealand to maintain lockdown for one more week
Jamie Smyth in Sydney
New Zealand will maintain its strict lockdown for another week despite making a “quantum leap” forward in achieving its goal to eliminate coronavirus, prime minister Jacinda Ardern said on Monday.
“The sacrifices made to date have been huge. Cabinet wanted to make sure we lock in our gains, give ourselves some additional certainty,” Ms Ardern told reporters.
“Going hard and early to stamp out the virus, backed by an effort of 5m New Zealanders to break the chain of transmission, means together we have helped stop the uncontrolled explosion of Covid-19 in New Zealand.”
New Zealand has enjoyed success in slowing the spread of the virus by imposing one of the world’s strictest lockdowns over the past four weeks and has set a goal of eliminating, rather than suppressing the virus. On Monday Wellington reported nine new cases bringing the total of confirmed and probable cases to 1,440. Some 12 people have died from coronavirus in the Pacific nation.
Some businesses have lobbied for an easing of the lockdown, arguing that maintaining the current alert level 4 restrictions — the highest level of restrictions — risks severely damaging the economy.
But Ms Ardern said an easing to alert level 3 would not occur until 11.59pm on Monday April 29. Level 3 restrictions would stay in place for a further two weeks before they are reviewed on May 11. Under alert level 3, many business will be able to reopen, although they must still restrict physical interaction with customers. In addition, children who can stay at home from school should stay at home.
Chinese banks cut benchmark lending rate to bolster economy
Hudson Lockett in Hong Kong
Chinese lenders have cut the country’s benchmark lending rate in the latest bid to prop up the country’s coronavirus-hit economy.
Major lenders on Thursday reduced the one-year loan prime rate — a key lending rate used across China’s financial system — by 0.2 percentage points to 3.85 per cent.
The reduction had been expected following the Chinese central bank’s own cut last week to the medium-term lending rate, which serves as the LPR’s floor.
Lowering the LPR – an average of the lending rates 18 commercial banks in China extend to their best customers – will ease lending conditions and marks the latest attempt to stimulate the country’s economy, which notched its first contraction in more than four decades during the first quarter.
Iris Pang, chief Greater China economist at ING, said that there was a “strong argument for the PBoC to save some ammunition for further rate cuts” after the pandemic subsides, in case the US-China trade war reignites.
That could prompt the PBoC to instead focus on reducing banks’ reserve requirements. With the reserve requirement ratio for China’s biggest banks now at a relatively high 12.5 per cent, Ms Pang said, “the central bank can cut the RRR of the big banks to release liquidity”.
Alimentation Couche-Tard drops takeover offer for Caltex Australia
Jamie Smyth in Sydney
Canadian convenience store operator Alimentation Couche-Tard has walked away from its proposed A$8.8bn ($5.6bn) takeover offer for Caltex Australia, one of the nation’s largest transport fuel providers and retailers, due to uncertainty linked to the coronavirus crisis.
Alimentation Couche-Tard said on Monday that while it remained “highly interested” in acquiring Caltex, the current situation in the world was highly uncertain and therefore it was not in a position to revise its existing takeover offer.
The company said it might re-engage with the process when there was sufficient clarity on the global outlook.
“Couche-Tard is focused on managing its own business through this period and prioritising the health, safety and wellbeing of its employees, customers and the communities it serves,” said the company in a statement.
“Given that uncertainty and the impact it is having on our outlook for Caltex’s business, and consistent with Couche-Tard’s disciplined approach to acquisitions, the company is not in a position to make a revised proposal at this time, despite having secured the necessary financing commitments.”
The spread of the coronavirus has brought dealmaking to a screeching halt over recent weeks, as companies’ management have turned their attention to strengthening their balance sheets rather than expansion.
Japan exports fall 11.7% in March
Robin Harding in Tokyo
Japan’s exports fell by 11.7 per cent in March compared with a year earlier, but imports fell by only 5 per cent, showing the slow development of the coronavirus outbreak in the country.
The figures compared with analyst expectations for a drop of around 10 per cent in both imports and exports. Japan’s large exporters are heavily exposed to the slowdown in global demand.
Exports fell to almost every region. There was a 16.5 per cent decline in exports to the US, a 13.2 per cent drop in the value of shipments to western Europe and a 9.4 per cent fall in exports to Asia. By sector, automobile exports fell by 13.1 per cent and machinery exports by 17.9 per cent.
Analysts said the full impact was yet to hit. “Looking ahead, we’ve pencilled in a 30 per cent quarter-on-quarter drop in exports of goods and services in the second quarter which would exceed the largest fall during the global financial crisis,” said Tom Learmouth, who follows Japan at Capital Economics.
Vietnam reports no new Covid-19 cases for fourth day running
John Reed in Bangkok
Vietnam reported no new Covid-19 cases on Monday for the fourth day running, raising hopes that the worst of the outbreak there may have passed.
The south-east Asian country has confirmed 268 cases of the disease to date and no deaths.
Since discovering its first case of the disease in mid-January, Vietnam has undertaken some of the region’s most aggressive measures to contain the virus, cancelling flights to China and then other international destinations, imposing mandatory quarantines on people arriving from abroad, including at centralised state facilities, and closely tracing contacts of infected people.
Among members of the Association of Southeast Asian Nations, Singapore, Indonesia and the Philippines have confirmed the highest number of coronavirus cases, reporting more than 6,000 each.
China reports 12 new cases of coronavirus
China reported 12 new cases of the coronavirus to the end of Sunday, as attention turns to risks of a new outbreak in the country’s north-east.
Three of the cases were in Heilongjiang, where the emergence of a cluster of infections has led to new lockdown measures.
Since reporting zero new domestic infections in mid-March, locally transmitted infections have crept back into China’s official reporting. Eight of the new cases were imported, health authorities said on Monday.
Asian economies — the earliest to be hit by the global pandemic — have over the past month been bracing for the prospect of a second wave of infections, especially as citizens who have been to badly affected countries in the west return to the continent.
US crude oil prices crash below $15 a barrel
David Sheppard in London
US crude oil prices fell more than 20 per cent as trading reopened on Monday, crashing below $15 a barrel for the first time since 1999.
The latest slump, which has seen US oil prices hit a succession of lows, comes as the coronavirus pandemic has slashed global demand as much as a third, and led to warnings about storage filling up within weeks.
The US crude benchmark, West Texas Intermediate, fell more than 20 per cent shortly after trading began in Asia on Monday to hit a low of $14.47 a barrel. The May contract expires on Tuesday, and has come under extreme pressure in the last two sessions with traders seemingly nervous about taking deliveries of barrels without easy access to storage.
The WTI contract for June delivery was firmer, losing only 9 per cent to hit a low of $22.71 a barrel, partially supported by a large influx of retail investors in recent weeks trying to pick the bottom in oil prices. The USO exchange traded fund, the biggest WTI-linked ETF, saw $1.5bn pour in between Monday and Thursday of last week, in a move traders believe has widened the gap between the two contracts.
Brent crude, the international benchmark, lost 0.5 per cent on Monday to trade just below $28 a barrel.
The crash in oil prices in the past weeks has come despite a landmark deal by the Opec+ group to remove almost 10 per cent of global supply, with backing from the US and G20. Oil traders say the move, while amounting to the largest co-ordinated oil supply cut on record, has not been enough to underpin a market where as much as a third of demand has been wiped out by lockdowns and other measures to stop the virus’s spread.
Jefferies analyst Jason Gammel said the oil industry faced “the bleakest oil macro outlook since at least the late 1990s and perhaps ever”, cutting his forecast for WTI prices in the second quarter to $19 a barrel.
South Korea shuts down military hospital on virus fears
Edward White in Wellington
South Korea has temporarily shut down a military hospital after medical workers showed symptoms of the coronavirus, raising fears of a new outbreak.
Four staff at the hospital, located in Daejeon, central South Korea, have been quarantined, but each has tested negative for the virus in initial assessments, the defence ministry said on Monday.
The case comes after health officials in Seoul on Sunday reported new Covid-19 cases had fallen into single digits for this first time in two months, down from a peak above 900 in late February.
Despite the country’s success in containing what was for a time the worst outbreak outside China, the government has extended broad social distancing measures through to early May amid concerns that new clusters could still emerge.
Asia-pacific markets open lower
Asia-pacific equity markets opened weaker on Monday, ahead of a week in which corporate earnings are set to shed further light on the impact of the coronavirus.
In Japan, the Topix fell 0.6 per cent. Australia’s S&P/ASX 200 was down 0.4 per cent, while in South Korea the Kospi 200 edged 0.2 per cent lower.
Last week, Wall Street rallied for the second consecutive week for the first time since February, amid further signs of government support for business and markets.
The S&P 500 is now up by more than 30 per cent since its lows in March.
Here’s a round up of latest developments
Donald Trump on Sunday said he was preparing to use the Defence Production Act to compel a US company to produce millions of the medical swabs used for coronavirus tests that remain in short supply.
All six of Amazon’s warehouses in France are to remain closed, the company said, as it awaits the outcome of its court appeal. Last week, a court ordered Amazon to limit what it handled to food and essential items only, or risk a €1m-a-day penalty, while additional safety measures were worked out with union leaders.
New York is ramping up testing efforts as a prerequisite for reopening the state’s economy. In addition to the standard diagnostic tests, it will embark on widespread antibody tests to try to understand how many people may now have some degree of immunity.
Gavin Williamson, education secretary, has admitted he cannot say when UK schools will reopen, as he announced that a further 596 people had died of coronavirus, taking the country’s hospital death toll to 16,060.
The Trump administration says it is close to reaching a deal with Congress to provide another $300bn in loans for small businesses that have been devastated by the Covid-19 pandemic.
The United Arab Emirates central bank has urged commercial lenders to process more debt relief applications from corporate and retail customers, revealing that 30 per cent of the Dh50bn ($13.6bn) liquidity offered to the country’s lenders has been passed on to customers.
Saudi Arabia’s highest religious authority has urged Muslims around the world to pray at home during Ramadan if their countries have imposed social distancing measures in an effort to contain the spread of coronavirus.
US death toll surpasses 40,000
Matthew Rocco in New York
The number of deaths attributed to coronavirus in the US has surpassed 40,000, as confirmed cases rise above 750,000.
The US has recorded 755,533 Covid-19 infections with 40,461 fatalities, according to data compiled by Johns Hopkins University. The death toll in New York, the worst-hit state in the coronavirus pandemic, rose by 507 to 13,869, officials announced on Sunday.
The latest figures come amid signs the spread of coronavirus in the US has slowed. In New York, governor Andrew Cuomo said the state is “past the high point” of the outbreak, with the number of new hospitalisations in decline.