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Coronavirus: NY Fed economists find hardest-hit states received fewer PPP loans — as it happened

US suffers third-highest daily increase in deaths

Peter Wells in New York

The US suffered its third-highest daily increase in deaths from coronavirus, taking the national total above 65,000 at a time when a growing number of states take steps to reopen their economies.

Over the past 24 hours, a further 2,527 people died, according to data compiled on Tuesday by the Covid Tracking Project. That was the third-highest daily increase since the outbreak began, owing to a jump in new deaths in New Jersey — partly because of a system outage over the weekend that caused a delay in reporting weekend data — and a record daily increase in Pennsylvania.

New Jersey, the second-hardest hit state, saw a further 334 people die over the past day. That was up from 39 on Monday, after the system shutdown. The total death toll stood at 8,244, lagging only New York.

Pennsylvania cemented its place as the fifth-hardest hit state overall, with a record 554 new deaths over the past 24 hours. Since the pandemic began, 3,012 people have died there.

New York’s daily death rate remains on a downward trend, with 230 over the past 24 hours and close to Monday’s increase of 226.

Since the outbreak began, 65,307 people have died nationally, according to CTP.

Asia-Pacific stocks mixed as optimism buoys Wall Street

Asia-Pacific equities were mixed on Wednesday after cautious optimism over countries and US States easing lockdown measures buoyed oil prices and lifted Wall Street.

The Kospi in South Korea was up 1.4 per cent, while Australia’s S&P/ASX 200 nudged down 0.1 per cent. Futures tip the Hang Seng index in Hong Kong to open 0.3 per cent higher.

Japanese markets are closed for a public holiday.

The moves came after the S&P 500 ended 0.9 per cent higher in the US as healthcare stocks rallied on news of developments for a potential coronavirus vaccine and a potential treatment and as oil prices continued their rise.

S&P 500 futures were up 0.3 per cent.

West Texas Intermediate, the US marker, was up 3.5 per cent at $25 a barrel and on track for a sixth consecutive day of gains with investors expecting demand for fuel to return as economies reopen. That improved sentiment saw Brent crude climb above $30 a barrel on Tuesday.

Colombia extends lockdown but will allow some sectors to reopen

Gideon Long in Bogotá

Colombia has extended its coronavirus lockdown until May 25 but from next week will allow some areas of the economy to open up again.

The quarantine was due to end on May 11 but President Iván Duque said the extra fortnight was necessary to combat the virus. The country has been in a relatively strict lockdown since March 25.

The third most populous country in Latin America, Colombia has recorded 8,613 cases of coronavirus and 378 deaths — relatively low figures per capita.

Mr Duque said companies that sell vehicles, furniture and stationery would be among those allowed to operate again from this weekend. The manufacturing and construction sectors have already resumed work.

The government also said that from next week children would be allowed to leave the house three times a week for 30 minutes each time.

Bars and restaurants will remain closed until at least May 25 and domestic and international flights are suspended until the end of the month.

Corporate news round up

Video game makers Electronic Arts and Activision Blizzard said they anticipated strong sales this year as consumers search for entertainment amid stay-at-home orders and social distancing.

Gilead is preparing to make the potential Covid-19 drug remdesivir available in developing countries, after a positive trial result for the antiviral was announced last week.

Match Group, the parent of dating app Tinder, said fewer new users signed up in March, before stabilising last month, but added that people were more willing to have virtual dates as social distancing measures took effect in response to the coronavirus pandemic.

Disney’s quarterly earnings were sliced in half compared with a year ago, as the world’s largest media group grappled with coronavirus lockdowns that have left its most profitable businesses at a virtual standstill.

Beyond Meat expects to continue benefiting from consumers staying at home and cooking during coronavirus lockdowns, extending a trend that helped it beat Wall Street’s earnings expectations in the first quarter.

China reports 2 new coronavirus cases, no new deaths

Health authorities in China reported two new coronavirus cases to the end of Tuesday, both of which were found in people who had returned from overseas.

The number of new symptomatic cases reported in mainland China has remained in the low single digits this month.

The new cases bring the total in mainland China to 82,883, with 4,633 deaths linked to Covid-19.

There were 20 new cases of people who tested positive for coronavirus but showed no symptoms.

Millions of Chinese tourists made trips for the May Day holiday

Robin Yu in Hong Kong

China’s holidaymakers turned out in force for the five-day May Day holiday, which ended Tuesday, according to government figures that showed 115m people made domestic tourism trips, contributing Rmb47.56bn ($6.7bn) to tourism revenue.

That marks a surge from the 43m trips made during the three-day Qingming holiday a month earlier, suggesting residents’ confidence in the government’s epidemic controls has risen.

However the total is much lower than the 195m logged in the same holiday in 2019, which was one day shorter, indicating the tourism industry is far from having made a full recovery.

News you might have missed

Spain’s leftwing government appears likely to maintain control over the country’s lockdown — and the process of phasing it out — after striking a deal with the pro-market Ciudadanos party on Tuesday night.

Rick Bright, the former head of the US government biomedical research agency, has filed a whistleblower complaint alleging that he was removed as retaliation for pushing for robust scientific evidence and a more aggressive response to the Covid-19 crisis.

Goldman Sachs has warned staff that it will “take longer” for employees in London and New York to follow the slow return to the office already underway by colleagues in areas less badly hurt by the coronavirus.

Two East Coast businessmen have been charged with inventing dozens of employees to apply for more than $500,000 in small business rescue loans, in the first case taken against individuals for allegedly attempting to defraud the $610bn US Paycheck Protection Program.

Britain’s demand for electricity has dropped by almost a fifth since lockdown measures to control the spread of coronavirus were introduced six weeks ago, according to a new study.

China lowers coronavirus risk level for town bordering Russia

Christian Shepherd in Beijing

China has lowered the coronavirus risk level at a town bordering Russia, which in early April became the frontline of China’s efforts to avoid a second wave outbreak.

Hundreds of cases of Covid-19 were confirmed in Suifenhe last month, leading the Chinese government to close its land border with Russia, build new quarantine hospitals and fly in medical equipment to the remote region of northeastern Heilongjiang province.

The government on Wednesday said that the town would now begin to reopen its economy and gradually return to normal life, after officially declaring the risk level to be low, Chinese state media reported.

Chinese nationals who wish to return from Russia, which is facing a surge in new cases, have become a focus of China’s efforts to avoid a resurgence of Covid-19, and China’s ambassador to Russia has said the 2,616 mile land border will not reopen until the pandemic is “entirely over”.

More than 5% of Singapore’s foreign workers in dormitories have coronavirus

Mercedes Ruehl in Singapore

More than 5 per cent of the 323,000 foreign workers living in dormitories in Singapore have tested positive for coronavirus.

The city state, which has the highest number of cases in Asia after China and India, announced another 632 cases on Tuesday, with 605 of those cases migrant workers, mostly from countries including India, Bangladesh and China.

Most of the labourers live in tightly packed dormitories, where there can be up to 20 people sleeping on bunk beds in a single room.

Overall, there are now 16,998 cases among the foreign workers, about 5.3 per cent of the total, according to data from the Ministry of Health.

The update brings the total number of coronavirus cases in Singapore to 19,410.

China reintroduces fees on country’s toll roads

Thomas Hale in Hong Kong

China has reintroduced charges on its extensive network of toll roads for the first time since mid-February, in a further sign that the country is shaking off the impact of the coronavirus outbreak.

The Ministry of Transport suspended fees on toll roads in the country on February 17, saying the measures would apply until “the end of the epidemic prevention and control work”, Xinhua reported at the time.

The Chinese government had allowed cars and lorries to travel for free one of the world’s longest paid-for road systems as part of a push to encourage the country to return to work following coronavirus lockdown measures.

In March, S&P noted that the measures had been “effective”, pointing to a rise in traffic in mid-March compared to a year earlier. Roads account for three-quarters of all passenger and freight transportation in China, the rating agency added, far ahead of air or rail.

The return of fees will also be welcomed by toll road operators that control China’s network, many of which are highly indebted.

Asia stocks lose momentum, oil gains

Hudson Lockett in Hong Kong

A rally in global equities lost momentum in Asia on Wednesday after stocks on Wall Street received a boost from rallying oil prices driven higher by hopes that more economies could soon begin to reopen from coronavirus lockdowns.

China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped 0.5 per cent on return from an holiday break, while Australia’s S&P/ASX 200 dropped 0.8 per cent and Hong Kong’s benchmark Hang Seng index rose 0.8 per cent in morning trading in Asia.

Brent crude, the international benchmark, was up 0.1 per cent at $31.01 a barrel, having shot above the $30 mark for the first time in six weeks on Tuesday. West Texas Intermediate was down 0.4 per cent at $24.47 a barrel but likewise still holding on to most of the previous session’s gains.

Crude prices in China also rallied as onshore markets played catch-up with gains made earlier by global energy markets during the recent holiday in China. Shanghai crude futures jumped 6 per cent to almost Rmb250 ($35.40) a barrel, on track for their best daily performance this year.

Amazon announces death of employee from controversial Staten Island facility

Dave Lee in San Francisco

A worker at an Amazon facility in Staten Island, New York, has died from coronavirus, the company has confirmed, bringing to three the total number of its employees killed by Covid-19.

The Staten Island facility — known to staff as JFK8 — had become a focus of worker activism after the virus spread among Amazon’s vast logistics operation.

Workers at the warehouse were informed about the employee’s death on Monday evening. He has not been named.

A spokeswoman for Amazon said the man was last on site on April 5, and tested positive for the virus on April 11. The man’s family informed Amazon of his death on Monday.

“We are deeply saddened by the loss of an associate at our site in Staten Island,” the spokeswoman said. “His family and loved ones are in our thoughts, and we are supporting his fellow colleagues.”

At least three Amazon workers are now known to have died from coronavirus. Last week, it was reported that a worker in Tracy, California, had died from complications related to Covid-19, while another worker in Hawthorne, in the south of the state, died last month.

In March, a small number of workers staged a walkout at the Staten Island site. One of them, Christian Smalls, was later fired.

That action, and conditions at Amazon facilities more broadly, are currently being investigated by New York’s state attorney general, Letitia James.

Amazon has previously said it has undertaken an unprecedented effort to secure protective gear and take other measures to keep its employees safe, at an expected cost of around $4bn in the current quarter alone.

India hikes fuel and liquor taxes to strengthen finances

Amy Kazmin in New Delhi

India has sharply increased excise duties on fuel, and several states have hiked taxes on alcohol, as government agencies seek to mop up additional revenues amid a massive strain on public finances due to the coronavirus lockdown.

Prime Minister Narendra Modi’s government announced late Tuesday that it was imposing a Rs10 ($0.13) per litre additional excise duty on petrol and a Rs13 excise on diesel, which brings the total tax rate on fuel to around 30 per cent.

Excise on fuel is normally an important component of government revenues, but fuel sales collapsed last month.

Analysts have already warned that New Delhi’s target of holding the country’s fiscal deficit to just 3.5 per cent of gross domestic product appears impossible to meet, given the hit to the economy as a result of the coronavirus shutdown.

Meanwhile, four state governments — Andhra Pradesh, Delhi, Rajasthan and West Bengal — hiked excise duties on liquor by amounts ranging from 10 per cent to 75 per cent to mop up additional revenues. Drinkers mobbed liquor stores this week after the end of a six-week nationwide ban on the sale of alcoholic beverages.

States depend on excise taxes on alcoholic beverages for between 15 to 30 per cent of their revenues, and the nationwide prohibition imposed as part of the lockdown has put a huge strain on their exchequers, as they face a sharp rise in costs to strengthen the health care system to cope with the pandemic.

The sharp hike in prices in alcoholic beverages this week has so far done little to dampen demand, with massive queues and crowds gathering at liquor retail outlets over the last two days. Some drinkers have joked that they are happy to pay more to contribute to the nation’s battle against coronavirus.

Beijing labels Hong Kong protesters ‘political viruses’, says it will not ‘sit idly by’

Beijing’s office that oversees Hong Kong branded the city’s anti-government protesters as “political viruses” and warned China would not “sit idly by” if violent protests resumed now that coronavirus appeared to be contained.

China’s Hong Kong and Macau Affairs Office said the black-clad violent protesters and their “if we burn, you burn with us” mentality were a political virus and the enemy of the one country, two systems model under which Hong Kong is governed.

It pointed to protests on May 1 and the discovery of a suspected bomb by police over the holiday weekend as signs protests were returning. The spokesman said if the “black violence” did not stop, Hong Kong would have no peace and the central government would not “sit idly by” when faced with these “destructive forces”.

Protesters took to the streets in Hong Kong in 2019 in opposition to a now-withdrawn extradition bill that would have allowed suspects to be sent to China for trial. But the street protests, which became increasingly violent through last year, largely died out as the coronavirus made public gatherings potentially dangerous in January.

Protests in Hong Kong have resumed on a small scale in recent weeks following a series of arrests of democracy activists and moves by Beijing’s office in the city to assert a supervisory role, in contradiction to the local mini constitution.

Rules banning public gatherings of more than four people will be relaxed and businesses closed to stop the spread of the virus will be allowed to reopen at the end of this week.

Hong Kong has reported no new local infections since mid-April.

Hong Kong’s economy contracted by 8.9 per cent in the first quarter as social distancing measures taken by residents and a fall in tourism hit consumption, piling further woes on businesses battered by months of street protests.

Analysts expect street protests to pick up again and for the economy to continue to struggle.

Coronavirus threatens €10bn hit to football transfer market

Murad Ahmed in London

Up to €10bn will be wiped off the value of European football players due to the coronavirus pandemic, as some of the sport’s biggest clubs warn that plummeting revenues mean less cash will be spent on star signings.

According to analysis by the consultancy KPMG, the growing financial crisis at teams across Europe has resulted in a steep drop in the value of footballers as clubs prepare to cut transfer spending this year.

The cost of acquiring players has steadily increased in recent years across the biggest leagues, such as England’s Premier League, Spain’s La Liga and Germany’s Bundesliga.

With matches suspended due Covid-19, clubs across the continent are facing steep losses of income and seeking to cut costs.

Read more here.

Spanish government set to retain lockdown power

Daniel Dombey in Madrid

Spain’s leftwing government appears likely to maintain control over the country’s lockdown — and the process of phasing it out — after striking a deal with the pro-market Ciudadanos party on Tuesday night.

Parliament is due on Wednesday to vote on the government’s request to extend the so-called state of alert, the extraordinary legal order that underpins the lockdown and which grants the government the power to rule by decree and restrict mobility. The outcome of that vote had been cast into doubt after the People’s party, the biggest opposition force, said it would not support any further extensions of the state of alert.

Although Ciudadanos has only 10 seats in the 350 member chamber of deputies, its support makes it far more likely that the governing coalition – which has 155 seats – will win the vote. It also signals a potential rift with the PP, which governs with Ciudadanos in several regions across Spain.

Under the deal, the government agreed to brief Ciudadanos on a weekly basis on the health emergency and to reach consensus with it on phasing out of the lockdown, which Madrid hopes to accomplish by late June. The two sides agreed to work together on what health measures should be put in place when the state of alert is no longer in force. They will also seek to adapt Spain’s temporary leave programmes — which currently support some 3.5m people who might otherwise have been fired. At present these programmes are due to expire when the state of alert ends, but business groups say they will need to remain in place to avoid a huge surge in unemployment.

India’s service sector activity plunges in April

Benjamin Parkin in New Delhi

India’s service sector activity plummeted in April as the country’s lockdown brought the economy to a near halt.

The IHS Markit’s services purchasing managers’ index for India fell from 49.3 in March to a record low of 5.4 last month, plunging well below Reuters’ forecast of 40. Any level below 50 indicates that a majority of companies said activity in their businesses had declined.

The survey highlighted the dire effect that the lockdown — which was introduced in late March and is due to continue until mid-May — has had on India’s economy and its vital services sector.

The manufacturing index for April fell from 51.8 in March to 27.4, also the sharpest contraction on record. But Capital Economics said pain for services was likely to be more severe.

“Factories [are] more likely to reopen earlier than people-facing sectors such as hospitality and retail,” it said.

Hacker stokes controversy over India’s virus tracker app

Stephanie Findlay in New Delhi

Indian authorities were forced to defend the safety of their coronavirus tracking app after a hacker alleged that the personal data of millions of people was at risk.

New Delhi has made downloading Aarogya Setu, a Covid-19 contact tracing app, mandatory among government and private employees, registering 90m downloads.

But a Twitter user under the name Elliot Alderson said that “a security issue has been found in your app. The privacy of 90 million Indians is at stake. Can you contact me in private?”

In response, Aarogya Setu officials released a statement early Wednesday morning morning confirming that they “were alerted by an ethical hacker of a potential security issue.”


The hacker had raised concerns that the app fetches user location, according to the statement. In reply, the officials said: “This is by design and clearly detailed in the privacy policy.”

They added that the data was fetched at the time of registration, self assessment, when the user voluntarily submitted it, and when a user had “turned Covid-19 positive”.

“No personal information of any user has been proven to be at risk by this ethical hacker,” said authorities.

However, their response was not sufficient for the hacker who tweeted: “We will see. I will come back to you tomorrow.”


Ocado pulls guidance despite sales surge

Jonathan Eley in London

Ocado said that sales in its retail joint venture were up by two-fifths so far in the second quarter, but still withdrew its full-year financial forecasts citing uncertainty about consumer behaviour in the later stages of the Covid-19 pandemic.

The online retailer had previously been expecting revenue growth of 10-15 per cent for the year to December 31.

In a trading update ahead of its annual meeting, the group said:

Although we expect the long term shift towards online grocery to accelerate post-crisis, there remain many uncertainties about the length of the crisis, customer reaction immediately post and its long term impact on customers’ disposable incomes.

We have suspended our guidance for retail revenue for 2020 until we can accurately forecast likely outcomes.

It added that grocery market conditions, which threatened to overwhelm its relatively fixed capacity earlier in the year, appeared to be reverting to normal.

ITV advertising revenues fall 42% in April

ITV reported a 42 per cent slide in ad revenues in April – significantly worse than previously anticipated – as the coronavirus pandemic forces companies to cut back on marketing.

The British free-to-air television network had warned in March that ad revenues were likely to drop 10 per cent in April as the travel industry postponed campaigns.

The figure underlines both the speed and scale the of the blow from the virus to companies’ marketing spend. Ad revenue had been up 8 per cent in February and flat in March.

ITV has suspended the majority of its productions across the world since mid-March due to the lockdowns and social distancing measures imposed by authorities in many countries.

It said on Wednesday it was cancelling its final dividend for 2019 and was unable to provide guidance for the second quarter of 2020 or the remainder of the year as the outlook remained “uncertain and is changing rapidly”.

The group has furloughed 800 members of staff – 15 per cent of its workforce – and said it would double its overhead savings this year to £60m.

Carolyn McCall, ITV chief executive, said:

ITV has taken swift and decisive action to manage and mitigate the impact of Covid-19, by focusing on our people and their safety, and by continuing to reduce costs and tightly manage our cashflow and liquidity.

European stocks set for muted open

A rally in global stocks faded on Wednesday, with European and Asian markets struggling to build on overnight gains on Wall Street.

Futures trade pointed to a gain of 0.1 per cent for London’s FTSE 100, while major bourses in continental Europe were seen opening lower.

Traders and investors have been cheered by the cautious reopening of economies in recent days, while equities have also been boosted by a recovery in oil prices.

Chinese markets reopened on Wednesday after a five day holiday during which tensions between the US and China over the origins of the pandemic have escalated. The stand-off has stoked fears that the trade war between the world’s two largest economies could be reignited, but the CSI 300 index of Shanghai- and Shenzhen-listed stocks was recently 0.6 per cent higher.

Virgin Money profits halve as it braces for surge in bad loans

Nicholas Megaw in London

A 201 per cent jump in charges for bad loans caused profits to more than halve at Virgin Money in the first half of its financial year, highlighting the challenges facing banks as a host of Britain’s mid-sized lenders sought to reassure investors about their resilience.

Virgin’s impairment charges in the six months to March tripled to £232m, from £77m in the same period last year, to cover an expected increase in future bad debts particularly among its business customers.

The charges pushed its underlying pre-tax profit down from £280m to £120m. However, its statutory net profit of £22m was higher than last year, when it was affected by higher conduct charges and costs related to CYBG’s acquisition of Virgin Money.

David Duffy, Virgin chief executive, said:

We enter this period from a position of strength with a defensive loan book and resilient capital position, meaning we are well-placed to help our customers and colleagues through the crisis.

Other banks reporting trading updates on Wednesday included the Co-Operative Bank, OneSavings Bank and Metro Bank. All four stressed their resilience in the face of the pandemic, but OneSavings also pointed out that its bad loan provisions would double if it applied updated economic forecasts.

UK halts house price data as market dries up

Valentina Romei in London

The UK statistics office has been forced to halt its house price data, robbing the nation of one of its favourite talking points, as coronavirus has largely frozen the market.

The decision came as the number of housing transactions is so low that there is not enough to produce a “meaningful measure of UK house prices”, the ONS said. Estate agents are shut or working remotely, and house views not permitted under the country’s social distancing measures.

The announcement follows warnings from Rightmove that in April said there were “not enough properties coming to market to provide meaningful new seller asking prices this month”. Nationwide had produced a house price index for April as their data is constructed using mortgage approval data, and there is a lag between mortgage applications being submitted and approved. However, they have warned they might stop in the months ahead.

The pandemic has also complicated the compilation of other standard economic measures such as consumer prices or GDP, as they are partially survey-based and are subject to a lower response rate during the lockdown period.

UK corporate news round-up

ITV said that revenues fell 7 per cent in the first quarter, despite an uptick in viewership, as the broadcaster warned that advertising revenue dropped 42 per cent in April. A further £30m of cost savings had been identified, while 800 employees have been furloughed, it added.

Coach operator National Express said that it plans to place 19.99 per cent of its share capital to avoid reaching the top end of its debt covenant range by the end of next year. The group has a market capitalisation of £1.22bn.

Ocado, an online grocery delivery company, said that its retail division sales increased by 40.4 per cent in the second quarter to date compared to last year, outpacing the 10.3 per cent growth recorded in the first quarter. However, the group pulled their guidance due to uncertainty about the length of the health crisis and customer reactions in the aftermath.

Greeting cards retailer Card Factory said that it has furloughed 90 per cent of its employees, withdrawn its dividend and deferred tax payments.

Retail bank Virgin Money reported that underlying profit slumped almost 60 per cent to £120m after it recorded a £232m of loan loss charges due to the impact of Covid-19.

JD Sports said that it “fundamentally disagrees” with the Competition and Markets Authority’s decision to block its takeover of Footasylum, since its conclusion fails to take proper account of the rapidly evolving competitive landscape and the “likely permanent” impact of coronavirus on sports fashion retailers.

Insurer Direct Line reported that motor insurance claims fell 70 per cent in April, as UK citizens drove less and stayed indoors during the lockdown.

Smith & Nephew, a medical device maker, reported that revenues were down 47 per cent in April since elective surgeries had been suspended in most markets as medical systems geared themselves towards dealing with patients infected with coronavirus.

Cycle and car parts retailer Halfords said sales were 23 per cent below last year in the four weeks to May 1, a better performance than it initially anticipated as British commuters swap public transport for bicycles.

German industry hit by record drop in monthly orders

Martin Arnold in Frankfurt

German factory orders suffered a record monthly decline of 15.6 per cent in March, as the pandemic froze the activities of many businesses and consumers around the world, according to new data published on Wednesday.

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

The Federal Statistics Agency said the monthly drop in new German industrial orders was the biggest since it started its survey in 1991, adding that price-adjusted turnover in the country’s vast manufacturing sector was down 11.5 per cent in the period.

“The 15.6 per cent decline reported today even underestimates the recent momentum, as the first two weeks of March are likely to have been relatively good,” said Ralph Solveen, economist at Commerzbank. “Therefore, a further substantial decline is expected in April before a counter movement is likely to begin in May.”

The decline in March was heaviest for orders of German capital goods, such as machinery, equipment and vehicles, which dropped 22.6 per cent, while orders for intermediate goods, such as car parts or chemical additives, were down 7.5 per cent. Consumer goods orders fell 1.3 per cent.

Carsten Brzeski, economist at ING, pointed out that German industrial orders would have further to fall if they were to match the cumulative 40 per cent decline in a six-month period after the 2008 financial crisis.

Qatar Airways tells staff to expect a ‘substantial’ number of job cuts

Simeon Kerr in Dubai

Qatar Airways’ chief executive has told staff to expect a “substantial” number of redundancies as the national carrier struggles with the impact of coronavirus.

In a note, Akbar Al Baker said the Gulf airline could not sustain current staffing levels and that the layoffs would include cabin crew.

“The global outlook for our industry looks grim and many airlines are closing or significantly reducing operations,” he wrote. “Unfortunately, Qatar Airways is not immune to this challenge.”

In a statement, the company confirmed it would make “a number of roles” redundant, declining to comment further. The statement thanked staff for their “professionalism and dedication” and it said:

The unparalleled impact on our industry has caused significant challenges for all airlines and we must act decisively to protect the future of our business…When circumstances improve, it is our intention to enable employees to rejoin when possible.

Mr Baker said in the note that management would be communicating planned reductions in the coming weeks, assuring affected staff that they would be paid their contractual dues.

Those unable to return to their home countries will have their accommodation costs covered and be paid a living allowance until repatriation.

As of March, the airline employed more than 46,000 staff, mostly expatriates, serving a network of 170 destinations.

Germany sees uptick in Covid-19 infections and deaths

Guy Chazan

Germany reported 947 new coronavirus cases on Monday, an increase on the day before, and also saw an uptick in recorded deaths from the disease.

According to official data from the Robert Koch Institute in Berlin, the number of people who died from Covid-19 over the past 24 hours rose by 165 to 6,996. The total number of detected infections increased to 164,807, though around 137,400 of them have already made a full recovery.

Russia to run a 4% budget deficit due to low oil prices and lockdown

Henry Foy in Moscow

The pandemic will force Russia to run a deficit worth 4 per cent of GDP this year, its finance minister has warned, as tumbling oil prices cut tax revenues and an extended lockdown hurts domestic growth.

Russia has run budget surpluses for the past two years and had targeted a surplus of 0.8 per cent of GDP this year before the coronavirus pandemic began. Moscow will tap its national wealth fund and raise about $60bn in fresh debt to support the budget, finance minister Anton Sulianov said in an interview with newspaper Vedomosti on Wednesday.

The warning came as government data showed a fourth consecutive day of more than 10,000 new coronavirus cases in Russia, taking its total to 165,929 infections. The country has the second fastest growing total infections after the US.

That growth has forced the Kremlin into extending a national lockdown into a seventh week, increasing the pressure on the country’s economy. Mr Siluanov said:

There are several scenarios, all of them are not very optimistic…For the base scenario, we took the scenario of GDP reduction by 5 per cent this year, which corresponds to the Central Bank estimates. Budget revenues will be about Rbs 4tn ($55bn) less than planned, including Rbs 1.5tn less in oil and gas revenues and about Rbs 2tn non-oil and gas revenues. The budget deficit will be about 4% of GDP.

What you may have missed

Beijing’s office that oversees Hong Kong branded the city’s anti-government protesters as “political viruses” and warned China would not “sit idly by” if violent protests resumed now that coronavirus appeared to be contained.

A bombshell ruling by Germany’s constitutional court questioning the legality of European monetary policy impinges on central bank independence and imperils the EU legal system, former policymakers and legal experts have warned.

UK treasury officials are locked in intense discussions as they try to work out how to phase the job furlough scheme out without triggering a wave of redundancies.

A jump in Airbnb bookings in a number of European countries is signalling that housebound citizens are starting to make holiday plans as governments begin to ease lockdowns.

Spain’s leftwing government appears likely to maintain control over the country’s lockdown — and the process of phasing it out — after striking a deal with the pro-market Ciudadanos party on Tuesday night.

India will begin repatriating hundreds of thousands of its citizens, nearly seven weeks after it banned all incoming passenger flights that left millions of migrant workers, students and holidaymakers stranded overseas.

The owners of hotel buildings across the US failed to make payments on about a quarter of their mortgages that are bundled into debt deals last month, as measures to slow the spread of the virus caused a total collapse in revenues.

The UK statistics office has been forced to halt its house price data, robbing the nation of one of its favourite talking points as coronavirus has largely frozen the market.

Services industries in Italy and Spain hit by historic downturn

Valentina Romei

Service sector executives in Italy and Spain have reported an unprecedented downturn in activity as businesses were forced to close and demand crashed.

Purchasing managers’ indices covering the eurozone’s third and fourth largest economies, respectively, tumbled last month to the lowest level on record, signalling a rate of contraction that far exceeds that recorded during recent recessions, including the global financial crisis.

Spain’s services PMI plummeted to 7.1 in April from 23 the previous month, with the same index for Italy sinking to 10.8 from 17.4, IHS Markit reported.

“The depth of the downturn [is] undoubtedly greater than anything we have ever seen before,” said Paul Smith, economics director at IHS Markit, referring to the Spanish data.

Business managers reported dramatic falls in orders in April across sectors, causing companies to rapidly reduce staffing. The figures echo gloomy manufacturing PMI reports and bolster economists’ forecasts for large drops in gross domestic product in the second quarter of this year, which began in April.

Last week, Italy reported a 4.7 per cent GDP contraction in the first quarter, the steepest since records began in 1996. Spain posted a 5.2 per cent contraction over the same period, also an unprecedented rate of decline.

VW upbeat on coming close to original China sales target in 2020

Christian Shepherd in Beijing

Volkswagen is hopeful it can hit near pre-pandemic sales targets for 2020 in China, due to a strong recovery in the world’s largest car market.

Stephan Wöllenstein, chief executive of Volkswagen Group China, said in a LinkedIn post on Wednesday that by early summer China’s auto market could be back to normal, after the group’s sales grew year-on-year in April.

“Should the current trend continue, we… can be cautiously optimistic and forecast a yearly result that is not so far away from our original plan,” he wrote.

Covid-19 sunk February sales in China to 80 per cent below last year’s levels, setting the market on course for a third consecutive year of contraction. However, the overall market bounced back to about 10 per cent below 2019 levels in April, Mr Wöllenstein said.

The pandemic will accelerate a shake-out in the Chinese market’s over 100 automotive brands, creating opportunities for global automakers like Volkswagen to take market share, he added.

Brussels warns pandemic poses threat to eurozone stability

Sam Fleming in Brussels

The coronavirus crisis risks exacerbating economic and social divisions within the EU and threatening the stability of the euro area, the European Commission has warned, as it predicted a deep collapse in economic output this year.

The commission’s spring forecast predicted that under “benign assumptions” EU output will fall 7.4 per cent this year, deeper than during the financial crisis, with a rebound of only 6.1 per cent in 2021. Compared with its autumn forecast, the EU is heading for a €850bn shortfall of investment in 2020 and 2021, the outlook showed.

The commission renewed its call for a pan-European “recovery plan” to complement national action aimed at compensating for diverging fiscal firepower between member states. “The risk otherwise is that the crisis will lead to severe distortions within the Single Market and to entrenched economic, financial and social divergences between euro area Member States that could ultimately threaten the stability of the Economic and Monetary Union,” it said.

The forecasts showed that Greece, Italy and Spain are on course for the steepest falls in gross domestic product this year, all tumbling by more than 9 per cent. By contrast, GDP in Poland will fall by 4.3 per cent, before rebounding by 4.1 per cent.

Overall, next year’s rebound could leave the European economy about 3 per cent below the level implied by the EU’s autumn forecast. But the outcomes could be even worse: for example, another surge in infections could reduce GDP by an additional 3 percentage points.

“The danger of a deeper and more protracted recession is very real,” the commission said. “The point forecasts presented in this document should therefore be understood as just one among several possible scenarios.”

Avoiding worsening economic divergences among member states will hinge in part on a coordinated response, said Paolo Gentiloni, economy commissioner. The commission is currently seeking to overhaul plans for its upcoming seven-year budget to front-load spending aimed at restoring growth, while raising debt in markets to fund an EU recovery instrument.

Five claims from the US health official behind whistleblower suit

Rick Bright, the former director of the body charged with funding potential drugs and vaccines to tackle coronavirus, filed a whistleblower complaint on Tuesday, accusing the US government of ignoring his warnings in its response to the pandemic and engaging in “cronyism” with its investments.

Read here for the five main claims from Dr Bright’s suit, reported by the FT’s Hannah Kuchler.

EmoticonICE’s Abu Dhabi venture pushed back

Philip Stafford in London

Intercontinental Exchange will delay the launch of its new crude oil futures exchange in Abu Dhabi owing to the fallout from the coronavirus pandemic.

In a statement to the Financial Times it confirmed the venture, in conjunction with the Abu Dhabi National Oil Company, would not begin trading in the first half of this year as originally anticipated.

We continue to make progress including obtaining relevant regulatory approvals and working with our members and trading participants to prepare for launch. We will communicate further on launch timing as we continue through the process.

Crude oil prices based on the biggest global benchmarks, WTI and Brent, have been highly volatile in recent weeks as the pandemic is expected to cut global demand and traders fear there will be few places left to store excess crude.

The project is being supported by nine of the world’s largest energy traders, and marks a significant change for the way Abu Dhabi prices the crude it sells. It will use futures contracts traded on an exchange, ending a decades-long policy of retroactive monthly official selling prices for its mainly Asian customer base.

Eurozone retail sales fall at record pace

Valentina Romei in London

Eurozone retail sales crashed in March, contracting at the fastest pace on record as non-essential shops were closed across the bloc in an attempt to limit the spread of coronavirus.

The volume of retail sales dropped by an unprecedented 11.2 per cent in March compared to the previous month, according to data published on Wednesday by Eurostat.

This is by far the largest contraction since records began in 1995 and comes despite a strong performance in food and drink sales, where spending rose by 5 per cent — also a record pace.

During the financial crisis, retail sales dropped at a maximum rate of 1.7 per cent.

Excluding food, sales volumes in the eurozone contracted by 23 per cent in March, driven by a nearly 40 per cent drop in spending for clothing and footwear, as consumers were forced to remain indoors.

Among the region’s largest economies, France reported the steepest fall with a 17 per cent contraction, followed by Spain with a 14 per cent drop-off. Figures are not reported for Italy. German sales were less severely impacted, dropping by 5.6 per cent.

Bert Colijn, senior economist at ING, said the contrasts between countries point to “key differences” in the extent of lockdowns in different parts of Europe. He noted that Germany and Austria have already re-opened many stores, which will likely lead to further divergence between European economies when April figures are released.

Czech study finds limited virus exposure, raising fears of future waves

James Shotter in Warsaw

A major coronavirus study in the Czech Republic has found a limited level of exposure to the novel virus in the general population, with officials concluding that, even in the worst-hit areas, 4-5 per cent of people have developed antibodies.

The study, which was carried out in April and early May, is one of the first large-scale efforts to gauge how widely Covid-19 has spread through the population as a whole.

Overall, 26,549 people in the central European country were tested for antibodies, which are developed by people who have been infected by the virus, but only 107 tested positive, Czech officials said on Wednesday.

The World Health Organization has previously suggested that a similarly low proportion – perhaps just 2 or 3 per cent – of the global population has developed antibodies to Covid-19.

The officials in charge of the study said that, given the low level of immunity, the Czech Republic would need to prepare for further waves of infections.

The Czech Republic, which was one of the first countries in the EU to introduce strict lockdown measures to stem the spread of the virus, has recorded 7,896 cases of coronavirus, and 257 people have died, data from Johns Hopkins University show.

Putin’s approval ratings fall to record low

Henry Foy in Moscow

Public support for Russia’s Vladimir Putin has fallen to its lowest level in his presidency, as his administration struggles to deal with the coronavirus pandemic.

Mr Putin’s approval rating fell to 59 per cent in April, a monthly survey by the Levada Center, Russia’s sole pollster independent of the state, has revealed. This is the lowest level since he first became president in January 2000.

Russia has the world’s fastest growing number of coronavirus infections after the US and on Wednesday recorded its fourth consecutive day of more than 10,000 new cases.

President Putin’s response has been piecemeal and inconsistent, and his government has promised only a small amount of stimulus relative to other large countries despite implementing a seven-week lockdown that has paralysed the economy.

His rating in March was 63 per cent, down from a high of 89 per cent recorded in 2015 shortly after the invasion of Crimea.

UK prisoners sew medical scrubs with fashion institute

Andy Bounds in Manchester

Once famed for sewing mail bags, British prisoners are now producing vital medical garments for the National Health Service after a collaboration with Manchester Metropolitan University.

The university’s Fashion Institute enlisted the help of Public Sector Prison Industries directly after local hospitals said they were short of medical clothing because of the surge in coronavirus cases.

Now several prison workshops are making thousands of medical scrubs to a template designed by the MFI for staff across Northwest England.

Pete Turkington, medical director of Salford Royal, one of the hospitals involved, said:

The supply and availability of equipment and clothing to support our frontline staff is so important as we continue to use and work with national and local suppliers. We are in unprecedented times.

The way we respond to this pandemic will rely largely on how all sectors and all areas of healthcare and business work together to develop innovative ways of working.

Higher gold prices driven by Covid-19 lift profits at Barrick Gold

Henry Sanderson in London

Barrick Gold reported a 55 per cent increase in adjusted profit for the first quarter on the back of higher gold prices, which helped to offset a drop in gold production.

The world’s second-largest gold miner reported adjusted net earnings of $285m, or 16 cents a share, which was in line with analysts’ estimates. Revenues rose 30 per cent from the same period last year to $2.7bn.

Barrick has benefited from a 12 per cent rise in the gold price this year as investors seek haven assets amid the market turmoil caused by coronavirus.

The higher prices helped offset a 13 per cent fall in gold production from the fourth quarter to 1.25m ounces of gold. The Toronto-listed miner is locked in a dispute with the government of Papua New Guinea after the prime minister decided not to renew the special lease for its Porgera gold mine.

Barrick trimmed its full-year production guidance because of the dispute in PNG to between 4.6m to 5m ounces of gold, from an earlier forecast of between 4.8m to 5.2m ounces.

Shares in Barrick have risen 64 per cent this year, outperforming the gold price. They traded at C$39.66 on Wednesday.

Heathrow trials passenger temperature checks

Jim Pickard in London

The chief executive of Heathrow airport has told MPs that it has begun a pilot of temperature checks for passengers as a way to increase flights after the end of the lockdown.

John Holland-Kaye told MPs on the transport select committee that the checks were being carried out at the departure gate on some existing passengers.

Airlines have warned of thousands of job losses after a huge slump in passenger numbers because of the coronavirus crisis. So far the UK has not introduced safety checks at airports, in contrast with many other countries. But Heathrow has called for a new set of international standards to enable a return of travellers in safe conditions.

“If we are told that the only solution until we can get a vaccine in 12 to 18 months’ time is to socially distance in an airport, then tens of thousands of jobs will be cut,” said Mr Holland-Kaye. “We cannot afford to wait that long to get flying again.”

Tim Alderslade, the chief executive of Airlines UK, also told MPs the government would need to do more to support the sector in a time of crisis.

He said airlines would likely need an extension of the government furlough scheme until at least September or October, and relief on rules that require airlines to use 80 per cent of their slots or risk losing them to be extended until the end of the year.

“The key question for us is does [the government] see aviation in the way that it should do,” he said. “I remain to be convinced.”

Johnson to set out UK’s lockdown exit strategy on Sunday

Sebastian Payne in London

Boris Johnson has announced he will set out the plan for easing the UK’s lockdown this Sunday, with some changes to the strict measures coming on Monday.

In his first bout with Keir Starmer, the leader of the opposition Labour party, the prime minister confirmed reports that he will deliver a TV address to the nation setting out how the shutdown will be eased.

The prime minister said that the government was waiting as long as possible before making the announcement to ensure it had as much data as possible. The initial changes proposed by the government are expected to cover outdoor activity, with more easing later in May.

Mr Johnson was quizzed by Sir Keir on the UK’s rising death toll and the spread of the virus in care homes. Mr Johnson said he “bitterly regrets” the epidemic in care homes.

He rejected Sir Keir’s comparisons of the UK’s death toll with other countries, suggesting “the data isn’t there” to make accurate comparisons. Mr Johnson also gave his strongest hint to date that there will be an inquiry to examine the government’s handling of the crisis.

At every stage, we took the decisions it did, we were governed by the overriding principle aims: to save lives and protect the NHS. There will be a time to look at what decisions we took and whether we could have taken different decisions.

Mr Johnson also said that the government’s new daily target for coronavirus tests is 200,000 by the end of May.

Nearly 60% of Scotland’s most recent Covid-19 deaths linked to care homes

Mure Dickie

The proportion of coronavirus-linked deaths in Scotland occurring in care homes has risen further to nearly 60 per cent, but fewer people are dying from Covid-19 in such institutions amid signs of declining mortality from the pandemic.

Weekly statistics published on Wednesday by the National Records of Scotland, which offer the most up to date view of coronavirus deaths, showed that coronavirus was mentioned in the death certificates of 523 people in the week to May 3, down 135 from the previous week.

The data showed 310 of the coronavirus-linked deaths occurred in care homes, down from 339 the previous week but accounting for 59 per cent of the total. The NRS said that in the week to May 3 there were a total of 1,673 deaths in Scotland, 55 per cent higher than the average for the week over the past five years. It said 83 per cent of these 594 “excess deaths” involved Covid-19.

A Scottish government paper released on Tuesday said the national Covid-19 reproduction number was now between 0.7 and 1, implying falling numbers of cases. But Nicola Sturgeon, Scotland’s first minister, said the R number remained above 1 in care homes, which have been struggling to contain infections.

Baltic states to set up common travel area

Richard Milne, Nordic and Baltic correspondent

The three Baltic states are creating a common travel zone from next week that will allow Estonians, Latvians and Lithuanians to move freely into each other’s countries.

The prime ministers of Estonia, Latvia and Lithuania said they would open their borders to citizens of the three countries from May 15. People from outside the three Baltic countries would still have to go into quarantine for 14 days on arrival.

Lithuania’s prime minister, Saulius Skvernelis, wrote on Facebook:

We agreed that all three Baltic countries have properly contained the spread of coronavirus. We also trust each other’s health systems.

The common travel zone is the first within the EU since the coronavirus pandemic began and comes after many countries within the supposedly free-movement Schengen zone shut their borders to non-citizens. It also comes after Australia and New Zealand agreed a “travel bubble” between the two countries after all but eliminating the spread of coronavirus.

Estonia has had 55 deaths from coronavirus, Latvia 17, and Lithuania 49.

CVS boosted as consumers stock up on prescriptions and essentials

CVS Health results topped expectations as consumers stocked up on prescription medications, general health items and other household goods amid the pandemic.

Revenues at the drugstore chain climbed 8.3 per cent from a year ago to $66.8bn, eclipsing Wall Street expectations of $64.1bn, according to a Refinitiv survey. Within that revenues at its pharmacy services segment climbed 4.2 per cent to $34.98bn, while revenues in its retail/long-term care segment climbed nearly 8 per cent to $22.75bn.

Sales were boosted by higher prices for branded drugs and a rise in claims, including “greater use of 90-day supply of prescriptions and early refills of maintenance medications as consumers prepared for the Covid-19 pandemic”. Consumers stocking up on general health and merchandise because of the pandemic also helped boost sales, the company said.

CVS also noted its insurance benefit costs slipped as people deferred elective procedures.

Net income jumped to $2bn or $1.53 a share, up from $1.4bn or $1.09 a share in the same quarter a year ago. Adjusted earnings of $1.91 a share topped analyst estimates of $1.63.

CVS maintained its full-year outlook for adjusted earnings of between $7.04 and $7.17 a share, on sales of between $10.5bn and $11bn. Shares rose 4 per cent pre-market to $63.50.


General Motors to start reopening US plants in less than two weeks

Claire Bushey

General Motors will join Fiat Chrysler in reopening plants in the US and Canada on May 18, the American carmaker said on Wednesday as it revealed a near-90 per cent tumble in its quarterly earnings.

The announcement means Ford is likely to begin that date as well, given that the carmakers all work with the United Auto Workers union. UAW president Rory Gamble said on Tuesday: “The companies contractually make that decision, and we all knew this day would come.”

GM announced the restart date as it reported first-quarter earnings, which were hit by the pandemic. While the company’s net income fell 87 per cent to $300m, the results nevertheless bested Ford, which posted a $2bn loss.

GM’s sales fell 6 per cent to $32.7bn.

The company beat Wall Street’s profit expectations: analysts polled by FactSet expected an adjusted profit, which excludes certain items, of 40 cents per share, but the carmaker eked out earnings of 62 cents.

US private sector employment falls by record 20m in April

The US private sector shed a record 20m jobs in April as coronavirus lockdowns and the resulting closure of non-essential businesses led to historic unemployment.

Non-farm private employers cut 20.2m jobs last month, according to payroll processor ADP. That compared with economists’ expectations for 20m and easily surpassed the previous record of about 835,000 in February 2009 during the financial crisis.

Large companies with 500 or more employees were hardest hit with employment down by 8.96m, while small companies, those with under 50 employees, resulted in about 6m dismissals.

The report also showed the bulk of job losses stemmed from the services sector, which cut 16.7m jobs.

Bangalore blocks train services put on for migrant workers

Amy Kazmin in New Delhi

Bangalore, India’s IT hub, will not permit special trains to send migrant workers back to their home states after construction companies complained that they would face an acute shortage if labourers were allowed to leave.

Indian Railways, which has suspended passenger trains since March 22, this week began operating special services for migrant workers, millions of whom have been stuck in big cities and industrial areas without work or wages while the country has been in lockdown.

With New Delhi’s permission and by mutual agreement between states, thousands of migrants have returned home on direct train services. But the state of Karnataka, where Bangalore is capital, has barred the trains from operating, fearing that an exodus of migrant workers would impede the restart of economic activities as the lockdown eases.

Tejasvi Surya, a member of parliament from Bangalore from Prime Minister Narendra Modi’s Bharatiya Janata Party, called the stoppage of the special interstate trains a “bold and necessary move”.

“It will help migrant labourers who came here with hopes for a better life to restart their dreams. Also, it will kickstart economic activities full throttle. Karnataka will emerge out of this stronger,” he tweeted.

Other states, such as in the Punjab, are becoming anxious about the flight of migrant workers.

Global daily death rate edges higher after a week of decline

Steve Bernard in London

After a week of a slowing death rate, the latest data revealed an increase in the daily toll.

Globally, 5,780 people died of Covid-19 yesterday, bringing the global total to 251,588.

In the US, 2,527 people died on Tuesday, more than two and a half times the total from the day before, and the third-highest daily death toll since the outbreak began. New York — the hardest-hit state — continues to see a downward trend as it reported 230 deaths, significantly lower than the peak of over 1,000 in early April.

Globally, the number of newly confirmed Covid-19 cases climbed by 79,635 on Tuesday, bringing the total number of infections to 3.6m.

The UK death toll jumped by 693 yesterday after three days of declining numbers. This brings the total to 29,428, surpassing Italy to become the hardest-hit country in Europe by deaths.

Russia posted its third consecutive day of 10,000 or more new cases. It has registered 48,616 infections over the past five days, taking the total number of cases to 165,929.

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

US to increase sovereign debt sales to record levels

Colby Smith in New York

The US Treasury is ramping up its sales of government debt in the coming months to record levels, in order to fund the unprecedented emergency measures passed by US legislators to minimise the economic damage inflicted by the coronavirus outbreak.

The agency said it would boost the size of its Treasury auctions at all maturities, with issuance increasing more for longer-dated debt. The department said it plans to sell a record $96bn of debt maturing in three-, 10- and 30-year benchmarks over the next three months, and will expand the sizes of its auctions for two-, three- and five-year notes by $2bn per month.

The announcement comes just days after the Treasury unveiled that it plans to borrow $3tn through June, a historic sum that is more than triple the previous record seen in 2008 and far beyond the $1.28tn the Treasury borrowed for the entirety of the 2019 fiscal year.

Through September, the agency said it expects to borrow $677bn. Having already borrowed $477bn in the first quarter of the year, it would bring the total amount to over $4tn for the full fiscal year.

Most of this borrowing has come in the form of Treasury bills, which mature in one year or less, but on Wednesday, the department said it would need to shift its financing to longer-dated instruments. The agency said:

In light of the substantial increase in borrowing needs, Treasury plans to increase its long-term issuance as a prudent means of managing its maturity profile and limiting potential future issuance volatility.

United turns to private debt offering to repay $2bn loan

Claire Bushey in Chicago

United Airlines is using a private debt offering to repay a loan it secured in early March, as the pandemic was taking hold outside of China.

The two tranches of notes, one set due in 2023 and the other in 2025, will be backed by jets from a designated pool of 360 aircraft.

The Chicago airline borrowed $2bn from lenders led by JPMorgan Chase on March 9. United’s interest rate was either the London Interbank Offering Rate plus up to 2.5 per cent, or another rate selected by the airline plus up to 1.5 per cent.

Delta Air Lines raised $3.5bn through a private offering announced April 22. The Atlanta airline will pay interest at 7 per cent.

United said any funds left over after paying off the loan will be used for general corporate purposes. The airline had $23.4bn in debt at the end of the first quarter, a 14 per cent increase from the end of 2019. Last month it raised more than $1bn through selling shares.

Trump reverses plan to wind down coronavirus task force

Lauren Fedor in Washington

Donald Trump has reversed plans to wind down the White House coronavirus task force, saying the group will “continue on indefinitely”.

On Tuesday, US vice-president Mike Pence, who chairs the task force, told reporters it could be disbanded as soon as Memorial Day on May 25.

Speaking at a Honeywell plant in Arizona, Mr Trump defended the decision, saying the US “could not be closed for the next five years”.

But on Wednesday morning the US president appeared to switch course, saying on Twitter that the task force, which counts Deborah Birx and Anthony Fauci among its most high-profile members, would continue “indefinitely” with a “focus on safety and opening up our country again”.

The president’s plans to disband the task force had attracted the ire of Democrats and public health experts on Tuesday, with Democratic senator Bob Casey saying the president was taking “exactly the wrong approach”.

Wall Street opens higher as investors focus on reopening

US stocks followed global markets higher on Wednesday morning, with investors focused on the gradual reopening of the world’s big economies following weeks of lockdown.

The S&P 500 advanced 0.7 per cent after the opening bell. The tech-heavy Nasdaq Composite jumped 1.1 per cent.

Donald Trump said in Arizona on Tuesday that the US could not be “closed for the next five years”. He continued: “The governors, it’s in their hands, but our country wants to open.”

Data from payroll processor ADP offered another glimpse at the economic toll in the US. The private sector lost 20.2m jobs in April as businesses were forced to close in response to the pandemic.

Uber to cut 3,700 jobs due to coronavirus hit

Dave Lee in San Francisco

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

In a staff memo seen by the Financial Times, chief executive Dara Khosrowshahi warned additional cuts would be announced in due course as the company made “difficult adjustments” to match “the reality of our business”.

“We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” said Mr Khosrowshahi, who has waived his salary for the remainder of the year.

You can expect we will have a further, final update for you within the next two weeks.

The ride-sharing company joins a string of major Silicon Valley names making deep cuts. Last week, rival group Lyft said it would cut 17 per cent of its workforce. On Tuesday, home-sharing site Airbnb said it planned to lay off 25 per cent of its staff.

Germany eases shutdown but sets up ‘brake’ in case infections rise

Guy Chazan in Berlin

The German government moved further to relax its coronavirus-related shutdown, but created an “emergency brake” allowing restrictions to be reintroduced if the pandemic flares up again.

In places where more than 50 people in 100,000 have been infected in the past seven days, local authorities would be obliged to reintroduce shutdown measures, Angela Merkel said on Wednesday after a telephone conference with leaders of Germany’s 16 states.

“If something happens locally then we won’t wait for it to spread throughout the whole country, but we will act locally,” the German chancellor said at a news conference.

The leaders said in a statement that Germany had succeeded in “significantly reducing” the number of daily new coronavirus infections. That meant it could move ahead with removing curbs on public life, though people will be required to keep a distance of 1.5m from each other and wear masks on public transport and while shopping. Such “social distancing” rules will remain in force until June 5.

Shops will be able to reopen, even large ones, as of Wednesday, Ms Merkel said. Previously, those with a retail space of more than 800 square meters had to stay shut.

Children will gradually be able to return to school and care home residents will be able to receive visits from one designated person. Sportspeople will from now be allowed to train in the open air and the Bundesliga can resume matches in the second half of May.

The leaders dropped a key restriction on Germans’ social lives. Since March 22, the authorities have insisted that people can only be outside either on their own, with members of their immediate family, or with one other person from another household. From now, two families, two couples or members of two households can meet up.

Ms Merkel said that the states would largely be responsible for most further relaxation of the shutdown. Many regions have announced that they will reopen hotels and restaurants this month, without waiting for instructions from Berlin.

States could work on plans to reopen theatres, opera- and concert-houses and cinemas gradually, the chancellor said.

Relaxing of UK lockdown rules is ‘premature’, says Manchester mayor

Andy Bounds in Manchester

The mayor of Greater Manchester has warned that any UK government steps to ease the lockdown next week would be “premature”, after prime minister Boris Johnson said he would “get going” with loosening restrictions on Monday.

“We’re not certain yet that we’ve plateaued in terms of new cases,” Andy Burnham said, despite falling hospital admissions and deaths.

While London shows a downward trend, the mayor said he feared his city of 2.8m residents, and the surrounding region, was behind the capital and may not yet have peaked.

“They would need to provide reassurance that they have looked across the northwest and they are confident that it is safe to do whatever they are…proposing,” said Mr Burnham, a member of the opposition Labour party.

Car parts maker Delphi and BorgWarner recut deal amid pandemic

James Fontanella-Khan in New York

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

Under the terms of the new deal, Delphi shareholders will receive 0.4307 shares of BorgWarner common stock for each of theirs, a 5 per cent discount compared to the agreement announced in late January. BorgWarner shareholders would end up owning about 85 per cent of the combined company, while the rest would be held by Delphi’s stockholders.

The resolution of the dispute comes at a time when several other deals — struck before the coronavirus outbreak was declared a global pandemic by the World Health Organisation in March — are at risk of falling apart or being terminated.

Victoria’s Secret’s owner L Brands and Sycamore Partners have called off their $525m deal after the private equity group said that the troubled lingerie retailer had breached the terms of its deal when it shut stores and furloughed staff in response to the pandemic.

Meanwhile, Bed Bath & Beyond is suing 1800flowers.com to force the gift company to complete a $250m asset purchase announced in February that was set to close in late March. 1800flowers has said that it cannot currently close the transaction due the pandemic’s fallout.

BorgWarner sent a breach of contract notice to Delphi in March after the London-headquartered company decided to draw its entire $500m revolving credit facility, an action taken by several companies who were rushing to secure cash to mitigate the impact of the Covid-19 outbreak. After Wednesday’s agreement, BorgWarner has consented to Delphi’s use of the revolver.

FT Health newsletter: inequalities laid bare

We’re not all in this together: FT Health, a monthly newsletter on the issues of health and finance. Darren Dodd and Andrew Jack report on the inequalities the pandemic lays bare, news on vaccines and a setback for the fight against malaria.

Former Google chief Eric Schmidt to chair panel to ‘re-imagine’ New York

Joshua Chaffin in New York

Eric Schmidt, the former Google chief executive, will chair a 15-member panel to “re-imagine New York” that was unveiled today by Governor Andrew Cuomo.

Mr Schmidt said the panel would focus on areas including tele-medicine, remote learning and broadband.

“We can take this terrible disaster and accelerate all those in ways that will make things much, much better,” he said.

UK coronavirus death toll surpasses 30,000

George Parker and Joshua Oliver in London

The confirmed coronavirus death total in Britain has topped 30,000, Robert Jenrick, communities secretary, has announced.

Mr Jenrick, speaking at the daily Downing Street briefing on the pandemic, said the number of fatalities has risen by 649 to 30,076, as of Tuesday at 5pm.

The UK’s daily coronavirus test rate dropped to 69,463 yesterday, the fourth day on which testing was below the government’s daily target of 100,000. During prime minister’s questions on Wednesday, Boris Johnson said the UK’s goal for daily testing capacity is 200,000 by the end of May.

On Tuesday Britain’s official death toll overtook that of Italy; only the US has recorded more Covid-19 deaths.

Official data showed that health department figures underestimated the deadly impact of the virus. The Office for National Statistics on Tuesday said 42,000 more people than normal had died in the UK since the virus outbreak began in mid-March.

Putin backs plan to ease lockdown despite rise in cases

Henry Foy in Moscow

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

Mr Putin, in a televised meeting with ministers and regional governors on Wednesday, endorsed a proposal for industrial companies and construction projects in Moscow to restart work on May 12 while warning against a return to normality beyond the Russian capital.

Read more from Henry on ft.com

Spain’s MPs vote in favour of two-week lockdown extension

Daniel Dombey in Madrid

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

Parliament voted by 178 votes to 75, with 97 abstentions, to give a two week extension to the so-called state of alert, which grants the government sweeping powers to rule by decree and limit mobility and which had been due to expire on May 10.

The outcome of Wednesday’s vote had been in doubt after the main opposition People’s party said this week it would no longer support the state of alert, which it depicted as a power-grabbing measure that was no longer necessary now that Spain plans to phase out the lockdown in the coming weeks. In the event, the PP abstained rather than vote against the measure.

Prime minister Pedro Sánchez argued that the state of alert was merely “a tool we need right now” and a “shield against the epidemic”.

The daily death rate has fallen steadily since a peak of 950 on April 2, although the 244 people who died in the most recent 24-hour period were more than the tolls in the previous three days.

Most Covid-19 cases in New York were non-essential workers ⁠— new data

Joshua Chaffin in New York

New York revealed new data collected by the state about who was still falling ill from coronavirus.

Many of the findings, announced by Governor Andrew Cuomo at his press conference today, dovetailed with previous reports.

Recent victims tend to be concentrated in New York City and its environs. Blacks and Hispanics were over-represented among their ranks, as were those over 50.

Yet there were also some unexpected findings. Two-thirds of the victims fell ill at home, compared with 18 per cent at a nursing home. Most were also non-essential workers, meaning they were not regularly braving public transportation and other potential hazards to do their job. More than a third were retired.

Gap to reopen up to 800 stores by end of May

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

The company behind brands such as Old Navy, Banana Republic and Athleta said a handful of locations in Texas will open their doors to the public as soon as this weekend. Gap joins other retailers and department stores like Macy’s, Kohl’s and Abercrombie & Fitch that are working to get their stores up and running.

Gap furloughed most of its store workers in the US and Canada and last month halted rent payments on closed North American stores, which total about $115m a month, as it attempted to preserve cash.

The San Francisco-based retailer will begin with reduced hours, implement a rigorous cleaning routine, close fitting rooms and provide hand sanitiser stations by the entrance while also maintaining social distancing as it seeks to ensure the safety of both customers and employees. The retailer also said it will provide all of its employees with reusable face masks, encourage customers to cover their faces and will quarantine returns for 24 hours before putting products back on shelves.

Gap shares were down nearly 4 per cent at $7.19 in afternoon trade in New York.

PPP going to areas with pre-existing bank relationships

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

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

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

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

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

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

S&P 500 closes lower amid slide in oil prices

US stocks dipped into the red on Wednesday as investors weighed the weakness of oil prices against the gradual reopening of the world’s big economies following weeks of lockdown.

The S&P 500 fell 0.7 per cent, as shares across the utility and energy sectors dragged down the benchmark index. Demand for technology stocks was stronger and the Nasdaq Composite was up 0.5 per cent, leaving it roughly 1 per cent shy of a return to positive territory for the year to date.

Oil prices, which had been buoyed this week by optimism that production cuts and recovering demand could ease the supply glut, retreated again on Wednesday.

Brent crude, the international benchmark, which climbed above $30 on Tuesday for the first time in six weeks, settled 4 per cent lower at $29.72 on Wednesday, ending a six-day run of gains. West Texas Intermediate, the US marker, was down 2.3 per cent at $23.99 a barrel, having rallied 20 per cent in the previous session.

In government bonds, US 10-year Treasury yields rose 0.05 percentage points to 0.71 per cent. The Treasury department on Wednesday laid out plans to boost the proportion of borrowing through longer-term debt to help finance $3tn-plus in economic stimulus.

The dollar index, which measures the currency against global peers, rose 0.4 per cent.

Lyft coy on outlook despite forecast-beating first quarter

Dave Lee in San Francisco

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

Lyft comfortably beat Wall Street’s revenue expectations, taking in $956m during the first three months of 2020, up 23 per cent from a year ago.

Net losses for the period — $398m — were in line with analyst expectations, and a sharp improvement on the same period last year when the company lost $1.1bn. It said it had $2.7bn of cash, cash equivalents or short-term investments on hand at the end of the period.

Having already withdrawn its guidance for 2020, Lyft did not offer any projections for its second quarter, where lockdown measures have been in full effect in the US and Canada, the two markets in which Lyft operates.

“While the Covid-19 pandemic poses a formidable challenge to our business, we are prepared to whether this crisis,” said Logan Green, the company’s chief executive and co-founder.

Last week, Lyft announced it planned to dismiss 982 employees — 17 per cent of its workforce — and had furloughed 288 more. Non-furloughed employees are, for the next 12 weeks, taking a pay cut of 10 per cent, while vice-presidents will have a 20 per cent reduction in their salaries. The company’s executive leadership is taking a 30 per cent cut.

Poland set to delay presidential election

James Shotter in Warsaw

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

The leader of Law and Justice, Jaroslaw Kaczysnki, and the head of its coalition partner, Jaroslaw Gowin, who have been at odds over when to hold the election, said that a new date would now be set by the speaker of the lower house of parliament.

The date of the election has become increasingly contentious since the spread of the coronavirus pandemic, which has so far infected almost 15,000 Poles, killed more than 700 and left the central European country in lockdown.

Law and Justice had insisted that the election — which its candidate, incumbent Andrzej Duda, is favoured to win — should go ahead, but the opposition argued that this would be an unacceptable gamble with the health of the Polish people.

Brazil slashes benchmark rate to record low

Andres Schipani in São Paulo

The Brazilian central bank on Wednesday decided to drastically slash 0.75 percentage points off the benchmark interest rate as a growing political crisis compounds the economic damage from coronavirus.

The monetary policy committee, known as Copom, unanimously brought down the Selic rate to a record low of 3 per cent after 19 successive cuts since October 2016, when the rate was at 14.25 per cent. Most economists forecast a cut of 0.25 percentage points or 0.5 percentage points.

The latest cut took place amid dark prospects about the impact of the coronavirus on Latin America’s largest economy, which is expected by the IMF to shrink 5.3 per cent this year.

Between 2015 and 2016 Brazil, a major exporter of soyabeans and iron ore, already suffered a brutal recession. This time, the bank said: “The Covid-19 pandemic is causing a significant slowdown in global growth, a drop in commodity prices and an increase in asset price volatility.”

Policymakers have aggressively intervened to defend a weakened Brazilian real, which hit a low of R$5.7 to the US dollar following the abrupt resignation of star justice minister Sérgio Moro late last month, sparking a serious political crisis amid allegations that president Jair Bolsonaro tried to meddle in police investigations.

US death toll tops 67,000

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

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

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

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

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

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

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