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Updated at 1/25/2021, 5:13:02 PM BST

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Defaults by US oil and gas producers are set to outstrip all other sectors again in 2021 as an industry battered by this year’s price crash faces yet more pain, according to a forecast from the Fitch rating agency. The US oil industry was thrown into turmoil in 2020 after the Covid-19 pandemic crippled global demand.

Regional governments in China are evading borrowing limits by transferring assets on to the books of local investment companies to lower debt-to-asset ratios. The practice allows local government finance vehicles to raise more money for infrastructure and other projects to boost the economy in the wake of the pandemic.

New Zealand officials on Sunday confirmed that six positive Covid-19 cases have been found to match the recently identified B.1.1.7 variant. Five travelled from the UK and one from South Africa, arriving in New Zealand from December 13-25. All were detected through routine testing and transferred to quarantine.

Iran and Russia are seeking to cooperate on producing the Sputnik V vaccine, Russian media reported at the weekend. Iran’s ambassador to Moscow, Kazem Jalali, told Sunday’s Izvestia newspaper that Russian president Vladimir Putin had discussed a collaboration with his Iranian counterpart, Hassan Rouhani.

US electric carmaker Tesla said at the weekend that it had delivered 180,570 vehicles during the fourth quarter of 2020, ahead of the 174,000 analysts had expected, and suggesting it was firing on all cylinders at the end of a year in which the global automobile industry suffered a sharp contraction in sales due to the pandemic.

Singapore Airlines announced that from Monday it would refuse to board people with a travel history that included South Africa within the previous 14 days, with the exception of Singapore citizens and permanent residents. They would not be allowed to enter or transit through Singapore because of concerns over the B.1.1.7 variant.

A Ukraine-based drugmaker has sought to license Russia’s Sputnik V vaccine, state media reported at the weekend. The Biolek pharmaceutical company, based in Kharkiv, would manufacture the Covid-19 vaccine, Tass reported. Ukraine has so far recorded 1,069,517 coronavirus cases and 18,731 deaths, according to official data.

European airlines are stepping up pressure on airports to slash landing charges, leading to warnings of a race to the bottom in an industry decimated by the pandemic. Ryanair, Wizz Air and easyJet are among carriers pushing for discounted fees as they decide where to fly when passengers return in significant numbers.

How the pandemic will change the City office

Daniel Thomas

The British office market is having one of its “Road Runner” moments. Like the coyote in the cartoon, it is still running forward despite having left the edge of the cliff some time before.

The vast Covid-19 economic stimulus this year has helped keep returns going for the sector, with central bank programmes pushing European bond yields into negative territory.

Agents Savills reckons the average spread between them and rental yields on prime European offices is now about 3.25 percentage points, well above historical average.

Read more here

India approves two locally manufactured vaccines

George Russell

India’s pharmaceuticals regulator on Sunday approved two locally made coronavirus vaccines for emergency use as the country recorded 20,000 new daily infections at the weekend.

The office of the Drug Controller General of India said both Serum Institute of India’s Covishield and Bharat Biotech’s Covaxin have been granted permission for “restricted use”. Covishield was developed by Oxford university and AstraZeneca.

VG Somani, the controller general of drugs, said the agency's expert committee met on January 1-2 to discuss the approval applications. It was approved for emergency use “in the public interest”, he added.

“We’ll never approve anything if there is slightest of safety concern,” Mr Somani told a media briefing. “The vaccines are 100 per cent safe.”

SII chief executive Adar Poonawalla said the company had applied for emergency use authorisation on December 7.

Indian prime minister Narendra Modi said the approvals were a “decisive turning point to strengthen a spirited fight” against the pandemic. “Congratulations to our hardworking scientists and innovators,” he added.

Home affairs minister G Kishan Reddy described the emergency use authorisations as a “huge moment in the pharmaceutical history of our nation”.

India reported 18,177 new cases of the disease on Sunday, ministry of health and family welfare data showed.

The country has detected more than 10.3m cases since the pandemic began.

Officials also reported 217 Covid-related deaths on Sunday, bringing the official total to 149,435.

Pope criticises ‘thoughtless’ lockdown violators

Pope Francis delivers his Angelus blessing from the Apostolic Library

George Russell

Pope Francis criticised lockdown violators in his Sunday blessing, saying they had no thought for others suffering the consequences of the pandemic.

The Roman Catholic leader said the pandemic would ease only “if we work together for the common good, putting the weakest and most disadvantaged at the centre”.

He said he had been saddened to read in the newspapers that some people chose to ignore lockdown rules in order to “have a good vacation”.

The pope gave his traditional Angelus blessing in a video address from the library of the apostolic palace in the Vatican.

It is normally given from a window overlooking St Peter’s Square but was moved indoors to prevent crowds gathering.

“We do not know what 2021 will bring, but what each of us and all of us together can do, is to commit to taking care of each other and of creation, our common home,” the pope said.

US breaks records for new cases as jabs fall short

George Russell

The US broke records for new daily coronavirus cases over the weekend, as a leading tracker of the pandemic on Sunday urged caution over data “oscillations”.

On Saturday, health departments registered more than 277,000 infections, the highest number yet of cases recorded in a single day.

The figure put the seven-day rolling average above 200,000 a day.

The hardest-hit country in the world, the US has detected more than 20.4m cases and more than 340,000 deaths.

Seven states did not report any data on Saturday, while nine others did not update their figures, according to the Covid Tracking Project.

“We believe that holiday reporting is still causing major oscillations in the data,” the CTP wrote on Twitter on Sunday. “Please use caution in interpreting the numbers.”

Nevertheless, infections have been surging since the Thanksgiving holiday in November.

Top US government virologist Anthony Fauci warned after Christmas that the worst of the pandemic may be yet to come.

More than 4.2m Americans have already received their first vaccine doses, falling short of the 20m inoculations that president Donald Trump promised by the end of 2020.

Covid-19 rules pose threats to media freedoms

George Russell

The Covid-19 pandemic has amplified the threats to freely reported, independent, diverse and reliable journalism, according to a Paris-based advocacy group for reporters.

There is a correlation between suppression of media freedom in response to the coronavirus pandemic, and a country’s ranking in the annual World Press Freedom Index published by Reporters Sans Frontières.

The 2020 edition evaluates conditions for journalists in 180 countries and territories. Norway, Finland and Denmark were adjudged the three most free nations.

The highest-ranked non-European country was Jamaica in sixth spot, while the top-ranked Asian country was South Korea in 42nd place. New Zealand (9th), Samoa (21st) and Australia (26th) were the most liberal Pacific nations.

Both China (staying in 177th place) and Iran (down three notches at 173rd) censored their major coronavirus outbreaks extensively, RSF said. In Iraq (down six at 162nd), the authorities stripped Reuters of its licence for three months after it published a story questioning official coronavirus figures.

RSF noted that Hungary (down two at 89th) passed a “coronavirus” law with penalties of up to five years in prison for false information, which RSF described as “a completely disproportionate and coercive measure”.

“The coronavirus pandemic illustrates the negative factors threatening the right to reliable information, and is itself an exacerbating factor,” said RSF secretary-general Christophe Deloire.

“The public health crisis provides authoritarian governments with an opportunity ... to take advantage of the fact that politics are on hold, the public is stunned and protests are out of the question, in order to impose measures that would be impossible in normal times,” Mr Deloire added.

Australian manufacturing ends 2020 on a high

A worker pours molten iron at IXL Manufacturing’s plant in Geelong

George Russell

Australian manufacturing continued to recover in December at one of the strongest rates seen over the past three years, according to purchasing managers’ index data released on Monday.

But the headline reading from the IHS Markit Manufacturing Purchasing Managers’ Index edged down to 55.7 in December from November’s 35-month high of 55.8.

A reading above 50 means growth in sector activity, while a reading below 50 means contraction.

Supply chain delays limited companies’ abilities to buy sufficient quantities of inputs, the survey found.

Higher output reflected rising demand as the economy showed further signs of lifting from Covid-19 lockdowns. New orders showed the largest gain since November 2018.

“Australia’s manufacturers ended 2020 on a strong note, reporting one of the strongest upturns in production since 2018 as order books continued to recover,” said Chris Williamson, IHS chief business economist.

Crisis managing the travel industry through Covid-19

Alice Hancock

The best way to run international travel policy is to approach it like a business, according to Gloria Guevara, chief executive and president of the World Travel and Tourism Council.

A national or international agreement, she said, is “what a corporation would call a business plan with your goals and your KPIs”.

Providing that clarity has never been so consequential for the global travel industry, which because of the coronavirus pandemic has suffered record losses this year.

Read more here

Philippine troops seal off Malaysia border

George Russell

The Philippines has deployed soldiers on the archipelago’s southernmost maritime border to help stave off a surge of coronavirus cases in the adjacent Malaysian state of Sabah, state media reported at the weekend.

A regional commander told the official Philippine News Agency that the army’s Western Mindanao Command has sent troops to Sulu province, a group of islands separating the Sulu Sea from the Celebes Sea.

“We are maximising our capabilities to keep the contagion offshore,” Lieutenant General Corleto Vinluan, the Western Mindanao commander, told the agency.

He said his soldiers would help the provincial government implement a lockdown from Monday until January 17 in a bid to prevent the entry of people from Sabah.

There is a thriving maritime trade for food and other products between Sulu and Sabah, the agency said.

Tokyo restaurants face calls for early closing

People dine at a restaurant in the Ameya Yokocho market in Tokyo

Robin Harding

Restaurants in Tokyo are facing calls to close at 8pm as Japan tries to control rising Covid-19 cases without imposing a crippling cost on the economy.

Governors from the capital and its three surrounding prefectures met with economy minister Yasutoshi Nishimura on Sunday to discuss tighter measures, including the possibility of a fresh state of emergency declaration under national law.

Tokyo reported 816 new coronavirus cases on Sunday out of a nationwide total of 3,149 as the outbreak in the capital continues to grow.

Prime minister Yoshihide Suga has been reluctant to seek tough lockdown measures, with schools expected to reopen as usual after the New Year break, but he is likely to extend the suspension of a domestic tourism campaign beyond January 11.

Saudis lift some curbs related to virus variant

George Russell

Saudi Arabia on Sunday lifted some restrictions on travel into the country that were imposed to prevent the B.1.1.7 variant of coronavirus from spreading, official media reported.

Non-citizens arriving from the UK and South Africa, the countries on which restrictions had been imposed last month, would be able to enter if they had spent the previous 14 days in a third country, according to the Saudi Press Agency.

They would also have to provide a negative result from a polymerase chain reaction test for Covid-19, the agency added.

Saudi citizens arriving from countries where the new coronavirus variant has spread would be required to home quarantine for 14 days after arrival, SPA reported.

UK restaurant slump cost 30,000 jobs, says retail body

George Russell

UK restaurants and casual dining outlets shed nearly 30,000 jobs last year as the economic impact of Covid-19 took its toll, according to a retailers’ group.

End-of-year figures compiled by the Centre for Retail Research show that during the 2020 calendar year, about 1,600 eateries closed down, resulting in the loss of 29,684 jobs.

That figure is 163 per cent higher than the 11,280 jobs lost during 2019.

The group reported 1,621 outlet closures, up from 922 in 2019, with “significant reductions” at Pizza Express, SSP Group, Casual Dining Group/The Big Table, The Restaurant Group, M&B, Harvester Beefeater and Pret a Manger.

The UK food and beverage sector was hit hard by lockdowns and social distancing.

Centre for Retail Research director Joshua Bamfield said Covid-19 exacerbated an existing crisis following rapid growth between 2014 and 2017.

“The need to cut costs caused by over-expansion, increased competition and weak consumer demand produced a crisis in the industry before the pandemic,” he said.

Asia-Pacific stocks gain on year’s first trading day

Alice Woodhouse

Stocks in Asia-Pacific rose on the first trading day of 2021, while bitcoin climbed to almost $35,000.

Japan’s Topix added 0.3 per cent and Australia’s S&P/ASX 200 rose 0.5 per cent.

A flurry of reports on the state of Asia’s manufacturing sector later in the morning will provide clues on the effects of the pandemic on the region’s factories.

The moves in Asia came after the S&P 500 closed at a record high on the last trading day of 2020. S&P 500 futures were down 0.1 per cent on Monday.

Bitcoin’s rally sustained, with the cryptocurrency touching a high of $34,800 on Sunday.

Ireland records end-of-year manufacturing boom

George Russell

The Irish manufacturing sector saw a boost to business in December as firms prepared for the end of the Brexit transition period, according to purchasing managers data released on Monday.

New orders and output both rose at the fastest rates since July, after the country’s coronavirus lockdown ended, and purchasing accelerated as firms sought to expand inventories to guard against a potential hard Brexit.

The headline AIB Ireland Manufacturing PMI rose sharply to 57.2 in December from 52.2 in November. The figure is a composite single-figure indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. A reading above 50.0 indicates improvement.

It was the sixth overall improvement in the past seven months and the 5-point rise was the third-largest on record. Manufacturers ramped up purchasing operations at the end of 2020 both to support current workloads and to build stocks for 2021 as the Brexit transition period ends.

Suppliers’ delivery times lengthened to one of the greatest extents in the survey history. “Stockpiling ahead of the end of the Brexit transition period was one factor behind the sharp rise in the index,” said Oliver Mangan, AIB chief economist.

“Companies remain optimistic about the 12-month outlook for production, no doubt hopeful that the recent positive news on Covid-19 vaccines will help bring about an improvement in economic conditions over the course of 2021,” he added.

Singapore GDP shrinks 5.8% in 2020

Cranes at Singapore’s port. The export-driven economy was hit by a fall in demand

Alice Woodhouse

Singapore’s economy contracted by 5.8 per cent in 2020 as conditions improved in the final three months of the year, according to an advance estimate.

The country’s gross domestic product grew 2.1 per cent quarter-on-quarter in the three months to the end of December, government estimates showed.

However, on a year-on-year basis, GDP fell by 3.8 per cent during the period, against a 5.6 per cent drop in the previous quarter.

Singapore was forced to impose a strict lockdown in April 2020 to control the spread of coronavirus. This has gradually been eased after outbreaks in migrant worker dormitories were brought under control.

The export-driven economy was hit by a fall in demand as governments around the world forced businesses to close and citizens to stay at home to halt the pandemic.

Muted celebration for world’s oldest person

A Japanese woman believed to be the world’s oldest person celebrated her 118th birthday at the weekend without visits from relatives due to coronavirus restrictions.

NHK News reported that Kane Tanaka was in good health, eats three times a day and exercises, adding that she has “almost no chance” of getting together with family due to measures against Covid-19.

Ms Tanaka lives in a care facility in Fukuoka, south-western Japan.

She celebrated her birthday on Saturday by clapping her hands and said she plans to stay healthy until she is 120, NHK said.

Japan manufacturing PMI stabilises in December

Alice Woodhouse

Operating conditions at Japanese factories stabilised in the final month of 2020, snapping a 19-month run of declines, as manufacturing showed a gradual recovery from the pandemic.

The au Jibun Bank Japan manufacturing purchasing managers index rose to 50 in December, from 49 in the previous month.

The 50-point level marks no change while figures below that show worsening conditions.

The December figure was the highest reading since April 2019.

Output levels stabilised and orders for manufactured goods rose. However, companies surveyed noted that a third wave of coronavirus infections had dragged down production.

"Buoyed by improved operating conditions, Japanese manufacturing firms increased employment levels for the first time since February, albeit only fractionally,” said Usamah Bhatti, economist at IHS Markit.

“Nevertheless, ongoing issues of an ageing population have continued to hold back Japanese manufacturing employment, as firms … continued to report retirements.”

Australian doctors in call to cancel cricket match

Jamie Smyth

Australian doctors have called on authorities to reverse their decision to allow Sydney’s traditional New Year’s international cricket match to go ahead with almost 20,000 spectators present due to the threat posed by an outbreak of Covid-19.

The Australian Medical Association warned on Monday the game between Australia and India was “an unnecessary risk” to health following a fresh outbreak of the virus in the state of New South Wales shortly before Christmas.

More than 150 locally transmitted infections have been reported by authorities in the Greater Sydney region since the December 3 outbreak, which has dashed hopes that NSW could follow most other Australian states in eliminating the virus outside of hotel quarantine.

“The safe thing to do is to say we’re in a health emergency, it's time to make decisions on the basis of health, rather than economy and sport, and it's just the wrong decision and we're certainly calling on the New South Wales government to re-look at this question,” Omar Khorshid, head of the AMA, told ABC, Australia’s national broadcaster.

Several senior doctors and epidemiologists have warned about the potential of the cricket match to become a Covid-19 “super-spreading” event. However, the NSW state government reiterated its support for the cricket match on Monday, noting it had put in place measures to manage the risk.

Australia’s Mitchell Starc drops a catch during the match against India in Melbourne on December 29

The call by the AMA follows a direction issued by NSW authorities this week for about 2,000 people to self-isolate and get tested following detection of a Covid-19 case at an off-licence in a Sydney suburb, which they visited.

Two new infections were identified late on Sunday which are linked to this cluster in Berala, although there were no further cases reported linked to a separate outbreak in Sydney’s northern beaches area.

Victoria reported three new locally transmitted cases of Covid-19 on Monday, which authorities believe are linked to the December 3 outbreak in Sydney.

All other Australian states and territories have gone at least 28 days without any local transmission of the virus.

Australia’s decision early in the pandemic to close its international borders and impose strict lockdowns has been praised by health experts for limiting the number of fatalities to 909, a fraction of the death toll in the UK, US and smaller European countries such as Belgium.

Chicago mayor calls on US to deliver more vaccines

George Russell

The mayor of Chicago on Sunday called for more vaccines to be delivered, saying it would take nearly 18 months to inoculate the entire city at the current rate of supply.

Lori Lightfoot, the Democratic mayor, said the city had already distributed more than 95 per cent of the vaccine doses it has received.

However, she added that the federal government’s distribution rate meant it would take 71 weeks — nearly one and a half years — to fully vaccinate the city’s inhabitants.

“We need more vaccine. Now,” Ms Lightfoot wrote on Twitter.

The mayor said the city had been preparing a rollout of vaccines since the pandemic started.

City officials said they expected a limited supply at the beginning, and that healthcare workers would be priority recipients.

Singapore probes marine personnel infections

George Russell

Singapore officials are investigating how a marine surveyor and a harbour pilot contracted Covid-19, suspecting they might have shared meals on board a vessel in violation of protocols.

The surveyor tested positive on December 30 and the pilot the following day. The health ministry said contact tracing is underway to prevent the cluster from spreading.

“Preliminary investigations reveal that the marine surveyor, like the marine service engineer who tested positive [in] November 2020, consumed food provided by or with the crew on board the ships, which was against a precautionary measure,” the ministry said in a statement.

The ministry said the surveyor’s employer, Lloyd’s Register Singapore, has suspended all its shipboard survey and audit activities and would test all its marine surveyors for Covid-19.

The November case prompted the Maritime and Port Authority of Singapore to halt the engineer’s employer, Master Systems Marine, from sending any of its personnel to work on board ships.

“This will continue until the company can demonstrate that its employees will adhere to safe management measures on board ships,” the health ministry said.

Australia’s New South Wales calls on residents to get tested

Wearing masks in public places became mandatory in New South Wales on Sunday

Alice Woodhouse

The Australian state of New South Wales has urged residents to meet a target of 50,000 tests a day as it seeks to contain a series of outbreaks of coronavirus.

John Barilaro, acting NSW premier, called on residents to get tested for coronavirus following outbreaks in the state over the past few weeks.

More than 22,000 people were tested for the virus on Sunday. Mr Barilaro called on residents of western Sydney and the state as a whole to get tested, adding that he wanted to get the daily testing figure up to 50,000.

“It is important that we keep that testing regime up,” he said.

NSW reported no new local cases on Monday, however, the first time it recorded no local infections since mid-December. Two infections were found overnight and will be added to the tally on Tuesday.

Mr Barilaro said health authorities had pinpointed the origin of the clusters, which would allow contact tracers to do their jobs effectively.

Health officials have called for anyone who visited an off licence in Sydney that is linked to a cluster of coronavirus cases to get tested and self-isolate for 14 days, even if their visit to the shop was brief.

Mask wearing in public places, such as shopping malls, became mandatory in NSW on Sunday.

Indonesia plans to vaccinate 81.5m people

George Russell

Indonesia plans to vaccinate 81.5m people against Covid-19 in the next 15 months, state media reported the health ministry as saying on Sunday.

Vaccination programme spokeswoman Siti Nadia Tarmizi told the Antara news agency that the country would implement inoculations in stages from this month until March 2022.

She said the initial period from January to April would prioritise 1.3m health workers and
17.4m public officials in all 34 provinces.

She said the duration meant that social distancing and hygiene protocols would need to be maintained until the end of the vaccination period.

South Korea infections top 1,000 despite curbs

Song Jung-a

South Korea’s daily coronavirus infections climbed back above 1,000 on Monday, despite tighter restrictions on small social gatherings as the country tackles its worst outbreak since the pandemic began.

The country on Monday reported 1,020 new Covid-19 cases, raising the total caseload to 64,264, according to the Korea Disease Control and Prevention Agency. The death toll increased by 19 to 981.

There were 126 new cases linked to a prison in eastern Seoul, bringing the total there to 1,084.

Health authorities have extended the second highest level of distancing rules for the Seoul metropolitan area for two more weeks and expanded a ban on private gatherings of more than four people for the whole country.

About 40 per cent of recent cases have been linked to small gatherings.

Officials are also tightening restrictions on the entry of foreigners as the country has reported 10 cases of a more infectious coronavirus variant first reported in Britain.

Starting Friday, foreigners arriving at South Korean airports will be required to present negative results of virus tests taken within 72 hours prior to their departure

Prime minister Chung Sye-kyun on Monday vowed to overcome the country’s health crisis and stabilise people’s livelihoods this year.

Health minister Kwon Deok-cheol said on Saturday that the next few months will be the “last hurdle”, given the country’s plans to begin vaccinations in February.

East Java governor tests positive for Covid-19

George Russell

The governor of Indonesia’s populous province of East Java has tested positive for Covid-19 and is self-isolating, she announced at the weekend.

Khofifah Indar Parawansa said she had no symptoms but tested positive on Saturday after a regular weekly swab.

“Currently, I am undergoing independent isolation,” she wrote on Twitter on Sunday. “I can still coordinate all government tasks.”

Ms Khofifah said she would stay at her home in Surabaya, the capital of the rugged province of nearly 40m people.

“To all people of East Java, I beg you to adhere to health protocols,” she added. “Never underestimate this virus.”

Kirin to buy stake in India’s Bira 91

Benjamin Parkin and Kana Inagaki

Kirin has agreed to buy a stake in Indian brewer Bira 91 as it looks to improve on a patchy record of overseas deals with its latest bet on the $90bn global craft beer industry.

The Japanese brewer will invest about $30m for a high single-digit percentage stake in craft beer maker Bira, according to people with direct knowledge of the talks.

Indian beer sales increased 8 per cent in 2019, according to Euromonitor, but growth was derailed by the pandemic after alcohol sales were banned nationwide for around six weeks.

Read more here

China manufacturing growth eases in December

Employees sort toothbrushes on a production line at the Yangzhou Shuguang Toothbrush Factory in Yangzhou, Jiangsu province

Alice Woodhouse

China’s manufacturing sector showed further improvement in December, although the pace of expansion slowed from the previous month.

The Caixin/Markit manufacturing purchasing managers’ index dipped to 53 from the decade-high recorded in November of 54.9. The 50-point level separates expansion from contraction.

Companies surveyed reported a slower increase in new orders, as demand from overseas clients “expanded only modestly”.

Strict virus control measures in China allowed the country to restart its economy months after the virus was discovered in Wuhan, but it remains reliant on external demand from countries still battling the pandemic.

Input costs rose at the fastest rate in three years amid higher prices for raw materials, particularly metals.

“In terms of the trend, we expect the economic recovery in the post-epidemic era to continue for several months, and macroeconomic indicators will be stronger in the next six months, taking into account the low bases in the first half of 2020,” said Wang Zhe, senior economist at Caixin Insight Group.

The official manufacturing PMI, which examines larger state-owned companies, came in at 51.9 in December.

Hong Kong braces for slow economic recovery

Primrose Riordan

Hong Kong's economy has experienced a record two years of contraction and is only expected to recover in the second half of this year, said Paul Chan, the city’s financial secretary.

Mr Chan said the pandemic, US-China tension and the local protest movement which started in 2019 were behind the economic woes in a blog he posted on Sunday.

“The economy will still face greater challenges in the first half of this year,” Mr Chan said.

He added that with the government planning to start distributing vaccines, he hoped the economy would return to growth in the second half of the year.

Hong Kong businesses — many of which depended on the once steady flow of tourists — were first hit when the number of visitors dropped after the 2019 anti-government protests, in which citizens demonstrated against rising mainland Chinese government influence in the city.

Apart from being caught in the middle of US-China tensions, the city’s economy came under further pressure as the government halted most inbound travel and introduced social distancing restrictions to get the pandemic under control.

England primary school reopening in chaos

Bethan Staton

Plans for the start of the new school term in England were in chaos on Sunday, as teaching unions and some councils refused government instructions to send primary school pupils back to classrooms amid a surge in coronavirus cases across the country.

Unions representing teachers, school leaders and support staff in England have demanded primary schools, which cater for children aged between four and 11, delay the start of in-person teaching, leaving many headteachers unsure about whether they will open their doors this week.

The confusion highlights profound disagreements over the role of school closures in containing the virus, as hospitalisations increased by one-third in a week and prime minister Boris Johnson warned the UK may have to implement tougher control measures.

Read more here

Renminbi rallies as virus worries sink Japan stocks

Renminbi bonds advertised outside the Bank of China Tower in Hong Kong

Hudson Lockett

China’s currency rallied against the dollar after global markets kicked off the first day of trading in 2021 while Japanese stocks fell as officials in Tokyo considered emergency measures to halt coronavirus outbreaks.

The onshore-traded renminbi strengthened 0.5 per cent to Rmb6.4986 per greenback in early trading on Monday as it crossed the important 6.5 per dollar threshold for the first time since June 2018.

China’s currency enjoyed a banner 2020, climbing 6.7 per cent against the dollar partly due to the country’s economic recovery from the coronavirus pandemic and hopes that a Joe Biden presidency in the US could lead to reduced tensions between Beijing and Washington.

The renminbi has now erased nearly all of the losses it suffered against the dollar since Donald Trump kicked off a trade war between the countries two-and-a-half years ago.

“The widening interest rate differential between China and the US has also bolstered capital inflow and the [renminbi’s] appreciation,” added Alicia García-Herrero, chief Asia-Pacific economist at Natixis.

China’s offshore-traded renminbi, which is less regulated than its onshore counterpart, gained 0.6 per cent to Rmb6.4645 on Monday. The offshore currency passed the 6.5 handle on Thursday.

Rolls-Royce to put engine development ‘on ice’

Peggy Hollinger

Rolls-Royce will put its UltraFan engine programme “on ice” when testing finishes in 2022, halting further investment until a new aircraft is launched, according to Warren East, chief executive.

The UK aero-engine maker will also postpone finding an industrial partner for the next-generation propulsion system until a new aircraft programme is launched, which is likely to be several years away, the chief executive told the Financial Times.

Rolls-Royce’s search for a collaborator has been made more pressing by the coronavirus pandemic, which has brought international air travel to a virtual standstill.

Read more here

Russia distributes 1.5m doses of Sputnik V

Russia has distributed more than 1.5m doses of its Sputnik V coronavirus vaccine, the official Tass news agency reported on Sunday.

The agency quoted health minister Mikhail Murashko as saying 800,000 Russian residents had already been vaccinated.

Mr Murashko told Tass that healthcare workers and Russians over the age of 60 were first in line for the jab.

The minister was in the city of Tver, 200km north-west of Moscow, inspecting deliveries of coronavirus vaccine to Russia’s regions, Tass said.

The news agency said Russia reported another 26,301 cases, bringing the total to 3,212,637 since the pandemic began.

China claims to find virus on car part shipments

China has suspected that imports of frozen food carry the coronavirus

Christian Shepherd

Chinese authorities have claimed that car parts and their packaging tested positive for coronavirus, as the government scrutinises logistics chains to halt transmission.

Since Friday, health authorities in at least five Chinese cities said that tests for automotive components being delivered to local dealerships had come back positive for Covid-19.

On Sunday, the municipal government of Hohhot, the capital of Inner Mongolia, said that five tests came back positive during screening of shipments of parts delivered to local stores.

The announcements mark a new development in China’s efforts to fully sanitise logistics in a bid to ward off a winter relapse in transmission after a handful of local cases were recorded in recent weeks.

The Chinese government, out of concern over new clusters of Covid-19 being seeded by imported goods, has in recent months installed an extensive system of checks and tracing for frozen foods.

Authorities have also repeatedly suspended imports from companies from which products or packaging tested positive.

Chinese epidemiologists have argued that the cold-chain environment allows the virus to survive on surfaces for long periods of time.

World Health Organisation experts maintain, however, that there is scant evidence of human infection resulting from food imports.

Australia to seek volunteers for ‘2nd-gen’ vaccines

George Russell

Australian researchers are set to open recruitment for volunteers aged between 18 and 75 years for an accelerated clinical trial of two “second generation” coronavirus vaccine candidates.

The country’s health department said in a statement on Monday that the University of Melbourne would lead the trials, and would receive A$10m (US$7.7m) in funding from the federal government.

The department said the vaccines would offer advantages over the first generation vaccines currently being rolled out across the world.

“[They would] not require storage in the extremely low temperatures needed for the Pfizer vaccine,” the department said.

The government is funding several other coronavirus-related research projects, including the use of ultraviolet light to reduce infection rates in aged care facilities and 3D-printed face masks to match facial shape and prevent leaks.

Law firms ditch trophy office moves

Kate Beioley and George Hammond

Leading international law firms are ditching trophy office moves as they look to slash space by as much as 50 per cent because of the shift to remote working as a result of the pandemic.

Global firm Norton Rose Fulbright, listed DWF and London-based Fieldfisher project a reduction in floorspace of between 30 per cent and 50 per cent with workers planning to work more regularly from home.

It comes just one year after a clutch of groups signed long-term deals on expensive trophy offices designed to lure graduates and impress high-end clients, which have cost them millions of pounds.

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Vietnam in negotiations to import four vaccines

Vietnam has managed to largely contain local Covid-19 infections

John Reed and Pham Hai Chung

Vietnam’s government on Monday said it was in talks with four countries, including the UK, to import Covid-19 vaccines, state media reported.

Truong Quoc Cuong, deputy health minister, said that talks were most advanced with the UK drugmaker AstraZeneca.

“We signed with them to guarantee vaccines for 15m people, that is about 30m doses,” Mr Cuong said.

The Vietnamese official also said that authorities in the south-east Asian country were talking to the US drugmaker Pfizer about importing its vaccine and to Russia about the Sputnik V jab.

Thanks to quick government action early in 2020, Vietnam has managed to largely contain local Covid-19 infections, and four local drugmakers are also developing vaccines.

With a population of 97m, the country has reported 1,494 cases of the disease, including 35 fatalities.

Eni bolsters defences after ‘year of war’

Anjli Raval

Eni is stepping up plans to adapt to a lower sustained oil price as the Italian energy major braces for more volatility after “a year of war”.

Francesco Gattei, chief financial officer, said the company was seeking to ensure it can break even with oil prices at even lower levels than previously targeted.

Mr Gattei, who took up his role in August, said the pandemic-related hit to oil demand, which prompted dramatic shifts in the crude price, had brought home the need to ensure Eni had an adequate cash buffer at all times.

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India manufacturing accelerates in December

Benjamin Parkin

India’s manufacturing activity picked up in December, continuing a sharp rebound from the depths of the country's strict lockdown last year.

The IHS Markit Manufacturing Purchasing Managers’ Index rose to 56.4 in December, up from 56.3 in November and above its pre-pandemic average.

PMI hit an eight-year high in October in a sign that India’s manufacturing sector was picking up despite significant challenges for the overall economy, which is expected to contract sharply after a strict multi-month lockdown.

Other data, such as consumer demand or corporate earnings, also hint at a tentative recovery.

Capital Economics said a successful inoculation drive, following the approval of two Covid-19 vaccines over the weekend, could accelerate the turnround.

Matt Hancock promises 1,000 UK vaccination sites

Oliver Ralph

The UK health secretary promised on Monday that there would be 1,000 vaccination sites up and running in the country by the end of the week.

“We’ve obviously delivered more than 1m vaccines into arms already,” said Matt Hancock, speaking on Sky News. “From today we accelerate that path. We’ve got from today 700 vaccination sites open across the UK. By the end of the week it’s due to be over 1,000.”

He also defended the government’s decision to delay giving second doses to people who have already been vaccinated, so that more people can have a first dose.

“The signs with the AstraZeneca vaccine are that you get a better protection if you wait a bit longer,” he said.

Mr Hancock said that there was a “sharp rise” in cases in some areas. “It is a very difficult situation in terms of the growth of the virus.”

UK becomes first country to administer Oxford/AstraZeneca vaccine

Oliver Ralph

The UK has become the first country to administer the Oxford/AstraZeneca vaccine, following its approval last week.

In a statement on Monday, the NHS said that Brian Pinker, an 82-year-old kidney dialysis patient, received the dose at the Oxford University Hospital.

The vaccine will be delivered at a small number of hospitals in the first few days for surveillance reasons, before being rolled out to GP-led services later in the week.

Earlier on Monday, health secretary Matt Hancock said that the UK would have over 1,000 vaccination sites operating by the end of the week.

Spain’s manufacturing activity picked up at year-end

Valentina Romei

Spain’s manufacturing activity returned to growth at the end of 2020, suggesting the pandemic is causing a milder economic blow than that endured in the spring.

The IHS Markit Spain purchasing managers index for manufacturing, a measure of the health of the sector, rose to 51 in December from 49.8 in the previous month.

This is lower than the 52.8 forecast by economists polled by Reuters, but still above the 50 mark, which indicates a majority of businesses reporting improving conditions.

Paul Smith, economics director at IHS Markit, said: "December was a mixed bag for Spain’s manufacturing sector as a positive uplift in external demand was again offset by sustained domestic weakness.”

He added: “With tourism and hospitality struggling to cope in the face of the pandemic, there has been a considerable knock-on effect for producers supplying these sectors”.

Spain’s economy has been hit hard by the drop in international tourism.

Official statistics show that the number of nights spent by foreign visitors in Spain fell 74 per cent in the 11 months to November compared with the same period a year earlier.

However, in the final three months of the year, improved conditions in the export-led manufacturing sector helped limit the blow to the economy.

Italian manufacturing activity expands again

Valentina Romei

Italy's manufacturing activity expanded for the seventh consecutive month in December, supported by improved foreign demand and brightened sentiment at home.

The IHS Markit Italy purchasing managers index for manufacturing, a measure of the health of the sector, rose to 52.8 in December from 51.5 in the previous month.

The figure is lower than the 53.7 forecast by economists polled by Reuters but it is well above the 50 mark, which indicates a majority of businesses reporting improving conditions.

New export orders rose solidly after a slight decline in November and resulted in a rising proportion of businesses reporting growing employment.

December data also showed a renewed increase in buying activity, with reports that businesses were building inventories in response to improved sales and in anticipation of higher demand.

Lewis Cooper, Economist at IHS Markit, said that manufacturers had cited "hopes of improved demand and a robust economic rebound following the pandemic and positive vaccine news."

Italy is the eurozone's second largest manufacturing economy after Germany and the sustained growth in the sector has helped to limit the economic damage resulting from Covid-19 restrictions in the country.

Manufacturing activity picks up across eurozone

Valentina Romei

Growth in eurozone manufacturing activity accelerated in December helped by strong foreign demand and positive news on Covid-19 vaccines.

The IHS Markit eurozone purchasing managers index for manufacturing, a measure of the health of the sector, rose to 55.2 in December from 53.8 the previous month.

Chris Williamson, chief business economist at IHS Markit said: “Eurozone manufacturing ended 2020 on an encouragingly strong note, with production growth accelerating to one of the fastest seen over the past three years.”

“The solid performance of manufacturing amid the tightening of Covid-19 restrictions in the closing months of 2020 represents a major contrast to the lockdowns earlier in the year, with factories acting as a crucial support to the economy as the service sector is hit by tough social distancing measures,” he added.

The figures was the highest reading since May 2018, marginally lower than initial estimates but well above the 50 mark which indicates a majority of businesses reporting improving conditions.

The improvement across the eurozone was largely driven by Germany, where the index rose to 58.3. However, all major economies reported improving factory activity.

Businesses reported strong growth in new export orders, with the Netherlands and Germany registering by far the sharpest increases in export sales.

Production was partly impacted by delays in the delivery of supplies during December.

Confidence about the year ahead improved to the highest level in nearly three years as optimism rose on hopes that operating conditions would be closer to normal by the end of 2021. Italian and Dutch manufacturers were the most confident in December.

UK government ‘prepared to move incredibly quickly’ on restrictions as virus spreads

George Parker and Harriet Clarfelt

The UK government has “shown we are prepared to move incredibly quickly, within 24 hours if we think that is necessary” to toughen Covid-19 restrictions, the health secretary said on Monday, as he pointed to “tier 3 areas of the country where the virus is clearly spreading and increasing”.

“We can see at the moment that there are significant rises, especially in the areas that are still in tier 3,” Matt Hancock told BBC Radio 4’s Today programme. “In fact some of those areas are where it’s increasing the fastest”, he said.

Much of the country is already subject to stricter tier 4 rules, entailing the closure of non-essential shops and allowing just one member of two different households to meet in public places outdoors.

While the Oxford/AstraZeneca coronavirus vaccine was rolled out in the UK on Monday, Mr Hancock conceded that “we have some very difficult weeks ahead". He said the NHS “is under significant pressure, particularly in some parts of the country”, with the total number of people in hospital “now higher than it was in April at the height of the first peak”.

On school closures, Mr Hancock said: “We have taken the decisions that we have not to reopen schools in some of the most affected areas,” but “the right place for children in normal times on January 4 is to be back in school.”

He also said he was “incredibly worried about the South African variant” of the virus, which is “a very significant problem. It’s even more of a problem than the new UK variant”.

Mortgage approvals topped November estimates, new data shows

Valentina Romei

Mortgage approvals beat expectations in November, rising to their highest level since August 2007 despite a month-long lockdown in England as buyers rushed to purchase properties before the end of the government’s stamp duty holiday in March 2021.

UK mortgage approvals rose to 105,000 in November from 98,300 in October, data from the Bank of England showed on Monday. This is despite expectations of a decline due to England’s lockdown and marginally rising interest rates.

The ‘effective’ interest rates – the actual interest rates paid – on newly drawn mortgages rose 5 basis points to 1.83 per cent in November, close to the rate at the start of the year and higher than the trough of 1.72 per cent in August.

Consumer credit weakened during the lockdown with net repayments of £1.5bn and households started piling bank deposits again.

Households’ deposits increased by £17.6bn in November, up from £12.7bn in October. The increase in November was similar to the average flow between March and June of £17.5bn a month.

The data landed as a closely followed survey showed that UK manufacturing activity rose to a 37-month high in December, boosted by pre-Brexit purchases.

The IHS Markit UK purchasing managers index for manufacturing, a measure of the performance of the sector, rose to 57.5 in December from 53.8 in the previous month.

A large part of the latest expansion reflected clients bringing forward orders to guard against potential disruption caused by the end of the Brexit transition period, the report noted.

Investors too optimistic about airline recovery, Citi analysts suggest

Naomi Rovnick

Investors have become too optimistic about an airline industry recovery in 2021, analysts have warned.

“The multitude of vaccine announcements triggered a stampede,” of investment into the airline sector in the fourth quarter of 2020, analysts at Citi led by Mark Manduca said in a research note, leading to “some highly frothy valuations.”

They also cautioned that airlines and their suppliers were “more cautious” than the investor community.

Coronavirus vaccines would not be a “silver bullet” for air travel recovery, the analysts said, because of the slow pace of vaccine rollouts so far.

The World Health Organization has warned that vaccines will not end the pandemic, while according to one survey cited by Citi almost four in 10 Americans are unwilling to take the shots.

And while business travel accounts for around 40 per cent of airline revenue, Citi said, the pandemic-induced shift to online meetings was set to continue, reducing corporate travel by around 25 per cent compared to 2019.

“We expect the recovery to be more truncated and jagged than expected,” the Citi team said.

Global stocks rise as markets kick off 2021

Hudson Lockett, Daniel Shane and Camilla Hodgson

European equities bounded into 2021 with indices up across the board, while the British pound hovered at its highest level since early 2018.

Europe’s benchmark Stoxx 600 index rose 1.6 per cent in morning trading on Monday, while London’s FTSE 100 gained 2.9 per cent, Germany’s Xetra Dax added 1.3 per cent and France’s CAC 40 notched 1.9 per cent.

Gains in Asia also helped push MSCI’s World Price Index to another record high, surpassing its previous late-December peak.

Jim Reid, a strategist at Deutsche Bank, said the recent post-Christmas optimism had been “supported by the passage of fresh Covid-19 relief in the US, which President Donald Trump signed on December 27, as well as the agreement of a post-Brexit trade deal between the UK and the EU.” All eyes are now on the rollout of vaccines, he added, with traders hopeful of a return to relative normality soon.

Sterling was flat at $1.3668 — holding at levels not seen since early 2018 — following the agreement of a Brexit trade deal with the EU.

The stock gains came despite the worsening pandemic, which prompted UK prime minister Boris Johnson to put the country on standby for tighter social restrictions as infections soared.

Read the full story here.

UK pound falls against euro as Covid cases surge

Naomi Rovnick

Sterling dropped against the euro on Monday as relief about a post-Brexit trade deal was overshadowed by concerns about surging UK coronavirus cases.

The pound fell by 0.7 per cent against the common currency to purchase €1.12. Against a weakening dollar, sterling traded flat.

On Sunday, the UK recorded more than 50,000 cases of the virus for the sixth day running, the opposition Labour party called for a third national lockdown and prime minister Boris Johnson hinted in a BBC interview that tougher restrictions were likely.

The UK has been hit by a new strain of the virus that pushes the R number — the measure of how many people an infected person will infect on average — up by 0.4 to 0.7. It is currently 1.1 to 1.3, according to official data.

“Given the rapid spread of the new variant, it looks like the UK will need a third national lockdown, with a severity somewhere between the first and second national lockdowns,” said David Mackie, an economist at investment bank JP Morgan.

“And although the vaccination programme has started, the pace is nowhere close to mitigating the impact of the new variant.”

Retail footfall drops as UK consumers stay at home

Harriet Clarfelt

Tougher coronavirus rules rolled out over the Christmas period knocked footfall across UK retail destinations, with a year-on-year decline of almost three-quarters in the strictest tier 4 areas.

Overall, retail footfall in the UK dropped more than a half last week compared with the same period in 2019, new data from Springboard showed on Monday.
London and large city centres posted the greatest decline, with footfall down more than four-fifths.

Tier 4 locations – whose inhabitants are under ‘stay at home’ instructions – were worst hit, with a fall of 72.2 per cent. Tier 3 locations, classified as ‘very high alert’, endured a contraction of just over a third.

“The end of the festive trading period and tightened government restrictions unsurprisingly saw footfall in UK retail destinations drop significantly at the end of 2020,” said Diane Wehrle, insights director at Springboard.

“Moving into a new year, with the extension of tier 4 across virtually all of England and lockdowns in place in the devolved nations, retailers are unlikely to see any respite until restrictions are eased in the coming weeks or months,” she added.

Greece tightens lockdown after vaccination programme hits delays

Kerin Hope in Athens

Greece has tightened its current lockdown after relaxing some measures over the holiday period as the country’s vaccination programme against Covid-19 ran into delays.

Stores that offer “click-and-collect” services, hairdressers, beauty salons and bookshops closed again on Monday, while the night-time curfew was brought forward to 9pm instead of 10pm.

A government official said the measures would remain in place for at least one week. He said that schools were expected to re-open on January 11.

Greece has started to vaccinate healthcare workers and elderly residents in care homes, but the government website where citizens can register to receive jabs is not scheduled to open before January 12 — two weeks later than expected — health authorities said on Monday.

The daily number of Covid-19 fatalities has fallen by half during the country’s eight-week lockdown to contain a second wave of coronavirus. New confirmed infections slowed over the holidays but the decline was partly due to a sharp reduction in testing, health officials said.

Greece reported 652 new Covid-19 cases over the weekend, raising the overall caseload to 140,099. The death toll increased by 76 to 4,957.

Brookfield to take real estate arm private in $5.9bn deal

Ortenca Aliaj and James Fontanella-Khan

Brookfield Asset Management has made an offer to take its real estate arm Brookfield Property Partners private in a $5.9bn deal.

The Canadian investment group has offered $16.50 in cash for every share in the property company it does not own, indicating a near 15 per cent premium on its trading price as of December 31.

Brookfield’s decision to delist its property business comes as US real estate companies have taken a huge hit during the coronavirus pandemic, with lockdowns and home working dramatically reducing occupancy and utilisation rates.

Brookfield Property Partners’ share price dropped more than 50 per cent in April and has only recently started to recover as restrictions on businesses such as malls and restaurants were partially lifted.

“The privatisation will allow us to have greater flexibility in operating the portfolio,” said Nick Goodman, chief financial officer of Brookfield Asset Management.

Sturgeon announces legal requirement to stay at home

Mure Dickie in Edinburgh

Nicola Sturgeon has announced that her Scottish government will introduce a legal requirement for people in Scotland to stay at home except for essential purposes until the end of January at least.

Ms Sturgeon told an emergency session of the Scottish parliament that the emergence last year of a new coronavirus variant had been a "massive blow" and the situation with the pandemic in Scotland was "extremely serious".

The Scottish first minister said the new legal restrictions would be similar to those imposed during the first coronavirus lockdown last March.

"I am more concerned about the situation we face now than I have been at any time since March," she said.

Ms Sturgeon said Scotland was currently roughly in a similar situation with coronavirus to that four weeks ago in London, where infections and hospital admissions have since soared.

While infection rates in Scotland were still substantially lower than in many areas of England, quick and decisive action was still needed, she said.

"The situation in some other parts of the UK where case numbers are already much higher than here — and where the contribution of the new variant is already greater — shows what may lie ahead if we don’t," Ms Sturgeon said.

“Delay or prevarication in the face of this virus almost always makes things worse," she said.

Schools in Scotland would be closed to most pupils until at least February, she said. Limits on outdoor contacts would be tightened with only two people aged 12 or over from two different households allowed to meet at a time.

Catalonia to face tougher virus restrictions

Ian Mount

The Spanish region of Catalonia has announced new restrictions on businesses and movement after coronavirus cases and hospitalisations continued to rise through the holidays.

Regional health minister Alba Vergés announced that for 10 days, starting on January 7, residents will be confined to their municipality, shopping centres of more than 400 square metres will remain closed and only essential stores will be allowed to open during weekends. “We have to reduce social interaction even further and try to keep the virus at bay," Ms Vergés said.

Schools will re-open as planned on January 11.

On Monday, Catalonia’s health service announced 1,314 new cases in the previous day, with 9.5 per cent of those tested returning positive results. The transmission rate (or R number) in Catalonia rose to 1.27, from 1.11 the previous day.

The new restrictions come as Spain has struggled to roll out the first round of the BioNTech/Pfizer Covid-19 vaccine. Catalonia only used about 8,000 of the 60,000 doses it received, and the capital region of Madrid only used some 3,100 of its first 49,000. Overall, Spain has only used about 18 per cent of the jabs it has received.

Spain will update its virus numbers later on Monday. The last statistics provided on New Year’s Eve showed 280 new cases per 100,000 people in the previous 14 days. More than 50,000 people have died from Covid-19 in the country, according to health ministry statistics.

Oil dips as Opec and allies meet for production debate

Anjli Raval

Oil prices retreated from earlier highs ahead of a meeting of ministers from Opec and Russia, as producer countries decide whether to unleash more barrels on to a market under threat from the latest coronavirus-related restrictions. 

In the run-up to a virtual meeting of the group of 23 countries, Brent crude eased to as low as $51.65 a barrel, a pullback from the nine-month high of $53.33 struck earlier in the day. West Texas Intermediate, the US marker, dipped as low as $48.15.

Oil ministers from the so-called Opec+ group must respond to a complex outlook for crude demand, with the reopening of economies in some parts of the world but renewed lockdowns in others.

The global rollout of vaccines has driven positive sentiment and pushed prices back above $50 a barrel, but case numbers in countries such as the UK have accelerated sharply, prompting new government curbs.

“Infection rates are still high in western industrialised countries, meaning that lockdowns will have to be extended in many places,” said Barbara Lambrecht, an analyst at Commerzbank. “The buoyant start to the year on the oil market risks faltering.”

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Moderna boosts vaccine production

Hannah Kuchler

Moderna is boosting manufacturing capacity to produce a minimum of 600m Covid-19 vaccine doses this year.

The Boston-based biotech raised its guidance for full-year production by 100m doses, while keeping the top end of its forecast at 1bn doses. Shares in Moderna rose 1.2 per cent to $105.71.

Moderna said it had supplied 18m doses to the US so far, after the vaccine received an emergency use authorisation on December 18. The US has ordered 200m doses, the first 100m of which are expected to be delivered in the first quarter.

The company has also sent supplies to the Canadian government, which has purchased 40m doses.

Boris Johnson set to announce new restrictions in England

George Parker

Boris Johnson is set to announce dramatic new Covid-19 restrictions across England in a national address at 8pm on Monday, as Downing Street admitted that cases of the virus were “rapidly escalating”.

Parliament will be recalled on Wednesday to debate the new measures and the escalating health emergency, with speculation that the prime minister will put the country into a third national lockdown.

Mr Johnson has not ruled out school closures, in spite of his desire to keep them open, and Number 10 declined to rule out the possibility of curfews to force the country to stay at home.

“The spread of the new variant of Covid-19 has led to rapidly escalating case numbers across the country,” Downing Street said. “The prime minister is clear that further steps must now be taken to arrest this rise and to protect the NHS and save lives.”

Aldi sales increase 10.6% in weeks before Christmas

Jonathan Eley

Discount supermarket Aldi said its UK sales rose 10.6 per cent in the four weeks leading to Christmas Eve amid strong demand for wine and premium products.

The growth was ahead of the 7.9 per cent increase reported in the same period of 2019 and is likely to have been driven largely by new store openings.

Aldi also said that “thousands of customers” ordered groceries online through its click-and-collect service and delivery partnership with Deliveroo, without providing further details.

Discounters have traditionally steered clear of grocery delivery, arguing that it is incompatible with their low-cost business model. But their lack of an online channel and convenience store network caused their sales growth to slow in the initial phase of the Covid-19 pandemic, when customers preferred to either shop locally or order online.

In November Aldi extended a trial using Deliveroo to cover more than 120 stores and in the same month pledged to offer click-and-collect services at 200 stores before Christmas.

UK chief executive Giles Hurley said the company was expecting “significant sales growth” in 2021 as it opens new stores. It is targeting 1,200 stores by 2025, up from just over 900 now and has pledged to spend another £3.5bn annually with British suppliers as part of this expansion.

“Our growth will lead to additional jobs and investment in our UK supply chain,” Mr Hurley added.

Wm Morrison is due to report on Christmas trading tomorrow; analysts are expecting same-store sales growth of 6.9 per cent for its third quarter, which includes the festive period.

Tesco and J Sainsbury are due to release updates the following week.

Sterling falls ahead of new restrictions in England

Naomi Rovnick

Sterling’s decline against the dollar and the euro steepened on Monday afternoon ahead of a press conference where UK prime minister Boris Johnson was expected to announced strong new coronavirus restrictions.

The UK currency, which had been trading at its highest against the dollar since early 2018 after Britain secured a post-Brexit trade deal with the EU, began falling against the US currency around lunchtime in London and was most recently 0.8 per cent lower at $1.36.

Against the euro, sterling widened a fall that began earlier in the session to drop 1.2 per cent, buying €1.106.

Northern Ireland officials to discuss possible Covid measures

Arthur Beesley in Dublin

Northern Ireland’s devolved executive will meet on Monday night to discuss possible new coronavirus restrictions, the leaders of the regional government indicated.

The meeting comes as Boris Johnson, UK prime minister, prepares to impose stricter restrictions on England, although the authorities at Stormont outside Belfast had already put Northern Ireland under a six-week lockdown on December 26.

According to a Twitter message by first minister Arlene Foster of the Democratic Unionists, executive leaders will discuss the coronavirus response throughout the UK with Mr Johnson’s government at 5pm. “There will be an executive meeting at 6pm immediately afterwards,” she said.

Michelle O’Neill of Sinn Féin, the deputy first minister, said “urgent” talks were required to discuss the “fast-moving and volatile” situation. “Urgent decisive action is required to respond.”

Northern Ireland reported 1,801 new coronavirus infections on Monday, bringing the total to 79,873. A further 12 deaths took the overall number of fatalities to 1,366.

UK Labour leader says school closures ‘inevitable’ part of any lockdown

Jim Pickard

At the weekend Labour leader Keir Starmer called for a national lockdown but stopped short of demanding that schools should close — prompting anger from some leftwingers.

Some MPs and union leaders wrote to Sir Keir on Saturday urging him to oppose the re-opening of schools this week.

But by Monday afternoon the Labour leader conceded that the closure of schools would be an “inevitable” part of any lockdown.

“We need to take action this week on national restrictions and that needs to include schools,” he said. “Shutting schools without a national plan is not going to work.”

The remarks came ahead of possible new restrictions for England, with Boris Johnson scheduled to give a public address this evening.

G20 grants debt relief to Ivory Coast, Comoro islands and Republic of Congo

Jonathan Wheatley in London

Ivory Coast, the Comoro islands and the Republic of the Congo have become the first countries to be granted debt relief in 2021 under a G20 initiative launched last year in the early stages of the coronavirus pandemic.

The Paris Club group of creditor nations, one of the bodies co-ordinating the initiative, said the three countries had been granted an extension of the G20’s debt service suspension initiative, initially open between May and December 2020, allowing them to defer repayments on country-to-country loans from G20 members falling due between January 1 and June 30 this year.

Data from the World Bank, also involved in the initiative, suggest that if all bilateral creditors take part, the Comoros will defer repayments totalling $1.9m in the period; the Ivory Coast will defer as much as $158m and the Republic of the Congo as much as $190m.

The DSSI is designed to deliver immediate cashflow relief to poor countries struggling to meet the fiscal costs of the pandemic but does not reduce their debt burdens — repayments due in the first half of this year must be repaid in full over the coming six years.

The scheme is open to 73 of the world’s poorest countries, of which 46 have so far taken part, deferring repayments last year worth about $5bn. That figure is about a quarter of the initial target, and the scheme has been criticised for failing to secure the involvement of private sector creditors.

New York hospitals face fines if they do not use all their vaccine allocations

Peter Wells in New York

New York governor Andrew Cuomo has said hospitals in the state will be fined and have their coronavirus vaccines taken back if they do not use their allotment of doses within seven days.

Mr Cuomo said on Monday morning that the state health department had written to all New York hospitals warning that they must use all of their vaccine inventory this week or face a fine of up to $100,000. Following this, all facilities must administer all allocated doses within seven days of receipt or face being fined or having subsequent allocations of the vaccine reduced.

The “use it or lose it" approach is designed to encourage hospitals to ramp up administering their vaccines or get laggards pass their vaccines on to facilities that are close to exhausting their allotment. Statewide, hospitals had administered about 46 per cent of the total allocation, but rates varied widely in individual facilities. Three of the state’s 194 private and public hospitals had used up more than 90 per cent of their doses, while three had used less than 20 per cent, Mr Cuomo said at his regular press conference.

The governor said public leaders of regions where vaccine administration had been slow — including New York City Mayor Bill de Blasio — needed “to take personal responsibility for their hospitals”.

In a further effort to boost the roll-out of the vaccine, the state will begin setting up drive-through facilities and ask for retired doctors and nurses to help with administering the shots.

Mr Cuomo expected that by the end of this week, 85 per cent of residents and nursing home staff would have had the vaccine, with the remaining 15 per cent projected to be completed over the next fortnight. Across the state, some 300,000 vaccine doses had been administered to nursing home residents, doctors, nurses and other eligible people.

New York became the fourth state to confirm more than 1m coronavirus cases, according to data on Sunday from Covid Tracking Project, and set a daily record for infections of 16,802 on December 31. On the final day of 2020, the state became the first in the US to confirm 30,000 deaths related to coronavirus.

Mr Cuomo said on Monday that there were 8,251 people in New York hospitals with coronavirus. That is nearly 44 per cent of its peak from mid-April. The governor said regionwide measures of hospital capacity were all below 70 per cent full, although some, particularly in hotspots in the west of the state, were approaching that level.

UK daily Covid hospitalisations hit record level

Anna Gross in London

Daily admissions of Covid-19 patients have surpassed the peak seen in April to reach a record, according to data released on Monday as the UK government prepared to tighten restrictions on millions of Britons.

A total of 3,145 people were admitted to hospital on January 2 — higher than the previous peak of 3,099 seen on April 1.

Meanwhile, the number of beds occupied by Covid-19 patients on mechanical ventilators stood at 2,310 on Monday morning, approaching the April peak of 2,881.

The total number of beds occupied by Covid-19 patients reached a record last week, rising above the April high of 18,970. The number has continued to rise and, as of Monday morning, there were 26,626 beds occupied by patients with the virus.

Ireland curbs non-essential hospital services in effort to free up beds

Arthur Beesley in Dublin

Ireland has curbed hospital services in an effort to free up capacity as coronavirus infections surge to record levels.

The move came two days ahead of a key government decision on whether it should proceed with already-delayed plans to reopen schools after Christmas on January 11 or impose a further shutdown.

Health officials on Monday reported 6,110 Covid-19 infections, by far the most on a single day since the pandemic struck last March. The number of new cases was up from 4,962 cases on Sunday, itself a record, after a warning that figures in coming days would reflect the delayed reporting of more than 9,000 new infections.

The number of people in hospital with the disease rose by 92 on Monday to 776 — 70 of them in intensive care. But Philip Nolan, chairman of the government’s disease modelling group, said data pointed to the possibility of 1,500-2,000 hospitalisations and 200-400 intensive care admissions by mid-January “if we do not act” to radically cut transmission of the virus.

Liam Woods, a director with the Health Service Executive, said: “We are introducing curtailments in non-essential services in adult hospitals in order to cope with increasing Covid-19 admissions. This will be subject to ongoing review.”

Boris Johnson announces new lockdown for England

Jim Pickard and Jasmine Cameron-Chileshe

Boris Johnson has announced a new lockdown for England with schools to be closed until mid-February and all citizens urged to stay at home in the country’s toughest set of restrictions since early 2020.

At the same time Mr Johnson put teenage school pupils on notice that exams will not go ahead as normal this year.

The UK prime minister said that hospitals were under more pressure than at any time since the start of the pandemic, with the number of coronavirus deaths up 20 per cent in only a week.

“It’s clear that we need to do more together to bring this new variant under control while our vaccines are rolled out,” he said in a public address at 8pm.

Mr Johnson said the public should stay at home apart from essential trips such as shopping, exercise, medical assistance or to escape domestic abuse.

Workers will be asked to work from home, except in professions where it is impossible to do so, for example in the NHS and construction.

While most school children will have to study from home until the February half term, the children of key workers and vulnerable children will be able to attend school in person, while early years settings such as nurseries and special schools will remain open.

It is likely that students will not be able to return to their universities and will be expected to study from their current residence where possible until next month. In-person teaching will likely only take place for those studying for critical sectors such as health care.

While a formal announcement on GCSE and A Levels exams has not been announced by the Department for Education or Ofqual, the government has signalled that exams will not be carried out as originally planned.

All non-essential retail stores alongside hospitality and personal care services such as hairdressers must close. Restaurants will be permitted to offer delivery and takeaway service but takeaway or the click and collect of alcohol will no longer be allowed.

Places of worship will remain open for communal prayer however social distancing rules will need to be followed, while outdoor team sports are now banned under the new rules with exceptions made for elite sports such as the premier league and PE lessons for pupils who will be attending school.

The prime minister briefed the cabinet earlier this evening and discussed the new measures with labour leader Sir Keir Starmer.

He ended his latest grim announcement with a pledge that through the "miracle of science" enough people would eventually be vaccinated to emerge from the latest lockdown.

Boris Johnson faces calls to boost business support after new lockdown

Jim Pickard

Boris Johnson faced calls for further financial support for companies – from both business groups and union leaders – after announcing England’s toughest set of restrictions since last spring.

The prime minister’s message to the general public to stay at home, with schools shut until mid-February, came amid fast-rising rates of coronavirus infections.

Adam Marshall, director-general of the British Chambers of Commerce, said companies would understand why Mr Johnson felt compelled to act.

“But they will be baffled and disappointed by the fact that he did not announce additional support for affected businesses alongside these new restrictions,” he said.

Mr Marshall said tens of thousands of firms were already in a precarious position and now faced a period of further hardship unless the government “stepped up” financial support.

“The lockdowns announced in England and Scotland today are a body blow to our business communities, hard on the heels of lost trade during the festive season and uncertainty linked to the end of the Brexit transition period,” he said.

“Billions have already been spent helping good firms to survive this unprecedented crisis and to save jobs. These businesses must not be allowed to fail now, when the vaccine rollout provides light at the end of this long tunnel.”

Roger Barker, director of policy at the Institute of Directors, said the Treasury should increase the discretionary grant scheme for local authorities to help struggling companies.

He also suggested that the government would need to extend the job support scheme – known as the “furlough” – which will be wound up at the end of March.

“It will also be crucial to smooth the cliff-edge in support that’s fast approaching in the spring,” he said.

“Many companies will have next to no chance to build up steam before the end of the first quarter, when support measures are set to wind down. Indications on future policy support and stimulus will be crucial for directors to factor into their plans now.”

Frances O’Grady, general secretary of the Trades Union Congress, said the existing financial package was just not good enough to cope with the renewed public health emergency.

“Without more support, jobs will be lost and businesses will close,” she said. “Ministers must act quickly by providing targeted help for hard-hit industries, boosting sick pay to a real Living Wage so that people can afford to self-isolate and increasing Universal Credit….government must not force a choice between lives and livelihoods.”

UK ministers plan to introduce pre-flight tests for foreign travellers

Jim Pickard

Ministers are finalising proposals to tighten up entry into England from abroad with plans to introduce pre-flight PCR tests for anyone entering the country.

The announcement, expected later this week, will mean that anyone hoping to travel to England will have to receive a negative coronavirus test no more than 72 hours before travelling.

Under a new system introduced in December, visitors from abroad already have to self-isolate on arrival and then take a PCR coronavirus test five days later under a scheme called “Test and Release”.

US stocks suffer worst day since October on worsening pandemic

Eric Platt in New York, Hudson Lockett and Daniel Shane in Hong Kong and Camilla Hodgson in London

US equities slid and European stocks gave up an early advance as new national lockdowns and key US Senate elections loomed.

Wall Street’s benchmark S&P 500 dropped 1.5 per cent on Monday — its worst day since October. The tech-heavy Nasdaq Composite lost 1.5 per cent.

Shares in more than 80 per cent of companies within the S&P 500 fell. Leading the declines were those companies in the industries hardest hit by the coronavirus pandemic, including airlines, hotels and cruise operators.

Interest rate-sensitive sectors also ranked among the biggest losers, with property companies and utilities sliding as a measure of inflation expectations rose. The 10-year break-even rate, which is derived from prices of US inflation-protected government securities, breached 2 per cent on Monday for the first time since late-2018.

Read more on today's market moves here.

Northern Ireland schools face another shutdown

Arthur Beesley in Dublin

Schools in Northern Ireland face a prolonged shutdown after an emergency meeting of the region’s devolved government to discuss new coronavirus restrictions.

In a statement shortly before 10:30pm on Monday, the executive said ministers had indicated that “there will be an extended period of remote learning for schools”.

Such measures will be in addition to the six-week regional lockdown that began on December 26.

The statement followed an “urgent” executive meeting that came as Boris Johnson imposed a third national lockdown in England.

Despite the clear signal that the scheduled return of schools next week will be put back, the final decision must await the executive’s weekly meeting on Tuesday.

The executive said the education minister would bring forward a paper at that point on schools, although it did not elaborate. But Michelle O’Neill of Sinn Féin, the deputy first minister, said on Twitter a little earlier that the proposal on schools would include “recommendations on exams”.

While non-essential retailers and the hospitality sector are already closed, first minister Arlene Foster of the Democratic Unionists said in advance of the meeting on Monday that the executive faced “very difficult decisions” to confront surging coronavirus infections.

“Schools will be part of the discussion tonight. I was very clear that I would like to keep the schools open for as long as possible,” Mrs Foster said.

“But if it is the case that we do need to close schools as we did in March of last year I will deeply regret that, but we will of course take whatever action is needed based on the medical evidence in front of us.”

California finds further cases of variant strain as New York confirms its first

Peter Wells in New York

California has confirmed further cases of a fast-spreading variant of coronavirus, Gavin Newsom revealed on Monday.

The governor said this afternoon the state now had six cases of the new strain, which was first identified in the UK late last year.

Three new cases were detected in San Diego county — where California's first known case of the variant was identified last week. Two new cases were found in San Bernadino county.

Separately, New York Governor Andrew Cuomo revealed on Monday afternoon the state had confirmed its first case of the UK variant of coronavirus. An individual from Saratoga county tested positive for the strain and had no known travel history, Mr Cuomo wrote in a message on Twitter.

The UK strain of coronavirus is more contagious, but is not considered to be more dangerous. The first US case was confirmed by Colorado health officials on December 29.

Data on Monday from California's health department revealed 29,633 coronavirus cases reported over the past 24 hours, following three straight days of more than 40,000 cases apiece. A further 97 deaths were attributed to coronavirus, the smallest daily toll in a week.

Mr Newsom cautioned that the slight retreat in the numbers was probably a lull before a “surge on top of the surge” that could stem from increased social interaction during the festive season.

The new figures took the total number of confirmed coronavirus cases in California over 2.4m for the first time, more than any other state. The death toll, at 26,635, is second only to New York's.

The number of people in California hospitals rose to a record 22,003, while there are just 1,337 intensive care unit beds available across the state. Mr Newsom said there had been a seven-fold increase in the number of hospitalisations over the past two months, while the number of people in ICU beds has risen six-fold over the same period.

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