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US death toll rises by 2,198
The number of deaths attributed to coronavirus in the US rose by 2,198 over the past 24 hours, as confirmed infections surpassed the 1m mark.
The US has completed nearly 5.8m tests with just over 1m of them positive, according to the latest data compiled by the Covid Tracking Project. A total of 52,525 people have died.
Italy downgraded by Fitch to one notch above junk
Fitch has downgraded Italy’s credit rating to a single notch above junk status, saying the jump in debt levels resulting from the coronavirus crisis will raise doubts about the sustainability of Rome’s borrowings.
In an unscheduled update on Italy's creditworthiness, the rating agency said it expects the country’s debt to GDP to rise about 20 percentage points this year to 156 per cent of output, as an 8 per cent slump in the economy is accompanied by a surge in spending.
“The downgrade reflects the significant impact of the global Covid-19 pandemic on Italy's economy and the sovereign's fiscal position,” Fitch said on Tuesday evening. “According to our baseline debt dynamics scenario, the [debt] to GDP ratio will only stabilise at this very high level over the medium term, underlining debt sustainability risks.”
The Italian government provided additional information which resulted in a rating “different than the original rating committee outcome”, Fitch said, adding that the current crisis had caused it to bring forward its scheduled rating review from July.
Roberto Gualtieri, Italy's finance minister, responded to the action by Fitch by saying that "the fundamentals of Italy's economy and public finances are solid".
US may test airline passengers from Brazil for coronavirus
Demetri Sevastopulo in Washington
Donald Trump is considering requiring airline passengers from Brazil to be tested for coronavirus, amid concerns that travellers could exacerbate the pandemic in Florida, which has been less hit than other big US states.
Speaking after a meeting with Ron DeSantis, Florida’s Republican governor, Mr Trump said he was looking “very strongly” at whether he should require passengers from South America, including Brazil, to be tested for the virus.
“We’re looking at doing it on the international flights coming out of areas that are heavily infected … Brazil is getting to that category,” Mr Trump told reporters. “We're looking at it very strongly.”
Sitting beside Mr Trump in the Oval Office earlier on Tuesday, Mr DeSantis said he was concerned about a possible influx of infected travellers from Brazil and that airlines should bear responsibility for testing all their passengers.
“Brazil and some of those places which have a lot interaction with Miami, you're gonna probably see the epidemic increase there as their season changes. We could be way on the other side, doing well in Florida, and then you could just have people kind of come in,” Mr DeSantis said in an exchange before their private meeting.
Asked by the president whether he would ever want to ban travel from a country, Mr DeSantis responded: “If they were seeding the United States … for sure.” Mr Trump banned most travel from China in late January, and imposed similar restrictions on travel from most of Europe the following month. Mr Trump told the Florida governor to keep the administration informed about the situation over travel into Florida, saying, “Let us know”.
Florida has just under 33,000 of the more than 1m confirmed cases of coronavirus in the US. The death toll in the state hit 1,171 on Tuesday, which was relatively low for a state of 21.4m people.
Fed's Jackson Hole summit in flux with lodge closed
James Politi in Washington
Central bankers had plenty to worry about already but the Kansas City Fed has landed them with some more bad news: the Jackson Lake Lodge, the venue for its annual pow-wow of global monetary policymakers in late August, will be closed for the occasion.
“The Federal Reserve Bank of Kansas City was made aware this afternoon that the Jackson Lake Lodge will be unable to open for the 2020 season,” it said on Tuesday.
“We are considering the implications of this announcement for our annual economic symposium and will communicate additional details when they are available,” it said.
The statement begs the question of whether the gathering will be held at all, or take place in a virtual setting, like the spring meetings of the IMF and World Bank earlier this month.
But it also leaves a glimmer of hope that if the pandemic subsides and some travel restrictions are lifted, the Kansas City Fed might just find an alternative site for the Rocky Mountain meeting, and preserve the tradition. Even if Jay Powell, the Fed chair, and Christine Lagarde, ECB president, have to wear masks as they ponder their extraordinary measures and deflation risks, it will be something to look forward to.
US gives out $52bn in new small business loans
Courtney Weaver in Washington
The Small Business Administration has given out more than $52bn of its new small business rescue funding, a sign that the programme is picking up speed after being beset by technical glitches on Monday.
More than 475,000 Paycheck Protection Program loans had been approved as of 1pm on Tuesday, the SBA said. Those loans were administered by more than 5,100 lenders. Nearly $30bn of those funds had gone through lenders with a market capitalisation of less than $10bn. The overall $52bn that has been administered so far represents just over 16 per cent of the total $310bn that has been allocated for this round.
The SBA on Monday re-launched the PPP program after the first $349bn tranche of the programme was oversubscribed. Congress approved an additional $310bn in funds for the programme last week.
However, bankers from US lenders complained they encountered delays and outages as they tried to log on to the system approving loans.
Starbucks expects financial hit from virus to intensify in June quarter
Starbucks said it expects the financial hit from coronavirus to intensify in the current quarter in the latest sign corporate America is not expecting a recovery from the crisis any time soon.
Shares in the coffee chain had rallied almost 40 per cent since lows hit last month, driven by hopes of a rebound in China — its second-largest market — and a gradual reopening in the US. But they fell 2 per cent in after-hours trading today.
While Starbucks said it expected the sales it generates from China to “substantially recover”, it was more cautious about the US. The Seattle-based group, which has 32,000 outlets globally, said the overall impact of the pandemic would be “significantly greater” during the current three-month period than in its fiscal second quarter.
Starbucks produced revenues of $6bn in the quarter to the end of March, down 10 per cent on a like-for-like basis, while net income slumped by half to $328m.
About half of Starbucks' company-operated outlets in the US, as well as more than three-quarters in Canada, Japan and the UK, remain closed. Almost all had reopened in China, but with reduced hours and limited seating.
Alphabet revenue growth slows on hit to online advertising
Richard Waters in San Francisco
Google’s growth slowed sharply in the first quarter as the coronavirus crisis ate into some of the most important categories of online advertising, according to figures released on Tuesday.
Alphabet, the internet company’s parent, said its revenue growth slowed to 13 per cent, compared to 18 per cent in the final months of 2019. For the second quarter, most analysts are expecting the company to suffer its first-ever revenue contraction.
Ruth Porat, chief financial officer, said Google — which supplies almost all of Alphabet’s revenue — had a strong start to the year, before the company “experienced a significant slowdown in ad revenues” in March.
The internet holding company reported gross revenue of $41.16n, compared to $36.3bn a year before, and earnings of $9.87 a share. A year ago it reported earnings of $9.50 a share, after taking a $2.40 a share hit from a fine in the EU.
The revenue slowdown is slightly less severe than Wall Street expected and Alphabet’s shares edged up more than 3 per cent in after-market trading. The stock price had already rebounded 17 per cent from the low point it hit a month ago, though it is still 17 per cent from its record high in February.
Despite the broader advertising slowdown, YouTube had 33 per cent revenue growth in the first quarter, a slight increase from the preceding three months — the first period for which Alphabet disclosed financial details for the video site. The 52 per cent revenue growth at the Google cloud business also matched the final quarter of last year.
Sundar Pichai, chief executive, told Google workers earlier this month that the company was stopping all but the most essential hiring in an attempt to hold costs down in the face of an expected advertising slump. The company had earlier predicted it would boost its workforce this year at even faster pace than in 2019, when headcount went up 20 per cent.
Ford expects $5bn adjusted operating loss in second quarter as sales slump
Ford expects to lose more than $5bn before interest and taxes in the second quarter as fewer vehicles are sold globally, said Tim Stone, chief financial officer.
Most of the company’s plants around the world remain shuttered because of the coronavirus pandemic. While Ford today said it plans to reopen European factories on May 4, and at other locations during the second quarter, the only plants producing and selling cars now are its joint ventures in China, where the virus first took hold and where the economy is reopening.
The Dearborn, Michigan-based company posted an adjusted free cash outflow for the quarter of $2.2bn. Cash use has been high as the company continued to pay suppliers after shutting factories in March, but Ford expects the outflow to decline after early May.
The company has drawn $15.4bn from two credit lines and sold $8bn worth of bonds this quarter. “We believe the company’s cash is sufficient to take us through the end of the year, even with no additional vehicle wholesales or financing actions,” Mr Stone said.
Ford reported a first-quarter net loss of $2bn on April 17, compared to net income of $1.1bn for the same period a year earlier. Revenue declined nearly 16 per cent to $34bn.
Tech and defensive stocks lead retreat for Wall Street
US stocks fell for the first time in three days, taking a breather from the recent stimulus-inspired rally of recent sessions.
The S&P 500 closed 0.5 per cent lower as investors dumped defensive stocks, leaving sectors such as consumer cyclicals, healthcare and telecommunications services in the red. Information technology was the biggest loser, down 1.9 per cent.
The tech-focused Nasdaq Composite fared worse, ending 1.4 per cent lower.
Global stocks posted back-to-back gains on Monday after the Bank of Japan revealed plans for a new round of stimulus measures.
Government bonds were firmer today, with yields declining. The yield on the benchmark 10-year US Treasury was down 0.05 percentage points at 0.61 per cent.
IMF approves $3.4bn in emergency funding for Nigeria
The IMF has approved $3.4bn in emergency funding to Nigeria, Africa's biggest economy, in what is the fund's largest disbursement to assist a country on the continent to deal with the coronavirus pandemic.
"Even before the Covid-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita GDP levels," the fund said today. "The pandemic — along with the sharp fall in oil prices — has magnified the vulnerabilities, leading to a historic decline in growth and large financing needs."
Nigeria, which is Africa's biggest crude producer, has been hit hard by the economic slowdown and slump in oil prices caused by the pandemic. It requested the amount, along with $2.5bn from the World Bank and $1bn from the African Development Bank, earlier this month to mitigate the economic fallout.
Finance minister Zainab Ahmed has warned that without the funding and other aggressive steps the country's economy could contract by up to 3.4 per cent this year. But most economists, including those at the IMF, predict Africa's most populous country will slip into its second recession in five years.
Crude accounts for more than half of government revenues and nearly all of Nigeria's foreign exchange.
The IMF said the funding will be used to finance the budget, shore up falling international reserves and provide temporary spending increases to contain the economic impact of the pandemic.
The IMF has said it will deploy more than $18bn to assist dozens of African countries that have requested assistance.
US coronavirus cases top 1m mark
The number of coronavirus infections in the US has topped 1m, according to data compiled by Johns Hopkins University.
Since the outbreak began, 1,003,328 people in the US have tested positive for Covid-19, representing about one-third of the global total.
The most recent data from Covid Tracking Project as of 2.13pm ET on Tuesday put the US's infections tally at 985,064.
Trump prepares to order meat-processing plants to stay open
Demetri Sevastopulo and Aime Williams in Washington
President Donald Trump is preparing to order meat-processing plants to remain open, amid mounting concerns about the US food supply chain with a number of large plants closing as workers contracted coronavirus.
Mr Trump plans to use the Defense Production Act — a Korean war-era law that allows the government to order companies to take action for security reasons — to force meat-packing companies to keep plants open, according to a senior administration official.
The government would help the companies take extra precautions to protect their workers by arranging for the provision of additional protective gear, the official said. The order could be signed as early as today, the official added.
The move comes after Tyson Foods, the largest US meat company, warned this weekend that the nation's food supply chain was “breaking” because of coronavirus cases at meat-packing plants. Tyson Foods has closed three slaughterhouses over the past week because of the spread of coronavirus at some facilities and to allow for the testing of workers.
While the order would force meat-packers to keep producing meat and could help curb expected food shortages, the move was criticised by unions which raised concerns about the impact on the workers at plants across the US.
“We only wish that this administration cared as much about the lives of working people as it does about meat, pork and poultry products,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, who criticised the Trump administration for not earlier developing meaningful safety guidelines for plants.
Slowdown in spread of French epidemic continues
Victor Mallet in Paris
France reported a further 367 coronavirus deaths in the past 24 hours, 313 in hospitals and 54 in old people’s homes and other care homes, as six weeks of confinement continued to restrict the spread of the epidemic.
The number of hospitalisations and admissions to intensive care of patients suffering from Covid-19 continued their slow but steady decline. Eastern France and the Paris area have been the worst-hit regions.
France has reported a total of 23,660 deaths from coronavirus since March 1, 14,810 in hospitals and a further 8,850 in care homes. Mortality in general also rose sharply at the peak of the epidemic above the levels seen in previous years.
In parliament today, Edouard Philippe, prime minister, outlined plans for a gradual easing of the lockdown on the French population that has been in place since March 17.
UK government withdraws support for four ventilator design projects
Michael Pooler in London
The UK government has pulled the plug on four ventilator designs submitted following an appeal for the life-saving machines to treat coronavirus patients, with a number of other new or adapted devices still undergoing regulatory tests.
Boris Johnson, prime minister, last month called on British industry to fill an anticipated shortage of invasive mechanical ventilators, which support patients with breathing difficulties.
Production of four different models made by domestic medical device manufacturers is being scaled up, while another pair — made by OES Medical and defence contractor Babcock, respectively — are subject to ongoing review, the Cabinet Office announced on Tuesday evening.
A further five devices, including one designed from scratch by Dyson, will be reassessed by a clinical panel next week.
However, the department said support had been withdrawn for four projects. They are:
- EVA, made by TEAM and Cogent Technology
- Helix, made by Diamedica and Plexus
- OxVent, made by KCL, Oxford University and Smith+Nephew
- InVicto, made by JFD
About 10,900 invasive mechanical ventilators are available to the National Health Service — an increase of 2,400 since the start of the pandemic, though below a target of 18,000 previously outlined by Matt Hancock, health secretary. The Cabinet Office added that every patient requiring a ventilator during the coronavirus crisis has had access to one.
Ireland records 59 new Covid-19 deaths
Arthur Beesley in Dublin
Ireland reported 59 further coronavirus deaths and close to 20,000 infections as Leo Varadkar’s government said it was not yet ready to ease the country’s lockdown when the restrictions expire on Tuesday.
The latest fatalities bring the number of lives lost to 1,159, and there are 19,877 cases. Ministers will decide at a special cabinet meeting on Friday whether to extend or slightly ease the lockdown from May 5, but they were told at a meeting on Tuesday that further progress was still required. “Cabinet heard that as of today, there are no indications that disease levels are low enough to enable any easing of restrictions,” the government said.
Some ministers are growing concerned about the escalating economic cost of the pandemic as the government pays special welfare payments to 566,000 people who lost jobs in the shutdown and subsidises the pay of 347,000 workers.
Royal Mail to halt Saturday deliveries to UK homes
Michael Pooler in London
Royal Mail is temporarily suspending the delivery of letters on Saturdays until further notice because of the coronavirus pandemic.
The UK's privatised postal operator said it was seeing high levels of staff absences as it announced the change, which comes into effect from May 2.
"We understand the importance of the postal service in keeping the UK connected at this time," the company said.
"We have also listened to our hard-working colleagues who have asked us to ease the additional burden on them if possible."
Special deliveries, tracked items and most other parcels will however continue to be delivered from Monday to Saturday.
Mail collections will take place on Saturdays from businesses, post offices and post boxes.
Investor gloom over Mexico deepens amid economic fears
Jude Webber in Mexico City
Investor gloom over Mexico has deepened with 99 per cent of respondents in a market survey by Credit Suisse believing the government is not doing enough to protect the economy from coronavirus.
“Results are generally sobering,” the bank said in a note to clients. “Ninety-nine percent of investors think the Mexican economy is in worse or much worse shape than one year ago, up from 51 per cent in our January 2020 survey.
"Thirty-five percent of these investors think it will take two to three years for the economic situation to improve and only 7 per cent think it will take less than one year. Furthermore, 60 per cent of investors think that Mexico's economic situation will be worse or much worse one year from now.”
President Andrés Manuel López Obrador said Mexico has already tamed the Covid-19 pandemic, despite infections not yet having peaked, and he insists it is a temporary crisis from which Mexico will bounce back swiftly, helped by the new USMCA free-trade pact with the US and Canada.
Following are other highlights from the survey:
• Only 18 per cent of investors thought it was a good time to buy Mexican equities and 23 per cent thought the time was right to buy the peso. Bond investors were less spooked: 52 per cent still saw it as a good time to buy.
• Investors (63 per cent of those surveyed based in Mexico and 76 per cent of those based abroad) saw Mexico losing its credit rating before the government's term ends in 2024.
• Mexico-based investors see interest rates ending the year at 5.1 per cent; those abroad saw 4.4 per cent. The key lending rate is currently 6 per cent.
• The peso will end the year at 23.7 to the dollar, according to an average of Mexico-based investors; foreign-based investors saw a rate of 24.2.
NHS to expand testing to more workers and over 65s
Laura Hughes in London
The NHS will increase its coronavirus testing from Wednesday to more workers and citizens over 65 as the UK government races to hit a target of 100,000 tests a day by the end of April.
Matt Hancock, health secretary, said eligibility will be expanded to include asymptomatic care home residents and staff, as well as NHS patients and staff.
Testing will be made available to those over 65 with symptoms and those who have to leave home to go to work, as well as those in their households.
"From construction workers to emergency plumbers, from research scientists to those in manufacturing, the expansion of access to testing will protect the most vulnerable and help keep people safe," Mr Hancock said at the daily Downing Street briefing. "It's possible because we've expanded capacity for testing thus far."
On expanding tests for asymptomatic care home residents and hospital patients, he added: "Building on successful pilots, we will be rolling out testing of asymptomatic residents and staff in care homes in England, and to patients and staff in the NHS.
This will mean that anyone who is working or living in a care home will be able to get access to a test whether they have symptoms or not.
I am determined to do everything I can to protect the most vulnerable.
Businesses advise New York on reopening strategy
An advisory board of 100 businesses and community and civic leaders is working with New York officials as the state considers a path forward to reopen the state’s economy.
Governor Andrew Cuomo said New York will establish regional control rooms that would detect any increase in infections, prompting officials to slow down the reopening process. He compared the spread of the virus in upstate counties in New York with some states in the US west and Midwest regions, while New York City has been a hotspot for cases.
Businesses must take precautions such as providing protective equipment for employees, and regions in the state looking to reopen must provide isolation facilities for infected residents who cannot self-quarantine, he added.
In the first phase of restarting New York’s economy, the state plans to allow construction and manufacturing to resume.
“We want to reopen, but we want to do it without infecting more people or overwhelming the hospital system,” Mr Cuomo said.
Several US states including Texas and Ohio have set in motion plans to restart their economies in stages. In Texas, governor Greg Abbott said on Monday the state will allow its stay-at-home order to expire after Thursday, and retail businesses will be limited to 25 per cent occupancy in the first phase.
New York, the hardest-hit state in the US, recorded a decline in the number of deaths and hospitalisations because of coronavirus. A further 335 people in New York died in the past 24 hours, compared with 337 a day earlier. The three-day average for hospitalisations fell below 1,000, down from 1,052.
Greece to phase out lockdown by July
Kerin Hope in Athens
Greek prime minister Kyriakos Mitsotakis has announced a roadmap for lifting the country's lockdown and restarting the economy by July 1.
Restrictions on movement in towns and cities will be lifted on May 4, when bookshops, electronics and sports equipment stores will reopen, as well as hairdressers. Most other retailers will resume trading on May 11. Parks and archaeological sites will open on May 18.
Masks will be required in public places and social distancing must continue, the prime minster said in a television address.
"Greece has done better than many other European countries in containing coronavirus... but this is a fragile situation. The government, public health authorities and the civil protection agency will be monitoring the situation on a 24-hour basis and taking new measures as needed," he said.
Cafés, restaurants and urban hotels are set to begin operating on June 1. No date was given for allowing resort hotels to open for the summer season or for lifting the current ban on travelling to the Greek islands.
Thirty-two new cases of coronavirus were reported on Tuesday, bringing the total to 2,566. The number of fatalities increased to 138 with two additional deaths recorded.
BA looks at plans to lay off as many as 12,000 workers
Tanya Powley in London
British Airways is looking at cutting almost 30 per cent of its 42,000 workforce as its parent company IAG warned that a return to 2019 passenger levels will take several years.
The airline on Tuesday announced plans to make up to 12,000 of its employees redundant, subject to consultation, as the aviation industry battles the worst crisis in its history.
In a letter to BA’s 42,000 staff, seen by the Financial Times, chief executive Alex Cruz warned that in the past few weeks “the outlook for the aviation sector has worsened further and we must take action now”.
He wrote: “There is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely. Any money we borrow now will only be short-term and will not address the longer-term challenges we face.”
Mr Cruz added that it did not know when countries will reopen their borders or when the lockdown will ease.
The move to cut jobs came as IAG reported an operating loss before exceptional items of €535m for the first quarter, compared with a profit of €135m last year. Its pre-tax profit was hit by an exceptional charge of €1.3bn from fuel and currency hedges for the rest of 2020 following the sharp fall in the oil price this year.
Spain to begin two-month exit from lockdown
Daniel Dombey in Madrid
Spain hopes to phase out its coronavirus lockdown over the next two months, Prime Minister Pedro Sánchez announced in an address to the nation on Tuesday night.
Mr Sánchez said that the shift towards a “new normality” would take place over four stages, which in the best case will be completed by the end of June — but will depend on whether the spread of the virus flares up again — and will vary by province. Apart from exceptional cases, schools will not return until September.
Speaking after a marathon cabinet meeting that thrashed out the details of the transition plan, the Spanish prime minister said the country would soon enter a preparatory stage, in which restaurants would soon be able to open for takeaway service and basic sports training could begin.
Mr Sánchez said that mainland Spain would enter the first phase of the transition on May 11, in which hotels and restaurant terraces could open at 30 per cent capacity. Smaller shops would be able to open for appointments, under strict hygiene conditions. He also called on businesses to operate special hours for older people.
Each phase of the transition would last for at least two weeks, Mr Sánchez said, so that its impact on the spread of the virus could be measured. He suggested that during the transition people would not be allowed to travel between different provinces and even after the arrival of the “new normality”, it would be highly recommended to wear masks on public transport.
Under the second phase outlined by Mr Sánchez, indoor restaurant spaces, cinemas, theatres and exhibitions would be able to open a third of their capacity. The third phase would relax those rules, but require continued social distancing of around 2 metres. The final fourth phase would be the “new normality”, Mr Sánchez said.
White House considers providing more help to US taxpayers
Demetri Sevastopulo and Lauren Fedor in Washington
The White House is debating whether Congress should provide more money to American taxpayers beyond the $1,200 payments being made as part of the $2.2tn economic rescue package that was passed last month.
Kevin Hassett, the former chairman of the White House council of economic advisers who has returned to the Trump administration to help tackle the response to the coronavirus pandemic, on Tuesday said the White House was “studying very closely” the idea of providing another round of emergency funding for individuals.
Mr Hassett said the House of Representatives was also debating whether another batch of funding would be necessary.
Congress has approved roughly $3tn in funding for individuals and small and big businesses to respond to the economic shock triggered by the pandemic.
The US labour department last week said more than 26m people had filed jobless claims over the previous five weeks.
Democrats said the $1,200 "economic impact payments" in the $2.2tn Cares Act are not enough to support working families. Some lawmakers, including Maxine Waters, chair of the House financial services committee, and Alexandria Ocasio-Cortez, a progressive New York lawmaker, have called for monthly cheques of $2,000 for the duration of the crisis.
In a shift on Monday, Nancy Pelosi, the Democratic speaker of the House, indicated she might support a universal basic income, telling MSNBC that, “we may have to think in terms of some different ways to put money in people’s pockets”.
The comments from Mr Hassett come as Congress debates the contours of the next stimulus package. Mr Hassett said the odds that there might not be another stimulus – what some have dubbed Cares 2 – was “pretty low”.
Italy's daily death rate continues to decline
Miles Johnson in Rome
A further 382 people have died in Italy from the Covid-19 virus over the past 24 hours, a small increase from Monday as the country’s daily fatalities continue to remain far below the peak of the outbreak.
Official statistics released on Tuesday showed that Italy recorded 2,091 new coronavirus cases, up from 1,739 on Monday which was the lowest daily increase since early March. On Sunday the Italian government outlined its plans to reopen parts of the economy by next week.
The number of patients in intensive care fell 4.3 per cent, or 93, to 1,863, while the number who were judged to have recovered rose by 3.5 per cent, or 2,317, to 68,941.
Italy carried out 57,272 tests over the past 24 hours, taking its total to 1.85m.
UK to publish daily Covid-19 figures from care homes
The UK has recorded a further 586 Covid-19 deaths in hospitals over the past 24 hours, below last week's average of 655.
In an effort to "bring as much transparency as possible", the UK health secretary said the government from Wednesday "will be publishing not just the number of deaths in hospital each day, but the number of deaths in care homes and the community too".
"This will supplement the [Office for National Statistics] and [Care Quality Commission] weekly publication and all add to our understanding of how this virus is spreading day by day, and it will help inform the judgments that we make as we work to keep people safe," Matt Hancock said.
A total of 21,678 coronavirus patients died in UK hospitals as of 5pm on Monday, the health secretary said at the government's daily briefing on Tuesday. A total of 3,996 people tested positive on Monday, taking the total to 161,145.
He said 43,453 tests were performed yesterday, out of a capacity of 73,400, still below the government goal of 100,000 tests a day by Thursday.
Mr Hancock also said: "The proportion of coronavirus deaths in care homes is around a sixth of the total, which is just below what we see in normal times."
Iran projects up to 6.4m jobs to be lost
Najmeh Bozorgmehr in Tehran
Iran’s parliament research centre warned on Tuesday that the coronavirus outbreak has put up to 6m jobs at risk and the country's economy will be in a state of “recession and uncertainty” until March next year.
In a report published in local media, the centre said the illness fuelled the hardships caused by two “difficult” years of struggling with US sanctions which would lead to declining revenues and rising health costs and consequently a significant budget deficit.
The current situation means “many businesses have lost their ability to survive” and “between 2.87m to 6.43m of those who are employed now will lose jobs”, it added.
“Whether the illness is curbed within the next few months or continues till the end of this [Iranian] year, Iran’s economy will be struggling with the economic consequences of the virus to the end of the year [March 20].”
The centre forecast there would be a fall in exports because of declining demand in the world while the shrinking income of Iranian families could affect consumption.
Canada nears 50,000 cases as it plans to ease lockdown
Canada has confirmed close to 50,000 cases of Covid-19 as several regions prepare to ease lockdown measures.
Health Canada reported 49,014 confirmed cases as of Tuesday morning, with the death toll from the pandemic standing at 2,766.
“We are not out of the woods yet,” said Prime Minister Justin Trudeau. He warned against lifting lockdowns too early and said the measures taken so far have worked to slow the spread of the virus.
Canada’s two largest provinces on Monday set out plans to relax social distancing restrictions. Quebec said that all daycares and elementary schools would reopen by May 19. Ontario laid out details of a 6-12 week phased reopening of workplaces and public spaces but did not set a date for when measures would start to be eased.
Mr Trudeau said the federal government will soon release guidelines for a “gradual and careful” reopening of the economy, which have been agreed by the provincial governments who will each manage the easing of their lockdown measures.
House of Representatives will not return to Washington next week
Lauren Fedor in Washington
Congressional leaders have scrapped plans for the US House of Representatives to be in session from next week, as concerns persist about the spread of coronavirus on Capitol Hill and Democrats and Republicans row over the best way forward.
Steny Hoyer, the Democratic House majority leader, said on Tuesday that the Democrat-controlled lower chamber was "not expected to be in session" from May 4 at the advice of the House-attending doctor.
The Republican-controlled Senate, meanwhile, is still expected to resume normal business next week.
Mitch McConnell, the Senate's Republican majority leader, said on Monday: "We will modify our routines in ways that are smart and safe, but we will honour our constitutional duty to the American people and conduct business in person."
Mr McConnell's spokesperson said on Tuesday that the majority leader's position was unchanged.
Both chambers have been in recess for more than a month, with many members worried about the spread of coronavirus on Capitol Hill, a crowded complex where legislators, staffers, journalists and members of the public are often in close quarters. Many legislators are over the age of 65, and seen at a higher risk from Covid-19.
Lawmakers have periodically returned to Washington, however, for key votes on economic relief measures, including the $484bn interim funding package passed last week.
Democratic proposals for "remote voting" in the House have stalled amid Republican opposition.
Portugal to end state of emergency
Peter Wise in Lisbon
Portugal’s president has said that gradual steps will be taken to ease the country’s coronavirus lockdown from next week and that a state of emergency, which came into force on March 18, will end on May 3.
Marcelo Rebelo de Sousa said on Tuesday that the economy would be reopened in small steps, but emphasised that life would not yet return to normal.
The end of the state of emergency does not mean the virus has stopped spreading or that we no longer need confinement measures.
“Every small step” towards relaxing restrictions would have to be evaluated by experts and politicians, he said.
António Costa, Portugal’s prime minister, said earlier that social distancing and personal protection measures would remain in place after the state of emergency was lifted. According to Portuguese media reports, easing the lockdown is expected to begin with a limited reopening of small shops and nursery schools.
Portugal’s health authorities on Tuesday reported a total of 24,322 confirmed coronavirus cases, an increase of 295 cases, or 1.2 per cent, over the previous 24 hours. The number of coronavirus-related deaths increased by 20, or 2.2 per cent, over the same period to a total of 948.
Russia extends lockdown for another two weeks
Henry Foy in Moscow
Russian president Vladimir Putin has extended a national lockdown until May 11 and warned that the country is still in a dangerous phase of the coronavirus pandemic.
“We have done so much, but it is still not yet enough,” he said in a televised speech. “We have been able to slow down the spread of the virus... but the situation remains very complex.”
Russia has not yet reached the peak of infections, he added.
Russia reported a record daily increase in coronavirus cases and deaths from the virus on Tuesday. Its total number of infections stands at 93,558.
Mr Putin had in late March announced a national holiday to keep workers at home, which has been supplemented by measures banning people from leaving their homes in major cities, with certain exceptions.
France outlines plans for reopening its economy
Victor Mallet in Paris
French prime minister Edouard Philippe has outlined plans to relax the coronavirus lockdown from May 11 to avert the risk of economic “collapse”.
“We must protect the French without immobilising the country to the point where it collapses,” he told the National Assembly in Paris as he set out rules for businesses, schools, public transport and households. “A little too carefree and the epidemic will take off again; a little too cautious and the whole country will be stuck.”
More than 23,000 deaths from Covid-19 have been recorded in French hospitals and old people’s homes since the beginning of March. The government imposed a lockdown on March 17 in an effort to stop the spread of the pandemic that threatened to overwhelm hospitals in the worst hit regions around Paris and in eastern France.
Businesses can reopen from May 11, except cafés, restaurants and large meeting places such as big museums and cinemas. Teleworking should be continued wherever possible for at least the first three weeks, said Mr Philippe.
Public transport will be largely restored, with the Paris metro and buses set to run 70 per cent of normal services. Companies will be encouraged to stagger working hours to avoid rush hour crowding. Long-distance travel will remain restricted to those on urgent professional or family business.
Schools will reopen progressively, starting with nursery and primary schools and with attendance depending on agreement from parents; class sizes will be limited to 15.
France's football season ends with no top-tier games until September
Murad Ahmed in London
No professional football will take place in France before September because of the Covid-19 pandemic, meaning the current season for its top leagues will end immediately.
Other major European leagues, such as England's Premier League, Germany's Bundesliga and Italy's Serie A, have started making plans to resume matches in the coming weeks.
Edouard Philippe said France would not risk a new outbreak of coronavirus and could not allow the return of sporting fixtures until the autumn.
“The big sporting affairs cannot occur before September,” Mr Philippe told France's National Assembly on Tuesday. “The 2019-20 professional football season cannot return.”
The Ligue de Football Professionnel, the league's governing body, is to meet next month to discuss how to conclude the season, such as settling promotion and relegation places and which teams gain entry into next season's lucrative European competitions.
Other leagues, such as in the Netherlands and Scotland, have ended their seasons early.
Germany picks SAP and Deutsche Telekom to build tracking app
Joe Miller in Frankfurt
The German government has chosen software company SAP and Deutsche Telekom to build its Covid-19 tracking app, which it says is vital to easing the country's lockdown.
The development of the smartphone app, originally due in mid-April, has raised concerns over data privacy.
On Sunday, Angela Merkel's government abandoned a homegrown design that it had backed for weeks, in favour of one supported by Google and Apple, putting pressure on France to follow or risk not being able to track coronavirus cases across borders.
Health minister Jens Spahn warned that the German app would not be available for several weeks.
In a statement, SAP said the two companies would make details of the software design publicly available, and that the app would ultimately be distributed by Germany's health agency, the Robert Koch Institute.
Jon Gray: Don’t handcuff private capital in this crisis
For FT Opinion, Jon Gray, the president and chief operating officer of Blackstone writes
It’s easy to get discouraged by the headlines. The effects of the coronavirus outbreak and an unprecedented shutdown of the global economy are being felt by markets, businesses, and individuals alike.
Even the most deserving companies may not have access to capital when they need it most for survival, job preservation and growth. The ensuing domino effect creates an environment that perpetuates market difficulties, hinders recovery and punishes workers. And governments can only do so much to shore things up.
Into the vacuum, well before the “all-clear” sign has been called on this downturn, must flow private capital.
I know from experience that this will inevitably be met with cries that private equity, real estate funds and private lenders are vultures swooping in to profit from economic suffering. There will also be dire warnings about the expansion of shadow banking. And yet the potential consequences are clear. Without private capital, more companies will fail.
US subprime car lender Santander Consumer posts $4m loss
Robert Armstrong in New York
Santander Consumer USA, one of the largest subprime car lenders in the US, reported a quarterly net loss of $4m because of $440m in provisions for credit losses.
Current loan performance remained solid, however, and the company maintained its dividend.
Investors cheered the first-quarter results, sending the lender’s shares up 12 per cent in early trading.
Chief financial officer Fahmi Karam noted that, despite the coronavirus crisis, the company had access to capital: “Subsequent to quarter end, we were one of the first ABS [asset-backed security] issuers to execute a transaction since the beginning of the pandemic, issuing approximately $1bn in securities.”
The company's 60-day delinquency rate stood at 4.6 per cent, up 40 basis points from a year earlier. Loan write-offs, at $593m, fell by $22m. After taking the additional provisions, Santander’s allowances for credit losses amounted to 18 per cent of its loan receivables.
Goldman Sachs bullish on energy stocks
Goldman Sachs has advised clients to buy beaten-up energy assets as it expects the price of oil to rise off its current multi-year lows.
In a note late on Monday, the US bank's energy strategists said:
We believe we are sufficiently near a cyclical trough in oil prices and energy sentiment to increase exposure to energy equities."
Extreme price swings have rocked oil markets in recent sessions. International benchmark Brent is trading around its lowest levels in two decades at $20 a barrel. The US price, which is subject to acute storage concerns, is changing hands at $12 a barrel, and briefly fell negative last week.
The US bank said it expects the oil price to rise, driven by falling supply, and that global demand should begin to recover in the coming months.
"Lower supply and a bottom in demand should limit the historic oversupply and begin rebalancing the market," the team led by Brian Singer wrote.
Late last week Bank of America advised clients that now could be a good time to buy “humiliated” oil-related assets.
Virus claims 5 per cent of previously healthy patients in English hospitals
Camilla Hodgson in London
More than 1,000 people thought to have been previously healthy have died after being hospitalised in England with Covid-19 — 5 per cent of all hospital deaths since the pandemic began.
Data released on Tuesday by NHS England brought the number of deaths of people who were diagnosed with the virus but had no known underlying health conditions to at least 1,003 — out of 19,301 total hospital deaths.
These patients were aged between 13 and 102. The data do not provide a full breakdown of their ages, genders or races.
The exact figure is unclear because NHS England changed the way it reports deaths at the end of March. It had previously specified the number of deaths each day of people in “vulnerable groups including with underlying conditions” but switched to reporting the number with “no known underlying health condition”.
On most days since March 25, at least one person under the age of 50 without a known health condition died in hospital.
US treasury to audit loans over $2m in relief programme
James Politi in Washington
Steven Mnuchin, the US Treasury secretary, said the Trump administration would be auditing any loan over $2m disbursed under a $659bn programme to help small businesses, as he lashed out at the Los Angeles Lakers basketball team for participating in the scheme.
“I’m going to be putting out an announcement this morning, that for any loan over $2m, the Small Business Administration will be doing a full review of that loan before there is loan forgiveness,” Mr Mnuchin told CNBC on Tuesday morning.
Launched as part of a $2tn coronavirus stimulus plan enacted last month, the so-called Paycheck Protection Program has been overwhelmed by huge demand from struggling businesses across the country and needed to be replenished from its original capacity of $349bn to add an additional $310bn.
But the scheme’s rollout has been overshadowed by questions over unequal access, as some larger businesses and public companies received funding early on, thanks to their close connections with financial institutions, while smaller entities were unable to secure the money.
Some companies have returned the money after a strong public and political backlash that the Trump administration latched on to.
“I’m encouraged by the number of people that have paid them back,” Mr Mnuchin said. He added that he would have “never expected in a million years” that the LA Lakers would take a $4.6m loan.
I’m a big fan of the team but I’m not a big fan of the fact that they took a $4.6m loan. That’s outrageous and I’m glad they returned it or they would have liability.
Free to read: Virtual rate cut forces Nintendo gamers into riskier assets
Leo Lewis in Tokyo and Robin Wigglesworth in Oslo
Savers at the Bank of Nook are being driven to speculate on turnips and tarantulas, as the most popular video game of the coronavirus era mimics global central bankers by making steep cuts in interest rates.
The estimated 12m players of Nintendo’s cartoon fantasy Animal Crossing: New Horizons were informed last week about the move, in which the Bank of Nook slashed the interest paid on savings from around 0.5 per cent to just 0.05 per cent.
The total interest available on any amount of savings has now been capped at 9,999 bells — the in-game currency that can be bought online at a rate of about $1 per 1.9m bells.
The abrupt policy shift, imposed by an obligatory software update on April 23, provoked a stream of online fury that a once-solid stream of income had been reduced to a trickle with the stroke of a raccoon banker’s pen.
You can read more about how the shock Bank of Nook rate cut mirrors efforts by monetary authorities around the world here.
Top spy to help design UK coronavirus app
Helen Warrell in London
One of Britain’s most senior spies has been drafted in to advise the government on how to secure the NHS’s contact tracing app — a vital part of the UK’s plan to lift lockdown restrictions in the coming weeks.
Ian Levy, technical director of the National Cyber Security Centre, a branch of Britain’s communications intelligence agency GCHQ, is advising the UK’s health service on how it can encrypt data and ensure privacy, according to people with knowledge of the arrangements.
The tracing app will use Bluetooth signals to inform people whether they have been in contact with someone with coronavirus, and advise quarantine measures for those at risk. Privacy campaigners have raised concerns about the prospect of the government also using the app to collect sensitive health data about the population on a mass scale.
Government says UK 'not there yet' on easing lockdown
Laura Hughes in London
Downing Street has played down reports the government could announce a lockdown exit strategy this week.
A spokesman said the UK had not yet passed the five tests that will be applied before any easing of the draconian restrictions, introduced on March 23.
These include a requirement that the NHS should have enough virus testing capacity and personal protective equipment.
Ministers would also have to be satisfied that the NHS could cope with any return of the disease, that the number of daily deaths was falling in a sustained way, that infection rates were being reduced to manageable levels — including in care homes — and that no risk remained that a second peak could overwhelm hospitals.
Asked about easing the lockdown measures, a No 10 spokesman said: "It is important that they remain in place for now. We need to pass five tests before we can think about moving on to the next phase in the coronavirus response. We are not there yet."
What we need to be focused on is everybody following the social distancing rules and ensuring that we have got the spread of this virus fully under control.
Responding to reports the Scottish government is advising people to use “facial coverings”, Downing Street said: "There have been points in response so far where announcements had been made ever so slightly different times, but by and large we have moved forward with a single four nations approach."
Labour challenges UK government over protective equipment figures
Jim Pickard in London
Labour has challenged the government over its claim that more than a billion items of personal protective equipment have been delivered to front-line workers after it emerged that the figure includes paper towels and individual gloves.
Rachel Reeves, shadow minister for the Cabinet Office, raised the claims after they were disclosed by the BBC's Panorama on Monday evening.
Michael Gove, Cabinet Office minister, said that the way that gloves were counted in the data reflected the fact that “depending on the surgical setting gloves are sometimes delivered in pairs or groups of four or different consignments”. Mr Gove said that 547m gloves had been delivered.
Downing Street said gloves were counted in different ways. “Sometimes they’re single, sometimes they’re pairs, and often they’re counted as fours in high-risk areas,” a spokesman said. “It’s not correct to say they’re all counted individually, they’re counted in a number of different ways.”
Scotland advises citizens to cover their faces in public
Mure Dickie in Edinburgh
The Scottish government is advising people to use “facial coverings” when in enclosed spaces in close proximity to other people, saying scarves or other cloth items may help reduce coronavirus transmission.
The new guidance, which is not mandatory, marks a step away from previous dismissals of the role that public use of face masks might play in stopping Covid-19.
At her daily coronavirus briefing, Nicola Sturgeon, Scotland’s first minister, stressed that she was not advising members of the public to use surgical or other medical-grade face masks, but said there was some evidence that a person wearing facial covering might be less likely to pass on the virus.
“The wearing of facial coverings is an extra precaution that you can — and we are suggesting you should — take. It may do some good in some limited circumstances, but it is not and must not be seen as a substitute for the other rules and guidelines,” Ms Sturgeon said.
Bellwethers Caterpillar, UPS and 3M count cost of the pandemic
Industrial bellwethers Caterpillar and 3M reported first-quarter profits that topped Wall Street forecasts, while UPS managed to scrape in with better-than-expected revenue, giving a silver lining to first-quarter performances that took hits from the coronavirus pandemic and resulted in them scrapping their financial outlooks for the year.
3M, which came into focus as a maker of the N95 face masks coveted by doctors and first responders, saw total revenues rise 2.7 per cent from a year ago to $8.1bn in the first quarter, with increases in sales from its health care and consumer divisions helping offset declines in other segments. Analysts forecast $7.9bn in total revenue.
Reported earnings of $2.22 a share were up from $1.51 a year ago, and ahead of analysts' forecasts for $2.01. The company said it would suspend its share buyback programme in order to prioritise organic investments and its dividend.
Earth-moving equipment maker Caterpillar reported a 21 per cent drop in revenue from a year ago to $10.6bn in the first three months of 2020, a little way off the mean forecast of $10.9bn among analysts surveyed by Refinitiv.
Reported earnings of $1.98 a share, boosted by a tax gain from the settlement of a non-US pension obligation and short-term incentive compensation expenses for executives, were down sharply from $3.25 a year ago but ahead of Wall Street forecasts for $1.78. Factoring out the tax gain, adjusted earnings of $1.60 were down 46 per cent from a year ago and missed analyst forecasts for $1.69.
UPS, which ships everything from letters to industrial machine parts, reported a 5 per cent rise in total revenue to $18bn in the first quarter compared with a year earlier. A 9.3 per cent increase in revenue from domestic operations offset weakness in its international business and helped overall sales come in ahead of Wall Street forecasts for $17.2bn.
Earnings of $1.11 a share were down from $1.28 a year ago and missed market forecasts for $1.29. The company also said it was suspending share buybacks for 2020 and would spend about $1bn less on capital investments than previously estimated.
In premarket trade on Tuesday, investors responded best to 3M's results and pushed shares 3.3 per cent higher. Caterpillar shares were up 0.3 per cent, while UPS was down 2.5 per cent.
Pfizer increases research budget as sales fall in first quarter
Donato Paolo Mancini in London
Pharma company Pfizer has reported an 8 per cent decrease in overall sales for the first quarter, but backed its yearly guidance for revenues and adjusted diluted earnings-per-share, as the coronavirus pandemic wreaks havoc on companies in all sectors.
The company has also stopped recruitment for some of its clinical research and delayed most new studies.
Reported net income fell 12 per cent, it said, while overall revenues tapered to $12.03bn. The company said it has and will maintain the ability to meet its liquidity needs "for the foreseeable future". It increased its guidance for adjusted research and development expenses by $500m to a range of $8.6bn to $9bn, as it moves to investigate possible Covid-19 interventions.
A tie-up of its generics division, Upjohn, with Mylan is expected to close in the second half of the year, which Pfizer disclosed last month.
Merck lowers its full-year forecast as prescriptions take a hit
Hannah Kuchler in New York
Merck lowered its forecasts for the full year as the US drugmaker warned that sales of products including its cancer drug Keytruda, a contraceptive implant and vaccines, which must all be administered by a doctor, will be hit by patients staying away from healthcare providers during social distancing.
Shares in Merck fell 1.5 per cent to $82.75 in pre-market trading after it said that it now expects full year revenue of between $46.1bn and $48.1bn, compared to the average analyst estimate of $51.7bn, including a 2.5 per cent negative impact from foreign exchange.
About two-thirds of Merck’s products have to be given by a physician. Merck said despite “strong underlying demand”, the coronavirus pandemic will have an impact on these sales because social distancing, fewer regular check-ups and delays in elective surgeries mean fewer of these medicines are being administered.
In the first quarter, the company beat expectations on earnings and revenue. Non-gaap earnings per share were $1.50, compared to the consensus forecast of $1.34. Net income was $3.8bn. Revenue, driven by sales of Keytruda, was $12bn, higher than the average analyst estimate of $11.5bn.
Housebound snackers drive surge in Pepsico sales
Alistair Gray, US Consumer Correspondent
Pepsico is sticking with plans to hand $7.5bn to shareholders this year as housebound consumers munch on its snacks, such as Lay’s and Walkers crisps, helping the food and drinks company offset a slump in demand for its beverages in bars and restaurants.
The snacking surge helped Pepsico, which is also behind Quaker Oats cereals, generate $13.9bn of sales in the first quarter, up 7.9 per cent year-over-year on an organic basis.
“With consumers spending more time at home we’ve seen an increase in eating breakfast and a tendency to snack more during the day,” said Ramon Laguarta, chief executive of Pepsico.
However, the New York-listed group, whose drink brands include 7Up and Lipton iced tea as well as the eponymous fizzy drinks, cautioned that the closure of out-of-home venues would hurt sales in the subsequent three-month period.
Hugh Johnston, chief financial officer, said he expected organic revenue growth to decline at a low single digit rate in the second quarter and also said the company’s operating margin would be “negatively impacted by the weakness in immediate consumption channels”.
Pepsico is nevertheless planning to pay dividends worth $5.5bn and buy back $2bn worth of shares this financial year. “We have ample flexibility to meet the investment needs of our business and return cash to shareholders,” Mr Johnston added.
UK bakery Greggs lays out plan to reopen
Alice Hancock in London
UK consumers will not have to go a summer without sausage rolls as Greggs, the cafe-cum-bakery chain, announced that it had plans to reopen all of its stores by the beginning of July.
The company, which has seen successive profit upgrades in the past year on the strength of its ability to adapt its traditional baked goods to new markets, will carry out a small trial of 20 shops in the Newcastle area, where it is headquartered, next month.
In an email to staff, seen by the Financial Times, Gregg's chief executive Roger Whiteside said that this would be expanded first to 700 of its 2,000 stores in June with the rest following by the beginning of July.
Protocols that are being considered for the reopened stores include areas marked out to enforce social distancing, one-way systems, card payments only and plastic screens at the till.
The reopened stores will only serve customers for takeaway and delivery.
EU offers banks capital relief in efforts to boost lending
Jim Brunsden in Brussels
Brussels has offered banks temporary capital relief that officials said could boost lending by as much as €450bn this year, arguing that the scale of the economic damage wrought by Covid-19 justified a “targeted” easing of regulations brought in after the 2008 financial crash.
The European Commission said that the bank rule changes would improve the transmission of monetary policy and allow the economy to reap the full benefit of government schemes to keep credit flowing.
The plans, which require approval from governments and the European Parliament, include delaying the full implementation of accounting standards that could erode banks’ capital, as well as a lighter regulatory treatment of government-guaranteed loans.
Brussels has also backed the call from global regulators in the Basel Committee on Banking Supervision to postpone the introduction of a new capital standard for large banks from 2022 to 2023. The rule, known as a leverage ratio buffer, would increase the amount of capital banks must have as a percentage of their total assets.
“We are using the full flexibility of the EU’s banking rules and proposing targeted legislative changes to enable banks to keep the liquidity taps turned on, so that households and companies can get the financing they need,” said Valdis Dombrovskis, the European Commission’s executive vice-president in charge of financial regulation.
EU officials said that the €450bn figure was “a very informal projection” that reflected the boost to bank capital ratios that would come from adjusting accounting rules.
Lufthansa weighing insolvency protection, says union
Joe Miller in Frankfurt
Lufthansa is considering launching insolvency protection proceedings, as negotiations over state-aid in Berlin become embroiled in political demands, according to the cabin crew union Ufo.
The German carrier, which warned last week it could no longer raise money on the capital markets, is mulling “a so-called protective shielding procedure similar to Chapter 11 bankruptcy in the US,” a spokesman for the union told the Financial Times.
The procedure, known as Schutzschirmverfahren, would buy Lufthansa time to restructure.
Lufthansa, which is burning through €1m in cash per hour, has requested emergency funding from governments in Brussels, Vienna and Bern, and has held detailed discussions with Angela Merkel’s administration this week.
However, Germany’s coalition partners have been sparring over whether to demand a controlling stake in the group, and whether any government aid should be contingent on job guarantees.
Lufthansa declined to comment.
Southwest Airlines sinks to a loss in the first quarter
Claire Bushey in Chicago
Southwest Airlines lost $94m in the first quarter on revenue that fell nearly 18 per cent from a year earlier amid the coronavirus pandemic.
The Dallas company paid out $639m in dividends and share buybacks during the quarter. The airline said on Monday that the payments to shareholders were now suspended indefinitely.
The loss was a reversal from last year’s first-quarter net income of $387m.
“This is an unprecedented time for our nation and the airline industry,” said chief executive Gary Kelly. “The US economy has been at a standstill, and the current outlook for second quarter 2020 indicates no material improvement in air travel trends.”
Southwest Airlines, one of Boeing’s best customers, said that it will not include the 737 Max in its published flight schedule until October 30.
“In light of the current environment, we are in the process of revising our aircraft order book with Boeing and will continue partnering with Boeing on a sensible delivery schedule,” Mr Kelly said.
Britons cautious about life after lockdown
Most British people would prefer to delay lifting lockdown measures until the virus is “fully contained”, and would feel worried about leaving their homes even once rules have been eased, according to a poll by Ipsos Mori.
As many as 70 per cent of UK residents said they were concerned about restarting the economy prematurely, while 71 per cent expected they would be “nervous” about venturing outside once businesses had reopened.
The results suggest that Britons are more cautious than other nations that took part in the survey of 28,000 people, conducted between April 16-19.
When asked if they would favour opening the economy before the coronavirus pandemic is fully under control, 65 per cent of Mexicans were against, followed by 61 per cent of Australians and 59 per cent of Americans.
The majority of respondents agree that the economic shutdown should be lifted, however, as some global leaders begin to outline exit strategies.
Eurozone banks report surge in business loan demand
Martin Arnold in Frankfurt
Demand for loans from businesses in Europe has surged since the coronavirus pandemic started, while banks have moderately tightened their lending criteria, according to a European Central Bank survey published on Tuesday.
The tightening of credit availability by eurozone banks has so far been much milder than in previous downturns, such as the 2008 financial crisis, the ECB said after surveying 144 lenders in the two weeks to April 3.
The limited tightening of credit standards by eurozone banks reflects the unprecedented efforts of public authorities to avoid a credit crunch. European governments have guaranteed vast amounts of loans to struggling borrowers, while central banks have flooded the financial system with cheap loans and allowed lenders to become more indebted.
Banks' balance sheets are coming under strain from both higher demand for loans as well as an expected rise in customer defaults because of the deep recession expected this year.
Loan demand from companies has shot up since the pandemic started, the ECB said, after finding a net 26 percentage point increase in the number of banks reporting increased demand for credit from corporate customers. The ECB said the proportion of banks expecting corporate loan demand to rise in the second quarter rose by a net 77 percentage points, a record since its survey started in 2003.
Credit standards for businesses were tightened by a net 4 percentage points of banks in the first quarter. However, the ECB said this was “contained” compared to the net 60 percentage points level of credit tightening reported during the 2008 financial crisis.
Ford to fire up production in Europe next month
Peter Campbell in London
Ford will re-open its European plants in May with plans to increase output over several months, as the US carmaker becomes the latest to restart operations across the continent.
From May 4, the carmaker will fire up production at Saarlouis & Cologne in Germany, Craiova in Romania, and Valencia in Spain. Valencia’s engine plant will re-open on May 18.
Its UK engine plants at Bridgend and Dagenham, which are closely linked to Jaguar Land Rover’s production sites, do not yet have a re-start date.
Production will begin slowly to fulfil dealer and customer orders, and “will gradually be ramped-up over the next few months before full production is resumed”, the company said.
Like many other carmakers, Ford is issuing its staff with protective equipment and requiring them to face temperature checks and other distancing measures in order to protect their safety.
Carmakers from Volkswagen to Toyota are cautiously reopening plants across Europe following last month’s shutdown because of coronavirus, but risk flooding showrooms with unwanted cars unless consumer demand recovers.
Some groups have taken a harder line in re-starts. France’s PSA, which owns the Peugeot and Vauxhall/Opel brands, has said it will not resume production until demand has recovered and dealerships are open again.
Revolutionary Guard support bolsters screening push in Iran
Monavar Khalaj in Tehran
The recruitment of half a million volunteers by Iran's Revolutionary Guard has expedited efforts to carry out a sweeping national screening programme, a senior military commander has said.
Iran has screened 72m out of its 80m person population for symptoms of coronavirus, as part of efforts to track the spread of the disease, with the military providing logistical support to the country's health service.
“If they had not joined health teams, the screening would have taken much longer time,” Brigadier General Nasrollah Fathian, a senior member of the joint staff of the armed forces, said on Tuesday in a video conference call. “The armed forces have been a massive support for the health sector and the Iranian nation.”
Pro-reform Iranian analysts agree that the agility of the armed forces in joining medical teams across the country has been crucial in managing the crisis. The military teams have also set up 20,000 hospital beds and 500 make-shift clinics, as well as producing test kits.
Iranian health officials have said the screening of most Iranians has helped lower the death rate, which currently stands at 5,877 compared with 5,806 yesterday.
UK sets coal power-free record
Nathalie Thomas in Edinburgh
Environment groups are hailing a fresh record set early on Tuesday for the number of consecutive hours in Britain without coal power.
The run of coal-free electricity generation started at midnight on April 9 and is still going. By 6.10am on Tuesday, when the previous record was surpassed, Britain had clocked up 438 hours and 10 minutes without calling on any of the last remaining coal-fired power stations, according to National Grid.
The latest record has been aided by a combination of good weather conditions for solar and wind generation and a sharp fall in electricity demand since lockdown was imposed last month. Cheaper renewables, which are called on first to meet demand, are making up a greater proportion of the generation mix.
However, Britain has been setting such records in recent years as the country works towards being entirely coal power-free by the middle of the decade.
FCA tells banks advising on debt not to muscle into equity raising
The UK markets watchdog has warned banks they must not pressure companies looking to secure debt financing into giving lenders an unwarranted role — and a portion of the fees — on equity capital raising.
The Financial Conduct Authority threatened to take action over the practice, which raises questions over their treatment of companies that are battling to strengthen their finances to see them through the coronavirus pandemic.
The regulator said on Tuesday it had heard “credible reports” that a “small number of banks” may have put pressure on corporate clients when in negotiations over new or existing debt facilities.
Such clients would not otherwise have given those banks a role on their equity mandates, according to the regulator, which warned that banks may have breached its rules and principles.
“In some cases, these roles may be ‘in name only’, with few or no additional services being provided in exchange for a share of the fee pool. We will be looking into this further, but want any practice of this nature to cease immediately,” the FCA wrote in a letter to chief executives.
The regulator told banks that provide lending services and equity capital raising to review their systems and controls.
Quarterly earnings at pork processors WH Group nearly double
Primrose Riordan in Hong Kong
WH Group, the world’s biggest pork processor and owner of Smithfield Foods, said quarterly profits almost doubled even as five of their US plants closed when they became the site of mini-outbreaks of the virus.
The Hong Kong-listed group reported net profit, before biological fair value adjustments, for the three months to March rose 80 per cent to US$353m compared with the same period a year earlier.
The average hog price in China soared by 171 per cent compared with the same period in 2019, the company said on Tuesday, due to supply shortages caused by African swine fever. Strong export demand pushed prices up in the US.
Hundreds of Smithfield employees have tested positive for Covid-19 at plants such as the company's one in Sioux Falls, South Dakota, which accounts for almost 5 per cent of pork production in the US.
During April the plant had offered workers a "responsibility bonus" of $500 if they were not late or sick, according to a Centres for Disease Control and Prevention report revealed.
Pandemic slows in Spain as Sánchez prepares to outline lockdown exit
Daniel Dombey in Madrid
Spain’s downward trend in coronavirus deaths is continuing and the spread of the virus is slowing further, according to government figures released on Tuesday.
As the pandemic slows in Spain, one of the worst hit countries in human and economic terms, Pedro Sánchez, prime minister, is due on Tuesday afternoon to outline plans for phasing out its harsh six-week lockdown.
The ministry of health said that in the last 24-hour period, 301 people had died after contracting coronavirus, the second lowest count in five weeks and a reduction on the previous day’s toll of 331.
The official death toll, which includes proven but not probable deaths, peaked at 950 on April 2. Overall, the government says 23,822 people have died to date. The figures include information up to 9pm on Monday night.
The ministry added that 210,773 people had been found to be positive for coronavirus in so-called PCR tests - an increase of just 0.6 per cent on the day before. At points last month, the rate of increase was 30 per cent a day and above.
However, the latest figures do not include the less reliable but faster antibody tests authorities are rolling out across the country. According to Tuesday's figures, 102,548 people have recovered from coronavirus.
Deaths in England and Wales highest on record in mid-April
Chris Giles in London
England and Wales recorded the highest number of death registrations on record in the week ending April 17, official figures showed on Tuesday, with 22,351 registrations — 11,854 higher than the average for that week.
Since the coronavirus outbreak began, England and Wales have recorded 27,000 more deaths than normal levels.
There were 7,316 deaths recorded in care homes between April 10 and 17, compared with a normal week of 2,400, for example, in the seven days ending March 20.
The figures demonstrate the high spread of Covid-19 throughout the UK's care homes, which is far in excess of daily hospital death tolls announced by ministers.
Tianqi Lithium shares sink after doubling annual loss
Henry Sanderson in London
Shares in China’s largest lithium producer fell to their lowest levels in more than four years on Tuesday after it increased its provision against shares it holds in Chilean rival SQM due to the impacts of coronavirus.
The Chengdu-based company said it had increased its provision against the 24 per cent stake to Rmb3.07bn from Rmb2.2bn in February to account for lower sales in China, Europe and the US.
Tianqi Lithium is struggling to pay back a $3.5bn loan it took out from China’s state-owned Citic Bank to buy the stake in SQM in 2018, when lithium prices were higher.
To raise cash the company is looking to sell a part of its stake in the world’s largest lithium mine in Australia, the Greenbushes mine, according to people familiar with the deal.
Last week SQM said it may have to put $330m worth of expansion plans on hold this year if demand for lithium, which is used in electric car batteries, continues to fall.
Shares in Tianqi last traded down 7.6 per cent to 16.77 Rmb, making Tianqi one of the worst performers in China’s CSI 300 index.
Hong Kong relaxes some border controls with mainland
Nicolle Liu in Hong Kong
Hong Kong relaxed border control with mainland China for certain groups, but extended wider measures to June, as the number of new confirmed coronavirus cases has remained low in the past weeks.
Students and business travellers arriving from mainland China and Macau will be exempted from compulsory quarantine starting from Wednesday.
However, the restrictions on other arrivals from mainland China, Macau and Taiwan were extended for another month to June 7.
Chief executive Carrie Lam today also announced that civil servants will return to offices from Monday. The territory had seen no new Covid-19 infections since Sunday, keeping the tally at 1037 cases, and four deaths.
European stocks make fragile gains
Equity markets in Europe shrugged off volatility in oil prices to edge higher in Tuesday morning. The European benchmark Stoxx 600 added 0.6 per cent, while London’s FTSE 100 and Germany’s Dax gained 0.4 and 0.5 per cent respectively.
Equity markets across Asia Pacific had also been largely unmoved by ructions in the oil market overnight.
Equities have held steady through unprecedented ructions in the oil market, soothed by massive interventions from the world's central banks and a gradual easing of lockdowns in many major economies.
Futures trading tipped the S&P 500 to open up 0.3 per cent later in the day.
UBS profits jump 40% as wealth unit performs robustly
Sam Jones in Zurich
UBS has warned coronavirus will disrupt its key profit drivers even as the Swiss lender struck a confident tone on its ability to weather the pandemic and revealed a sharp rise in first-quarter earnings.
The group said the Covid-19 outbreak and governments’ responses to it have “dramatically changed” the global economic outlook for the “foreseeable future”.
“Lower asset prices will reduce our recurring fee income, lower interest rates will present a headwind to net interest income, and client activity levels will likely decrease, affecting transaction-based income,” it said on Monday as it announced its quarterly results.
Russia reports record number of new deaths
Henry Foy in Moscow
Russia registered a record number of both new coronavirus cases and deaths on Tuesday, as the country overtook Iran to become the world’s eighth most affected.
Russia reported 6,411 new cases of Covid-19 and 73 deaths from the virus, daily increases that take its total infections to 93,558 and death toll to 867.
While the infection continues to spread, the overall rate of increase has dropped, doubling every eight days from every five days a fortnight ago.
The Kremlin has said that it expects the outbreak to peak only in mid-May.
Sweden leaves rates unchanged
Sweden's central bank has held interest rates at zero per cent and said it would maintain quantitative easing at current levels.
The Riksbank said cutting its benchmark repo rate was not "justified at this point", but left open the option of doing so in future to spur activity as the economy recovers. It said it would continue a SKr300bn ($30bn) programme of buying government and mortgage bonds up to the end of September.
"It was not deemed justified at this point in time to try to increase demand by lowering the repo rate when the downturn in the economy is due to imposed restrictions and people’s concerns about the spread of infection," the bank said.
However, this does not rule out the possibility of the interest rate being cut at a later date if this is deemed an effective measure to stimulate demand and support the development of inflation in the recovery phase.
The move supported the krona, which strengthened 0.8 per cent against the dollar to SKr9.95.
Half a million Spaniards stopped work in March because of coronavirus
Daniel Dombey in Madrid
Over half a million Spaniards stopped working in the second half of March due to the coronavirus crisis, the Spanish statistics institute said on Tuesday.
The government body said 509,800 people had ceased working by the end of the quarter, noting that “this figure is unprecedented”.
Spain’s lockdown was imposed on March 15, causing an immediate and devastating impact on the economy.
According to the data, which covers the first three months of 2020, 286,000 people lost their jobs. This figure does not include those who went on temporary leave schemes known as ERTEs.
Spain’s unemployment figures are generally regarded as less reliable than social security data, which has already indicated that more than 800,000 people lost their jobs in March. The government says that around 4m people are now covered by the ERTE schemes.
What you may have missed
More than 30m workers in Europe’s five biggest economies have applied to have their wages paid by the state via short-term leave schemes designed to stop unemployment skyrocketing.
Oil and gas companies in the UK’s North Sea fear as many as 30,000 jobs will be lost in the region as they brace for an “even more severe” crisis than the oil price crash of 2014.
Banco Santander put aside an additional €1.6bn in the first quarter to deal with an expected jump in bad debts, as it prepares for a “strong global recession”.
Singapore's de facto central bank said it was unclear how deep and lasting the city state's recession would be, with the economy potentially contracting more than expected due to the fallout from the pandemic.
New Zealand and Australia began easing social distancing restrictions with both countries reporting dramatic falls in new coronavirus infections over recent weeks.
Thailand is expected to announce an extension to its state of emergency for a further month to fight the spread of Covid-19. The current restrictions were due to expire on April 30.
Nissan has warned that it faces an annual net loss of up to ¥95bn ($886m) following a collapse in global vehicle sales.
Tyson Foods, the largest US meat company, has warned of shortages for consumers, saying the country’s complex food chain was “breaking” as Covid-19 spreads to refrigerated packing plants.
French consumer confidence in record fall
French consumer confidence suffered a record monthly fall in April, after households and businesses were placed into lockdown to slow the spread of coronavirus, raising concerns about falling income and job losses.
As French prime minister Edouard Philippe prepared to outline plans for easing the country’s lockdown that has been in place since March 17 later on Tuesday, the national statistics office said its indicator of consumer confidence had fallen from 103 in March to 95 in April.
The survey found that household confidence about whether it was a good time to make large purchases had fallen 43 points to its lowest point since the survey started 48 years ago.
There were widespread fears among French consumers about job insecurity, with the survey finding that anxiety about unemployment had risen 42 points to its highest level for almost five years.
Earlier this week, the French labour ministry said jobless claims rose by a record 7.1 per cent between February and March, with an extra 246,100 people registering to look for work at state employment agencies.
About 863,000 companies in France have placed 10.8m people - more than half of all private sector workers in the country - on a state-subsidized furlough scheme, it added.
Japanese airline ANA plans $8.9bn credit line
Kana Inagaki in Tokyo
ANA Holdings said it plans to secure a credit line of ¥950bn ($8.9bn) to weather the coronavirus crisis after Japan’s largest carrier suffered a quarterly net loss of $550m.
Compared to its international rivals, ANA’s equity ratio - a measure of capital strength - remains robust at 41 per cent, but the group said it would seek a “broader safety net” in the wake of a shutdown of international and domestic travel.
For the fiscal year through March, ANA reported a net profit of ¥27.6bn ($258m) compared to a ¥110.7bn profit a year earlier.
“We have no funding issue for now,” Ichiro Fukuzawa, ANA’s chief financial officer, said at a news conference on Tuesday. “But we cannot rationally estimate the depth and longevity of the coronavirus impact so we plan to have a broad safety net in terms of funding.”
Its credit line consists of ¥600bn in loans from private banks and ¥350bn from the state-backed Development Bank of Japan.
Global coronavirus death toll slows as total cases edge towards 3 million
Steve Bernard in London
The worldwide coronavirus death toll rose by 4,532 yesterday, according to data from Worldometers, representing the lowest increase on a Monday for four weeks.
Global new daily cases of Covid-19 rose by less than 70,000 for the first time since the end of March, as 69,223 diagnoses were confirmed on Monday, bringing the total to 2.99m.
Further support to the argument that the peak may have passed was provided by many of the worst-hit countries in Europe. UK, Italy, Spain, France and Germany all reported their lowest number of newly confirmed cases in several weeks.
Russia continues to struggle to contain the spread of coronavirus, adding 6,198 cases yesterday. This is the fourth consecutive day that more than 5,000 new diagnoses have been reported, bringing the total to 87,147.
The number of global recovered cases rose by 43,909 yesterday, leaving a total of 921,320 free from the virus.
UK health secretary says still 'too soon' to lift lockdown
Jim Pickard in London
Matt Hancock has said that it is “too soon” for the UK to come out of its lockdown amid a growing debate about when the current restrictions can be eased.
The intervention by Mr Hancock on LBC Radio comes as prime minister Boris Johnson is set to discuss with ministers this week how and when to begin the transition out of the lockdown for various sectors.
The health secretary said that the public were not yearning for an end to the lockdown.
"If you look at surveys among the public … if you look at how much the public are following the measures, the public are following the lockdown brilliantly," he said
There’s a media debate about it and I understand that but the proportion of the public that supports the lockdown remains absolutely solid.
The number of people taking journeys had barely changed in the last three weeks, Mr Hancock said. However he admitted that there were “clear consequences” to continuing the lockdown indefinitely, citing an alarming drop in the number of people coming forward with suspected cancer symptoms.
There are clear consequences of the lockdown, there are social and economic consequences, and for some people…there are health consequences so we have to take that into account
Supermarket sales boosted by increased eating at home
Jonathan Eley in London
Supermarket sales grew 5.5 per cent over the four weeks to April 19, a sharp drop from the 20.6 per cent growth in the previous four-week period, according to Kantar.
The research group said that the increase was mainly due to a switch from eating out to eating at home, and masked substantial sales falls in other categories such as food on the go and clothing.
Earlier this month Tesco said that clothing sales were down 70 per cent in its most recent trading weeks, and full-year results from Sainsbury's later this week are expected to show a similar pattern.
Shopping habits have changed too, with shoppers making fewer trips but buying more on each visit. While Friday and Saturday remain the most popular shopping days, the proportion of trips made between Monday and Thursday has risen as more shoppers find themselves either furloughed or working from home.
Online shopping accounted for 10.2 per cent of the total in the four-week period, against a more usual 7 per cent, with much of the increase accounted for by older people – over-65s spent 94 per cent more on delivered groceries than a year ago.
Convenience stores increased sales by 39 per cent in the latest four weeks to grab 16.3 per cent of the market, up from 12.4 per cent in the equivalent period a year ago.
Sales at Co-op, Ocado, Iceland, Lidl and independent groups such as Spar and Londis grew by more than the market average of 9.1 per cent over the 12 weeks to April 19.
Britain basked in sunniest April on record as lockdown began
Perhaps inevitably the British weather has played a part in the story of the country's response to coronavirus.
The UK was taunted by the sunniest April on record this year, provisional data from the Met Office showed, just as the government ordered people to stay at home to control the spread of the virus.
The unusually good weather has been a headache for police trying to enforce the government's lockdown measures.
Some London parks briefly shut due to crowds, while officers launched patrols over the Easter weekend to move on sunbathers. One English force provoked derision by flying a drone over beauty spots to highlight hikers on 'non-essential' journeys. People in the UK are allowed out for daily exercise, but must not stop to relax in public spaces.
Still, the problems seem sorted for now: forecasters predict a wet start to May.
Nissan warns of ¥95bn loss as car sales slide
Kana Inagaki in Tokyo
Nissan has warned that it faces an annual net loss of up to ¥95bn ($886m) following a collapse in global vehicle sales caused by the coronavirus outbreak.
Even before the outbreak, the Japanese carmaker, which has an alliance with France’s Renault, had already been lossmaking and was burning through its cash as it struggled to revive its sales in the US.
On Tuesday, the company blamed the profit warning on a decline in vehicle and components sales as well as reserves it has set aside for its sales finance business. Nissan had earlier projected a net profit of ¥65bn for the fiscal year that ended in March.
As its factories were shut down across the world, Nissan saw its sales in the US, Europe and China drop 45 per cent or more in March.
Due to the disruptions caused by the global pandemic, the group said it would also delay the release of its full-year earnings and its revised midterm business plan until May 28.
Burford Capital reports hit to profits in 2019 as activity slowed
Kate Beioley in London
Litigation funder Burford Capital reported double digit falls in profit and income in its annual results to the end of December caused by slowing activity in its portfolio, but predicted the aftermath of Covid-19 would result in a “time of significant demand”.
Burford posted a 15 per cent decline in total income to $356.7m and a 24 per cent fall in profit before tax to $239.7m.
It comes after a difficult year for Burford, which has been locked in a dispute with short-seller Muddy Waters over its accounting practices, and is also entangled in a court case in London over allegations its shares were manipulated.
The company said it had planned to file a US listing by the end of April but expected the audit process to be delayed due to Covid-19.
Burford said in April its chief executive and chief investment officer would use their bonuses to purchase Burford shares. The size of those cash bonuses was confirmed at $2.25m in cash on Tuesday.
The company closed the year with $206m in cash and cash-like assets on its balance sheet, down from $277m the previous year. Burford needs to raise cash in order to fund its commitments and has already filled its new Burford Opportunity Fund ahead of schedule.
Mr Bogart said: "Much as we share the world's distress at our current health crisis, the reality is that we expect its aftermath to be a time of significant demand for our services and a moment when uncorrelated cash flows are especially attractive."
UK corporate news round-up
Diageo, the spirits maker, launched and priced a $2.5bn SEC-registered bond offering as the group struggles with bar closures in most of its markets. It follows the announcement last month of a £1.9 billion euro and sterling bond issue.
Marks and Spencers said that it has undrawn credit available for the next 18 months, after its lenders relaxed or removed debt covenant tests up to September 2021 on its £1.1bn credit facility and it confirmed that it is an eligible issuer under the UK government’s Covid Corporate Financing Facility. The retailer said that it expects “highly uncertain trading conditions” in a prolonged lockdown exit period for its clothing and home business.
BP reported a 66 per cent drop in first quarter earnings as the initial fallout from the coronavirus pandemic on the finances of the energy sector began to be felt, yet the oil major still announced a dividend of 10.5 cents a share.
Plus 500 said that a “significantly increased level” of customer activity is helping the online trading platform to continue momentum from an “exceptional” first three months of the year into the second quarter.
Litigation funder Burford Capital reported double digit falls in profit and income in its annual results to the end of December as a result of slowing activity in its portfolio, but predicted the aftermath of Covid-19 would result in a “time of significant demand”.
Games Workshop, a fantasy game manufacturer and retailer, will restart sales to independent vendors in Europe and North America this week and resume online orders from the beginning of May, after its factories and warehouses closed temporarily due to coronavirus. Most of its own stores remain shut with a few reopening in China, the Netherlands and Scandinavia, the group said.
Scandinavian airline SAS to cut about half of its jobs
Richard Milne, Nordic and Baltic Correspondent
SAS said it would permanently cut the jobs of about half of its staff as it warned it would take “some years” for its business to go back to normal.
The Scandinavian airline, part-owned by the Swedish and Danish governments, said it would cut up to 5,000 full-time positions as it adapts to lower demand due to coronavirus. SAS has 10,445 full-time employees, according to its latest annual report.
About 1,900 jobs would be cut in Sweden, 1,300 in Norway, and 1,700 in Denmark. Due to notice periods in its staff contracts of six months, SAS said it had to act “proactively”.
Chief executive Rickard Gustafson said:
Covid-19 has forced SAS to face a new and unprecedented reality that will reverberate not only in the coming months, but also during the coming years.
The job cuts came a day after low-cost carrier Norwegian Air Shuttle warned that its base-case scenario was that its aircraft would remain fully grounded for the next 12 months with a full recovery only in 2022.
Stock futures stable even as oil renews its slide
European stocks were on course for fragile gains at the opening bell, while the price of oil tumbled for a second day.
Futures pointed to gains of around 0.4 per cent for the FTSE 100 and Dax, following a steady session in Asia. S&P 500 futures were flat.
Equities have held steady through historic ructions in the oil market, soothed by massive interventions from the world's central banks and a gradual easing of lockdowns in many major economies.
The rout in US oil prices gained momentum though, with the West Texas Intermediate contract for June delivery down more than 12 per cent to $11.20 per barrel, and fresh concerns that the contract could again fall into negative territory.
Brent, the global marker with less acute storage concerns, fell 4.5 per cent to $19.10 per barrel.
BP earnings tumble by two thirds
Anjli Raval in London
BP has reported a 66 per cent drop in first-quarter earnings as the fallout from the coronavirus pandemic on the finances of the energy sector began to be felt.
In the three months to March 31, underlying replacement cost profits — BP’s definition of net income and the measure tracked most closely by analysts — were $791m, versus nearly $2.4bn in the same period in 2019.
Although this is higher than consensus estimates of $710m, BP said it was hit by a plunge in energy prices; a drop in demand for fuels and refined products, especially in March; weaker earnings from its oil trading business and its stake in Russia’s Rosneft.
BP, which was newly confident about its ability to generate more cash at the start of the year, has been thrown into a fresh crisis just as a new chief executive has taken the helm of the company.
“Our industry has been hit by supply and demand shocks on a scale never seen before,” said Bernard Looney, who took over as chief executive in February. “We are taking decisive actions to strengthen our finances – reinforcing liquidity, rapidly reducing spending and costs, driving our cash balance point lower.”
Beijing detains Chinese journalists who published coronavirus reports
Christian Shepherd in Beijing
Beijing city police have detained three Chinese journalists who archived censored reports about coronavirus on open-source coding website Github, Human Rights Watch said on Tuesday.
On April 19, Beijing city policy detained Chen Mei, Cai Wei and Cai’s partner who had helped run a website called “Terminus 2049” where Chinese citizens could post articles about the outbreak, Human Rights Watch said in a statement.
The website was hosted on Github, which is not blocked in China, making it an online safe haven for Chinese rights and labour activists to discuss topics deemed sensitive by Chinese authorities.
The three are suspected of “picking quarrels and provoking trouble,” the organisation said. A friend of the three confirmed the detention.
“The lack of free flow of information about Covid-19 in China has contributed to a global pandemic,” Yaqiu Wang, China researcher at Human Rights Watch, said in a statement. “Governments around the world should press Beijing to release the wrongfully detained activists and citizen journalists immediately.”
Santander sets aside additional €1.6bn on expectations for jump in bad debts
Nicholas Megaw in London
Banco Santander put aside an additional €1.6bn in the first quarter to deal with an expected jump in bad debts, as it prepares for a “strong global recession” caused by the coronavirus.
The eurozone’s largest retail bank said it felt only a “relatively limited impact” from the pandemic in the three months to March, but increased its net loan loss provisions by 80 per cent year on year in expectation of further declines later in the year.
Investors have been bracing for sharp increases in provisions across the European banking sector this week, following on from a brutal first quarter earnings season in the USA.
Last week UniCredit, Italy’s largest bank, boosted provisions by €900m, while loan losses at Credit Suisse jumped 600 per cent.
The surge in provisions caused Santander’s net profit to drop by 82 per cent year on year, to €331m. Nevertheless, executive chairman Ana Botin said the bank entered the crisis from “a position of strength”, and said the bank’s underlying strategy would remain unchanged.
She said the bank would review its targets “once we have a more complete understanding of the full impact of the crisis.”
Contact tracing and isolation can help reduce infection rates, study shows
Contact tracing and isolation reduce the time during which cases are infectious in the community, a study published in The Lancet Infectious Diseases journal shows.
The research performed by scientists in Shenzhen’s Center for Disease Control and Prevention, from January 14 to February 12, at the height of China’s struggle with the emerging epidemic, looked at 391 patients who were confirmed to have been infected with the virus and 1,286 of their close contacts.
Scientists in the southern Chinese city found that contact tracing increased the speed at which new cases were confirmed by two days from an average of 5.5 days, if surveillance was based on finding people with symptoms, to 3.2 days with contact tracing.
A contact was defined as someone who lived in the same apartment, shared a meal, travelled, or interacted socially with a confirmed coronavirus patient as much as two days before their symptoms began.
Contact tracing also reduced the amount of time it took to isolate infected people by nearly two days from an average of 4.6 days, for those who had been identified only after presenting with symptoms, down to 2.7 days, the study found.
New Zealand and Australia start to open after coronavirus successes
Jamie Smyth in Sydney
New Zealand and Australia began easing social distancing restrictions on Tuesday with both countries reporting dramatic falls in new coronavirus infections over recent weeks.
“We can say with confidence that we do not have community transmission in New Zealand. The trick now is to maintain that,” said Jacinda Ardern, the prime minister.
The Pacific nation reduced its Covid-19 alert from level 4, the highest level of restrictions. Some non-essential businesses, including food takeaways, health and education services will be allowed to reopen.
Australia has achieved a similarly positive record, with authorities reopening Sydney’s famous Bondi beach on Tuesday to local swimmers and surfers after a month-long closure.
Read more here
Singapore warns of greater economic hit from pandemic
Stefania Palma in Singapore
Singapore's de facto central bank on Tuesday said it was unclear how deep and lasting the city state's recession would be, with the economy potentially contracting more than expected due to the fallout from the pandemic.
"The near-term outlook for the Singapore economy is fraught with uncertainty, and hinges on the evolution of the Covid-19 situation globally," said the Monetary Authority of Singapore. "Given the likely protracted nature of this pandemic, containment measures can only be wound down in a gradual manner and intermittent rounds of such measures may be required, thus hampering a decisive rebound in economic activity."
The MAS said Singapore's 2020 contraction in gross domestic product could fall below the forecast range of -4 to -1 per cent, but added that government measures including a record relief scheme of S$63.7bn ($44.8bn) should alleviate the disease's economic impact.
A small, open economy reliant on trade and tourism, Singapore has been hit hard by travel restrictions worldwide, fall in global demand and supply chain disruptions.
The country's oil industry — which accounts for 4 per cent of GDP — is among the sectors hit by the pandemic, with tumbling global demand and excess supply leading to drops in oil prices.
The wholesale fuel trade, which involves a relatively small number of players in Singapore, is of particular concern, said the MAS. "The performance of each entity could thus have a significant influence on the entire industry".
Singapore-based Hin Leong, one of Asia’s largest traders of bunker fuel, is seeking to restructure almost $4bn of debt after admitting to $800m of undisclosed losses.
Vietnam trade ministry proposes end to ban on rice exports
John Reed in Bangkok
Vietnam’s trade ministry has proposed lifting restrictions on rice exports from early May and ending a ban put in place due to food security concerns caused by Covid-19.
Vietnamese state controlled media reported on Tuesday that it made the recommendation after assessing output for the upcoming crop and concluding that the country could export 1.3m tons of the grain between May and mid-June.
However, to ensure food security the ministry recommended that exports be allowed only through international border gates and that steps be taken to crack down on smuggling.
Vietnam is the world’s third-largest rice exporter after India and Thailand, and the suspension of exports angered farmers keen to cash in on rising world prices.
The export restrictions, put in place in March, caused concerns in the nearby Philippines, which relies on Vietnam as its biggest source of rice imports.
Local media reports highlight desperation of India’s migrant workers
Benjamin Parkin in New Delhi
As India's coronavirus lockdown extends into its sixth week, desperation is setting in among the country's migrant workers. Many find themselves stuck without work in large cities where the virus is spreading, often separated from their families.
Local media report the case of one man who went to extreme lengths to circumvent the travel restrictions and return from Mumbai, where he lived in a slum, to his home in Prayagraj some 700 miles away.
Prem Murti Pandey, who works in Mumbai's airport, spent around Rs300,000 ($3,900) to buy around 25 tonnes of onions and rent a truck to make the three-day trip back home. Onions are seen as essential commodities so their shipment is permitted even under lockdown.
The case of Mr Panday, who was apparently ordered into quarantine, highlights the strain on India's legions of migratory labourers. The poorest face hunger after losing their income, and some have resorted to extreme measures to get back home — including walking hundreds of miles.
India's lockdown, which brought all but essential travel to a halt, is currently due to end on May 3, although officials have expressed the wish to remain cautious. India's confirmed number of coronavirus cases is currently approaching 30,000.
Singapore struggles to slash coronavirus infections
Stefania Palma in Singapore
Singapore has overtaken Japan to become the Asian country with the third-highest number of coronavirus infections, recording a daily triple-digit rise in the number of new cases.
The city-state recorded 799 new cases on Monday, taking its total to 14,423. The sharp increase in a country that won plaudits for seemingly keeping the pathogen under control has highlighted the difficulty in fighting the disease.
The number of coronavirus patients reported in Singapore has climbed almost fivefold in the past two weeks, as the city-state ramped up testing, putting it behind China and India in terms of infections.
Read more here.
Moscow flight brings 20 coronavirus infections to China’s Shaanxi province
Christian Shepherd in Beijing
A flight from Moscow has brought 20 new cases of coronavirus to China’s central Shaanxi province, as Russia has become the country’s leading source of imported infections.
State broadcaster CCTV reported that the batch was discovered during testing of passengers on an Air China flight from Moscow that stopped in Shaanxi’s capital Xi’an en route to Beijing, its final destination. An additional five individuals tested positive but displayed no symptoms.
All passengers on the flight are now quarantined and under medical observation; none of them have been able to travel elsewhere in Shaanxi, CCTV said.
China in early April shut its land border with Russia after hundreds of Chinese nationals with Covid-19 crossed from Siberia into the northeastern province of Heilongjiang, leading to fresh lockdowns in the border town of Suifenhe.
How Alibaba hit the limelight as PPE supplier to the world
Ryan McMorrow and Nian Liu in Beijing
Alibaba already had its sights on global expansion — but the coronavirus outbreak has given China’s largest ecommerce company an opportunity to accelerate that vision.
In recent weeks, the Hangzhou-based tech giant has emerged as a crucial middleman between Chinese factories and immense global demand for the equipment needed to fight the pandemic — from protective masks to hand sanitiser and ventilators.
In part, this is down to the donation efforts of founder Jack Ma and Alibaba’s charitable arm, which has shipped more than 40m items of personal protective equipment to 150 countries, and pledged to give 101m masks to the World Health Organization.
But Alibaba’s new-found PPE proficiency has also opened it up to an enormous potential new market, as global consumers turn to the Chinese ecommerce giant for the first time and discover what else it has to offer them.
Read more here
Hong Kong civil servants to return to work as coronavirus cases dwindle
Nicolle Liu in Hong Kong
Hong Kong civil servants will begin returning to work from next week, the government announced on Tuesday, after two weeks of the territory reporting daily new coronavirus cases in the single digits.
Chief executive Carrie Lam said that most government services would resume and outdoor sports facilities and libraries would reopen. However, indoor sports grounds and some performance venues will remain closed.
Government workers have been asked to work from home to slow down the spread of coronavirus since late March after the number of new infections threatened a second wave of cases.
The government will decide later whether other social distancing measures, such as travel restrictions and limiting public gatherings, will be relaxed.
The city has reported daily new confirmed Covid-19 cases in the single digits since April 12, and no new cases in the past two days. There have been only four fatalities since the virus outbreak started and a total of 1,037 confirmed cases.
Thailand expected to extend state of emergency for a further month
John Reed in Bangkok
Thailand is expected to announce the extension of its state of emergency for a further month later today as it continues to fight the spread of Covid-19. The current restrictions were due to expire on April 30.
Some of the strict provisions of the lockdown are expected to be lifted, however. The kingdom will keep a nighttime curfew and other emergency measures in place, authorities said, but allow business such as shopping malls and hair salons to begin opening from May 1.
The decision to extend rule under an emergency decree was confirmed by a government spokesman on Monday, and is due to be approved by Prayuth Chan-ocha’s cabinet at a meeting later today.
Thailand has been under emergency rule since late March, and its airspace closed to most arriving passenger flights — a provision which the country's Civil Aviation Authority of Thailand on Monday extended for another month.
The coronavirus has hammered the country’s export- and tourism-reliant economy, but Thai media quoted Taweesilp Visanuyothin, head of Thailand’s Covid-19 administration centre, as saying that Mr Prayuth supported a “public health-led economy”, where more consideration was given to health and safety than to the immediate state of business.
The country has reported 2,931 cases of Covid-19, resulting in 52 deaths, with the rate of infections slowing in recent days.
Japan jobless rate ticked higher even before lockdown measures
Robin Harding in Tokyo
Japan’s ratio of open jobs to applicants fell sharply in March in a sign that coronavirus was already hitting the economy hard even before the declaration of a state of emergency in early April.
The closely-watched ratio, regarded as one of the timely indicators of change in Japan’s labour market, fell by 0.06 points to 1.39. That is the lowest since mid-2016 and well below the recent peak of 1.63, indicating a significant cooling in the labour market.
The figures came as new data showed a rise in Japan’s unemployment rate to a one-year high of 2.5 per cent in March.
The slackening of the labour market is a reminder that Japan’s economy was in a fragile condition even before the virus struck, following a rise in consumption tax from 8 to 10 per cent last October. Economists expect to see a larger rise in unemployment in April.
Clothing retailer Esprit to close stores across Asia
Primrose Riordan in Hong Kong
Hong Kong-listed German women’s clothing retailer Esprit said it will close its 56 retail stores in Asia and “wind down” its business in mainland China in a desperate bid to cut costs.
The company’s German subsidiaries in March had already applied for bankruptcy protection under Germany’s protective shield proceedings, which are similar to Chapter 11 proceedings in the US.
The retail sector has been badly hit as a result of the coronavirus outbreak in the region even though many cities in Asia have not been subject to the strict lockdowns instituted in parts of mainland China or some European cities.
Esprit operates stores in Singapore, Malaysia, Taiwan, Hong Kong and Macau — all of which it said would close by the end of the financial year. It also operates stores through a joint venture in mainland China. The company said it was “winding down its business in mainland China” without giving details.
“After the proposed store closure, the group will continue its . . . wholesale and licence business in Asia, and focus on its core markets in Europe,” the company said in a statement to the Hong Kong stock exchange.
China reports 6 new coronavirus cases, no new deaths
Health authorities in China recorded six new coronavirus cases to the end of Monday with no new deaths linked to Covid-19.
Of those new cases, three were found in people who had recently traveled overseas while three were found in Heilongjiang, a province bordering Russia. Officials in Heilongjiang have rushed to stem the number of Chinese citizens returning home over a land border after a large number tested positive for coronavirus.
China has now reported 82,836 coronavirus cases and 4,633 deaths.
There were 40 new cases of people who tested positive for coronavirus but showed no symptoms.
Here’s some of the latest news you might have missed
From the US
The Federal Reserve has expanded the eligibility criteria for a lending facility set up to backstop municipal bond markets, in a move that will allow smaller US cities and counties to access liquidity from the US central bank.
Almost a third of finance executives in corporate America are expecting to make layoffs over the coming month, up from about a quarter two weeks ago.
Officials in New York have cancelled the state's Democratic presidential primary, planned for June 23, after more than a dozen other states delayed their primaries amid concerns about the spread of Covid-19.
Governor Andrew Cuomo said he planned to extend lockdown measures in parts of New York state beyond May 15 as he released new test results on Monday showing that nearly one-in-four New York City residents carry antibodies for coronavirus.
Uefa, European football’s governing body, has moved to support its 55 member associations through the coronavirus pandemic with the extension of €236.5m of funding.
Families of the UK’s National Health Service and social care workers who die on the frontline of the coronavirus crisis will receive £60,000 under a new “life assurance scheme”.
Italy’s total number of new Covid-19 cases on Monday was the lowest daily increase since the week in March when the country first introduced its nationwide lockdown, bolstering efforts by Rome to reopen parts of the economy by early next month.
Turkey will send a shipment of masks, overalls and other protective equipment to the US, President Recep Tayyip Erdogan has announced.
Airbus is furloughing more than half the workers at its wing factory in Wales in a sign of the deep job cuts to come as aircraft demand plummets in the face of the coronavirus pandemic.
And from elsewhere
Mexico’s state comptroller, a close ally of President Andrés Manuel López Obrador, has tested positive for coronavirus but is in good health with only mild symptoms, the government said.
Nigeria will extend the lockdown of its commercial centre Lagos and capital Abuja for another week, President Muhammadu Buhari announced in a national address Monday night.
Asia-Pacific stocks mixed as countries move to ease lockdowns
Stock markets in Asia-Pacific lost momentum on Tuesday after a global rally at the start of the week as countries prepared to lift restrictions amid hopes that the peak for coronavirus infections had passed.
Japan’s Topix dipped 0.3 per cent, while the Kospi in South Korea gained 0.4 per cent and the S&P/ASX 200 was up 0.1 per cent.
Overnight in the US, the S&P 500 ended 1.5 per cent higher following on from gains in Asia and Europe, with investors closely monitoring steps taken by a series of state governors to ease lockdowns. Attention remained on central bank meetings this week with the US Federal Reserve and the European Central Bank set to meet.
The number of deaths linked to Covid-19 slowed to multi-week lows in the UK, Italy, Spain, France and Germany, suggesting the peak for infections had passed.
West Texas Intermediate, the US crude benchmark, fell 25 per cent on Monday as the world’s largest oil-back exchange traded fund began selling all its short term contracts. In Asia trading on Tuesday morning, WTI was 2.8 per cent lower at $12.42 a barrel.
White House makes new push to expand coronavirus testing
James Politi in Washington
Donald Trump is making a new push to expand coronavirus testing alongside US retailers such as Walmart and CVS, after facing criticism that the current testing capacity was insufficient for many states to feel comfortable lifting restrictions on economic activity.
“We want to get our country open and testing is not going to be a problem at all,” the president said at a news conference on Monday afternoon.
Lacklustre testing has dogged the Trump adminstration’s response to the pandemic from the beginning of the outbreak, but has become an even more urgent priority to address as the White House pushes state governors to safely begin to reopen their economies.
Previous attempts to encourage pharmacy groups and retailers to set up drive-through testing in parking lots have had a very limited impact, but the Trump administration and industry executives, including commercial labs, held a meeting on Monday afternoon after which they pledged to sharply ramp up their efforts and make testing more widely available over the coming months.
“We’re going with maximum testing,” Mr Trump said, adding that US testing capacity would be doubled shortly. Mike Pence, the vice-president, said more than 5m tests had already been completed since the start of the pandemic.
Texas and Ohio take steps to restart economies
Matthew Rocco in New York
Texas will not renew its stay-at-home order after it expires on Thursday, adding to a growing list of US states that have taken steps to relax coronavirus-related shutdowns.
The state — whose economy ranks second among the largest in the US behind California — will allow businesses to reopen in stages beginning on Friday, when restaurants, bars, retail stores and movie theatres can open with occupancy initially capped at 25 per cent. Occupancy will expand to 50 per cent on May 18 in the second phase of the state’s reopening plan.
State-licensed health care professionals will be allowed to reopen their offices at the start of May with certain precautions. Hospitals must reserve at least 15 per cent of their capacity for Covid-19 patients.
“We’re not just going to open up and hope for the best,” governor Greg Abbott said on Monday. “Opening Texas must occur in phases.”
During the first phase of the plan, seniors and other “vulnerable populations” should remain home as much as possible, he said.
The moves detailed on Monday came after Texas reopened state parks and allowed retailers to offer curbside pick-up last week.
Ohio governor Mike DeWine also announced a plan to gradually restart the state’s economy.
General offices, manufacturers, distribution centers and construction companies will be able to open on May 4. Retail stores and other consumer businesses, such as barber shops and salons, can open on May 12. Dine-in service at restaurants and bars will remain closed.
Medical facilities can resume elective procedures on Friday if patients do not need to stay overnight.
Mr DeWine noted that employers must maintain social-distancing protocols and sanitise workplaces. The state will make face coverings for employees mandatory.