Can New York avoid a coronavirus exodus? | Free to read
Joshua Chaffin in New York
Just over a year ago, before the modern plague descended, Manhattan’s Hudson Yards threw a launch party that was Versailles-like in its overabundance of champagne, oysters, top chefs, beautiful people and other trappings of a great city.
But on a recent afternoon, Hudson Yards was a ghost town. Its 1m-square-foot shopping mall was shuttered and its anchor tenant, Neiman Marcus, would soon declare bankruptcy. The Vessel public art sculpture — likened by one reviewer to a giant doner kebab, and usually teeming with tourists — was empty but for a security guard patrolling its base.
The only foot traffic was a steady stream of soldiers, who had been treating Covid-19 patients at the hastily-erected field hospital at the nearby Javits convention centre. They were lined up, at six-foot intervals, to collect free meals at a Hudson Yards storefront that had been converted into a soup kitchen. Alongside them were delivery drivers, postal workers, office cleaners and others manning the frontlines in New York City’s struggle against coronavirus.
The tableau is a reminder of how drastically the virus has transformed New York, which has potentially suffered more deaths than any other city in the world, in just a matter of weeks. As New Yorkers inch towards a reopening, probably next month, according to Mayor Bill de Blasio, they are contemplating with trepidation how their city will emerge from the pandemic — and what sort of future it will find on the other side.
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Dimon says banks’ share buybacks will be smaller once they resume
Laura Noonan in New York
US banks won’t resume their share buyback programmes until executives can see “the white of the eyes of the recovery” and even then payouts “won’t be the size you saw before”, JPMorgan boss Jamie Dimon warned on Tuesday.
The comments from Mr Dimon came as he painted a mixed picture of the outlook for banks at Deutsche Bank’s financial services conference, predicting another round of big loan losses in the second quarter and another trading boom and insisting that JPMorgan could continue to pay its ordinary dividends since the bank will earn “quite a bit of money this year”.
He struck a cautious tone on the topic of buybacks, which eight top US banks voluntarily suspended in mid-March as the Covid crisis threatened hefty loan losses and outsize demands for additional credit. It is “a little premature” to begin a conversation about resuming those payments, which make up the vast majority of shareholder payouts, the bank boss said.
“You’ve got to see the white of the eyes of the recovery before you start to make buybacks,” he said. “If companies (banks) are all of a sudden retaining a lot of capital and they’re earning more money and reserves are coming down, yeah I think you may see people start them but they probably won’t be the size you saw before.”
New York state registers lowest one-day coronavirus death tally
Joshua Chaffin in New York
Coronavirus deaths in New York state came to 73 over the past 24 hours, a sharp drop from a day earlier and the lowest one-day tally since the crisis began.
“We’re on the other side of the curve,” said Andrew Cuomo, the governor of New York, who added at his daily briefing that he plans to redouble his administration’s efforts to address New York City, the last region remaining under lockdown as the rest of the state reopens.
A key part of that effort will involve testing that will allow authorities to target specific areas that are seeing stubbornly high infection rates.
Those communities, many in Queens and the Bronx, “tend to be predominately minority communities”, Mr Cuomo said during Tuesday’s briefing.
In some cases, their infection rates approached 40 per cent, or twice the citywide average.
“We’re going to focus on those zip codes. We’re going to focus on those communities, and we want to slow the infection rate even in those communities,” the state governor said. “And that will really bring the numbers down in New York City.”
New York governor Cuomo to push for infrastructure funds
Joshua Chaffin in New York
New York Governor Andrew Cuomo will make a push for investment in major infrastructure projects during a meeting on Wednesday with President Donald Trump.
“Now is the time. There’s no better time to build than right now,” the governor said, as he argued that addressing the state’s crumbling infrastructure was a way to jumpstart an economic recovery after the coronavirus shutdown.
Mr Cuomo said he wanted to take advantage of the slowdown to accelerate work on existing projects, such as the new LaGuardia airport and a revamped Pennsylvania station.
He touted other plans, which would require federal support, including transmission lines to bring renewable power from upstate New York and Canada to New York City. “Let’s invigorate this whole renewable market,” the governor said.
In addition to infrastructure spending, Mr Cuomo is also expected to prod the White House to support an aid package for state and local governments.
“If we don’t get funding from Washington, we’re going to have a serious financial issue,” he warned, saying the state may be forced to make “hard choices”.
In the absence of federal support, Mr Cuomo said he was reluctant to increase borrowing to cover operating costs.
Greece reports new Covid-19 cases at refugee facility
Kerin Hope in Athens
Three confirmed cases of Covid-19 were reported on Tuesday in a new outbreak of coronavirus at a hotel in southern Greece, home to almost 500 asylum seekers from Africa and the Middle East.
The public health organisation EODY said it tested 125 residents at the hotel after a child registered as an unaccompanied minor was diagnosed at the weekend with Covid-19. The facility, which is managed by the International Organization for Migration, was quarantined for 14 days, for the second time in five weeks.
Almost 150 residents tested positive last month in an outbreak that spread rapidly after a Somali woman and a Greek cleaner at the hotel became infected, an EODY official said. There were no fatalities.
Four asylum seekers among two groups that arrived by small boat from Turkey tested positive for Covid-19 this month on the eastern island of Lesvos. They were the first cases to be reported among new arrivals on the island, which hosts some 18,000 refugees and migrants, mostly living in crowded conditions in the Moria camp. No cases of coronavirus have so far been reported among its residents.
UK makes ‘major progress’ in providing protection kit for key workers
Jim Pickard in London
The health secretary said major progress has been made in Britain’s attempts to secure personal protection kit for healthcare workers and others.
Mr Hancock, at the daily Number 10 media briefing on Tuesday, reiterated the news of a trial in the UK for the anti-viral drug remdesivir, saying it was believed this could shorten recovery time by about four days.
After a “mammoth effort” led by Lord Deighton, who advises Mr Hancock on personal protection equipment for healthcare workers, there has been a step change in PPE provision, Mr Hancock told journalists.
The government has signed contracts to manufacture 2bn items of equipment in the UK, Mr Hancock said. Ministers have also agreed deals with more than 100 companies overseas, including contracts for another 3.7bn gloves.
“These new supplies mean we’re not just keeping up with demand, we will be able to replenish our stockpiles,” he said.
He said this was “probably the greatest step forward in the treatment of coronavirus since the crisis began”.
Most Britons think Cummings broke rules and should resign, poll shows
The majority of British people believe Dominic Cummings, the senior aide to Prime Minister Boris Johnson who drove his family more than 260 miles from London to Durham when the UK was in strict lockdown, has broken the rules and should resign, according to a poll.
YouGov, the UK pollster, surveyed 1,160 adults about Mr Cummings, who said he took his wife and child on the long journey to stay at a home on his parents’ property so they could self-isolate with coronavirus symptoms and seek assistance with childcare.
Boris Johnson and other senior Conservative ministers have backed Mr Cummings to stay on.
Here are the results of the YouGov poll:
Mr Cummings, according to statements he gave in a press conference on Monday, said he and his wife decided to go to his parents’ farm to self-isolate after they feared they had contracted the disease. Although neither he nor his wife were tested, he said they were both sick with Covid-19-like symptoms.
Mr Cummings admitted that during his stay in the north-east, he took a 30-minute drive to Barnard Castle, a local market town, to test his eyesight, which had been affected by the virus.
At the time, the government’s main message to Britons was “stay at home, protect the NHS, save lives”. The nation was told to stay inside apart from taking essential trips to buy food or medicine, or to exercise for one hour a day. People with Covid-19 symptoms were told to isolate in their homes while travelling to second homes was disallowed.
But Mr Cummings said he was worried that he and his wife, the journalist Mary Wakefield, would not be able to access adequate childcare in London if they both fell ill.
Police blame ‘pace of events’ for differing statements on Cummings
Chris Tighe in Newcastle
Durham police on Tuesday blamed the pace of “fast moving incidents” for discrepancies in their accounts of their interactions with the family of Dominic Cummings, the senior prime ministerial aide who took his wife and child from London to the northeast county during the strictest phase of the UK’s lockdown.
On Friday, Durham constabulary said its officers had contacted members of Mr Cummings’ family, with whom the aide was staying, to explain the guidelines on self-isolation and essential travel.
But on Monday afternoon the local police force clarified it had given no specific advice on coronavirus to any members of the family, although it had spoken to them about security issues.
The initial police statement suggested officers had explicitly reminded Mr Cummings, or members of his family, of the rules on essential travel.
Mr Cummings admitted in an unprecedented press conference in the Downing Street rose garden on Monday that he had driven his family 260 miles north from London to Durham and, while there, taken another trip to the Barnard Castle beauty spot, which he said was to test his eyesight in case he had coronavirus.
Asked to explain the retraction of their statement about lockdown advice, Durham police said:
Further information on the fast moving incidents came out that showed that didn’t happen.
The force did not elaborate further. It has yet to respond publicly to a request from Durham police commissioner Steve White for chief constable Jo Farrell to investigate the facts concerning Mr Cummings’ movements.
France unveils €8bn motor industry recovery plan
Victor Mallet in Paris
President Emmanuel Macron on Tuesday unveiled an €8bn plan to revive France’s motor industry, crippled by loss of sales and production during the coronavirus pandemic and the lockdowns aimed at slowing the spread of the disease.
The plan, including increased subsidies for buyers of electric or hybrid cars and support for research into hydrogen power, is aimed at ensuring that the country’s automotive assemblers and suppliers survive the crisis, invest in France and the EU and emerge in the years ahead as key global manufacturers and exporters of clean vehicles.
The intention, said Mr Macron, was to “relocalise” manufacturing and “to make France the leading country in Europe for the production of clean vehicles”, with an output target of 1m a year by 2025.
Renault, the carmaker seeking a €4bn-€5bn credit line from the French state, will become the third partner alongside PSA and Total subsidiary Saft in a multibillion-euro project to produce batteries for electric vehicles, most of which come from China and South Korea, within the EU. The state owns about 15 per cent of Renault.
Mr Macron, who has long championed European industrial “sovereignty” through investments in tech sectors dominated by Asian and US competitors, was speaking at the Etaples factory of the motor industry supplier Valeo near Le Touquet in northern France.
He was accompanied by five of his ministers, including finance minister Bruno Le Maire and Muriel Pénicaud, who has the labour portfolio.
Brazil reports world’s highest daily number of coronavirus deaths
Steve Bernard in London
Newly confirmed Covid-19 cases worldwide revealed the smallest daily increase for a week while the number of coronavirus deaths yesterday showed the lowest rise for a Monday since the end of March.
Globally, the number of new cases on Monday rose 88,239, bringing the total to 5.45m.
A further 3,100 coronavirus patients died on Monday, which puts the global death toll at 336,027.
Brazil reported 807 deaths, the country with the highest number yesterday. This is the first time any country has reported more deaths than the US since the end of March. An additional 11,687 new cases were reported, the smallest increase in seven days.
The US death toll rose by 523, bringing the total to 92,464, the smallest rise in nearly two months. Numbers tend to be lower at weekends due to late reporting, and the Memorial day holiday has likely compounded this issue. The country recorded 19,069 infections yesterday, pushing the national total to 1.65m.
Explore data about the pandemic to understand the disease’s spread and trajectory.
South Africa testing curbed by global lack of test materials
Joseph Cotterill in Johannesburg
South Africa’s mass coronavirus testing regime, the biggest in Africa, is being held back by a mounting global dearth of test materials, its health minister said.
Backlogs cut the country’s daily tests to about 13,000 on Monday from recent rates of about 20,000, in a sign of the impact of the shortages caused by a worldwide race to acquire test kits, Zweli Mkhize told South African lawmakers on Tuesday.
“The decline here is occasioned by the world shortage of supply… we are now running into difficulties with various suppliers not being able to meet our demands,” Dr Mkhize said. “Everybody in the world is looking for exactly the same thing,” he added.
South Africa has rolled out the continent’s biggest testing regime with about 600,000 tests to date that have recorded more than 23,000 cases. The country is now seeking to intensify testing further in major hotspot areas where infections are accelerating as the country emerges from a strict national lockdown.
In the Western Cape, where an outbreak centred on Cape Town is picking up pace and now accounts for two-thirds of South African infections, testing backlogs have reached 18,000, said Alan Winde, the region’s premier, on Monday.
John Nkengasong, the head of the Africa Centres for Disease Control and Prevention, told the FT this month that South Africa’s problems with obtaining testing materials underline why the CDC is setting up a platform for African nations to pool their pandemic-related medical procurement.
US new home sales unexpectedly rise in April
Sales of newly built homes in the US unexpectedly rebounded in April, suggesting the housing market may be stabilising as low mortgage rates entice home buyers amid the pandemic.
New home sales rose 0.6 per cent month-on-month in April to a seasonally adjusted annual rate of 623,000 units, the US Census Bureau said on Tuesday. That was better than the 21.9 per cent decline to 480,000 that economists had forecast and followed a 13.7 per cent decline in March.
A regional breakdown showed home sales climbed the most in the northeast, rising 8.7 per cent, and also advanced in the midwest and south, but fell in the west.
Indeed, data from Freddie Mac showed the average 30-year fixed mortgage rate hovered around 3.3 per cent in April and mortgage applications in the US have grown in recent weeks.
“The coronavirus pandemic has generated any number of nasty surprises over the past few months, but the unexpected strength in April new home sales may be the first pleasant surprise yet — and the clearest indicator so far that housing, so unlike the last time around, will be a source of relative strength during this downturn,” said Matthew Speakman, economist at Zillow.
Dubai to increase numbers going into shopping centres and offices
Simeon Kerr in Dubai
Dubai is to raise the number of people allowed into shopping centres, offices and restaurants as the emirate seeks to boost economic activity from Wednesday.
Businesses received guidelines in a government circular on how to increase activity in line with measures to prevent the spread of coronavirus.
The economy in the Gulf’s tourism and commercial hub has been rocked by the collapse in global travel and a strict domestic lockdown in April.
Businesses will be allowed to increase the number of employees going into offices to 50 per cent from 30 per cent.
Shopping centres, which reopened in late April, will be able to welcome 70 per cent of their full customer capacity, up from 30 per cent, but those below the age of 12 and older than 60 years will not be allowed to enter.
Cinemas, closed since late March, will have to allocate two seats per customer, leaving two seats vacant in each horizontal row while keeping alternate vertical rows empty.
US stocks rally on optimism of economic recovery
US stocks opened higher, building on a rally that has been defying pessimists for two months as the S&P 500 climbed above 3,000 for the first time since March 5.
Wall Street’s S&P 500 jumped as much as 2 per cent at Tuesday’s open, trading at around 3012. The Dow Jones Industrial Average rose 2.3 per cent while the tech-heavy Nasdaq Composite gained 1.7 per cent, after the US daily death toll from the virus reached a two-month low.
Some New York Stock Exchange traders are due to return to the trading floor for the first time since late March. The S&P 500 has risen 30 per cent since then. The index has fallen 6.7 per cent this year.
The comeback for US equities comes as governments ease coronavirus restrictions while some statistics provide grounds for some optimism that the worst of the economic impact may have passed.
European stock markets advanced about 1 per cent. Even Hong Kong stocks rebounded 1.9 per cent, after an initial decline that was triggered by security laws proposed by China.
Airlines’ $120bn support unevenly spread and failures loom, Iata says
Tanya Powley, transport correspondent
Airlines have received about $123bn in financial aid from governments, but that support is unevenly spread around the world, according to research by Iata, the global airline trade group.
The aid has helped keep the industry on “life support” but the trade body warned that there may be more airline collapses as some carriers struggle to repay the debt.
Iata found that out of the $123bn provided by governments, about $67bn will need to be repaid. Only about $11bn came in the form of equity.
Its research found that the airline industry’s global debt could rise to $550bn by the end of the year, a $120bn increase on debt levels at the start of 2020.
“That’s a lot of new debt that has been loaded onto the balance sheets of the airlines that have been given support,” said Brian Pearce, chief economist at Iata.
He added that the industry “could easily see airline failures under the weight of this debt”.
Macy’s announces $1.1bn bond offering using property as collateral
Alistair Gray and Joe Rennison
Macy’s is turning to its property portfolio to raise cash in the coronavirus crisis, pledging several of its department stores and other properties as collateral in a $1.1bn bond deal.
Flagship stores in downtown Brooklyn, San Francisco’s Union Square and near Millennium Park in Chicago, as well as 35 outlets in some shopping malls and 10 distribution centres, are being put up as guarantees as the retailer taps capital markets for cash.
In a filing with the US Securities and Exchange Commission Macy’s estimated the properties in question had a value of $2.2bn — more than Macy’s market capitalisation of $1.6bn.
Department stores have been particularly hard hit by the pandemic and JCPenney and Neiman Marcus have filed for bankruptcy this month. Macy’s, which owns Bloomingdale’s as well as its eponymous stores, forecast last week that it was set for a $1bn quarterly operating loss.
Macy’s, whose total debt has swelled from $4.7bn to an estimated $5.7bn over the past year, said it intended to use the proceeds to help repay monies it owes under a revolving credit facility.
Warner Music launches IPO to raise up to $1.8bn
Anna Nicolaou in New York
Warner Music Group has restarted its IPO plans, announcing its intention to raise up to $1.8bn in what would be one of the first major listings since the coronavirus pandemic rattled global markets.
The music label behind Lizzo and Ed Sheeran said it would sell 70m shares of its class A common stock, targeting a price of between $23 and $26 a share it said on Tuesday. That would give Warner Music a valuation of between $11.7bn and $13.3bn — well above the $3.3bn that billionaire Len Blavatnik paid for it in 2011.
The company had initially filed to go public in February, but put the listing on hold as the pandemic developed and stock markets plunged. But having seen an improvement in markets in recent weeks, as well as the resilience of the music industry even as other media groups were battered, the company decided to proceed with the offering, according to people familiar with the situation.
Warner Music won’t keep any of the money raised from the offering. Access Industries, Mr Blavatnik’s investment company, will retain the majority of voting power of Warner’s outstanding common stock, according to a regulatory filing. The shares will trade on Nasdaq with the ticker price WMG.
ECB warns on ‘sustainability of public finances’
Martin Arnold in Frankfurt
Soaring government debt levels threaten to make investors reassess European sovereign risk and could “reignite pressures” on more vulnerable countries in the region over the medium term, the European Central Bank has warned.
Forecasting that eurozone budget deficits will rise to 8 per cent of gross domestic product on average this year, far above the levels reached after the 2008 financial crisis, the ECB said: “The pandemic represents a medium-term challenge to the sustainability of public finances.”
Outlining the main risks for the eurozone from the coronavirus crisis in its annual financial stability review on Tuesday, the ECB said aggregate government debt would rise from 86 per cent of GDP to above 100 per cent across the 19-country bloc.
It said public debt would rise close to 200 per cent of GDP in Greece, 160 per cent in Italy, over 130 per cent in Portugal and just below 120 per cent in France and Spain, adding: “The associated increase in public debt levels could also trigger a reassessment of sovereign risk by market participants and reignite pressures on more vulnerable sovereigns going forward.”
Warning that “a number of countries are facing substantial debt repayment needs over the next two years”, the ECB said Italy would have to refinance more than 15 per cent of its debt in the next year, while that figure was over 10 per cent for France, Spain, Belgium, Finland and Portugal.
The ECB, which is due to update its economic forecasts and review its monetary policy next week, has already forecast that the eurozone will suffer its deepest postwar recession and contract between 5 per cent and 12 per cent this year.
It warned that a more severe downturn than expected, if combined with higher government borrowing costs and “the materialisation of contingent liabilities”, risked putting public finances “on an unsustainable path in already highly indebted countries”.
Brussels ends export curbs on masks
Jim Brunsden in Brussels
European manufacturers of masks and other protective equipment will no longer face export restrictions after the European Commission said curbs implemented at the height of the pandemic in March had outlived their usefulness.
On March 15, Brussels said companies needed approval from their national governments before selling personal protective equipment such as masks, gowns and visors to buyers outside of the EU trading bloc.
This was designed to quell fears that a global scramble for PPE would prompt national governments to keep hold of their own supplies, threatening the single European market and the collective effort to contain the virus.
The curbs were due to expire on Tuesday and the European Commission
said that no EU governments had asked for them to continue.
The EU-wide restrictions were criticised as “an export ban” but Brussels insisted that the rules were less draconian in practice.
The European Commission estimated that more than 13m protective masks, around 1m protective garments and more than 350,000 protective masks and visors have been exported from the EU since April 26.
NYSE trading floor to open after two-month shutdown
Philip Stafford in London
The New York Stock Exchange will begin reopening its trading floor at 11 Wall Street today after a two-month shutdown.
It will be a cautious start on the NYSE, which will only allow independent floor brokers to enter the building. These companies, who execute trades on behalf of clients, typically only have around 20 employees and all of their income is tied to the work they do on the trading floor, NYSE president Stacey Cunningham told the Wall Street Journal this month.
The coronavirus crisis forced the NYSE to close its trading floor in March for the first time in its 228-year history.
Returning brokers will be subject to health checks before entering and will have to wear protective masks and observe social distancing rules. Markers will define the space where each person may work on the floor, according to the exchange. The opening bell kicks off at 9.30am Eastern Time.
The designated market makers, who can intervene to smooth out volatile trading periods, will operate remotely. The NYSE’s Arca options floor in San Francisco reopened this month.
A trader arrives at the New York Stock Exchange
A trader checks the time before entering the NYSE
Russia passes pandemic peak, says Putin, as he reinstates parade
Henry Foy in Moscow
Russia has passed the peak of the coronavirus pandemic, the president said, adding that the second world war memorial event, cancelled this month, would take place in June.
Vladimir Putin’s comments come hours after Russia recorded a record daily death toll from Covid-19, and close to 9,000 new confirmed infections.
“According to experts, the peak is already considered to have passed,” Mr Putin said during a meeting with his defence minister.
While daily increases in cases have fallen slightly from a high of 11,656 a fortnight ago, Russia is the third most affected country in terms of the number of cases after the US and Brazil, and has the third-fastest growing number of infections.
“I order you to begin preparations for the military parade in honour of the 75th anniversary of the victory in the Great Patriotic War,” Mr Putin told defence minister Sergei Shoigu. “We will do this on June 24.”
The cancellation of the originally planned parade, on May 9, was the most public example of how the pandemic has disrupted President Putin’s plans this year.
The patriotic Victory Day parade has become one of the most important events in Russia’s political calendar, and this year’s event was set to take place weeks before a national vote on constitutional changes that would allow Mr Putin to extend his presidency to 2036.
Mexican economy shrinks 1.3 per cent in March
Jude Webber in Mexico City
Mexico’s economy shrank 1.3 per cent in March compared with February, and contracted 2.6 per cent compared with the same month last year, according to an official GDP proxy.
The data released by the state state statistics office, Inegi, comes as Mexico’s key car, construction and mining industries prepare to reopen amid the coronavirus crisis.
However, revised first quarter GDP showed a slightly brighter picture than earlier data. The new data pointed to a contraction of 1.2 per cent compared with the fourth quarter 2019, better than the 1.6 per cent fall previously reported. The 2.2 per cent drop versus the first quarter last year was also an improvement on the 2.4 per cent fall Inegi released at the end of April. The data confirmed that Mexico’s economy has been increasingly shrinking for four consecutive quarters, Inegi said.
Covid-19 is expected to inflict significant pain on Latin America’s second-biggest economy. Exports slumped 41 per cent in April, including a 42 per cent drop in manufacturing exports and a 79 per cent collapse in auto exports in the month, Inegi reported on Monday.
President Andrés Manuel López Obrador — who says he is working on an alternative economic indicator that will also measure happiness and wellbeing, not just GDP — forecasts a million jobs could be lost in total, although market analysts fear it could be double his estimate. The president insists tax collection and remittances are holding up despite the global crisis.
Balance of payments data also released on Monday showed a solid picture, helped by a competitive exchange rate. Alberto Ramos, an economist at Goldman Sachs, noted that the $5.8bn current account surplus was “the best outturn in at least 23 years” but warned that “the capital account remains vulnerable”.
Mexico, which reported 71,105 confirmed Covid-19 cases and 7,633 deaths as of Monday night, entered lockdown at the end of March and is due to lift restrictions gradually from the end of this month.
McLaren to cut 1,200 jobs as Covid-19 prompts restructuring
McLaren will cut 1,200 jobs in a major restructuring after coronavirus shut down the company’s showrooms and prevented it from racing.
The group, which operates an automotive business making supercars as well as a racing division and a unit selling engineering technology, employs around 4,000, mainly based in the UK.
Up to three-quarters of its staff are based within the automotive division, which makes around 4,000 supercars a year. The rest are split between its technology and racing units and back office functions.
“Like many other businesses, McLaren has been severely affected by the current pandemic,” the group said on Tuesday.
“The cancellation of motorsport events, the suspension of manufacturing and retail activities around the world and reduced demand for technology solutions have all led to a sudden impact on the group’s revenue generating activities”.
McLaren is attempting to raise £250m in a bond offering to help shore up its finances, offering a mortgage of its space-age headquarters in Woking and a fleet of heritage cars to secure the deal.
But the move has ignited the ire of investors in a £525m bond issued in 2017, who claim the assets were already put up by the company on their bond.
Last year the business made a pre-tax loss of £28m, a significant reduction on the £67m loss a year earlier, with revenues that were 18 per cent higher at £1.5bn.
The group made operating earnings of £177m, and had net debt of £572m at the end of 2019. The company is due to release first quarter trading figures later this week.
“This is undoubtedly a challenging time for our company, and particularly our people, but we plan to emerge as an efficient, sustainable business with a clear course for returning to growth,” said McLaren Group’s executive chairman Paul Walsh.
UK approves limited use of Gilead drug remdesivir to treat Covid-19
Donato Paolo Mancini in London
Gilead’s experimental coronavirus drug remdesivir will be made available to selected patients in the UK, health officials said on Tuesday.
Under the Early Access to Medicines Scheme, NHS coronavirus patients who are hospitalised will be able to receive the drug. Treatment will be limited to those showing the greatest likelihood of benefit, the Department of Health said.
The scheme is used in circumstances in which there is a clear medical need but no drugs have yet received marketing approval.
Earlier this month, the US Food and Drug Administration approved the drug for emergency use. Japan has also approved it to treat Covid-19, the disease caused by the new coronavirus.
Remdesivir was initially developed to treat viral conditions, and was later assessed against Ebola, but never approved to treat that disease.
Peer-reviewed evidence, released in The New England Journal of Medicine last week, shows the drug shortens time to recovery by about four days. Effects on mortality are still unclear.
A peer reviewed study published last month in The Lancet showed no statistically significant benefit, though the company and investigators involved said it was statistically underpowered. Trials, including in the UK, are continuing.
Gilead, which is providing the drug free of charge as part of its efforts to donate 1.5m vials, said it would continue to work closely with the UK government to enable broader access to patients across the UK. New York-listed shares gained 1.3 per cent in pre-market trade.
Travel stocks rally on prospect of salvaged European summer
Shares in European travel companies made sharp gains, after reports that Germany plans to lift travel warnings for 31 European countries on June 15 have raised hopes of a starting gun on the continent’s summer holiday season.
Shares in British Airways owner IAG and Tui, the world’s largest tour operator, jumped almost 20 per cent on Tuesday, following the news that would be a reprieve for the continent’s embattled travel industry. EasyJet, InterContinental Hotels Group and Whitbread shares rose more than 10 per cent.
According to the news agency dpa, the foreign ministry will submit a paper to the German cabinet on Wednesday lifting the travel warning for the 26 member states of the EU as well as the UK, Iceland, Norway, Switzerland and Lichtenstein.
The travel sector rally also follows news that Lufthansa, the continent’s second-largest carrier, will be receiving a €9bn bailout from the German government.
The Stoxx 600 Travel and Leisure price index remains about 50 per cent lower than three months ago, as share prices in leisure and tourism companies crashed due to travel restrictions imposed by governments to stop the spread of the deadly virus.
Excess UK deaths during Covid-19 pandemic approach 60,000
Chris Giles in London
The UK has suffered almost 60,000 more deaths than usual since the coronavirus pandemic struck the country in mid-March, according to official figures released on Tuesday.
The Office for National Statistics said that in the week ending May 15, 14,573 deaths were registered in England and Wales — 4,385 more than average for that week and a deterioration on the 3,081 excess deaths recorded in the previous week.
With separate official figures for Scotland and Northern Ireland, the total number of excess deaths, directly or indirectly caused by Covid-19 across the UK rose to 59,359 over the past nine weeks.
Nick Stripe, head of life events at the ONS, said there had been “just under 60,000 excess deaths across the UK”.
The prime minister and his scientific advisers have said that they want to be judged on excess all cause mortality rather than the daily total announced by the Department of Health and Social Care, which stood at 36,914 in figures released on Monday.
Pound hits two-week high as UK economy slowly re-opens
Sterling rallied to the highest level in nearly two weeks after the UK government outlined plans to open non-essential stores next month and as authorities elsewhere have managed to dodge fresh jolts of infection as they ease lockdowns.
The pound jumped 1.2 per cent against the US dollar on Tuesday to $1.2325, the highest level since May 13. It climbed by a shallower 0.4 per cent against the euro, with one unit of the common currency buying £0.8902.
Equity markets in Europe and Asia climbed on Tuesday amid growing optimism about re-opening economies around the world. Paul Jackson, head of asset allocation research at Invesco, said that the “risk-on” mood started with Japan easing its lockdown, while the easing of restrictions suggested by UK prime minister Boris Johnson on Sunday have helped UK assets. The FTSE 100 index gained 1.3 per cent.
The positive sentiment pushed the dollar weaker against both its developed and emerging market peers, helping to provide further fodder for sterling gains.
Fearing potentially negative headlines about the progress of Brexit negotiations due to start next week, investors had been betting on a weaker currency going into the end of May. But the pound has recovered sharply since Friday, when it traded as low as $1.2156.
“Brexit fears have suddenly gone away for now and the market is playing out what you see in the streets with people enjoying the sunshine,” Kit Juckes, a macro strategist at Société Générale, said.
Saudi Arabia to ease restrictions in three-phase plan
Ahmed Al Omran in Riyadh
Saudi Arabia has announced that it will begin easing restrictions on movement and travel in the coming days, more than two months after strict measures were placed to help stop the spread of coronavirus in the kingdom.
The reopening plan is divided into three phases starting this Thursday, with the curfew to be completely lifted from June 21 except in the holy city of Mecca, the interior ministry said.
At the first phase, the 24-hour curfew will be shortened to between 3pm-6am nationwide and travel by car will be allowed between the different regions in the country. Some retail and wholesale businesses will also be allowed to resume operations.
The government has imposed full curfews on most cities and towns last month but eased them during the fasting month of Ramadan before reimposing them for five days for the Muslim Eid al-Fitr holiday which started last Sunday.
Free movement between 6am to 8pm will be allowed from Sunday May 31 and mosques can hold prayers once again as part of the second phase. Domestic flights will resume on the same date but the ban on international flights will remain in place. Hajj and umrah pilgrimages will remain suspended until further notice.
Public and private sector employees will be allowed to return to their offices under new guidelines set by the health and labour ministries. Restaurants and cafes will reopen. Other business where social distancing is not practical, such barbers, gyms and cinemas will remain closed and social gatherings of more than 50 people will still be banned.
The third phase, which begins on June 21, will see life in Saudi Arabia return to its pre-coronavirus restrictions norms but citizens are still urged to wear masks in public, wash hands and maintain social distancing.
Heseltine: ‘lack of credibility’ is damaging the government
Michael Heseltine, the Conservative Party grandee who has clashed with prime minister Boris Johnson in the past by urging voters to back the Liberal Democrats, has said Dominic Cummings staying in his job is damaging the government.
In an interview with Sky News, Lord Heseltine said of Mr Cummings’ press conference in the Downing Street rose garden on Monday, when the prime minister’s chief aide defended taking his family to Durham from London during lockdown and said he had then driven to a local beauty spot to test his eyesight:
‘The lack of credibility in the story is damaging the government and its policies.
Lord Heseltine, a former deputy prime minister whose pro-European views have long put him in opposition with Brexiteers in government including Mr Johnson, Mr Cummings and cabinet minsiter Michael Gove, said of the prime minister:
I myself don’t think he’s wise to keep Dominic Cummings on.
He then went on to ask:
What is the position of Mr Cummings in this government? He’s not accountable to anybody except the prime minister but he appears to be increasingly in charge and increasingly able to make decisions.
Referring to the resignation of Mr Johnson’s former chancellor Savid Javid following a clash with Mr Cummings over staffing, Lord Heseltine continued:
What is the relationship with the rest of the cabinet, are they expected to bow down to this particular guy? He’s already cost a chancellor his job.
Lord Heseltine then pointed out the unusual development of a special adviser to a prime minister becoming the centre of a major political story.
Dominic Cummings has become the story and the government won’t escape from that.
If I was advising Boris Johnson I would say if Mr Cummings won’t resign…then you should ask him to step down.
Swiss watch sales record sharpest contraction on record
Sam Jones in Zurich
Exports of Swiss watches fell 81 per cent in April, in the industry’s worst sales contraction on record, as factories in Switzerland shut their doors and wealthy consumers across the world stayed at home.
Swiss watchmaking is critical to the Swiss economy; behind gold and pharmaceuticals, watches are the third largest category of products exported from the wealthy alpine state. In 2019 watch exports were worth SFr22bn ($22.7bn).
The sector has been “stopped in [its] tracks,” the Federation of the Swiss Watch Industry said in a statement, adding that it believed the decline to reflect an “exceptional situation rather than a trend in demand.”
Analysts are less sanguine. “We believe trends are unlikely to improve materially until the back half of the year,” said Thomas Chauvet of Citi.
The impact will be significant given the existing structural challenges Swiss watchmaking faces, Mr Chauvet added, citing among them: “risks of production overcapacity, slow pace of innovation and limited product newness, reluctance to embrace technology, unattractive pricing architecture, limited control over distribution, low e-commerce penetration and conservative communication.”
Switzerland has been among the first of developed economies to roll-back lockdown measures as a result of the coronavirus pandemic as Bern has sought to revive business activity and limit the financial fallout of the crisis.
The grim outlook for the country’s watchmaking industry, however, highlights the extent to which the country’s economic recovery is highly geared to the global economic outlook.
Minister Gove defends Johnson aide Cummings on air
Michael Gove, the cabinet minister and Brexit architect, has this morning led the defence of Boris Johnson’s decision to keep Dominic Cummings in post.
In an interview with Sky News, Mr Gove was asked by presenter Kay Burley whether a statement Mr Cummings made in his press conference on Monday that he took a drive in the north-east to test his eyesight was plausible.
Ms Burley asked:
If you’re struggling with Covid-19 and you think you’ve got a problem with your eyesight, what is the government advice?
Mr Gove said:
I think that different people will take different steps in order to ensure that their eyesight is properly addressed.
When pressed on what the government advice was, he answered:
Well, we advise people obviously to seek medical advice.
And when Ms Burley asked: “so it’s not to get in a car and drive half an hour with your four-year-old strapped in the back,” Mr Gove responded:
Dominic, and I know you’re alluding to Dominic, was given the all-clear by the medics, he was told that it was safe for him to return to work.
He wanted to make sure before he did return to work that he was in a good condition in order to drive the long journey back down the A1 so he took a short journey, that short one that was consistent with the medical advice, consistent with medical guidance.
Then, in response to a tweet from the Bishop of Leeds that the government had “lied to” the British people, Mr Gove said:
I wish the bishop well..I’m a Christian too and I think therefore I have great respect for the Church, for bishops, for the leadership they exercise. I wish him well.
Statistics suggest pandemic could widen UK regional inequality
Valentina Romei in London
The share of people working from home is nearly double in London than in eastern regions of the UK, according to official statistics that highlight how the pandemic might be widening the regional economic differences that the government has pledged to narrow.
More than 60 per cent of workers in the rich region of London said that they worked from home in April because of the pandemic, according to a survey by the Office for National Statistics. London is the region with the highest proportion of home workers, nearly twice as high as the 33 per cent for the East of England and East Midlands, where income per capita is significantly lower.
The difference largely reflects the greater importance of professional and financial services in the capital and could mean that the economic hit to the London economy is less severe than that to other poorer regions, making the pre-crisis government’s pledge to “level up” regional differences more difficult to achieve.
Together with the North East, Londoners are also those reporting the lowest share of the population with reduced household income. In the 30 days to May 3, 18 per cent of Britons said their household finances had experienced a reduction in income. The proportion varied from 15.6 per cent in London and 21 per cent in the West Midlands.
Tate Britain to hand out 10 Turner bursaries instead of overall prize
James Pickford in London
The Turner Prize, the UK’s best known contemporary art prize, has been shelved as a result of the coronavirus crisis.
Tate Britain, which organises the prize, will instead award 10 artists “Turner bursaries” of £10,000 each, as a way of supporting artists whose livelihoods have been threatened by the tight restrictions imposed under lockdown.
Under normal circumstances, four artists would be nominated in May and an exhibition of their work unveiled in September, but the organisers said the practicalities of putting on the annual show was “impossible in the current circumstances”.
“Gallery closures and social distancing measures are vitally important, but they are also causing huge disruption to the lives and livelihoods of artists,” said Alex Farquharson, director of Tate Britain and chair of the Turner Prize jury. “JMW Turner, who once planned to leave his fortune to support artists in their hour of need, would approve of our decision.”
The award has taken place every year since 1984 – except for 1990, ahead of its relaunch in 1991 as a contemporary art prize with a focus on emerging artists.
The 10 artists to be awarded bursaries will be selected by the Turner judges at the end of June. The £100,000 money for the awards has come from “a group of Tate’s supporters”, the organisers said.
The closure of private galleries and public exhibition spaces has greatly affected the ability of artists to market their work, though online sales have continued to take place during the lockdown.
It is not the first disruption to the prize in recent years. The most recent award in December 2019 was given to all four nominees at their request, asking not to be “pitted against one another” at a time of political crisis in the UK.
Yale study adds to evidence Covid-19 can be detected in sewage
Clive Cookson in London
Levels of coronavirus detected in municipal sewage are an astonishingly accurate leading indicator of future Covid-19 cases in the community, a study by Yale University scientists has shown.
The team sampled sludge at a treatment plant serving around 200,000 people in New Haven, Connecticut, from March 19 to May 1. Amounts of virus detected predicted very precisely the rise and fall in positive Covid-19 tests in the area a week later — adding to the growing evidence that sewage testing is a useful way to monitor infection levels.
“Our study could have substantial policy implications,” the Yale researchers say. “Jurisdictions can use primary sludge [viral] concentrations to [predict] community outbreak dynamics or provide an additional basis for easing restrictions.”
UK minister resigns over Johnson’s handling of Cummings scandal
Sebastian Payne and Jim Pickard in London
A UK government minister has resigned over Boris Johnson’s handling of accusations that his adviser Dominic Cummings broke coronavirus lockdown rules.
Douglas Ross, who served as a junior minister in the Scotland office and the MP for Moray, said the events surrounding Mr Cummings over the weekend “mean I can no longer serve as a member of this government”.
Mr Cummings, an influential adviser to the prime minister, held an unprecedented press conference on Monday to address reports about a 264-mile journey he made from his London home to the north east of England.
Mr Ross said:
I have constituents who didn’t get to say goodbye to loved ones; families who could not mourn together; people who didn’t visit sick relatives because they followed guidance of the government. I cannot in good faith tell them they were all wrong and one senior adviser to the government was right.
Following Mr Ross’ statement, a flurry of Conservative MPs expressed their opposition to Mr Cummings staying on. These included Tory veteran Sir Roger Gale, MP for West Worcestershire Harriet Baldwin, MSP Adam Tomkins and MP for East Devon Simon Jupp.
Latam Airlines files for bankruptcy after ‘collapse’ in demand
Latam Airlines, Latin America’s largest carrier, has filed for bankruptcy protection, the second airline this month in the region to fall victim to the coronavirus crisis.
The Santiago-based airline and its sprawling network of affiliates in Chile, Peru, Colombia, Ecuador and the US launched a Chapter 11 bankruptcy filing late on Monday in a federal court in New York.
Latam is the latest in a string of large groups in the travel industry to have filed for bankruptcy or sought government bailouts as the Covid-19 crisis has wreaked havoc on the sector. Colombia’s Avianca airline filed for bankruptcy protection on May 10 while European airline Lufthansa on Monday agreed a €9bn rescue from the German government.
“Latam entered the Covid-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future,” said Roberto Alvo, the group’s chief executive.
Latam, which generated revenues of $10.4bn last year, said it expects to continue operating through the bankruptcy proceedings. It has already secured up to $900m in financing from three of its largest equity holders, the company said in a statement.
Qatar Airways, which owns around 10 per cent of the group’s equity, along with Chile’s Cueto family and Brazil’s Amaro family have stumped up for the debtor in position financing.
Wuhan detects 218 asymptomatic cases after 6.5m tests
Christian Shepherd in Beijing
Wuhan, the Chinese city where the coronavirus pandemic began, said it has conducted 6.5m tests and discovered 218 asymptomatic cases in a 10-day push to unearth lingering infections.
The city ramped up so-called RNA testing for Covid-19 when a neighbourhood cluster of cases was discovered after weeks of zero local transmissions.
From May 15 to May 25, at least 6.5m swab samples were collected, bringing the official tally of tests in Wuhan to over 9m since late February, according to the city’s health commission.
Over the 10 day period, 218 new asymptomatic cases were found, with one individual later developing symptoms, the commission said.
The drive has not yet finished, however. The city announced on Monday that it still needed to “plug the gaps” in coverage, asking residents who had not yet been tested to register for samples to be taken.
China has adopted a maximal suppression approach in an effort to fully halt the spread of the virus within its borders, locking down cities whenever a new cluster is discovered, despite expert warnings that outbreaks will continue to re-emerge.
Thailand extends state of emergency until end of June
John Reed in Bangkok
Thailand’s government extended a state of emergency imposed in March to fight the coronavirus until the end of June.
Opponents of Prayuth Chan-ocha’s government have accused it of using the emergency legislation to quash political gatherings or potential unrest, but Narumon Pinyosinwat, the government spokeswoman, said the extension was needed for public health reasons.
Thailand, which has already reopened parks, shopping malls, and restaurants with social distancing measures in place, is expected later this week to announce a third phase to ease its lockdown, including a further shortening of a night-time curfew and the easing of limitations on domestic travel.
Thailand has confirmed 3,045 Covid-19 cases and 57 deaths to date, with the number of new infections dropping sharply in recent weeks. The three most recent cases announced on Tuesday were Thai citizens returning from Russia and Kuwait.
French hospital tests show sustained Covid-19 immunity
Victor Mallet in Paris
Tests on coronavirus-infected healthworkers in two French hospitals show that 98 per cent of them maintained strong immunity a month later, a finding that will help ease concerns that Covid-19 immunity is not durable.
Arnaud Fontanet, a professor from the Institut Pasteur who led the research, was quoted by France Inter radio as saying that initial testing showed 159 of the 160 infected healthworkers at two Strasbourg hospitals, all with mild symptoms, had antibodies to the virus.
A month later, 98 per cent still had antibodies likely to protect them from reinfection.
“These results are indeed good news,” he said. “The fact of having protective antibodies a month after the first symptoms suggests that very probably they would be protected from reinfection if they were exposed again to coronavirus.”
An Institut Pasteur study last month calculated that only about 6 per cent of the French population would have been infected by the time the nationwide lockdown was lifted two weeks ago.
European stocks set to make strong gains at market open
European stock markets are set to rally on Tuesday when the market opens, as investors are cautiously optimistic that the easing of lockdowns has yet to spark a large outbreak of fresh Covid-19 cases.
Futures for London’s FTSE 100 suggest gains of 2.5 per cent, as the return to economic activity gathered pace in May and Boris Johnson indicated that non-essential retailers will open mid-June. Activity in the UK for the week of May 11 returned to just below 80 per cent of normal, driven by higher retail sales, based on real-time indicators, according to analysts at Barclays.
Frankfurt’s Xetra Dax is set to rise 1.2 per cent, after a slight recovery in GfK German consumer confidence indicators for June.
The lack of evidence linking opening up and renewed outbreaks of the virus, combined with encouraging signs of government stimulus support, helped investors shrug off concerns over rising US-China tensions.
Ian Tomb, an analyst at Goldman Sachs, said that it was encouraging that countries early to lift their lockdown restrictions such as New Zealand and South Africa had not seen a resurgence in cases so far.
“With coronavirus concerns moderating, limited evidence so far that opening up has triggered fresh medical concerns, and the potential negative effects of lockdowns continuing to accrue, markets have tentatively started to take a more positive view of reopening,” he said.
Indian families reunited as domestic flights resume
Amy Kazmin in New Delhi
A five-year-old boy stuck at his grandparents’ house was among thousands of Indians reunited with their families, as the country resumed domestic flights that were suspended two months ago as part of Prime Minister Narendra Modi’s draconian coronavirus lockdown.
Indian airlines operated 532 domestic flights, carrying 39,321 passengers, on Monday, the first day that flights had operated since the country shut down its economy and suspended all public transport in a bid to stop the spread of coronavirus.
Flights are expected to increase in the coming days as more states permit the arrival of flights from other Indian cities.
Among the first fliers to take advantage of the resumption of domestic air services was a five-year-old, who flew alone to Bangalore to be reunited with his parents after his visit to grandparents in New Delhi ended up unexpectedly lasting for months.
Most passengers were travelling to reunite with family members from whom they’d been unexpectedly separated when the lockdown was imposed. Others were going to see ailing relatives. Few were travelling for business purposes.
India’s surprise lockdown — which was imposed with just four hours’ notice and accompanied by the suspension of all public transport — left millions of migrant workers stranded without work or wages in the country’s big cities.
Many members of India’s middle and affluent classes were also left separated from family given the lack of prior warning.
India has approved the operation of around 1,000 daily flights for the next two months. Demand for domestic air travel is likely to remain muted, as many states have imposed strict quarantine requirements for travellers arriving from other areas.
New normal comes with scars for businesses in Italy
Davide Ghiglione in Rome
At the door of the PBA stainless steel factory in northern Italy, employees check their temperatures, change their shoes, walk on a special decontaminating carpet and put on their masks — or full medical personal protective equipment if they work in production.
Meetings are banned, and the quintessentially Italian pausa caffè — or mid-morning coffee break to chat with colleagues over an espresso — is prohibited. The coffee machines have been distanced to keep workers apart.
PBA, or Profilati Brevettati in Alluminio, has gone back to work, but it is far from back to normal as the facility in Tezze sul Brenta, in the Veneto region, and its workers emerge from the strictures of lockdown and the trauma of one of the most serious coronavirus outbreaks in the world.
Read more about how Italy is getting back to work here
South Korean receives 4 month jail sentence for self-isolation offence
Song Jung-a in Seoul
A South Korean man was sentenced to four months in prison on Tuesday for breaching the mandatory self-isolation rule aimed at containing the coronavirus, in the country’s first such court ruling following the viral outbreak.
The Uijeongbu District Court said a 27-year-old man surnamed Kim violated the authorities’ self-quarantine order by leaving his designated residence without permission last month. Mr Kim was ordered to stay at home for two weeks in early April, after being discharged from St Mary’s Hospital in Uijeongbu, which reported cluster infections.
The court said his crime was “serious in nature” and stern punishment was needed as he visited “high risk facilities” during his self-quarantine period. He left his home just two days before the end of his self-isolation and was sent to a temporary shelter, which he then left without permission.
Under the South Korean law, those who breach self-isolation rules could face up to a year in prison or a fine of up to Won10m ($8,127).
Mr Kim’s mother told reporters that his family plans to appeal the ruling, saying the sentence is too heavy.
South Korea reported 19 new cases of Covid-19 on Tuesday after the outbreak has largely been contained.
Hopes for fast-track approval of Avigan to treat Covid-19 dashed
Kana Inagaki in Tokyo
The Japanese government has given up on approving Fujifilm Holdings’ Avigan this month, saying it needs more time to assess whether the anti-flu drug is an effective treatment for Covid-19.
Prime Minister Shinzo Abe has made a big push for Avigan, which has the generic name favipravir, even before formal results have come out from randomised clinical trials that are being carried out in Japan and the US.
While Mr Abe had hoped to get the drug approved by the end of May using a fast-track method, interim results from a government-sponsored clinical trial indicated it was “too early” to scientifically assess Avigan’s effectiveness, according to health minister Katsunobu Kato.
At a news conference on Tuesday, Yoshihide Suga, Japan’s chief cabinet secretary, stressed that clinical trials on Avigan will continue. “There is no change to our policy that we would promptly approve the drug once its effectiveness and safety are confirmed,” Mr Suga said.
Avigan raised hopes globally in mid-March after early clinical trials in China, which were not randomised, suggested faster recovery times for those given the drug.
But interim results from a clinical trial led by Fujita Health University did not provide enough evidence that Avigan was effective in treating coronavirus patients.
South Korea consumer sentiment improves as restrictions ease
Song Jung-a in Seoul
South Korea’s consumer sentiment improved this month from the lowest level since the global financial crisis in April, as the economy reopened and the coronavirus outbreak was brought under control.
The consumer sentiment index rose to 77.6 in May from 70.8 in April, the Bank of Korea said on Tuesday. There are growing signs of a consumption recovery, driven by heavy government spending.
Many South Koreans have gone on the so-called “revenge spending” sprees after months of social distancing, as the government has granted cash handouts to every household to help them cope with the economic fallout from the pandemic.
The index may affect the Bank of Korea’s decision on interest rates on Thursday. Many economists expect the BoK to cut interest rates by 25 basis points to 0.5 per cent after a 50 basis point cut in March.
The IMF forecasts the Korean economy, which is Asia’s fourth-largest, will shrink by 1.2 per cent this year. Lee Ju-yeol, the BoK governor, expects the economy to still eke out positive growth of less than 1 per cent.
The government relaxed its social distancing rules this month after the country’s daily new caseload has fell to less than 20.
More students are returning to school this week after months of school closures and remote learning.
Singapore cuts GDP forecast to as low as minus 7% on worsening outlook
Mercedes Ruehl in Singapore
Singapore is facing a much more severe recession than originally forecast after the Asian city state again cut its economic projections due to the coronavirus outbreak.
The Ministry of Trade and Industry said in a statement on Tuesday that it expects 2020 gross domestic product to shrink between 4 and 7 per cent, compared with a previously projected range of a 1 to 4 per cent contraction.
Singapore’s trade-reliant economy has been hurt by a prolonged shutdown since early April to contain the spread of the virus. The city state has some of the highest numbers of cases in Asia and government measures such as the closure of most workplaces have dampened domestic economic activity and consumption.
“The outlook for the Singapore economy has weakened further since March,” the MTI said.
The cut in GDP forecast comes as the government was set to unveil a fourth stimulus package in Parliament later on Tuesday, with more support for businesses and households.
Hong Kong to resume airport transit, reopen night clubs
Alice Woodhouse and Nicolle Liu in Hong Kong
Hong Kong leader Carrie Lam said the city’s international airport will resume some transit services from June as the territory relaxes measures designed to limit the spread of coronavirus.
Transit through Hong Kong international airport will resume next month after a suspension at the end of March as the city tightened restrictions at the travel hub.
Ms Lam also said that night clubs, karaoke bars, bathhouses and private spaces for hire known as “party rooms” could reopen from Friday.
Hong Kong this month relaxed restrictions on public gatherings, allowing groups of eight, from four previously. No new local cases of Covid-19 have been reported since mid-May. The city has reported 1,066 coronavirus cases and 4 deaths linked to Covid-19.
Coronavirus is a defining test for Thailand’s powerful business families
John Reed in Bangkok
With the coronavirus crisis hammering Thailand’s economy and millions of citizens registering for cash handouts, Prime Minister Prayuth Chan-ocha recently made an unusual public appeal to the kingdom’s powerful billionaire business families, asking them to “do more”.
“I would like to ask you if you could do more in utilising your abilities and talents in helping and healing the people of Thailand, who are suffering very badly, in a quicker, more efficient manner,” he wrote in an open letter to 20 of the country’s richest people last month.
Thailand has confirmed just over 3,000 coronavirus cases and 56 deaths. This is a relatively light caseload but the disease has devastated the country’s tourism sector and many of its industries, turning this year into a defining one for Thailand’s billionaire-led conglomerates — companies that grew rich over decades in symbiosis with the ruling establishment and are now being asked to pay back.
Read more here
Seoul makes masks compulsory as rising temperatures hit compliance
Song Jung-a in Seoul
Seoul has made face masks compulsory on public transportation such as buses, taxis and subways after growing reluctance to wear them, despite outbreaks related to a cluster of infections linked to a Seoul nightlife area, due to rising temperatures.
Wearing of masks has been widespread in South Korea since the outbreak began, but until now people have done so voluntarily. Summer months are very warm and humid.
Air travelers on domestic and international routes will also be required to wear masks from Wednesday as a further measure to stem the spread of coronavirus, according to Seoul’s transport ministry.
The number of daily infections has fallen to below 20 in recent days. However, about 237 cases have been tied to the nightlife area cluster after testing of more than 82,000 people. Health authorities remain on alert over undetected transmission routes as it becomes clear that infections have been passed among the contacts of people who went to the nightlife area.
Meanwhile, South Korean President Moon Jae-in on Monday called for “wartime-like” fiscal spending to cope with the economic fallout from the pandemic, brushing aside growing concern about South Korea’s fiscal soundness.
“The bottom of the global economy is invisible. This is indeed an economic wartime situation,” he said at an annual fiscal strategy meeting.
South Korea has rolled out a series of stimulus packages worth about $200bn to shore up Asia’s fourth-largest economy. The Bank of Korea is scheduled to hold a rate-setting meeting on Thursday after cutting interest rates by 50 basis points in March to 0.75 per cent.
US bans travellers from Brazil following surge in deaths
Andres Schipani in São Paulo and James Politi in Washington
US President Donald Trump has brought forward a ban on travellers from Brazil to Tuesday following a surge in coronavirus deaths in the South American nation.
Mr Trump on Sunday announced the travel ban would start Thursday. But on Monday, Brazil reported 807 new deaths from Covid-19, whereas 523 died in the US in the same period.
This has pushed the Brazilian death toll to 23,473. With an additional 11,687 cases, the total of confirmed cases rose to 374,898. Brazil ranks second only to the US in the number of infections, ahead of Russia which is the third worst-affected nation.
Despite the rising number of cases, hard-right President Jair Bolsonaro, a political soulmate of Mr Trump, continues to shrug off the seriousness of the pandemic and is more focused on solving self-inflicted political crises.
Japan’s decision to lift state of emergency spurs Asia-Pacific stocks
Asia-Pacific stocks climbed for a second day on Tuesday amid optimism over the easing of coronavirus lockdowns and despite lingering US-China tensions.
Japan’s Topix was up 1 per cent after the country lifted a nationwide state of emergency designed to control the spread of coronavirus. The Kospi in Seoul gained 0.5 per cent and Australia’s S&P/ASX 200 added 0.7 per cent.
China attempted to reassure international investors that a proposed national security law that has already sparked mass protests would improve Hong Kong’s business environment. The Hong Kong Bar Association, which represents the city’s barristers said the legislation could be a violation of the territory’s mini constitution.
Mike Pompeo, US secretary of state, called the plans for a new national security law a “death knell” for autonomy in Hong Kong.
US and UK markets were closed on Monday. S&P 500 futures pointed to a 1 per cent gain when US markets reopen from the long weekend.
US death rate hovers at two-month low
Peter Wells in New York
The US’s one-day coronavirus death rate hovered at its lowest level in about two months, slowing the nation’s march towards an overall total of 100,000 fatalities.
A further 523 people in the US died from Covid-19 over the past 24 hours, according to data compiled on Monday by the Covid Tracking Project, down from 680 on Sunday. That is the smallest one-day increase since March 30.
Figures on Mondays tend to be lower than other days of the week owing to a slowdown in reporting over the weekend, and there is often an uptick on Tuesday, Covid Tracking Project has pointed out. That pattern could be delayed slightly this week because of the Memorial Day public holiday on Monday.
New York reported a further 97 deaths over the past 24 hours, the second time in three days that the one-day death toll has been below 100. Before Saturday, March 25 was the most recent time the state had fewer than 100 deaths in a single day.
Massachusetts and Vermont — with 44 and 37 deaths, respectively — had the next highest one-day increases.
Since the pandemic began, 92,646 people in the US have died from coronavirus, according to Covid Tracking Project, which does not count so-called probable deaths. Johns Hopkins University, which does count those fatalities, put the US death toll at 98,184 as of Monday afternoon.
Dubai to ease restrictions from Wednesday
Simeon Kerr in Dubai
Dubai will ease restrictions on commercial activity from Wednesday, allowing cinemas and gyms to reopen.
The Gulf emirate’s media office on Monday said businesses would have to comply with social distancing protocols as the daily lockdown on movement is also set to be shortened to 11pm-6am. The curfew currently starts at 8pm.
The reopening of entertainment and commercial facilities shuttered since late March comes as the government seeks to avoid “disrupting activity in vital sectors” while sustaining measures to stem the spread of coronavirus, including wearing face masks and enforcing physical distancing of 2 metres.
The United Arab Emirates on Monday said the number of Covid-19 cases had surpassed 30,000, with 822 new cases and a death toll of 248.