Bank of America sees opportunities in ‘humiliated’ energy assets
Bank of America has advised clients that now is a good time to buy ‘humiliated’ oil assets, following a crash in the price of crude that has rippled across the energy sector.
“If distressed assets can’t attract a bid now, time to pack up the toys,” the bank’s investment strategists wrote in a note to clients late on Thursday.
The oil market has come under significant pressure during the coronavirus pandemic, as fears over dwindling demand and a lack of storage space combined to drive US crude prices negative for the first time in history this week.
The Wall Street bank also said that a sharp rally in risk assets could have further to run, with a $4.7tn cash mountain still sitting on the sidelines waiting to be deployed.
Michel Barnier demands ‘serious engagement’ from UK in negotiations
Mehreen Khan in Brussels
Michel Barnier, the EU’s chief Brexit negotiator, has hit out at the UK for failing to “seriously engage on a series of fundamental points” over its negotiations with only eight months left before the country’s exit.
Speaking after a week of online negotiations by videoconference with his counterpart David Frost, Mr Barnier said he was “worried” by the UK’s failure to take seriously a number of key subjects that need to be agreed to secure the EU-UK future relationship.
“We cannot accept to make selective progress on a limited set of issues only,” said Mr Barnier. “I regret this and I am worried”.
Speaking at a press conference in Brussels, Mr Barnier laid out four areas where negotiators failed to make “tangible” progress including level playing field issues such as social standards, the governance of the future relationship, and the UK’s resistance to accepting judgments from the EU’s highest court.
“This week the UK failed to engage substantially on these topics. It argued that our positions are too far apart to reach an agreement”, said Mr Barnier, referring to the issue of the level playing field. “The UK cannot refuse to extend the transition and at the same time slow down the progress of the negotiations,” said Mr Barnier.
The British government has repeated that it will not ask for an extension to the talks beyond the end of this year despite the disruption caused by the coronavirus.
“More than ever, the clock is ticking,” said Mr Barnier.
American Express profit sinks on increase in credit provisions amid pandemic
Robert Armstrong in New York
Net income at American Express fell by 76 per cent in the first quarter, driven down by a $1.8bn increase in credit provisions and lower customer spending at the end of the quarter.
“The deterioration in the economy due to Covid-19 impacts that began in the first quarter and accelerated in April has dramatically impacted our volumes,” chief executive Stephen Squeri said.
Revenues, adjusting for the impact of currency, were up 1 per cent from the year-ago period, at $10.3bn, and earnings were 41 cents a share. The company said were it not for the increase in provisions, EPS would have been $1.98. Wall Street analysts had been expecting revenues of $10.6bn and EPS of $1.88.
Provisions for credit losses, at $2.6bn, more than tripled. Unlike Mastercard and Visa, which act as pure payment networks and card-issuing banks, American Express holds its customers loan balances on its own balance sheet.
“In light of the current environment, we are aggressively reducing costs across the enterprise, while at the same time selectively investing in initiatives that are key to our long-term growth strategy,” Mr Squeri said, adding that the company had committed to no Covid-19 related lay-offs for the rest of this year.
Total expenses fell 5 per cent, to $7.2bn, from the year before.
American Express shares have fallen almost 40 per cent since the virus first hit markets in late February. The shares rose by 2 per cent in early trading on Friday.
UK government apologises after closing virus test booking site
Laura Hughes in London
The UK government has apologised after it was forced to close a new online booking site for coronavirus tests within hours of its launch following a flood of applications for appointments and home testing kits.
Matt Hancock, health secretary, announced on Thursday that ministers were expanding coronavirus testing to 10m workers and their families as they race to hit a target of 100,000 tests a day by the end of April.
Around 1,000 home testing kits and an unspecified number of appointments at centres were made available on the gov.uk website on Friday morning amid reports of frontline workers driving for hours to testing stations.
But applications for self-referral closed within hours of the site’s launch. It states: “Coronavirus test: applications closed. You can’t currently register for a Covid-19 test. Please check back here later.”
In a statement on Twitter, the health department said: “There has been significant demand for booking tests today. We apologise for any inconvenience. We are continuing to rapidly increase availability. More tests will be available tomorrow.”
The government has said it hopes to increase the number of home tests to 18,000 a day by the end of April.
Spain’s Covid-19 deaths drop to lowest level in a month
Daniel Dombey in Madrid
Spain’s coronavirus death toll has fallen to its lowest level in more than a month, according to government figures released on Friday, as the country ends the sixth week of one of the world’s toughest lockdowns.
The ministry of health said that in the 24 hours until 9pm on Thursday, 367 people had died after contracting the virus. This is the lowest death toll since 324 people died on March 21 and is well below the peak of 950 deaths on April 2. For most of this week, the death toll has been above 400 a day; throughout the previous week it was above 500 a day.
The official death toll now stands at 22,524 although the true figure is almost certainly significantly higher, since only people who tested positive are included, while those who displayed symptoms but were never tested are not.
The Spanish government is changing its methodology for counting the numbers of confirmed coronavirus cases, as it rolls out relatively speedy antibody tests. It said that a cumulative total of 219,764 people had been found to carry the virus, either because of the antibody tests or more accurate PCR tests.
The number of people who tested positive under the PCR test rose 1.4 per cent on the previous day to 202,990. The 2,796 people who had positive PCR results in the last 24 hour period were fewer than the 3,105 people who were confirmed to have recovered in the same period – the first time this milestone has been passed.
China’s top envoy shrugs off misinformation allegations
Michael Peel in Brussels
China’s top envoy to the EU has hit back at allegations that Beijing is spreading disinformation over the coronavirus crisis, as tensions rose over a Brussels internal report that accused Chinese official sources of a push to deflect blame for the pandemic.
Zhang Ming said it was better to “forget the politics for now” to focus on the fight against Covid-19, in a riposte to claims from some European officials that Beijing is trying to exploit the health emergency for strategic gain.
“Disinformation is an enemy for all of us and it should be addressed by all of us,” Mr Zhang said in an online event on Friday organised by the Friends of Europe think-tank. “From the very beginning, China has suffered a lot from disinformation.”
His remarks came after an internal report prepared by the EU’s diplomatic service this week accused Beijing of using “both overt and covert tactics” in a “global disinformation campaign”.
The report – contents of which have been leaked and which is expected to be published soon in edited form – has angered China, European officials said.
Mitsubishi cancels dividend and docks executive pay to mitigate losses
By Kana Inagaki in Tokyo
Mitsubishi Motors will cancel its year-end dividend and cut its executive pay after warning it faces an annual loss of $240m caused by the coronavirus downturn in car sales.
In a statement late on Friday, the Japanese carmaker, which has an alliance with Nissan and France’s Renault, said the sharp decline in vehicle demand “greatly exceeded” its expectations as the pandemic also forced an industry-wide shutdown of factories worldwide.
For the fiscal year that ended in March, Mitsubishi said it now expects a net loss of ¥26bn ($241m) compared with an earlier forecast for a profit of ¥5bn. Even before the outbreak, the company was already lossmaking as sales fell in Indonesia, China and Australia.
Mitsubishi said it would cut its base executive pay by up to 30 per cent for the new 2020-21 fiscal year.
Its alliance partner Renault is also close to securing a multibillion-euro credit line from the French state as it burns through cash at a rate of €600m a month to combat collapsing sales.
Russian central bank slashes interest rate to curb economic damage
Henry Foy in Moscow
Russia’s central bank cut its benchmark lending rate by 50 basis points on Friday to its lowest level in six years, in a bid to limit the economic pain from the coronavirus pandemic.
The Covid-19 outbreak, which has sparked a global economic crisis and seen oil prices fall by around 60 per cent has placed the bank in a bind, caught between wanting to limit the scale of Russia’s economic contraction and temper pressure on both inflation and the rouble.
The scale of the cut, which reduces the key interest rate to 5.5 per cent, was deeper than usual, but widely expected following comments from the bank’s governor earlier this month.
“The situation has changed dramatically since the meeting of the board of directors in March,” the bank said in a statement accompanying the decision. “With the development of the situation in accordance with the basic forecast, the Bank of Russia admits the possibility of further reduction of the key rate at the next meetings.”
The rouble has fallen 20 per cent since the start of the year. A weaker currency typically fuels rising inflation in Russia by pushing up the cost of imported goods.
“We believe a cut is premature, given growing inflationary pressure,” said Luis Saenz, head of equities at BCS Global Markets. “The economic effect of such a move would likely be negligible.”
Exclusive: US banks pull back from lending to European companies
Olaf Storbeck in Frankfurt, Stephen Morris in London and Laura Noonan in New York
US banks are pulling back from lending to European companies during the coronavirus pandemic, fuelling concerns that Wall Street may be quietly withdrawing to its home market in a repeat of the last financial crisis.
Bankers, advisers and company executives said American lenders had become more cautious in underwriting bilateral and syndicated loans to large corporate clients across the region in recent weeks.
In Germany, JPMorgan recently pulled out of talks over an additional credit line for BASF, the world’s largest chemicals group, according to people involved in the transaction. Similarly, Bank of America lent half as much as the other six international banks that underwrote a €3bn state-backed loan to sportswear giant Adidas.
Goldman Sachs — which helped underwrite a €3.5bn syndicated loan for Italian-American carmaker Fiat Chrysler this month — did not take part in a similar €12bn facility for German rival and long-standing client Daimler, leaving other lenders to make up the difference.
“We are increasingly observing an ‘America first’ attitude among large US banks,” said an adviser directly involved in negotiations between banks and corporates in Germany. “Those are not just idiosyncratic cases: there is a clear pattern.”
Read the full story here
Germany braced for 1m people to lose their jobs
Martin Arnold in Frankfurt
German unemployment is expected to rise by more than 40 per cent as about 1m people lose their jobs in the coming months because of the coronavirus crisis, according to new research published on Friday.
The Institute for Employment Research said the surge in unemployment numbers was expected to be partially offset as the economy recovers later in the year, though it predicted Germany would still end the year with 520,000 more jobless people.
Forecasting an 8.4 per cent contraction in Germany’s economy this year, which would be the worst recession in the country’s postwar history, the report warned: “The sudden and serious slump in economic output puts massive pressure on the job market.”
It predicted that about 1m people would lose their jobs in the coming months, including several hundred thousand people doing so-called mini-jobs, the lightly regulated part-time posts that can earn up to €450 a month while not paying any taxes or social security. The Institute, which is an arm of the Federal Employment Agency, said the government’s short-term leave scheme, known as Kurzarbeit, would provide significant support to the labour market.
Suspension of English cricket season extended to July
Samuel Agini in London
The suspension of the cricket season in England and Wales has been extended, meaning the schedule for domestic and international matches faces further upheaval.
The England and Wales Cricket Board said on Friday that no professional cricket can be played until at least July 1, an extension of the previous delay, which had been due to run until at least May 28.
The ECB said the Vitality Blast, a short form competition, will take place as late into the season as possible, while all other matches that had been due to be held in June will be moved. International cricket matches will be pushed from July to the end of September.
However, there was no decision on whether to postpone the Hundred, a new 100-ball cricket tournament that had been set for its inaugural season in July. The ECB said it has scheduled a board meeting next Wednesday to discuss the tournament.
Tom Harrison, ECB chief executive, said:
As much as we remain hopeful that we can deliver some cricket this summer, we are in the midst of a worldwide crisis and our priority – over and above the playing of professional sport – will be to protect the vulnerable, key workers and society as a whole.
UK regional transport networks receive government funding
Jim Pickard in London and Arthur Beesley in Dublin
Five light rail systems in the Midlands and northern England are set to receive tens of millions of pounds in support as they struggle to stay afloat during the coronavirus epidemic.
The Department for Transport refused to say precisely how much money it would give to the five light rail schemes in Greater Manchester, Sheffield, Nottingham, West Midlands and Tyne and Wear. But it said the money would soon be forthcoming through deals with the relevant local authorities.
The government also agreed £17m of state support to ferry companies to maintain “roll on, roll off” services on five routes between Great Britain and Northern Ireland – with 40 per cent of the cost coming from the Belfast administration. Another £10.5m will be provided to keep “lifeline” services going to the Isles of Scilly and Isle of Wight for three months.
Brandon Lewis, secretary of state for Northern Ireland in the UK government, said London and the regional executive were also working on an aid plan for airlines. “A further support package is also being developed to help ensure crucial air passenger services to and from London, Belfast City Airport and City of Derry Airport are maintained.”
The latest interventions by the DfT follows a package of support for train companies – who have seen rail lines effectively nationalised for six months – as well as money for struggling bus companies.
The department has so far failed to reach an agreement with Transport for London, which has begged central government for financial assistance after plunging traveller numbers on the Tube and buses.
London’s transport network to furlough 7,000 staff
Bethan Staton in London
Transport for London will furlough 7,000 staff as a result of the coronavirus pandemic as it works to cut costs following a massive reduction in passenger numbers, the London operator announced today.
The network said furloughing the workers, which account for around 25 per cent of its total workforce, would save an estimated £15.8m every four weeks. Under its job retention scheme the UK government will pay 80 per cent of furloughed staff’s salaries, with TfL paying the additional 20 per cent.
Government advice to stay at home and reserve public transport for essential workers has meant tube journeys in London have fallen by 95 per cent and bus journeys by 85 per cent, the operator said.
TfL is one of several UK regional rail networks seeking a bailout from the government to ensure the continuation of business and skeleton transport services for essential staff. Transport Commissioner Mike Brown described discussions with the government as “constructive”.
Dettol maker warns against injecting disinfectant after Trump comments
Reckitt Benckiser — the company behind cleaning brands including Lysol and Dettol — has warned that “under no circumstance” should disinfectants be used to treat coronavirus patients.
The statement from the UK consumer goods group comes after US President Donald Trump caused uproar among medics by suggesting that injections of disinfectant could provide a potential coronavirus treatment.
Mr Trump speculated in a press briefing yesterday that it would be “interesting to check” if use of disinfectants could play a role in combating the virus “by an injection inside”.
Reckitt said it had since been asked whether internally administering disinfectants “may be appropriate for investigation or use as a treatment” for the virus. Its answer was abundantly clear:
As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route).
French lockdown averted 62,000 hospital deaths, study says
Victor Mallet in Paris
The first month of the French lockdown on its population to slow the spread of coronavirus saved nearly 62,000 lives that would have been lost to the pandemic in hospitals alone, according to a research paper.
“Our analysis shows that in absence of any control measures, the Covid-19 epidemic would have had a critical morbidity and mortality burden in France, overwhelming in a matter of weeks French hospital capacities,” the researchers said in the study released by the School of Higher Studies in Public Health (EHESP).
Since March 1, France has officially reported 21,340 Covid-19 deaths, 13,236 in hospitals and the rest in old people’s homes and other care institutions.
Without any control measures, 14.8m people or 23 per cent of the population would have been affected by Covid-19, the study said. Another research paper has calculated that only about 6 per cent of the population will have been infected by the time the lockdown ends on May 11.
The lockdown therefore prevented 587,730 hospitalisations and 140,320 admissions to intensive care, the EHESP paper said. The total number of ICU beds required to treat patients in critical conditions would have been 104,550, much higher than the 5,000 such beds available before the crisis or the 10,000 available now.
How Richard Branson changed his mind over government aid
Tanya Powley in London and Jamie Smyth in Sydney
At the height of the financial crisis in 2009, billionaire Richard Branson balked at the idea of government intervention to stop companies going bust, proclaiming that weak airlines should be allowed to go to the wall.
Just over 10 years later and the Virgin Group founder has had a change of heart as he fights to protect his business empire from the fallout of the coronavirus crisis.
Read the full story here
Co-op faces £200m hit from pandemic
Andy Bounds in Manchester
The Co-operative Group said the coronavirus outbreak will cost it £200m, which will only be partially recouped by increased food sales and government support.
The UK’s sixth largest grocer by market share continued its strong sales performance but warned of challenges ahead. It also had to knock £10m off 2018’s pre-tax profits after discovering historical accounting errors within Nisa, the wholesaler it bought in May 2018.
Total revenues grew 7 per cent to £10.9bn, Group underlying profit before tax, excluding the impact of lease accounting changes, was up 50 per cent from £33m to £50m.
Steve Murrells, chief executive said:
No part of our business has been unaffected by the outbreak of the virus and we have played a critical role in communities throughout the UK.
German business confidence crushed by coronavirus lockdown
Martin Arnold in Frankfurt
German businesses are confronting their worst ever fall in activity, orders and confidence as the heavy toll of the lockdown to contain the coronavirus pandemic was revealed by a new survey on Friday.
The Ifo Institute in Munich said its monthly survey of 9,000 German companies found that sentiment had “crashed” from 85.9 in March to a record low of 74.3 in April.
“Never before has the index fallen so drastically,” the Ifo said. “This is primarily due to the massive deterioration in the current situation. Companies have never been so pessimistic about the coming months. The coronavirus is striking the German economy with full fury.”
The survey found that businesses’ assessment of both their current situation and their expectations for the next six months had deteriorated dramatically in all sectors. The hardest hit sectors were manufacturing, where Ifo said demand for industrial products had “collapsed”, and trade, where confidence had “continued to nosedive”.
The outlook of companies in the services sector also fell to a record low. While in the construction sector it said “the index has never sunk so abruptly” but most companies were “still satisfied with their current situation”.
Trump faces backlash for raising ‘disinfectant’ injection idea
Clive Cookson, Science Editor
US president Donald Trump has sparked outrage among the medical community by raising the idea that injecting disinfectant or irradiating the body with ultraviolet light might treat coronavirus.
Mr Trump picked up on research mentioned by White House officials showing that sunlight and disinfectant kill the virus outside the body, and floated the idea that similar measures might work inside patients.
“I see the disinfectant where it knocks it out in a minute,” Mr Trump said.
One minute! And is there a way we can do something by an injection inside or almost a cleaning? Because you see it gets in the lungs . . . so it’d be interesting to check that.”
In fact, disinfectants can be poisonous when swallowed. External exposure can burn the skin, eyes and lungs.
Doctors quickly responding by condemning the comments. Dr Vin Gupta, a lung specialist, told NBC News:
This notion of injecting or ingesting any type of cleansing product into the body is irresponsible and it’s dangerous. It’s a common method that people utilise when they want to kill themselves.”
You can read more on the president’s comments here.
Global death toll passes 175,000 as fatalities steady
Steve Bernard in London
The worldwide death toll rose by 6,618 on Thursday to stand at 176,492. The daily increase is holding at 4 per cent, a much lower rate of growth than the peak of 15 per cent in late March, according to data from Worldometers.
New cases of Covid-19 rose by 85,534 on Thursday, bringing the total to 2.66m. This is the fourth consecutive day that daily cases have been greater than the day before.
The daily death toll in the US dropped below 2,000 on Thursday. 1,911 people lost their lives according to data from The Covid Tracking Project, pushing the current death toll to 44,014.
New York, the hardest-hit state, added 438 deaths yesterday, the lowest daily increase since April 2, bringing the total to 15,740.
The UK remains the worst-affected country by deaths outside the US, adding a further 638 fatalities to a total which now stands at 18,738. The number of newly confirmed cases rose by 4,583, the 16th consecutive day with more than 4,000 cases diagnosed.
The number of global recovered cases rose by 27,969 yesterday, leaving a total of 745,413 free from the virus.
Russia reports record number of daily deaths
Henry Foy in Moscow
Russia reported close to 6,000 new cases of coronavirus on Friday, and a new daily record of 60 deaths.
Friday’s 5,849 cases breaks a two-day streak of shrinking daily increases, and takes Russia’s total number of infections to 68,622. More than 600 people have died from Covid-19 in the country.
Moscow’s mayor on Thursday said he expected the outbreak to peak only in a few weeks.
Underlying the scale of the outbreak, Russia has recorded infections in 82 of the vast country’s 85 regions.
Boris Johnson hoping to return to work next week
Jim Pickard in London
Boris Johnson could be back at work as soon as Monday – two weeks earlier than expected – according to government officials as the prime minister makes a rapid recovery from coronavirus.
Mr Johnson is hoping to return to his office early next week, Downing Street figures said, although they emphasised that no decision had been finalised. The news was first reported in the Daily Telegraph, which quoted one official saying the prime minister had already been working “pretty much full time” this week.
Overnight, Donald Trump, the US president, said that Mr Johnson had sounded ready to return to work when the duo spoke on the phone earlier in the week. “I will tell you, he sounded incredible, he was ready to go,” he said. “It’s like the old Boris, tremendous energy, tremendous drive.”
Mr Johnson will return to a growing row within his Conservative party over whether the government should accelerate plans to end the current coronavirus lockdown.
German infections top 150,000
Tobias Buck in Berlin
Germany reported 2,337 new coronavirus cases on Friday, an increase of 2 per cent compared with the previous day that took the total number of detected infections to 150,383 since the crisis started.
According to official data from the Robert Koch Institute in Berlin, the number of Covid-19 deaths recorded over the past 24 hours rose by 227, or 4 per cent, to 5,321.
The increase in new cases is broadly in line with previous days, but notably lower compared with Friday last week, when the Koch Institute recorded 3,380 new cases.
Germany allowed small and medium-sized shops to reopen and some students to return to school this week. The move reflects recent data showing that the spread of the virus has slowed markedly, but was still criticised by some virologists as premature.
Sanofi boosted by drug stockpiling
Leila Abboud in Paris
Sanofi confirmed its annual profit growth goal after first-quarter sales and profit were buoyed by people stockpiling its drugs during the Covid-19 outbreak.
The French pharmaceutical manufacturer said it expected that the boost would be “largely offset” in the second quarter though.
Revenue rose 6.6 per cent on like-for-like basis to €8.97bn in the quarter to March 30 driven by higher sales of over-the-counter medicines for pain and fever, as well as of eczema drug Dupixent. Net income rose 16.1 per cent to €2bn with about half the increase attributable to Covid-19, the company said on Friday.
Sanofi is one of the companies racing to produce a vaccine for coronavirus that has killed roughly 190,000 this year. It has two in development, and has teamed up with GlaxoSmithKline on one of them.
Sanofi is also testing the efficacy of two of its drugs already approved for other uses against Covid-19, including the malaria drug hydroxychloroquine and Kevzara, which is usually used to treat rheumatoid arthritis.
South Korea hands $2.3bn lifeline to country’s major airlines
Song Jung-a in Seoul
South Korea’s state-run policy banks will provide the country’s two biggest airlines with a Won2.9tn ($2.3bn) lifeline as carriers struggle to stay afloat amid a global industry crisis sparked by the coronavirus pandemic.
Korea Development Bank and Export Import Bank of Korea will provide Won1.1tn to Korean Air, the country’s flag carrier, and Won1.7tn to its smaller rival Asiana Airlines to help tide them over the liquidity crisis.
The emergency lifeline will be provided to the troubled airlines before the government provides Won40tn of financial support to the country’s worst-hit industries including carmakers, telecoms, airlines and shipbuilders. The relief funding for the country’s main industries was announced earlier this week.
The financial support for the airlines will be provided on condition that the companies advance restructuring, retain jobs, and refrain from increasing salaries for executives or buying back their own shares.
South Korea’s travel sector was one of the earliest to be hit by the pandemic after a big outbreak in February promoted more than 100 countries to introduce travel bans or tougher entry restrictions on people travelling from the Asian country.
Eni earnings dealt large blow by tax bill and oil drop
Italy’s Eni reported a 94 per cent drop in first-quarter earnings, as a massive tax bill coincided with severe measures to curb the spread of the coronavirus outbreak, hurting oil demand and propelling a slide in crude prices in March.
Adjusted net profit fell to €59m in the three months to March 31, far below analyst expectations of €240m, with lockdowns and travel bans rolled out by governments across the world in the final month in the quarter.
Eni said it would cut spending by 30 per cent and it now expects lower production levels, at 1.75m-1.8m barrels of oil equivalent per day – down by at least 500,000 boe/d.
Chief executive Claudio Descalzi said:
The period since March has been the most complex period the global economy has seen for more than 70 years. For the energy industry, and in particular for oil and gas, the complexity is even greater given the overlap of the effects of the pandemic with the collapse in oil prices.
Eni had already announced a series of spending cuts, which it said it would deepen – amounting to a fall of €2.3bn. It has also cancelled a share buyback programme and issued debt.
Investors trapped as Franklin Templeton gates six Indian debt funds
Benjamin Parkin in New Delhi
Franklin Templeton’s Indian arm has gated six debt mutual funds, trapping more than $3bn of investors’ money as coronavirus sparks turmoil in Indian bond markets.
The asset manager announced that it was shutting the fixed income and credit funds in response to heightened outflows as the pandemic has badly affected India’s financial system, with the country in the midst of a near six-week lockdown. The move stands to affect retail and corporate investors that have poured into the schemes.
India’s debt markets were rocked by the collapse of a large shadow bank 18 months ago, and have struggled with liquidity since. The country’s central bank has taken various measures to boost liquidity since the lockdown was announced, but with limited success so far.
The company said “this is the only viable option to preserve value for unit-holders and to enable an orderly and equitable exit for all investors in these unprecedented circumstances”.
Italian bonds sell off after EU summit fails to agree on recovery fund
Tommy Stubbington in London
Italian bonds are under pressure again after European leaders failed to agree on the details of a “recovery fund” to help relaunch the region’s economies after the coronavirus crisis.
Italy’s 10-year yield was trading at 2.09 per cent early on Friday, close to its high for the week. The gap with German yields — an important measure of eurozone risk — was 0.15 percentage points wider at 2.56 percentage points. Spanish and Portuguese bonds also joined the sell off.
Analysts said Thursday’s brief videoconference summit between EU leaders provided little evidence that euro area countries were moving towards a crisis package which shared the financial burden between member states. Proposals for jointly-backed “coronabonds” have foundered on Dutch and German opposition, and Angela Merkel expressed her opposition to direct grants for badly-hit states following the summit
“There was little in yesterday’s EU Council outcome for optimists to hang their hats on,” said analysts at ING. “With the two options most akin to fiscal burden-sharing ruled out, the European Central Bank is left on its own to suppress financial fragmentation in the eurozone.”
Italian spreads are closing in on the 2.8 percentage point level reached prior to the launch of the ECB’s €750bn emergency bond-buying programme, with some investors saying the central bank would have to announce further purchases to keep borrowing costs under control in Italy.
European stock markets open lower
European shares fell at the market open, after a potential antiviral drug to treat coronavirus disappointed in its first clinical trial.
The continent-wide Stoxx 600 dropped 1.4 per cent and the FTSE 100 in London was down 1.3 per cent on opening, after a volatile week in the oil markets.
Brent crude pared earlier gains to trade at $21.62 per barrel, up 1.4 per cent. The front month contract for WTI, the US oil marker, rose 1.9 per cent to trade at $16.82 a barrel, rebounding mildly from earlier losses this week.
Shares on Wall Street were close to flat overnight, as investors grappled with the news of a setback in developing a possible Covid-19 treatment. S&P futures suggested a 0.4 per cent drop when trading opens later on Friday, following a fall of 2.7 per cent over the past week.
Pearson revenues knocked by school and university closures
Mark Di Stefano in London
Pearson has seen revenues decline in the first three months of the year with the educational publisher blaming widespread school and university closures brought on by the coronavirus pandemic.
Revenues fell 5 per cent in the first quarter, driven by the company’s US-textbook business which was down 10 per cent.
But Pearson’s outgoing chief executive John Fallon said the company had been boosted by the shift into online learning and virtual schools.
“When the threat of the pandemic eventually eases, it will be even clearer that the future of learning is increasingly digital,” he said. “Through the crisis, we are continuing to invest in the platform, products and services that will make the next generation of digital learning a reality.”
The company also announced Mr Fallon and the chief financial officer were taking a pay cut of 25 and 20 per cent respectively, while none of Pearson’s more than 20,000 staff would be furloughed.
UK corporate roundup
Persimmon joined the list of UK housebuilders planning a return to construction work, announcing a “phased restart” from next Monday, April 27.
That comes after rivals Vistry Group, formerly known as Bovis Homes, and Taylor Wimpey, one of the sector’s biggest names, set out their plans to restart operations yesterday.
Trading website IG Group has continued to reap the rewards of “exceptionally high” levels of market volatility, which it said had led to “exceptionally high” trading volumes and, in turn, “exceptionally high” revenues from client fees.
It said estimated revenue in the first 61 days of its fourth quarter, which began in March, would be around £173m. That compares with £140m in the three months to the end of February, when trading had already been boosted.
Educational publisher Pearson reported a 5 per cent slide in revenue in the first quarter of its financial year as coronavirus forced it to close test centres and knocked demand for courseware. Its digital sales were boosted, however.
Fashion retailer Burberry said senior management and board members would be taking a 20 per cent pay cut from April to June and pushed publication of its full-year results back by a week to May 22.
It also said its trenchcoat factory in Castleford in the north of England was manufacturing non-surgical gowns for the NHS.
UK retail sales in historic drop as lockdowns hit industry
UK retail sales tumbled the most on record last month as the closure of non-essential stores overshadowed a historic surge in grocery purchases.
The volume of retail sales in the UK dropped 5.1 per cent in March compared with the previous month, according to data from the Office for National Statistics. This marked the largest drop since the ONS started producing the series in 1996 and reflects the closures of many stores from March 23 following government guidance during the pandemic.
“Retail sales saw their biggest monthly fall since records began over 30 years ago with large declines in clothing and fuel, only partially offset by strong food sales” said Rhian Murphy, ONS head of retail sales.
The volume of food sales rose 10.4 per cent in April compared with the previous month, the strongest on record.
In contrast, the volume of fuel sales, which is adjusted for price changes, fell 18.9 per cent over the same period. Sales of clothing tumbled 35 per cent. The size of the drop could not be offset even by many consumers switching to online purchases, which reached 22.3 per cent of all retailing last month, a historic peak.
India to receive more test kits from China despite concerns over quality
Stephanie Findlay in New Delhi
India is set to receive more test kits from China even as authorities voiced concerns over their quality.
Anurag Srivastava, a Ministry of External Affairs spokesman, said in a statement late on Thursday that in the past two weeks India had received nearly “400 tonnes of medical supplies”, including test kits, personal protective equipment and thermometers.
“Around 20 more flights are expected to bring supplies from China in the coming days, and this is likely to be stepped up considerably in the next few months as our procurement efforts gain momentum,” said Mr Srivastava.
The announcement came in the same week that India announced it was suspending the use of rapid antibody kits, including some imported from China, over accuracy concerns.
New Delhi has moved to procure more kits from South Korea, announcing a partnership with diagnostic company SD Biosensor to produce antibody testing kits in India.
Pre-pandemic stockpiling boosts sales at Nestlé
Judith Evans in London
Nestlé posted higher-than-expected sales for the first quarter as the outbreak of coronavirus prompted consumers to stockpile coffee, pet food and ready-made meals.
The world’s largest food company reported organic sales growth — a key metric for the sector — of 4.3 per cent, up from 3.4 per cent a year earlier.
The maker of Nescafé, KitKat chocolate and Purina pet food said stockpiling had aided “significantly increased growth” in most of its markets. But the exception was China, where the outbreak began earlier and lockdown measures caused a “sharp sales decline”.
Mark Schneider, chief executive, said: “Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries. However, this crisis is far from over and we will face many uncertainties in the coming quarters.”
The company has set up a SFr500m ($512m) initiative to aid restaurants and other customers reliant on eating and drinking outside the home, which has been hard hit by lockdowns. It will extend payment terms, suspend rental fees for coffee machines and offer free products, Nestlé said.
Delayed test results double Ecuador’s positive caseload
Gideon Long in Bogotá
The number of confirmed coronavirus cases in Ecuador has doubled to more than 22,000 after the health ministry received the results of thousands of tests that had been delayed as the country grapples with the pandemic.
In an online news conference, health minister Juan Carlos Zevallos said 10,977 new cases had been confirmed, on top of the 11,183 cases that were already known about.
The new total of 22,160 is the second-highest number in Latin America behind Brazil. Per capita, Ecuador is among the worst affected countries in the region. More than 500 people have died from the outbreak.
Guayaquil, a port city of more than 2m people, has been particularly badly hit and for a while local authorities were so overwhelmed that they were unable to collect the bodies. Some corpses were abandoned in the streets or stored inside houses for days in the tropical heat.
The pandemic comes as Ecuador is struggling to keep afloat economically. It has negotiated a four-month reprieve from debt repayments to bondholders and is talking to the IMF about reaching a new lending arrangement to replace the $4.2bn package it agreed last year.
Heavily dependent on oil exports, it has been hit hard by the fall in prices, and also suffered floods and landslides which knocked out two of its main oil pipelines.
Asian Development Bank approves $1.5bn loan to Philippines
John Reed in Bangkok
The Asian Development Bank on Friday approved a $1.5bn loan to help the Philippine government respond to the coronavirus pandemic.
The Japanese-backed, Manila-headquartered development bank said the loan would help Manila fund programmes including social protection measures, relief for small businesses, and health measures.
The loan was announced shortly after President Rodrigo Duterte declared a three-week extension of the lockdown that has been in place in greater Manila since mid-March and an extension of enhanced quarantine measures in place elsewhere on Luzon island and other parts of the country, even as lockdowns elsewhere were partially eased.
The Philippines has one of the highest Covid-19 caseloads in south-east Asia, and the Duterte government’s emergency spending measures announced so far include a 205bn peso ($4bn) subsidy programme meant to help 18m families that depend on informal-sector jobs.
The ADB earlier this month pledged to lend member countries $20bn to help them cope with the Covid-19 outbreak. On Thursday, the bank said it had approved a similar $1.5bn loan to Indonesia.
Virgin Australia owes more than $4bn to 12,000 creditors
Jamie Smyth in Sydney
About 12,000 creditors to Virgin Australia, including 26 banks and 50 aircraft lessors, are owed almost A$7bn ($4.5bn), according to initial estimates by the company’s administrator.
Deloitte on Friday said aircraft leasing companies, unsecured bondholders, banks and more than 9,000 employees are among the largest groups of creditors to the troubled airline.
Aircraft lessors are owed A$1.8bn, unsecured bondholders A$1.9bn and lenders A$2.2bn, mainly under secured corporate debt and aircraft financing facilities. Employees are owed A$450.7m, trade creditors A$166.7m and landlords A$71.2m, according to court documents submitted to the Federal Court.
Deloitte confirmed “more than 10 sophisticated parties, including international parties, have expressed an interest in buying the company”, as it begins a three-week process at gauging interest in buying the company.
Virgin’s board of directors appointed administrators this week following its failure to persuade the government to provide a A$1.4bn loan to rescue the company.
A first creditors’ meeting is due to be held by videolink next week. Deloitte has identified just over 10,000 creditors so far but expects the final number to be about 12,000.
Mexico braces for rapid jump in coronavirus infections
Jude Webber in Mexico City
The confirmed death toll from Covid-19 in Mexico has now breached the 1,000 mark, rising to 1,089 while the number of confirmed cases has climbed to 11,633.
Mexico is expecting the epidemic to peak by the second week of May.
Hugo López-Gatell, Mexico’s coronavirus tsar, acknowledged that the country should brace for a rapid rise in infections.
The head of Mexico’s national science and technology council said two prototypes of ventilators were advancing and the first models should be ready by mid-May.
President Andrés Manuel López Obrador’s increased austerity measures to help Mexico manage the economic fallout from the pandemic were published in the official gazette on Thursday, including pay cuts for senior officials.
WHO reports fivefold increase in Covid-19 scam emails
The World Health Organization is facing a new plague: fraudulent emails from scammers attempting to capitalise on the coronavirus pandemic.
Since the start of the Covid-19 outbreak, the WHO said, it had seen a “dramatic increase in the number of cyber attacks directed at its staff, and email scams targeting the public at large”.
The number of cyber attacks is now more than five times the number directed at the organisation in the same period last year, the Geneva-based agency said on Thursday in a statement on its website.
This week, about 450 active WHO email addresses and passwords were leaked online. The health body said it was now migrating affected systems to a more secure authentication system.
The UN agency said scammers impersonated WHO staff to channel donations to fictitious funds instead of its own fund.
Korea’s Posco reports 45% fall in first-quarter operating profit
Song Jung-a in Seoul
Posco on Friday reported a 45 per cent drop in first-quarter operating profit as the world’s fifth-largest steelmaker feels the pinch from the coronavirus pandemic’s economic fallout.
Operating profit fell to Won458bn ($371m) in the first three months of this year from Won833bn a year earlier. Net profit dropped 32.5 per cent to Won453bn as sales declined 10.8 per cent to Won6.97tn.
The company expects the industry slump to continue as steel demand falls due to the global economic slowdown.
“The difficult situation is likely to continue as demand from our customers including automakers and construction companies slows and product prices fall due to the global spread of Covid-19,” the South Korean company said.
Shares in Posco fell 0.6 per cent to Won170,500 on Friday morning in line with the benchmark Kospi Composite Index.
Indonesia bans Ramadan travel in bid to check spread of virus
Indonesia has halted domestic and international air, sea and overland travel from Friday, in a bid to control the spread of coronavirus just as the Islamic holy month of Ramadan begins.
“[There is a] temporary ban on the use of transport facilities for homecoming activities during Lebaran,” said transport ministry spokesperson Adita Irawati, using the Indonesian term for Ramadan, which began on Friday.
She said in a statement posted on the ministry’s website that the decree prohibits travel by “buses, passenger cars, trains, planes, river and lake transport, and ships”.
Freight transport is exempt from the ban.
At the end of May, up to 20m people were expected to travel across the world’s largest Muslim-majority nation to celebrate the end of Ramadan.
The ban on land travel would stay in force until May 31, June 1 for air travel, June 8 for ships and ferries, and June 15 for trains.
Ms Adita said travel in private cars and motorbikes is also banned. Violators caught between Friday and May 7 would be given a warning and directed to return home. After that, violators would be fined and turned back.
Ticket-holders who had already booked would be given full refunds, the ministry said.
Duterte extends greater Manila lockdown for three weeks
John Reed in Bangkok
The Philippine government on Friday morning extended a strict lockdown in greater Manila and several other cities and provinces considered at “high risk” from coronavirus for another three weeks.
President Rodrigo Duterte’s spokesman Harry Roque said that “enhanced community quarantine” would continue until May 15 in the Philippine megacity, where more than 12m people live, and in several other provinces on Luzon island, as well as in the Visayas and in Mindanao, the country’s two other biggest island groups.
Mr Roque said that Mr Duterte decided to extend the lockdown after approving all the recommendations of the government’s inter-agency task force devoted to fighting Covid-19.
The announcement represents a partial easing of one of the strictest lockdowns in Asia announced for all of Luzon, the Philippines economic heartland where more than 50m people live, in mid-March.
Some provinces in Luzon and in other parts of the Philippines that are deemed to be low-risk areas will be put under “general community quarantine” until May 15, with workers allowed to return to their jobs in phases and shopping malls opened for people aged 21 to 59 who pass temperature and ID checks and who are “not looking too sickly”.
As of Thursday, the Philippines had confirmed 6,981 cases of the disease, mostly in metro Manila, and 462 deaths.
Mumbai slum tests India’s coronavirus response
Benjamin Parkin in New Delhi and Andrea Rodrigues in Mumbai
Mumbai’s slums, where an estimated 40 per cent of the city’s 20m population lives, are particularly susceptible to the spread of Covid-19.
In the Dharavi area of Mumbai, thought to be one of Asia’s largest slums, public health experts suspect the true number of infections is far higher than has been detected.
“This was originally a disease of the rich, of people who travelled abroad,” said Ramanan Laxminarayan, founder of the Centre for Disease Dynamics, Economics and Policy, adding that the lockdown was reversing this dynamic.
“The lockdown reduces transmission among people who have space to distance . . . As a result you’re going to see more disease in the poorer areas, in the slums, now.”
Read more here
Asia-Pacific stocks slip in early trading over antiviral drug flop
Daniel Shane in Hong Kong
Stocks across Asia-Pacific slipped in early trading on Friday after a potential antiviral drug for coronavirus disappointed in its first randomised clinical trial.
In early trading in the region, Japan’s Topix share index fell 0.8 per cent and Australia’s S&P/ASX 200 edged 0.1 per cent lower.
Overnight, Wall Street’s S&P 500 erased earlier gains to close 0.1 per cent down after draft documents published accidentally by the World Health Organization appeared to show that remdesivir, a drug developed by Gilead Sciences, did not improve Covid-19 patients’ condition.
Futures trading in Asia tipped the US stock benchmark to open 0.3 per cent lower when trading begins in New York later on Friday.
Oil, which traded in negative territory for the first time in history this week, rose. West Texas Intermediate for June delivery added 5 per cent, with the US marker at $17.36.
Here’s a round-up of some of the latest news you might have missed
Intel’s revenue jumped 23 per cent in the first three months of the year as the new demands of working from home drove up sales of PCs and put more strain on cloud data centres that rely on the company’s chips.
Two British doctors have launched a legal challenge over the UK government’s guidance on personal protective equipment and how it should be used in hospitals.
About 5,000 US meat and food-processing workers have been infected or exposed to coronavirus, and 10 have died, according to estimates from the United Food and Commercial Workers Union.
The Federal Reserve said it would provide names and details of every beneficiary of its lending under the $2.2tn economic stimulus package.
EU leaders have agreed to work on creating a “recovery fund” to rebuild Europe’s economy after the coronavirus pandemic.
The disappearance of petrol demand because of coronavirus lockdowns has forced the shutdown of two of the world’s largest ethanol refineries, owned by Archer Daniels Midland, which process farmers’ corn into biofuel in the US Midwest.
Expedia, the online travel booking company, has raised $3.2bn in fresh capital, including $1.2bn from the private equity firms Apollo Global Management and Silver Lake.
Lufthansa has reported losses of around €1.2bn for the first three months of 2020, as it warned that it would run out of cash within weeks unless it received government aid.
The UN has called for the creation of an international agency to oversee sovereign debt relief programmes for developing countries, which it said face unsustainable debt repayments of $2.6tn this year and $3.4tn in 2021.
Poland is planning new takeover rules that will broaden the government’s powers to block attempts by non-EU investors to buy up Polish companies. The move follows a similar tightening of takeover rules in neighbouring Germany.
A vaccine is only likely to be available to the US public by June 2021, according to forecasts by Morgan Stanley.
Dubai to ease lockdown restrictions from Friday
Simeon Kerr in Dubai
Dubai has confirmed plans to ease its strict lockdown from Friday morning, allowing residents to leave their homes without a police permit for the first time in almost three weeks.
On the eve of the holy fasting month of Ramadan, the government on Thursday said allowing freedom of movement would also require strict preventative measures to curtail the spread of coronavirus, including wearing face masks whenever leaving home.
Public transport, retail, restaurants, hotels and offices will be able to operate at a reduced capacity while enforcing social distancing protocols.
The emirate has been under the tightest restrictions in the Gulf over the past month, including a 24-hour curfew, as the authorities rolled out a massive testing campaign for Covid-19. Residents will now be able to leave their homes without a permit between 6am and 10pm.
People will be allowed to visit family members, but private gatherings remain banned. The public will be able to exercise outside for up to two hours a day in groups of no more than three people.
New York deaths ease to lowest since April 2
Peter Wells in New York
New deaths in New York, the hardest-hit US state, eased to 438 over the past 24 hours, the lowest daily rate since April 2, taking the total to 15,740.
New Jersey and Michigan, the next hardest-hit states overall, had daily death rates of 305 and 164, respectively, but both are down from record daily increases on Tuesday.
A total of 1,911 people died over the past day, taking the national total to 44,014, according to the data released on Thursday compiled by the Covid Tracking Project.
There were 178 deaths in Massachusetts, which is the fourth-hardest hit overall.
Unlike the Covid Tracking Project, Johns Hopkins University counts co-called presumptive deaths in New York City, which puts its total death count at a higher 47,272.