Global daily new cases rise as Brazil remains worst-hit country
Steve Bernard in London
Globally, the number of newly confirmed Covid-19 cases rose by a further 127,465 yesterday. This is the seventh consecutive day more than 100,000 infections have been reported, and the second-highest increase to date. The worldwide total now stands at 6.43m.
A further 5,775 people died of the disease caused by coronavirus yesterday, the highest number of daily fatalities since May 13. The global death toll now stands at 378,579.
Latin America continues to be in the spotlight with both Brazil and Mexico reporting more than 1,000 fatalities. Mexico’s dramatic increase is the result of a data update of previously unaccounted for deaths. Brazil once again recorded more deaths and cases than other countries by a considerable margin. A further 1,349 people lost their lives. Infections rose by 28,633 — almost 9,000 more than the US — bringing the country’s total to 584,016.
Explore data about the pandemic with the FT’s Covid-19 trajectory charts.
UK government’s furlough bill estimate cut by 30 per cent
Delphine Strauss in London
The UK’s furlough scheme will cost less than expected because employers have been concentrating its use on part-time and low-paid workers.
The Office for Budget Responsibility cut its estimate of the UK government’s job retention scheme’s gross cost by 30 per cent. Take-up is now higher than expected, with employers claiming for 8.7m jobs to date, but the average grant per job is lower than the OBR had assumed.
The OBR now estimates a gross cost of £60bn, down from a previous estimate of £84bn, over the period from March to October. The scheme is set to end in October after a period in which the government’s contribution will be tapered and employers asked to contribute more.
It was already clear the furlough scheme had been heavily used by employers in sectors such as hospitality and retail, where low pay is prevalent. But the OBR said employers seemed to have “concentrated their use of the scheme on furloughing employees whose pre-virus jobs involved significantly fewer hours and/or lower hourly pay than the average”.
Weekly data and provisional analysis by HM Revenue & Customs suggested the average monthly grant for each job was around £1,200, OBR said. This implied average weekly pre-virus gross pay of £320 for the jobs furloughed so far, much closer to the median pay of part-time than of full-time workers.
Wall Street inches lower after four days of gains
US stocks opened lower after notching up four days of consecutive gains as confidence waned on a quick economic recovery from the pandemic.
The S&P 500 was down 0.1 per cent. A rally since mid-March helped the US benchmark achieve on Wednesday its biggest ever gain over 50 days, according to broker LPL Financial. Meanwhile, the tech-heavy Nasdaq opened up 0.1 per cent.
The advances in US markets this week have come despite nationwide protests sparked by police killing George Floyd.
First-time unemployment benefit claims by Americans last week slowed down for a ninth consecutive week to 1.9m, according to official data released on Thursday.
Economists at ING said that the rate of claims, which took the total number of applications to almost 43m since lockdowns began in mid-March, remained “stubbornly high” considering that the US economy is in the process of reopening.
The muted opening for US stocks followed a rally in eurozone bonds after the European Central Bank announced a bigger-than-expected boost to its stimulus package to tackle the economic fallout from the coronavirus pandemic.
Mexican president defends response as deaths mount
Jude Webber in Mexico City and John Burn-Murdoch in London
An irritated President Andrés Manuel López Obrador sought to dispel the gloomy picture painted by a record one-day rise in confirmed Covid-19 deaths in Mexico, saying the almost 1,100 increase reported on Wednesday night was the result of data updates rather than a single day’s fatalities, and that Mexico had far less deaths than the US and European countries.
Speaking at a news conference in the southern state of Chiapas, the president defended Mexico’s Covid-19 strategy as “correct” and said media reports were “alarmist and irresponsible”.
“This doesn’t mean 1,000 people died on one day, I want to make that very clear,” Mr López Obrador said.
What he did not say, however, is that Mexico only officially reports hospitalised cases and deaths that have been confirmed by laboratory tests, and that the level of testing in Latin America’s second-biggest economy is lower even than Nepal. Even Hugo López-Gatell, deputy health minister and coronavirus tsar, has acknowledged that the number of officially reported cases is underestimated.
Mexico on Wednesday reported 11,729 deaths, a rise of 1,092 from Tuesday’s tally and more than double the previous highest daily jump. The number of confirmed cases rose 3,912 to 101,238.
According to data tracked by the FT, only the US, Brazil and the UK have ever reported a higher single daily death toll and on Wednesday, only Brazil reported more deaths than Mexico – 1,349. Brazil, India, Peru, Russia, Chile and Pakistan all recorded more new cases than Mexico on Wednesday.
Johnson spent time with unwell minister who is being tested for Covid-19
George Parker in London
Alok Sharma, the cabinet minister who was taken ill in the House of Commons on Wednesday and has been tested for coronavirus, spent 45 minutes with Boris Johnson and chancellor Rishi Sunak in a Downing Street meeting on Tuesday.
Downing Street said that, if the business secretary tested positive for the virus, he would work with NHS “tracers” to identify contacts who might need to go into quarantine, although Mr Johnson’s spokesman said all meetings in Number 10 took place under two-metre social distancing rules.
Asked whether the prime minister and Mr Sunak might have to self-isolate for 14 days, Mr Johnson’s spokesman said that would be a question for the judgment of staff trained on the new test-and-trace system.
However there was hope in Downing Street that Mr Sharma might not actually have the virus. “He’s feeling better,” said one Tory official. “He thinks it’s food poisoning.”
Another government official said Mr Sharma was working from home “so he can’t be that ill”. The business secretary was seen perspiring heavily on Wednesday while introducing a government insolvency bill and returned home shortly afterwards to take a coronavirus test.
Downing Street declined to comment on the health of Mr Sharma. One ally of the prime minister said: “It’s too early to say. We’re waiting for the results of the test.”
Czech borders with Germany, Austria and Hungary set to reopen
James Shotter in Warsaw
The Czech Republic is poised to reopen its borders with Germany, Austria and Hungary, as European nations start to remove the limitations on free movement put in place to contain the coronavirus pandemic.
Czech prime minister Andrej Babis said that he would discuss the move, which follows the reopening of the border between the Czech Republic and Slovakia, at a cabinet meeting on Friday.
“I expect to decide that not only Austria, but also Germany and Hungary… and their and our citizens will be able to travel freely, like before the virus arrived, without any certificates or quarantine or testing,” he said, according to the CTK news agency. “I will suggest that we do it as soon as possible.”
Like much of central Europe, the Czech Republic was quick to introduce a range of measures to prevent the spread of the pandemic, and has suffered far fewer cases and deaths than countries in western and southern Europe. As of Thursday, it had recorded 9,438 cases and 324 deaths, according to data from Johns Hopkins University.
Virgin Atlantic to restart passenger flights out of London in mid-July
Bethan Staton in London
Virgin Atlantic has confirmed its plans to restart passenger flights as lockdown measures ease, with five international routes taking off from Heathrow in mid-July.
Services from London to Orlando and Hong Kong will resume from July 20 this year, the airline announced, followed by routes to Shanghai, New York and Los Angeles on July 21.
The carrier is set to announce more destinations for August flights in the next two weeks, as it gradually ramps up passenger flying in the latter half of the year and in 2021.
The news is among the first concrete announcements of return to business in an industry that has been devastated by the Covid-19 pandemic. Virgin Atlantic announced last month it would cut almost one third of its workforce, some 3,150 staff, and end operations from London Gatwick following a sharp fall in demand.
American Airlines on Thursday also announced it planned to fly more than 55 per cent of its July 2019 domestic flight schedule and nearly 20 per cent of its international flights next month. In May the carrier’s domestic schedule was reduced by 80 per cent compared to 2019.
Juha Jarvinen, chief commercial officer at Virgin Atlantic, said the company was keeping a close eye on external conditions, particularly quarantine measures that will require international passengers to spend 14 days in self-isolation after arriving in the UK.
Mr Jarvinen said:
We know that as the Covid-19 crisis subsides, air travel will be a vital enabler of the UK’s economic recovery.
Therefore, we are calling for a multi-layered approach of carefully targeted public health and screening measures, which will allow for a successful and safe restart of international air travel for passengers and businesses.
Spain steps back from earlier border plan statement
Daniel Dombey in Madrid
Spain has walked back on an earlier statement that it will bring forward the date when it will reopen its land borders, clarifying that it will co-ordinate any relaxation of controls with France and Portugal.
Earlier, the tourism minister unveiled plans to reopen Spain’s borders on June 22, an announcement that brought forth a riposte from Portugal’s foreign minister.
Augusto Santos Silva said he was “surprised” by the unilateral announcement from Reyes Maroto of the land border reopening, Reuters reported.
Reuters then quoted a Spanish government official as saying the plan is “under study”.
Spain said though that international travel would start up from July 1, in a note released in the past few minutes that “clarified” Ms Maroto’s earlier comments:
“The interior ministry is maintaining permanent contacts with the French and Portuguese authorities to co-ordinate measures in the land borders with both countries.”
Reuters added that the ministry said Spain’s border controls may be maintained beyond the state of alert.
Ms Maroto, Spain’s tourism minister, said earlier on Thursday that the country planned to drop all border restrictions with France and Portugal on June 22, several days earlier than previously announced. The southern European nation, which is one of the most visited by tourists every year, may also lift quarantine demands for those coming by land from France and Portugal, Ms Maroto said then. That is yet to be approved though, Reuters quoted her as saying.
Greek economy shrinks 1.6 per cent in the first quarter
Kerin Hope in Athens
Greece’s economy contracted by 1.6 per cent on a quarterly basis in the first three months of this year as the impact of coronavirus began to affect activity.
Gross domestic product contracted 0.9 per cent year on year, according to seasonally adjusted data, the statistical service Elstat said.
“The economy saw a dynamic first two months of the year while March was not as bad as had been predicted,” said Stelios Petsas, the government spokesman.
Greece imposed a tight lockdown in mid-March to contain the spread of Covid-19, just as the tourism season was beginning. Consumer spending and domestic travel were also hit as shops, cafes and restaurants shut down and the number of flights from Athens airport was sharply reduced.
Greece’s central bank predicts that the country’s GDP will fall by around 4 per cent this year, well below the European Commission’s forecast of 9.7 per cent.
Panos Tsakloglou, a professor at Athens University of Economics and Business, said:
The economy was hit hard by a decline in retail transactions, which make up a bigger percentage of the economy than in other eurozone countries, and also by a fall in receipts from shipping, reflecting the global trade situation.
ECB’s Lagarde warns eurozone recovery still ‘tepid’
Martin Arnold in Frankfurt
ECB president Christine Lagarde said the eurozone economy was “experiencing an unprecedented contraction”, adding that “severe job and income losses and exceptional uncertainty” had led to a “severe fall” in both consumer spending and investment.
The ECB published new forecasts, predicting the eurozone economy would shrink 8.7 per cent this year before expanding by 5.2 per cent next year and 3.3 per cent in 2022.
It also slashed its inflation forecasts to 0.3 per cent this year, 0.8 per cent next year and 1.3 per cent in 2022 — all well below its core target for price growth to be below but close to 2 per cent.
Speaking after the central bank boosted its bond-buying stimulus package by €600bn, Ms Lagarde said there had been a “bottoming out” in economic activity in May, but the recovery had so far been “tepid” compared with the speed with which the economy had contracted after the pandemic hit, she said.
She added that inflation had been dragged down by lower energy prices but would “remain subdued” because of the sharp decline in economic activity.
US jobless claims ease to 1.9m as economy struggles to reopen
Almost 1.9m Americans filed for unemployment benefits for the first time last week, taking the total number of new claims to nearly 43m since lockdowns began in mid-March as the US economy struggles to reopen.
Initial jobless claims slowed for the ninth consecutive week to 1.88m in the week ended May 30, the US labour department said on Thursday. That marked the first time claims fell below 2m in the eleven weeks since the start of the pandemic shutdowns, and compares with economists’ expectations of 1.84m.
Continuing claims, which counts the number of people actually receiving benefits and is considered a gauge of ongoing unemployment, edged up to 21.49m for the week ending May 23, accounting for 14.8 per cent of the workforce.
California and Florida were the states had the highest initial claims last week.
The slowing in the pace of jobless claims and the number of people collecting benefits indicates some Americans are returning to work as states have begun to emerge from Covid-19 shutdowns and reboot activity.
Federal Reserve chair Jay Powell has said the US central bank is “strongly committed” to deploying measures to help the economy during the coronavirus pandemic.
Thousands defy HK restrictions for Tiananmen Square memorial
Nicolle Liu in Hong Kong and Tom Mitchell in Singapore
Tens of thousands of people defied social distancing rules in Hong Kong to mark the 31st anniversary of the Tiananmen Square crackdown, when authorities crushed mass pro-democracy protests in Beijing.
The gathering occurred just hours after pro-Beijing lawmakers in Hong Kong passed a bill that would made it a crime to mock China’s national anthem.
Hong Kong’s Victoria Park has for 30 years seen hundreds of thousands of people converge every June 4 to hold a candlelit vigil. Hong Kong is the last place on Chinese government-controlled territory where large-scale memorial activities can be openly held.
This year’s memorial, however, was banned by police as social distancing measures enacted to curb the pandemic remain in force.
The crowds removed police barriers and chanted slogans, including “independence for Hong Kong is the only way out”.
The national anthem law, which is seen as the latest effort by Beijing to assert its authority over the territory, would impose a maximum three-year prison sentence on anyone convicted of insulting the March of the Volunteers.
Number of cases in Pakistan surpasses China
Farhan Bokhari in Islamabad
The number of people infected by coronavirus in Pakistan has exceeded the number of cases reported in China, as the virus continues to spread in south Asia.
There have now been 85,000 cases in Pakistan, 1,000 more than in China, a government official said, confirming estimates by Johns Hopkins University. At least 1,770 people have died so far.
Prime minister Imran Khan has defended his decision to lift a lockdown, citing increasingly unsustainable economic losses. Mr Khan urged Pakistanis to learn to “live with the virus”.
For weeks, Mr Khan’s government has cited China’s relative success in battling the virus as a case for Pakistan to emulate. But healthcare experts have criticised the failure to enforce a tighter lockdown when the first cases of the virus were found earlier this year.
Euro climbs to two-month high as ECB adds to bond-buying programme
Eva Szalay in London
The euro struck its highest against the dollar in two months in its climb towards the peak it reached at the start of the coronavirus crisis.
The European single currency surged 0.6 per cent just before the central bank’s decision to add €600bn to its bond-buying plan to trade at its highest against the dollar since March 10. That brought the currency close to the peaks it hit at the start of the coronavirus crisis.
The euro traded at $1.1270 when the central bank announced an extension to June next year to its pandemic bond-buying programme.
The currency slipped back to $1.1254 after the announcement. ECB president Christine Lagarde will address journalists at a news conference shortly.
Peripheral European debt rallies after ECB extends bond-buying plan
Philip Stafford and Philip Georgiadis
Greek and Italian government bonds rallied after the European Central Bank widened its response to the coronavirus pandemic by adding €600bn to its emergency bond-buying programme.
The yield on 10-year Italian and Greek debt dropped sharply after the announcement. Italian debt fell 16 basis points to 1.40 per cent. Yields move in the opposite direction to prices.
European stock markets recovered nearly all of their earlier losses, with the regional benchmark Stoxx Europe 600 index 0.1 per cent lower in the minutes after the central bank’s decision.
Carsten Brzeski, an economist at ING, said: “Today’s decision should dent any future speculation about whether or not the ECB is willing to play its role of lender of last resort for the eurozone. It is.”
ECB adds €600bn to bond-buying plan and extends to June 2021
Martin Arnold in Frankfurt
The European Central Bank has added an extra €600bn to the bond-buying programme it launched to support the eurozone’s pandemic-stricken economy as it steps up its efforts to stop the region sliding into a deflationary spiral.
The yield on 10-year Italian and Greek debt dropped sharply following the announcement. Italian debt fell 16 basis points to 1.40 per cent. The central bank kept its main deposit rate unchanged at minus 0.5 per cent.
The move to increase the ECB’s pandemic emergency purchase programme to €1.35tn was slightly above most economists’ expectations and means the central bank is on track to buy a record total of more than €1.7tn of assets this year.
“This is likely to push European government bond yields even further into negative territory, and investors in search of positive returns will be forced to take more risk,” said Rachel Winter, associate investment director at Killik & Co. “Although inflation is currently very low, these levels of asset purchases are causing some concern about inflation further down the line.”
The ECB extended the timeframe of its emergency bond-buying programme until June 2021 and said it would “continue net asset purchases under the PEPP until it judges that the coronavirus crisis phase is over”.
The ECB’s decision “reflects the ‘we will do what it takes’ mentality of central bankers”, said Neil Birrell, chief investment officer at Premier Miton. “The policy support is likely to keep markets happy, particularly as some of the economic data is improving as lockdown loosens.”
Spain to ease border restrictions with neighbours from June 22
Spain plans to drop all border restrictions with France and Portugal in just over two weeks’ time, several days earlier than previously announced.
The southern European nation, which is one of the most visited by tourists every year, may also lift quarantine demands for those coming by land from France and Portugal, the tourist minister said on Thursday.
That is yet to be approved though, Reuters quoted Reyes Maroto as saying.
Borders have been closed to all visitors since mid-March when the country went into lockdown to try and staunch the spread of coronavirus. Spaniards and cross-border workers were the only people allowed through.
Spain, which had initially said it will start easing border restrictions from July 1, is to bring the date forward to June 22.
No-deal Brexit holds fewer fears for Covid-ravaged UK | Free to read
Chris Giles in London
Britain is once again confronted by the prospect of a no-deal Brexit come the end of the year as talks between the UK and the EU remain deadlocked.
Some economists and policymakers in Britain, where the economy is being ravaged by the coronavirus crisis, are wondering whether the effects of the UK failing to secure a trade deal with Brussels could be masked by the impact of the pandemic.
Chris explains how no-deal warnings are similar to those aired last year
How Germany got coronavirus right | Free to read
Guy Chazan in Berlin
Walther Leonhard belongs to Germany’s army of Kontaktmanagers or tracers, the foot soldiers of its strategy for containing coronavirus. His job is to call people who have tested positive — and all those they have recently come into contact with — to tell them to self-isolate for a fortnight. It’s not much fun. A lot of people are scared and confused when he breaks the news.
Combined with its six-week shutdown, Germany’s “track and trace” system has been instrumental in stalling the spread of Covid-19 and preventing it from overwhelming the health system.
Guy Chazan’s magazine piece is one of two
free to read articles available today.
Covid-19 pandemic hits black voters’ incomes hardest, FT poll shows
Far more African-American than white voters have suffered a reduction in their family’s income due to the coronavirus outbreak, according to a poll for the Financial Times that highlights the racial disparities of the Covid-19 pandemic.
The survey showed 74 per cent of black voters reported a financial hit compared with 58 per cent of white voters. It also found that more African-Americans had lost their jobs since the outbreak began, highlighting the growing economic inequalities at a time when Americans are protesting against the death of George Floyd.
The monthly survey of likely voters for the FT and the Peter G Peterson Foundation found 25 per cent of black respondents had been dismissed or furloughed since the start of the recent lockdowns, compared with 19 per cent of white respondents.
The findings come as more than 100,000 Americans have died from Covid-19, a virus that has disproportionately killed black and Latino Americans.
Young’s refuses to open until 2m social distancing rule eased
Alice Hancock in London
Young’s, the UK pub operator, will not open until August, a month after the government’s suggested reopening date for pubs and restaurants, as it refuses to start trading while two-metre social distancing rules are in place.
Pubs that opened for takeaway fare, as many did during sunny weather in the UK in April and May, risked losing goodwill as police had at times to be called out to deal with rowdy drinkers on streets and in parks without toilet facilities, the chief executive said.
“With the pressure on the hospitals and police it’s not right,” Patrick Dardis said on Thursday. “You have to think about the consequences of serving alcohol to people in pints who will then go to parks and drink.”
Young’s, which was founded in 1831, will not open until August 3 when, Mr Dardis said, he expected the government to have reduced social distancing measures to one metre — in line with France, Germany, Denmark and World Health Organization guidance.
It will be “highly recommended” for staff in its 276 pubs to wear face masks but the company will not insist, Mr Dardis said, adding that he wanted “pubs looking like pubs and not operating theatres”.
Alice has written a full story here
France and Spain bear brunt of eurozone retail sales slump
Valentina Romei in London
Eurozone retail sales crashed in April at the fastest pace on record as lockdowns depressed demand, although the impact was less severe in Germany than in France and Spain.
The volume of eurozone retail sales dropped 11.7 per cent in April compared with the previous month, a marginally steeper fall than in March, according to data from Eurostat. The falls in both months were the steepest since records began in 1999.
April sales declined 19.6 per cent compared with the same month last year.
The data were released ahead of a European Central Bank meeting that could announce further action to sustain the struggling regional economy.
In Germany, retail sales were down 6 per cent over the previous year, with the Netherlands and Finland also reporting single-digit drops.
But in France and Spain, sales dropped by about 30 per cent, the largest falls across eurozone countries. Data are not yet available for Italy.
The fall was driven by a 63 per cent annual contraction in clothing and a 45 per cent annual drop in car fuels sales, reflecting restricted mobility.
The contraction in spending suggests a sharp fall in GDP in the second quarter. However, high-frequency data point to a pick-up in May as restrictions ease.
“This is probably as bad as it gets,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. Sales “will look a lot better over the next six months”.
French public deficit to hit 11.4% of GDP in 2020
Victor Mallet in Paris
France’s public sector deficit will reach a record 11.4 per cent of gross domestic product this year as a result of the coronavirus crisis, according to Gérald Darmanin, the minister responsible for the budget.
Mr Darmanin, who is set to present the latest revisions to the budget in parliament next week, acknowledged in an interview on France 2 television that the expected deficits of €220bn for the state and €50bn for the social security system were “vertiginous”.
But he said France was taking on more debt to save an economy devastated by the Covid-19 pandemic and the nationwide lockdown that is only now being eased.
The government has already announced that it expects the economy to shrink by 11 per cent this year in the deepest recession since the second world war.
UK government to guarantee £10bn of trade credit insurance
Oliver Ralph in London
The UK government is to provide a £10bn guarantee for trade credit insurance in an effort to stop the market seizing up in the wake of the coronavirus crisis.
Trade credit insurance protects companies from the risk that their customers go bust before paying for goods or services. Business leaders say it is a vital cog in the economy, allowing companies to trade with each other with confidence. It covers about 630,000 businesses in the UK each year.
The crisis threatens to throw the market into turmoil. Trade credit insurers are facing huge claims — Morgan Stanley estimates that globally coronavirus-related trade credit insurance payouts could run to $46bn. The insurers say that without government support they would be unable to continue offering cover, or would have to increase prices sharply.
Read the fully story here
Drop in new orders continues to hurt UK construction sector
Valentina Romei in London
The decline in UK construction eased in May as more building sites reopened, but the sector remained in contraction as customers continued to put projects on hold.
The IHS Markit UK construction purchasing manager index rose to 28.9 in May, up from a survey low of 8.2 in April. The reading is slightly below the 29.7 forecast by economists polled by Reuters.
Respondents are asked to state activity at their companies compared to the previous month with a reading below 50 indicating the majority of businesses reporting a contraction.
“It seems likely that construction activity will rebound in the near-term, as adaptations to social distancing measures become more widespread and the staggered return to work takes effect,” said Tim Moore, Economics Director at IHS Markit.
“However, latest PMI data pointed to another steep reduction in new orders received by UK construction companies, with the pace of decline exceeding the equivalent measures seen in the manufacturing and service sectors.”
Around 64 per cent of the survey panel reported a drop in construction activity during May, while only 21 per cent signalled an expansion, according to the report. Companies reporting growth attributed it to limited return to work on site following shutdowns in April.
May PMI indicated a rapid drop in new orders received by UK construction companies, with builders attributing it to the pandemic impact on demand.
Residential work was the most resilient category in May, followed by civil engineering. Commercial building also fell at a slower pace during the latest survey period, but was the worst-performing broad area of construction, said IHS Markit.
“Spending was slashed as clients continued to stonewall building firms and put new projects on hold,” said Duncan Brock, at the Chartered Institute of Procurement & Supply.
“With furloughed staff across the supply chain, companies saw their capacity leak away and the construction sector now faces the most challenging environment for generations.”
The UK reading is lower than the corresponding figure for the eurozone where May’s PMI construction index rose to 39.5, up from a survey low of 15.1 in April.
UK car sales collapsed in May
Peter Campbell, Global Motor Industry Correspondent
UK car sales fell 90 per cent last month in a “devastating” month for the sector as showrooms across the country were shuttered and factories left at a standstill.
Just 20,247 new cars were sold in May, compared with 183,724 a year earlier, according to figures released on Thursday by the Society of Motor Manufacturers and Traders.
Dealerships across England reopened on Monday, in the hope that social distancing measures would convince customers to revive sales that are critical to supporting car factories across the UK and Europe.
Mike Hawes, chief executive of the SMMT, said:
After a second month of shutdown and the inevitable yet devastating impact on the market, this week’s reopening of dealerships is a pivotal moment for the entire industry and the thousands of people whose jobs depend on it.
Restarting this market is a crucial first step in driving the recovery of Britain’s critical car manufacturers and supply chain, and to supporting the wider economy.
Of last month’s sales, 12,900 were retailed to customers, with fleet and business sales just 7,347 as companies such as car hire groups slammed the brakes on ordering new vehicles. While showrooms were closed, some businesses were offering online deliveries, as well as the introduction of a “click and collect” service late into the month of cars bought online during the lockdown.
European stock markets rally pauses ahead of crucial ECB meeting
A rally in global stocks lost pace on Thursday as investors seeking signs of further coronavirus economic support measures paused for breath ahead of an important European Central Bank decision.
London’s FTSE 100 was 0.4 per cent lower and the CAC 40 in Paris slipped 0.7 per cent in early morning trading. Frankfurt’s Xetra Dax was down 0.6 per cent despite the German government agreeing a second €130bn stimulus package late on Wednesday.
The region-wide Stoxx 600 fell 0.5 per cent. The benchmark has climbed more than 40 per cent from its nadir in March, and the current rally in global equity markets has shown little sign of a sustained reversal, despite growing risks including US-China tensions and the economic damage caused by the coronavirus pandemic.
The loss of momentum for equities came ahead of the ECB’s monetary policy meeting on Thursday, which will focus on economic growth projections for the eurozone and the possible extension of the bank’s €750bn bond-buying programme.
“Anything less than a €500bn expansion will be a disappointment and could undo the recent weeks of market strength,” said Seema Shah, chief strategist at Principal Global Investors.
Decline in eurozone construction industry eases as building starts up
Valentina Romei in London
The contraction in the eurozone construction sector eased in May as restrictions were lifted and most building sites start up again in all major economies of the currency union.
The IHS Markit eurozone construction purchasing manager index rose to 39.5 in May, up from a survey low of 15.1 in April.
Respondents are asked to state activity at their companies compared with the previous month. A reading below 50 indicates the majority of businesses reporting a contraction.
“The rate of decline eased considerably as restrictions on business operations and workers were relaxed,” said Bernard Aw, principal economist at IHS Markit. “In fact, Italy posted a mild rise in construction output, though Germany and France still recorded declines, albeit at much slower rates”.
In Italy, which has seen some of the most stringent restrictions in Europe, the construction index rose to 51 in May, from a record low of 4.8 in the previous month.
“Latest PMI data showed a slight increase in Italian construction activity during May after a record drop in April, as a number of firms reopen and recommence work on projects that were put on ice during the Covid-19 lockdown,” said Annabel Fiddes, associate director at IHS Markit.
The index rose nearly 30 points to 32.4 in France and to 40.1 in Germany, where the limitation to building activity was less marked.
New business received by eurozone construction businesses fell in May, though the rate of decline eased from a survey record set in April. Survey respondents suggested that delays in tenders and suspensions of construction activity during the Covid-19 pandemic crisis continued to weaken demand. Jobs were cut in the industry at a rate that was one of the sharpest recorded since the global financial crisis more than a decade ago.
Aston Martin to cut 500 jobs
Aston Martin is to cut 500 jobs as the carmaker overhauls its business in response to falling sales of its signature sports cars.
The pandemic has deepened the crisis at the luxury carmaker that was already trying to reduce a backlog of cars before the UK government lockdown closed its dealerships and showrooms.
Aston Martin said on Thursday that its business required a “fundamental reset” as it aimed for profitability, and that the proposed job cuts would help “right size” its structure. An employee consultation process will be launched in the coming days.
Corporate round-up: Lookers jobs, IG, Youngs pubs to open in August
Lookers, one of Britain’s largest car dealerships, has unveiled its restructuring plans that could lead to the loss of as many as 1,500 jobs and save about £50m in payroll costs. The one-off restructuring cost will be about £9m, the group said. On Monday it reopened its dealerships.
The group, which announced on March 10 “potentially fraudulent transactions” inside the business, said the investigation by Grant Thornton was close to completion and its draft report was under review by the board. The group expects to report its 2019 earnings by the end of this month. Net debt was £57m at the end of May with a facility of £250m.
Online trading group IG Group has reported “high levels of client trading activity” as market volatility remains “elevated” as it estimates fourth-quarter net trading revenue at about £259m, compared with £117.9m in the same quarter a year ago, and higher than its estimate on April 24 in its trading update of £173m. It expects its full-year net trading revenue to be about £649m, up from £476.9m a year ago.
Last month the group’s mobile app and website crashed, leaving many users stranded and unable to close their trades for more than an hour. Spread betters and online trading platforms have seen a boom in activity in recent months during the pandemic lockdown.
Brewer and pubs company Youngs expects to open its pubs by August 3, adding that closing them for the final 10 days of its financial year resulted in an
estimated £13m shortfall in revenue. The hit on profits was about £7.7m. Total group revenue rose 2.6 per cent to £113.6m. It expects sales to return to normal in fiscal year 2022.
European stock markets rally set to falter ahead of ECB meeting
European stocks are on course to pause their rally in advance of a crucial European Central Bank meeting to decide on extending stimulus measures.
London’s FTSE 100 and the CAC 40 in Paris will open 0.2 per cent lower when trading begins on Thursday, futures markets suggest. Frankfurt’s Xetra Dax is due to open down 0.1 per cent at the opening bell after the German government agreed on a second €130bn stimulus package late on Wednesday.
The loss of momentum comes ahead of the ECB’s monetary policy meeting on Thursday, which will focus on the possible extension of the bank’s €750bn bond-buying programme.
The region’s central bank is widely expected to extend the programme, which at its current pace of about €30bn a month will run out of firepower by October.
Futures for the S&P point to similar losses when Wall Street opens later in the day, as protests against the killing of a black man at the hands of police continue across America.
Kuwait PM seeks to reduce foreign population
Simeon Kerr in Dubai
Kuwait’s prime minister has said the Gulf state should over time reduce the foreign population from 70 per cent to 30 per cent, amid growing resentment against foreigners exacerbated by the collapse in oil prices triggered by coronavirus.
Sheikh Sabah Khaled Al Sabah, in a meeting with newspaper editors, said Kuwait faced a “big challenge” in addressing this discrepancy in the population, of which 3.34m are expatriates and 1.45m are nationals.
“The ideal population structure is to have Kuwaitis being 70 per cent and non-Kuwaitis 30 per cent,” he said in comments carried by the official news agency late on Wednesday.
As economic pressures build in the wake of lower oil prices, especially since the coronavirus outbreak, resentment against expatriates has been building in the oil-rich state.
There are about 750,000 expatriate domestic helpers, the equivalent to half the Kuwaiti population, he said. Kuwaitis would have to take on all professions, as previous generations did when building the modern state, he added.
Many Kuwaitis have been calling for a reduction in the number of expatriates to ease the burden on public services, but few nationals are willing to take on jobs viewed as menial.
How Germany got coronavirus right
Combined with its six-week shutdown, Germany’s “track and trace” system has been instrumental in stalling the spread of Covid-19 and preventing it from overwhelming the health system.
It has also helped that the country has a well-oiled government, led by Angela Merkel, a physicist, that has avoided the screeching policy zigzags seen elsewhere. On April 17, authorities announced that the pandemic was under control — less than six weeks after Germany’s first deaths from Covid-19.
The country saw its first outbreak in January at the headquarters of Webasto, an automotive supplier near Munich. The source was quickly identified as a Chinese employee who had been attending in-house workshops there.
By June 1, Germany had 183,508 confirmed Covid-19 cases, according to data from Johns Hopkins University, making it the world’s ninth-worst-hit country.
But the number of infected people who have died is remarkably low — just 8,546, or about 4.7 per cent of the total. That works out at roughly 103 deaths per million inhabitants, compared with 430 for France, 554 for Italy and 579 for the UK.
Read more here
George Floyd autopsy reveals he tested positive for coronavirus
The man who was killed while being restrained by police in Minneapolis, prompting widespread unrest across the US, tested positive for coronavirus, his full autopsy report reveals.
The findings from the Hennepin County Medical Examiner’s Office said that it was known that George Floyd had previously tested positive on April 3, but the post-mortem swab collected on May 26 showed he was still positive for the virus.
“The autopsy result most likely reflects asymptomatic but persistent PCR positivity from previous infection,” the autopsy said, referring to the polymerase chain reaction tests that are used to detect presence of the virus.
The autopsy did not link the presence of coronavirus to Floyd’s death. A summary report issued on Monday concluded that Floyd had a heart attack while being restrained by officers and classified his May 25 death as a homicide.
Australia unveils $469m housing industry stimulus
Jamie Smyth in Sydney
Australia unveiled a A$680m ($469m) stimulus package aimed at supporting the construction and home building industries on Thursday, as the nation braced for its first recession in almost three decades.
Under the government’s HomeBuilder programme homeowners can apply for a A$25,000 grant to subsidise the cost of renovating an existing property or building a new house. The scheme is intended to provide around 27,000 grants and support 140,000 direct jobs and up to 1m related jobs in the residential construction sector, said the government.
Applicants for the grants are subject to a means test, which includes income caps of A$200,000 for couples and A$125,000 for single people.
“The home building industry is critical to our economies all around the country,” said Scott Morrison, Australia’s prime minister.
“It’s all about jobs. And at the end of the day, the difficult news we got yesterday about what happened in the first quarter of this year, and we expect that to get worse than the one we’re in right now, that’s why we’re putting these plans in place.”
On Wednesday, Australia’s Treasury confirmed the nation was already in recession following a 0.3 per cent fall in gross domestic product in the first quarter and a sharp contraction of up to 10 per cent forecast in the second quarter. It marks the first time in 29 years that Australia will experience a technical recession, which is two consecutive quarters of contraction.
The Conservative government has already unleashed more than A$70bn in spending on a Jobkeeper programme, which is subsidising the wages of about 3.5m people, many of whom have been furloughed due to Covid-19.
China to ease restrictions on foreign airlines
Thomas Hale in Hong Kong
China’s civil aviation regulator will allow more foreign airlines to resume flights to the country next week, as part of a gradual easing of controls designed to limit the spread of coronavirus.
Foreign airlines that are not currently sending planes to China will be able to choose a city to send flights to each week, Xinhua reported on Thursday, citing a notice from the country’s civil aviation authority.
The decision comes several months after China introduced restrictions on air traffic, severely limiting international flights in late March amid fears that a second wave of the coronavirus could be imported from overseas.
The move also comes a day after the US threatened to ban Chinese passenger airlines if the country did not lift restrictions on its own companies, at a time when relations between the two countries have worsened in part because of demands for an inquiry into the origins of coronavirus.
The US transport department said it would block any Chinese-operated scheduled flight from June 16, but would be “fully prepared to revisit the action” if China allowed US airlines such as Delta Air to fly to the country.
In late March, China limited international flights based on the passenger schedules of domestic and foreign airlines on March 12. At this time, US airlines had stopped flying to and from China, the US Department of Transportation said on Wednesday, meaning they have been unable to resume services, while Chinese carriers “generally maintained a degree of passenger service”.
On Wednesday, China agreed with Singapore to resume essential business and official travel between the two countries, as part of an approach which requires travellers to test negative for coronavirus prior to departure.
The ‘Japan model’ that tackled coronavirus
Robin Harding in Tokyo
When Shinzo Abe ended a nationwide state of emergency last week with just 16,724 infections and 894 deaths from Covid-19, he could not resist bragging about the “Japan model” for handling coronavirus.
“In a characteristically Japanese way, we have all but brought this epidemic under control in the last month and a half,” the prime minister declared. He lavished praise on the public but Mr Abe’s remarks begged a question: what is this Japan model and could it work anywhere else?
Although there has been a surge in cases in Tokyo, understanding the reasons for Japan’s relative success in controlling Covid-19 has global significance. After all, the country did not impose a compulsory lockdown and carried out little virus testing, two elements other nations regard as crucial.
Read more on Japan’s approach here
Employees sue Amazon for exposing them to coronavirus
Dave Lee in San Francisco
Amazon is being sued by a group of employees who accuse the tech giant of exposing them, and their families, to coronavirus. In one case, the lawsuit alleges, one worker “brought the virus home”, infecting a family member who later died.
The employees are based at the company’s facility in Staten Island, New York, where it is confirmed at least one employee has died after contracting Covid-19.
The lawsuit accuses Amazon of creating a “facade of compliance” with guidance on containing the spread of the virus. The action is not seeking damages for illness or death, but instead calls for an injunction that would force Amazon to comply with worker safety measures. It is backed by a number of advocacy groups for workers’ rights.
Amazon said on Wednesday it was “saddened by the tragic impact Covid-19 has had on communities across the globe, including on some Amazon team members and their family and friends”.
A spokeswoman said the company complied with expert advice, adding: “From early March to May 1, we offered our employees unlimited time away from work. And since May 1 we have offered leave for those most vulnerable or who need to care for children or family members.”
Qantas to increase domestic flights as travel restrictions ease
Australian airline Qantas and its subsidiary Jetstar will resume 300 flights a week by the end of this month as travel restrictions ease.
The increase in capacity will reach around 15 per cent of pre-coronavirus levels by the end of June, up from 5 per cent in recent months.
More flights will resume between Melbourne and Sydney as well as routes to and from the capital Canberra.
The airline expects to reach 40 per cent of pre-coronavirus capacity by the end of July, however this is dependent on whether restrictions on travel between states will be relaxed further.
“We can quickly ramp up flying in time for the July school holidays if border restrictions have eased more by then,” said Alan Joyce, Qantas Group chief executive. “Normally, we plan our capacity months in advance, but in the current climate we need to be flexible to respond to changing restrictions and demand levels.”
Australia has begun the process of reopening its economy after success in controlling the spread of coronavirus.
The airline last month said it would provide passengers with masks and sanitising wipes as well as increasing cleaning programmes for its aircraft.
Mexico’s one-day death toll rises above 1,000
Jude Webber in Mexico City
Mexico has for the first time surpassed more than 1,000 Covid-19 deaths in a single day as the federal government struggles to convince people to continue staying at home.
The health ministry reported 11,729 deaths, an official rise of 1,092 from Tuesday’s count and more than double the previous highest daily jump.
There were 101,238 confirmed coronavirus cases as of Wednesday, but Mexico’s refusal to conduct widespread testing means the figure is widely seen as a gross underestimation.
Hugo López-Gatell, the deputy health minister and coronavirus tsar, warned in a newspaper interview published on Wednesday that the shift to the “new normal” from the start of this week, in which non-essential industries will gradually be cleared to reopen as regional health conditions allow, did not mean people could abandon caution after two months of quarantine.
He told El Universal that the death toll could prove as high as 30,000 but stressed that was “if, and only if, the conditions which led to this prediction are maintained. If in one state they start opening bars or allowing businesses to stay open, then obviously, we’ll have a resurgence”.
President Andrés Manuel López Obrador says Mexico has “tamed” coronavirus and will emerge speedily from a deep economic recession.
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Singapore and China have established a bilateral travel arrangement under which essential business and official travel will resume between the two countries.
The Trump administration has said it will ban Chinese passenger airlines flying to and from the US this month unless Beijing relaxes restrictions on American airlines.
The S&P 500 gained 1.4 per cent on Wednesday, its fourth straight day of gains, amid optimism over an economic recovery and potential progress in the development of a coronavirus vaccine.
The World Health Organization will resume coronavirus trials of the contentious drug hydroxychloroquine after doubts emerged of a study that led to them being put on hold.
Meanwhile, research published on Wednesday showed that hydroxychloroquine did not help people who had already been exposed to the virus from developing Covid-19. The study did not capture how the drug would fare with people who had not been exposed at all.
UK Business secretary Alok Sharma has been tested for coronavirus and is self-isolating at home after struggling to deliver a speech in the House of Commons on Wednesday.
A sharp rise in personal savings will squeeze consumer spending and slow the economic recovery in the US, according to Oxford Economics.
Spain’s chamber of deputies has voted to prolong the sweeping government powers that underpin the country’s lockdown for a sixth and last time, from this Sunday to June 21.
The headquarters of India’s biggest steel maker in Delhi have been sealed for two days after five people, including top executives, tested positive for Covid-19, highlighting the mounting challenge for Narendra Modi’s government as it tries to restart the flagging economy amid rapidly rising infections.
Boris Johnson has defended the government’s decision to impose a 14-day quarantine for people arriving in the UK. The policy, to be introduced on June 8, has been widely criticised by Conservative MPs who argue it is pointless to impose a quarantine against arrivals from countries with much lower Covid-19 infection rates.
Former Ecuadorian president arrested in medical supply corruption probe
Gideon Long in Bogotá
A former Ecuadorian president was arrested on Wednesday as part of an investigation into alleged corruption related to the purchase of medical supplies for a hospital in the port city of Guayaquil, which has been badly hit by coronavirus.
Police arrested Abdalá Bucaram at his home in the city and charged him with illegal firearms possession. They confirmed they carried out the raid as part of the corruption probe.
In all, police conducted 37 raids in Guayaquil, Quito and elsewhere, and arrested 17 people, including the governor of the province of Guayas, of which Guayaquil is the capital.
On its Twitter feed, the public prosecutors’ office posted photographs of face masks and other medical kit that it said it had seized in the raids.
Mr Bucaram was Ecuador’s president for just six months in 1996-97 before being forced to quit amid massive street protests. He was accused of embezzling millions of dollars and fled into exile in Panama. He only returned to Ecuador in 2017 once lawsuits against him had expired.
Ecuador is one of the worst-hit countries in Latin America for coronavirus and has recorded the highest per capita death rate anywhere in the region. It has registered over 40,000 cases and 3,438 deaths. The epicentre was in Guayaquil in April, when hospitals and cemeteries were overwhelmed by the number of cases.
Although the situation in Guayaquil and the surrounding area has improved somewhat, Guayas still accounts for 14,000 confirmed cases of the virus.
Asia-Pacific stocks extend rally on economic recovery hopes
Stock markets in Asia-Pacific extended a rally on Thursday as optimism about a recovery for economies hit by the coronavirus pandemic overshadowed protests in the US and the Trump administration’s move to block Chinese airlines.
In Japan, the Topix gained 0.9 per cent, the Kospi in Seoul was up 1.8 per cent and Australia’s S&P/ASX 200 added 0.3 per cent.
Overnight in the US, the S&P 500 closed up 1.4 per cent as economic data showed an improved picture from April and amid expectations of more stimulus from central banks. Protests sparked by the death of George Floyd, a black man in Minnesota who died after a police officer detained him with a knee to his neck had little effect on markets.
The US transport department said it would block scheduled passenger flights by Chinese carriers unless Beijing lowers restrictions on American airlines introduced as a result of the pandemic.
S&P 500 futures were up 0.1 per cent.
US daily Covid-19 death rate hovers above 1,000 for second straight day
Peter Wells in New York
US coronavirus deaths rose by more than 1,000 for the second day in a row on Wednesday, led by New Jersey.
A further 1,015 people in the US died from coronavirus over the past 24 hours, according to data compiled by Covid Tracking Project, down from 1,172 on Tuesday.
About one-tenth of those were in New Jersey, which recorded 110 deaths over the past day, more than any other US state.
The next highest one-day increases were for Illinois and California — with 96 and 75, respectively — keeping the two as the fifth and seventh hardest hit US states overall.
The death rate in Massachusetts retreated to 35, following a jump of 239 on Tuesday that far exceeded the rises in all other states.
Since the pandemic began, 101,192 people in the US have died from Covid-19, according to Covid Tracking Project.
Amazon boosts air cargo fleet with lease on 12 Boeing jets
Dave Lee in San Francisco
Amazon is beefing up its presence in the skies: announcing it is leasing 12 additional Boeing 767-300 converted cargo jets from Ohio-based Air Transport Services Group.
The new additions, one of which is already in service, bring the Amazon’s total fleet to more than 80, the company said on Wednesday. The remaining 11 aircraft will be operational by 2021, it said.
“Amazon Air is critical to ensuring fast delivery for our customers — both in the current environment we are facing, and beyond,” Sarah Rhoads, vice president of Amazon Global Air, said.
“During a time when so many of our customers rely on us to get what they need without leaving their homes, expanding our dedicated air network ensures we have the capacity to deliver what our customers want: great selection, low prices and fast shipping speeds.”
The growing fleet comes alongside the opening of new regional air hubs across the US, with the latest, in Florida, due to open this summer. The company plans to open a large “central air hub”, located just outside Cincinnati, next year.