Coronavirus latest: US death toll rises by more than 2,000 for third straight day

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US death toll rises by more than 2,000 for third straight day

The US’s death toll increased more than 2,000 for the third day in the row, taking the total to more than 57,000.

Over the past 24 hours, a further 2,041 people died from coronavirus, according to data compiled by the Covid Tracking Project, down from a record daily increase of 2,700 on Wednesday.

New York had its smallest daily increase in deaths — 306 — since March 30, but the 18,321 fatalities since the outbreak began keep it placed as the hardest-hit state in the country.

New Jersey reported a further 458 deaths over the past 24 hours, a record daily increase that takes its overall tally to 7,228. It is the second-hardest hit state.

Since the outbreak began, 57,266 people have died, according to CTP.

Visa’s payments networks recover, driven by debit card spending

Robert Armstrong in New York

Spending on Visa’s payments networks has recovered in recent weeks, the company said as it reported its results for the March quarter.

Spending by Visa customers bottomed in the last week of March, when it fell almost 30 per cent from a year earlier. But in the week ended April 28, the decline was just over 10 per cent.

The recovery has been driven by debit card spending, which is now up slightly from a year earlier. Spending on credit cards remains deeply depressed.

The company also reported a surge in online payments. Transactions completed without a physical card, excluding travel, were up almost 30 per cent in recent weeks.

The spending patterns match those reported by Visa’s competitor Mastercard earlier in the week. Mastercard’s results spurred a sharp rally in the shares of credit card lenders.

Revenues and earnings at the company, at $5.9bn and $1.38 a share, rose 7 per cent and 6 per cent, respectively in the first three months of the year, as much of the quarter’s activity was not affected by the coronavirus pandemic. Both figures were slightly ahead of Wall Street’s estimates.

Visa’s shares fell one per cent in after-market trading. They are up 16 per cent in the past month.

Gilead says investment in potential coronvirus drug could become ‘material’ this year

Hannah Kuchler in New York

Gilead’s investments in potential Covid-19 drug remdesivir could become material, the company said. Spending on research and development by the biotech group increased in the first quarter because of the cost of clinical trials and a ramp up in manufacturing of the drug. 

The California-based company said it spent $50m on remdesivir R&D in the first quarter, increasing its overall R&D investment to $1.1bn. However, it said this may become a material investment some time this year, as it increases manufacturing to 140,000 10-day courses of the drug by the end of May — and a million by the end of 2020. 

Daniel O’Day, Gilead chief executive, said it is prepared to navigate the uncertainty of the pandemic. “Our focus at this time is on both our work with remdesivir and our ongoing commitments to the people who depend on our medicines today,” he said.

Gilead did not give forecasts for the coming year. Shares fell 1.4 per cent to $84.00 in after-hours trading in New York.  

“The amount, timing and accounting for the investments as well as the potential to recoup Gilead’s at-risk investments at some point in the future are dependent on clinical trial and regulatory outcomes,” it said in its first-quarter earnings release. 

Apple services and accessories boost sales despite store closures

Patrick McGee

Strong growth in Apple services and accessories such as Airpods and watches helped the iPhone maker beat analysts’ estimates and grow revenues slightly last quarter, even though it shut retail stores across the globe because of the coronavirus.

The California tech group reported $58.3bn in revenue for the three months to March, its fiscal second quarter, up 1 per cent from a year ago and well above the $54.5bn expected by analysts.

“We’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” said chief executive Tim Cook.

Apple had expected to grow total revenues between 9 and 15 per cent to as high as $67bn, but it withdrew that guidance in a revenue warning in mid-February as Covid-19 caused factory shutdowns across China. Conditions deteriorated further when Apple closed all of its retail operations outside of China, shifting to online-only sales.

Amazon says second-quarter sales surge could be negated by Covid-19 costs

Dave Lee in San Francisco

Amazon warned coronavirus measures could cost it as much as $4bn in its next quarter, potentially wiping out any gain from a surge in sales.

The ecommerce group delivered $75.5bn in net sales in the first quarter of this year, a company record for this period, and stronger than Wall Street’s estimates. However, its operating expenses increased to $71.5bn, up from $55.3bn a year ago. Net income for the quarter fell 30 per cent.

Looking ahead to its second quarter, Amazon said it expected to report revenues in the region of $75bn-$80bn, in line with analysts’ expectations of $78.9bn.

But citing severe coronavirus-related strain, the company said operating income could swing between a loss of $1.5bn, or gain of the same amount.

Shares were down 5 per cent in after-hours trading.

S&P ends lower but notches biggest monthly gain since 1987

Matthew Rocco in New York

US stocks fell on Thursday after worse than expected unemployment data underscored the collapse in the American economy caused by the coronavirus pandemic.

The S&P 500 closed 0.9 per cent lower. Better than expected earnings results from Microsoft and Facebook helped limit losses on the Nasdaq to 0.3 per cent.

More than 3.8m Americans filed new claims for jobless benefits last week, taking the total seeking unemployment insurance since the start of the lockdown to more than 30m. The figure was worse than the 3.3m expected by economists, and comes as states weigh Covid-19 health risks against the damage being done to economies.

Despite Thursday’s losses, the S&P 500 climbed 12.7 per cent in March to nab its biggest monthly gain since January 1987. Meanwhile, the Nasdaq Composite notched its biggest monthly increase since June 2000.

India: the millions of working poor exposed by pandemic

Amy Kazmin and Jyotsna Singh in New Delhi

Gopal Das has laboured on construction sites in Mumbai for nearly two decades, helping build the office towers of India’s bustling financial capital. Though the rural migrant’s average monthly earnings were just Rs10,000 ($133), most was sent home to support his wife, two teenage children and ageing parents in the impoverished state of Bihar.

But for the past six weeks, Mr Das has felt less like a worker and more like a beggar, struggling to get by without wages during India’s strict anti-coronavirus lockdown. Trapped in Mumbai after a failed effort to get a train home before all public transport was suspended on March 22, the 41-year-old has relied on daily food handouts to survive in the Bandra slum, where he shares a single room with five others. 

Some days, the labourer — who had just Rs500 in his hand when curfew was imposed — receives a daytime meal from a nearby temple, or charities that occasionally distribute food. Otherwise, he depends on the police, who come to the area most evenings to dish out boiled rice and dal to the hungry, restless residents. He says he has not had a cup of tea since lockdown began. 

“I never thought I would have to live like this and depend on people’s charity for food,” Mr Das says.

Read the full article here.

Ford announces health screenings as it readies to reopen plants

Claire Bushey in Chicago

Ford unveiled what it called “the playbook” for keeping employees safe from the spread of Covid-19 when North American plants reopen.

Ford is gradually reopening car plants around the world. Chief operating officer Jim Farley today said the company has learned from restarting plants in China, which are now 90 per cent open, and will apply that to reopening plants in Europe on May 4 and eventually North America.

No date has been set for US plants to reopen. Gretchen Whitmer, governor, has extended Michigan’s stay-at-home order until May 15. Ford’s white-collar employees may start returning to offices in late June and early July.

“The auto industry is America’s economic engine,” Mr Farley said. “So we want to restart as soon as we can, and we want to do it safely.”

The new routine for Ford employees involves doing a health self-assessment before clocking in for work, then having their temperatures taken after they arrive on site. Ford issues each employee a kit each day that includes a mask, face shield, goggles and hand sanitizer. For employees who report feeling poorly on the health assessment, Ford has arranged for hospitals and clinics near their plants to administer tests.

The United Association of Autoworkers said it wants as much testing as possible, while acknowledging tests are not always available or accurate. But for self-reporting health information to work, workers cannot be penalized—that includes not paying them for time spent doing the health assessment. The union said talks continue with Ford.

Allianz abandons 2020 profit target

Olaf Storbeck in Frankfurt

German insurance giant Allianz ditched its 2020 profit target after operating earnings dropped 23 per cent year-on-year between January and March.

In a regulatory statement published on Thursday evening, the Munich-based group said that “the macroeconomic development caused by the current pandemic” will make it impossible to reach the targeted operating profit of €11.5bn to €12.5bn this year, adding that a revised target will be announced at a later point in time.

Allianz’s operating profit plunged 23 per cent year-on-year to €2.3bn, while shareholders’ net profit fell 30 per cent to €1.4bn. The group will report detailed results for the first quarter on May 12.

France releases coronavirus maps for end of lockdown

Victor Mallet in Paris

A third of France is currently in the red category that would prevent release from the coronavirus lockdown on May 11 if the circulation of Covid-19 and the capacity to treat and test patients does not improve by then, according to maps released by health minister Olivier Véran on Thursday.

He released maps showing that 35 of the country’s 101 departments, mostly in the Paris area and the north and east of France, were still marked red, but said the situation would evolve in the days ahead. Even in “green” departments, people could not yet come out of the confinement imposed since March 17.

The maps “don’t change anything about the confinement which remains absolutely necessary until May 11”, Mr Véran said.

Jérôme Salomon, director-general of health, released data showing a continued decline of Covid-19 hospitalisations, intensive care patients and deaths. A further 339 deaths were recorded, bringing the total in hospitals, old people’s and other care homes to 24,376 since March 1.

Spain sets out rules for people exercising outdoors

Daniel Dombey in Madrid

Spain has set out rules for people going for walks or exercising outdoors in the latest, incremental relaxation of the country’s almost seven-week-old lockdown.

Until now, Spanish adults have been forbidden for going outside for sport or recreation in their own right. As of Saturday, they will be allowed to do so, but only in shifts.

People under the age of 70 will be permitted to go for walks and exercise once a day, either between 6am and 10am or between 8pm and 11pm. The walks can be to a maximum of 1km from people’s homes’. Two people living together can accompany each other, but cannot meet up with other friends.

Those over 70 and people accompanied by carers can leave home between 10am and midday or between 7pm and 8pm. Finally, children under the age of 14, who were allowed out last weekend for the first time since the lockdown began in mid-March, will be able to go for walks between 12pm and 7pm – but still have to be accompanied by an adult and can go no further than 1km from home.
The time slots do not apply to villages of fewer than 5,000 inhabitants, which are not perceived to be at the same risks of crowds and hence of infections.

Spain has outlined a complex plan to phase out the lockdown, consisting of successive phases in which bars, restaurants and shops will gradually be permitted to attend to more clients. The government hopes that the phase-out will be complete by late June or mid-July at the latest, but warns that people will still be urged to wear masks on public transport and to practice social distancing until either a vaccine or an effective treatment for coronavirus is in use.

Russian prime minister diagnosed with Covid-19

Max Seddon in New York

Russian prime minister Mikhail Mishustin says he has been diagnosed with Covid-19, the infection caused by the coronavirus.

Mr Mishustin told President Vladimir Putin in a televised video message that he had tested positive for the virus and would isolate himself from the cabinet.

“The tests I submitted came back positive, so […] I must self-isolate,” Mr Mishustin said, adding that he planned to remain in “close contact” with the cabinet.

Mr Putin appointed Andrei Belousov, Mr Mishustin’s deputy, acting prime minister.

Austerity will ‘not be our approach’ to rebuilding economy, says Johnson

George Parker in London

Boris Johnson said he was confident the economy would bounce back strongly but added that austerity would “certainly not be part of our approach” when it came to rebuilding public finances, speaking at the Downing Street press briefing today.

That suggests Mr Johnson views higher taxes — or debt running at high levels for a long period of time — as the government’s likely response to the build-up of borrowing, which could run to hundreds of billions of pounds over the crisis.

The prime minister added that the government would be advocating the use of face coverings as part of the plan to encourage people back to work and to try to slow the spread of the disease.

New York City to shut down subway from 1 to 5am for daily cleaning

Joshua Chaffin in New York

Andrew Cuomo’s daily briefing on Thursday featured a novel occurrence in the coronavirus pandemic: an outbreak of mutual admiration between the New York governor and his frequent rival, New York City Mayor Bill de Blasio, as they announced a sweeping plan to clean the city’s subways.

The plan will involve shutting down the vast system each day from 1am to 5am so that work crews can disinfect every subway car and station. Buses, vans and private-hire cars will be provided to the 10,000 or so people who are currently riding the trains during those hours. Given the closure of the city’s bars and restaurants, most of those riders are essential workers.

The unveiling of the plan represented a rare moment of harmony between the mayor and the governor, who have clashed repeatedly in recent weeks over school closings and other elements of New York’s response to the pandemic.

“The mayor is stepping up, and he’s stepping up in a big way. And I want to applaud him for it,” Mr Cuomo said.

In turn, Mr de Blasio, appearing by video link, commended Mr Cuomo, who holds broad sway over the Metropolitan Transportation Authority, which controls the subway.

Mr de Blasio also expressed hope that the daily shutdown of the system would create an opportunity for aid workers to intervene with the thousands of homeless that have taken up residence underground. Their growing presence has prompted complaints from MTA workers about the safety of their jobs, as well as the befouled state of many trains.

Mr Cuomo has insisted that essential workers should have clean and safe transportation to and from their jobs. The situation has been worsened, the governor acknowledged, by a shortage of police and MTA workers, due to illness.

Air travel could fall by over 70%, says UN agency

Airline passenger numbers could fall by as much as 72 per cent this year as the coronavirus pandemic continues to paralyse global travel, according to the UN’s special aviation agency ICAO.

Aviation could suffer losses of up to $273bn this compared to previously expected gross operating revenues, as the future of national travel restrictions and international trade remain uncertain.

The forecast, released on Thursday, predicted passenger numbers could fall by up to 1.5bn in 2020 down from previously expected levels.

“The projections are significant to many countries now planning their Covid-19 recovery scenarios, given the importance of tourism, global supply chains, and many other air connectivity factors to local socio-economic prosperity,” said the report.

The research was based on a “U-shaped” recovery scenario, which assumes the most pessimistic pathway – a prolonged economic contraction and muted recovery with no possibility of returning to normal growth.

Europe was expected to experience the most severe falls, with a 74 per cent drop in air passenger numbers compared to regular operating levels, followed by Africa and Asia Pacific with a 71 per cent fall. North America will see a 65 per cent reduction in flyers, according to the data.

Johnson says UK is ‘past the peak’ of coronavirus

George Parker and Joshua Oliver in London

Boris Johnson has confirmed that Britain is past the peak of its coronavirus outbreak, even as a further 674 deaths were added to the country’s death toll.

“I can confirm today that for the first time we are past the peak of this disease and we are on the downward slope,” said the prime minister, speaking at his first daily press conference since recovering from Covid-19.

Mr Johnson, in his first setpiece press conference since contracting coronavirus, said he would next week set out a plan to lead the country out of its lockdown. But he insisted he would not risk the prospect of Britain easing its restrictions too early and risking a second peak.

The prime minister said it was as if the country had been going through “some huge Alpine tunnel” and that “we can see the sunlight and pasture ahead of us”. He added: “It’s vital we don’t lose control and slap straight into a second and even bigger mountain.”

Mr Johnson said the government would be guided in its policy by the R number – the measure of how many people each coronavirus victim infected on average. He said the number was now below one, which meant the disease was declining.

Patrick Vallance, chief scientific adviser, said the R rate was now thought to be between 0.6-0.9. He said it was higher in some places, lower in others, but on average it was below one across the country.

The UK performed 81,611 tests for Covid-19 on Wednesday, ahead of today’s deadline of reaching 100,000 per day. The daily testing rate jumped sharply from the previous day, when 52,429 tests were carried out.

The country’s death toll has risen to 26,711 on the second day of figures that include all deaths after testing positive for Covid-19.

A total of 171,253 people have tested positive for coronavirus in the UK, including 6,032 yesterday.

Pemex reports deeper net loss in first quarter on peso weakness

Jude Webber in Mexico City

Mexican state oil company Pemex reported results pummeled by the peso’s fall that pushed it to a deep net loss in the first quarter.

Pemex reported a 562.2bn peso ($23.6bn) net loss in the first quarter, up from a loss of 169.8bn pesos in the fourth quarter and a swing from the 35.7bn peso profit in the first quarter last year.

Pemex highlighted a 2.8 per cent rise in crude production, to 1.759m barrels per day. Output at its six refineries, however, fell 2.7 per cent to 542,000 b/d.
President Andrés Manuel López Obrador, who has made boosting production and becoming self-sufficient in fuel production top priorities and says Pemex will refine 1m b/d in May.

Pemex said it exported 66,000 b/d less in the first quarter to focus on domestic refining. Exports were 1.166m b/d, it said.

Before the 469.2bn first-quarter peso currency loss, exacerbated by swings in foreign exchange markets at the coronavirus took hold, Pemex made an operating profit of 30.2bn peso profit. That was up from a loss of 112.2bn in the fourth quarter but half the 60.7bn peso profit in the first quarter last year.

Pemex said the peso’s plunge did not have cash flow implications for the company but had boosted the value of its debt by 24.2 per cent compared with the end of 2019. Total debt at the end of the first quarter was $104.8bn, it said.

Ebitda was 53bn pesos, compared with 62.2bn in the fourth quarter, giving an Ebitda margin of 18.7 per cent compared with 21.7 in the prior three months.

“In the first quarter, Petróleos Mexicanos continues to generate value, contributing 177.722bn pesos to the federal government via fiscal contributions to support Mexico’s public spending,” it said.

Tfl suggests staggering work hours as London looks to ease lockdown

Bethan Staton in London

Londoners could be encouraged to rearrange their working hours and commuting habits to prevent overwhelming the transport system, as authorities consider how to ease lockdown measures in the capital, Transport for London said on Thursday.

TfL was responding to questions raised by a leaked report from London’s Strategic Coordination Group, reported by the BBC, which said social distancing rules requiring people to keep two metres apart while travelling would likely reduce the capacity of London’s underground network to about 15 per cent.

The network said it was currently working with the government to understand how lockdown measures, which since mid-March have reserved public transport for essential workers, will be lifted, and what social distancing measures will be put in place.

“This will dictate how many people can be safely carried on our services and the extent to which mitigating measures, like re-timing journeys to spread demand out of peak times and managing stations differently, will be needed,” TfL said.

Long-term changes could include staggering start times for work according to sector, changes to school hours and more working from home, as well as an increase in walking and cycling.

US intelligence says Covid-19 is not manmade

Katrina Manson in Washington

America’s intelligence community has said it agrees with the wide scientific consensus that coronavirus was not manmade or genetically modified.

The assessment, released to the public in a rare statement, comes amid fears the intelligence community’s investigations into the origin of coronavirus risk being politicised as the Trump administration has repeatedly accused China of covering up the origins of the disease and refusing to share information with the US.

The statement, issued by the office of the director of national intelligence, said the intelligence community was “surging resources” but was still working to determine whether the outbreak “began through contact with infected animals or if it was the result of an accident at a laboratory in Wuhan”.

US secretary of state Mike Pompeo, former director of the CIA has accused China of destroying virus samples, failing to grant access to the Wuhan Institute of Virology, which was studying bat coronaviruses, and floated the possibility of an accidental lab release.

Free to read

Satya Nadella: crisis requires co-ordinated digital response

Society’s deepest concerns are rooted right now in two connected questions: how do we protect public health and how can we promote an economic recovery that is inclusive? A third question is becoming more important because intensive use of technology has become so central to the other two: how do we preserve the privacy and cyber security needed for trustworthy computing?

The past two months have seen digitisation progression that would ordinarily take two years generated by the demands of remote working and the need for accurate data and intelligence.

Neither the public nor the private sector alone can provide the answers. The challenges we face demand an unprecedented alliance between business and government. Too often we celebrate the ideal of a maverick working alone in a garage solving all our hard problems. We do need those mavericks, but we also need more co-ordinated combinations of government and industry that respond and innovate. That’s true for this pandemic and it is true for global warming, homelessness and other pressing concerns.

Read the Microsoft chief executive’s full piece here.

McDonald’s considers further relief for struggling franchisees

Alistair Gray

McDonald’s has given $1bn worth of relief to its franchisees and is assessing the financial health of those that are particularly struggling as they grapple with a sharp decline in sales in the coronavirus shutdown.

The fast food chain, which has more than 38,000 outlets globally, more than 90 per cent of them franchised, said it had deferred rent and royalty payments for March and April and was reviewing whether to give additional assistance to the worst hit.

On a call with Wall Street analysts to present quarterly earnings, Kevin Ozan, chief financial officer, also said that McDonald’s was seeking to “prioritise” its dividend, which it has increased every year since 1976, as its revenues come under pressure in the pandemic.

Like-for-like sales in the US, where McDonald’s outlets remain open for drive-through, declined 13 per cent in March and are expected to fall about 20 per cent this month.

Overseas operations have been harder hit as outlets have been forced to close entirely in several countries. Sales at McDonald’s “international operated” division — overseas markets where it runs its restaurants, including the UK, France and Italy — fell 35 per cent in March and are expected to slump 70 per cent this month.

“Many of the fully closed markets are now just beginning to reopen,” Mr Ozan said.

Shares in McDonald’s were down 2.3 per cent in morning New York trading.

Airbus to convert passenger planes to carry cargo

Airbus is offering to convert passenger planes to purely cargo-carrying vessels as airlines look to adapt to the collapse in traffic brought about by the coronavirus pandemic.

The aircraft manufacturer said it would modify A330 and A350 wide-body jets so that carriers could use them to fly goods around the world in a bid to offset some of the damage done by the biggest crisis ever faced by the sector.

The move comes a day after Airbus chief executive Guillaume Faury said that the industry would have to learn to “coexist” with the virus.

The modifications involve gutting planes of seats and inflight entertainment systems, and replacing them instead with cargo pallets.

Airbus said the move would help airlines to keep planes flying and alleviate a global shortage of “belly freight” capacity, where passenger planes transport some cargo in their hold, that has come as a byproduct of the widespread grounding.

Like rival Boeing, Airbus has been hit hard by the pandemic. It has slashed production rates by a third and more reductions are set to follow, with thousands of job losses expected. Earlier this week Mr Faury warned staff that the company’s survival could be at stake.

Fed expands eligibility for $600bn business support scheme

James Politi in Washington and Colby Smith in New York

The Federal Reserve has moved to expand eligibility for a new $600bn lending plan designed to help medium-sized “Main Street” businesses access liquidity during the coronavirus pandemic, following concerns that the original criteria were too limited.

The US central bank will now allow both larger and smaller companies – and riskier borrowers – to access the scheme compared to its previous guidance regarding the plan.

The Fed said businesses with up to 15,000 employees or with annual revenue of up to $5bn are now eligible for the programme. Initially, the Fed said it would purchase up to $600bn in loans of up to four years for businesses with no more than 10,000 employees or with revenues of $2.5bn or less. The central bank also lowered the minimum size of the loan for two of its schemes, reducing the amount to $500,000 from $1m.

The central bank also unveiled a third loan option to better support riskier borrowers.

The changes came after the Fed received more than 2,200 letters from individuals, businesses, and nonprofits, which flagged potential areas of improvement to ensure its efficacy. The central bank added that it was evaluating “a separate approach” to meet the “unique needs” of non-profit groups.

Reliance profits suffer from falling oil demand

Benjamin Parkin in New Delhi

Reliance Industries, India’s oil-to-telecom conglomerate, announced that its profits fell almost 40 per cent in the most recent quarter as its core refining business was hit by “unprecedented demand destruction”.

Reliance, owned by India’s richest man Mukesh Ambani, last week announced that it had secured a $5.7bn investment by Facebook for a 10 per cent stake in its fast-growing telecoms business Jio. The company also has India’s largest retail business.

But growth in Jio has been offset by stress in global oil markets. In its results for the quarter ended March, Reliance reported that its net profit fell 37 per cent to Rs65bn ($870m) from the same time a year earlier.

The company lost money on its oil inventories due to the drop in prices, with demand for its products also tumbling as India entered a lockdown to stop the spread of the coronavirus in March.

Greggs cancels trial re-opening, fearing too many customers

Chris Tighe in Newcastle

Greggs, the UK bakery retailer, has dropped its plan to reopen 20 shops in the Newcastle area in a “controlled trial” early next week, saying it fears “excessive numbers of customers” could affect its ability to test coronavirus-related social distancing and safety measures.

Chief executive Roger Whiteside said Greggs would now operate the trial “behind closed doors only” with walk-in customers invited “only when we can be confident of doing so in the controlled manner we intended”. In an email to staff posted on the company website, Mr Whiteside said: “It was never our intention to attract high levels of customers to these trial shops.”

Greggs, which employs 25,000 people, has furloughed all its retail staff. The 20 trial shops, staffed by volunteers, will enforce social distancing for workers as well as customers. Employees will be given PPE including gloves and visors. No revised date for when Greggs will start serving the public has been given.

Launch of new cricket tournament The Hundred postponed

Samuel Agini in London and Benjamin Parkin in Mumbai

The England and Wales Cricket Board has decided to postpone the launch of a new competition that was meant to help revive interest in the sport with quicker and more accessible gameplay.

The Hundred has been delayed until the summer of 2021, the ECB said on Thursday, having originally been scheduled to hold its inaugural tournament this July.

The decision comes after the governing body last week extended the suspension of the cricketing season to at least the end of June.

Delaying the launch of the new 100-ball tournament is a blow to the ECB’s ambitions of drawing in a new generation of fans and players of the game. Social distancing measures, travel restrictions, and the need to hold events without fans in attendance were among the reasons for the delay highlighted by the ECB.

“As we emerge from the fallout of Covid-19, there will be an even greater need for The Hundred,” said Tom Harrison, chief executive of the ECB. “Our survival as a game, long-term, will be dependent on our ability to recover financially and continue our ambition to build on cricket’s growing fan base. That need has not gone anyway, if anything, it is now more critical.”

Mr Harrison added the Hundred would also help to generate millions of pounds in revenue across the game.

Speaking before confirmation of the delay, Daniel Gidney, chief executive of Lancashire Cricket Club, which will be represented by Manchester Originals in the new tournament, said:

The Hundred is very important for the UK, for world cricket. It’s something new, something fresh, particularly for a younger, more diverse audience…You can only launch once, you can’t launch a tournament twice.

Downing Street hints UK’s lockdown could be extended until June

Laura Hughes in London

Downing Street has hinted the lockdown could be extended until June as it urged the public to be “realistic” about the consequences of easing measures.

A spokesman cautioned on Thursday that the “worst thing we could do is relax the social distancing measures too soon” and allow the virus to spread in an exponential way.

Questioned on whether the lockdown could be extended until June, a spokesman said: “I think we will have to wait for the review to take place and I don’t think it is wise for me to pre-empt that.”

What you’ve obviously heard from Chris Whitty is that this is a disease that is going to be around for a significant amount of time – he’s said we have to be realistic, we’re going to have to do a lot of things for a long period of time…Let’s not pre-empt the review but, as the PM himself has said, the worst thing we could do is relax the social distancing measures too soon and throw away all of the progress which has been made thanks to the hard work and sacrifice of the British public.

No 10 added that ministers were “working hard” to carry out 100,000 coronavirus tests by the end of the day.

“The target is for 100,000 tests today and the health secretary and all of his team are working hard to hit it,” the spokesman said.

On the eve of the Thursday deadline, the government was still only halfway towards meeting the target. On Wednesday, daily capacity stood at 73,000, but just 52,429 tests had been carried out.

Consumer spending falls by most on record in March

US personal spending in March plunged by the most on records going back more than six decades, data on Thursday showed as cornavirus lockdowns pushed Americans to cut back on consumption.

Personal-consumption expenditures, or household spending, tumbled 7.5 per cent in March from the previous month, the Commerce Department said. That was the steepest monthly decline since 1959 and compared with economists’ expectations for a 5 per cent drop.

That came as incomes slid 2 per cent month-on-month in March from the previous month, the Commerce Department said. That compared with economists’ expectations for a 1.5 per cent drop.

Lagarde says scale of eurozone contraction ‘unprecedented in peacetime’

Christine Lagarde, the president of the European Central Bank, said the speed and scale of the collapse in economic output currently being experienced by the eurozone was “unprecedented in peacetime”.

Speaking after the ECB launched a fresh push to lend to banks at ultra-low rates, Ms Lagarde said:

Measures to contain the spread of the coronavirus Covid-19 have largely halted economic activity in all the countries of the euro area and across the group.

Ms Lagarde said that modelling suggested euro area GDP would fall by between 5 and 12 per cent this year and that as countries began to open back up, the speed and scale of the recovery remained highly uncertain.

Her comments come after data earlier on Thursday showed that the eurozone’s economy shrank by the fastest rate on record in the first quarter.

G7 aims for co-ordinated response when lockdowns are lifted

James Politi in Washington

G7 finance ministers discussed “strategies to accelerate economic activity once our economies begin reopening” on a call held on Thursday morning, the US Treasury department said.

The readout of the call arranged by Steven Mnuchin, the US Treasury secretary, points to an attempt by advanced economies to co-ordinate policies as countries emerge from the worst of the coronavirus outbreak and begin lifting restrictions after the rolling shutdowns that have already led to sharp contractions in output.

The US has the rotating leadership of the G7 this year. “As directed by G7 leaders, G7 finance ministries are in regular contact to co-ordinate on timely and effective actions in response to the economic fallout of the Covid-19 pandemic,” the US Treasury said in a statement.

The Finance Ministers discussed domestic and international economic responses under way, strategies to accelerate economic activity once our economies begin re-opening, in line with necessary health and safety measures.

In addition, the finance ministers appeared to make a push for more cross-border investments within the group. “The finance ministers also discussed the importance of foreign direct investment and the use of investment screening mechanisms to identify national security risks,” the US Treasury said.

UK government accused of burying bad news on apprenticeships

Jonathan Moules, Business Education Correspondent

Apprenticeship providers have accused the UK government of trying to bury bad news after the Department for Education announced it was cancelling monthly updates on the number of people starting workplace training schemes.

The latest numbers, published on Thursday, show that in the six months to January there was a 12.1 per cent drop in new apprentices among under 19-year-olds to 58,100 compared with a year earlier.

Future figures, which will cover the period of the coronavirus lockdown, are expected to be considerably worse as companies have struggled with maintaining existing employee numbers let alone taking on new recruits.

Apprenticeship numbers plummeted after the government introduced a new funding system for workplace training, using a levy on employers with staff payrolls over £3m equivalent to 0.5 per cent of their annual wage bill.

There were 26 per cent fewer apprenticeship starts in the first year after the levy was introduced in April 2017 than in the same period between 2015-16. Numbers have barely recovered since.

The move to replace the monthly statistics with less frequent updates was condemned by apprenticeship training providers and opposition MPs.

“I am struggling to understand what the huge bureaucratic task is that prevents them continuing to publish this data monthly,” Toby Perkins, shadow education minister, said.

“New apprenticeship starts are falling off a cliff and the more time the government vacillates over the Covid-19 guidance, the worse it’s going to get,” Mark Dawe, chief executive of the Association of Employment and Learning Providers, said.

A Department for Education spokesperson said the cancellation of monthly figures was a “temporary measure” in response to the coronavirus pandemic.

“We will continue to publish headline statistics, including on apprenticeship starts, just not on the previously advertised dates,” the spokesperson added.

During this period we will continue to publish the end-of-year releases as normal, allowing a fuller picture of the period affected by the pandemic.

Kellogg sales surge as consumers turn to cereal

Alistair Gray

A surge in demand for breakfast cereal in the coronavirus lockdown has led sales to jump at Kellogg, maker of Special K, Rice Crispies and All-Bran.

Kellogg estimated that more than half of the 8 per cent rise in organic sales it recorded in the three months to the end of March was attributable to changing consumer behaviour in the pandemic.

Demand increased significantly in March, and Kellogg said consumption accelerated across its main categories and brands, which also include Pop-Tarts, Froot Loops and Apple Jacks. The company posted net income of $347m, up from $282m last year, on sales of $3.4bn .

Americas: what you might have missed

For our readers just tuning in, here is a snapshot of the latest coronavirus news from FT reporters around the world.

European banking stocks fell in the wake of the European Central Bank’s move to bolster the region’s financial system, dragging stock markets to their lows of the day. The ECB launched an ultra-low lending rate of minus 1 per cent, in a move to bolster the European banking system’s access to funds and to avoid a drying up of credit.

Twitter joined Google and Facebook in posting a resilient performance in March, with first-quarter revenues increasing 3 per cent year-on-year to $808m, as usage of the social media platform surged through the pandemic.

Mexico’s economy shrank 1.6 per cent in the first quarter signalling what analysts forecast could be the most brutal recession in a century for Latin America’s second biggest economy.

Oil companies announced 1.6m barrels per day of production closures since last month when crude prices crashed from above $50 per barrel, in an early sign of the devastation yet to come.

The eurozone economy plunged into its largest contraction on record as member countries shut businesses to contain the pandemic. Eurozone GDP fell 3.8 per cent in the first quarter with many countries reporting record contractions.

McDonald’s in Singapore chooses to extend its closure indefinitely

Stefania Palma in Singapore

McDonald’s has extended the closure of its Singapore operations indefinitely after suspending business activity earlier this month as per government directives.

The fast-food chain said in a Facebook post that while it had been allowed to reopen on May 4, it would extend its closure “for the safety and wellbeing of our employees and customers … We will continue to monitor the Covid-19 situation in the community before determining an appropriate time for us to reopen”.

Singapore’s health ministry earlier this month directed McDonald’s to suspend all operations after seven workers infected with coronavirus had worked at nine different outlets. The company at the time said it was following the ministry’s preventive instructions with safety as a “top priority”.

The health ministry said it told McDonald’s it could resume operations on May 4 if no new coronavirus cases had emerged among its staff up to May 3. “Upon resuming operations, McDonald’s will have to ensure they implement health and safe distancing measures at all outlets,” it added.

McDonald’s said that all seven employees were recovering and that no other staff had tested positive.

Competitors such as Burger King or KFC remain open for take out and delivery services under Singapore’s near total lockdown, which will run to June 1 and under which dining in is prohibited.

US jobless claims hit 30m on cornavirus lockdowns

Demetri Sevastopulo in Washington and Mamta Badkar in New York

More than 3.8m Americans filed new unemployment benefit claims last week, bringing the six-week total since the start of the Covid-19 pandemic to nearly 30m, as companies struggle with lockdowns and feeble consumer demand.

The labour department on Thursday said the number of initial claims had fallen from 4.44m the previous week. But the figure underscored the collapse in the economy sparked as states try to curb the spread of the virus by implementing stay-at-home orders across the US and companies lay off, or furlough, their workers in response.

The growing numbers of unemployed came one day after the government said the economy had shrunk at an annualised 4.8 per cent in the first three months of the year, the sharpest fall since the end of 2008. Illustrating the harsh jobs landscape, Boeing on Wednesday said it would cut its 160,000-strong workforce by 10 per cent.

Kevin Hassett, a White House economic adviser, this week said the unemployment rate would rise steeply to as much as 20 per cent by June, which would be the highest figure since the Great Depression nine decades ago.

The latest jobless report comes as states across the country attempt to balance health and economic risks as they debate when they should start re-opening their economies.

Tapestry to start reopening North American stores in May

Tapestry, the company behind Coach and Kate Spade said it will begin reopening stores in North America in May as it reported quarterly sales fell by a fifth and warned that “consumer behaviours are changing”.

The luxury handbag and accessories company said 90 per cent of its stores were either closed or operating on reduced hours during its fiscal third quarter ending March 28. Tapestry said beginning on May 1, the company will reopen about 40 stores in North America for contactless curbside or storefront pickup service. The company has already reopened five locations in Germany and Austria and is planning a phased reopening in Europe.

Earlier this month, Tapestry said it would cut 2,100 part time jobs effective April 25 and expected to furlough more in-store staff in North America if stores didn’t re-open by the end of May. On Thursday, the company announced it “is taking additional actions to further streamline its organisation, including reductions in its corporate and retail workforce”, which will result in pre-tax charges of about $55m to $70m, primarily related to cash severance costs, which will be reflected in the beginning of the fourth quarter.

Net sales fell nearly 20 per cent from a year ago to $1.07bn. The company swung to a net loss of $677m or $2.45 a share, from a profit of $117m or 40 cents a share in the year ago quarter.

“We entered the calendar year with strong underlying momentum. As the novel coronavirus expanded across the globe, our results materially weakened,” chief executive Jide Zeitlin, said.

Looking ahead however, the company cautioned that “the impact of the Covid-19 pandemic transcends near-term results” and said “consumer behaviours are changing”.

European stocks fall following ECB

European banking stocks fell in the aftermath of the European Central Bank’s move to bolster the region’s financial system, dragging stock markets to their lows of the day.

The regional benchmark Stoxx Europe 600 index was 1 per cent lower, with the sector tracking the banking industry accelerating losses and down more than 4 per cent.

Among individual lenders, Société Générale fell 9 per cent, having already been under pressure following weak results, while Credit Agricole lost 7 per cent and Commerzbank was 2.5 per cent down.

The central bank will inject money into the financial system by lending at minus 1 per cent to banks. It held rates at minus 0.5 per cent and stuck to its plans to buy more than €1tn of assets this year.

The euro was little changed, down 0.1 per cent against the US dollar.

American Airlines reports $2.2bn loss

American Airlines reported a $2.2bn net loss — far worse than Wall Street expected — and said it will burn an average of $70m per day in the second quarter as the pandemic hits airlines.

Analysts polled by FactSet had predicted a net loss of just $406m, down from last year’s first quarter net income of $185m. Instead, earnings per share of $0.41 in the first quarter of 2019 fell to a loss per share of $5.26. Operating revenue tumbled nearly 21 per cent to $7.7bn. The airline said its cash burn should decline to $50m per day for the month of June.

The losses for the largest US airline come as Covid-19 has hit the travel industry particularly hard, with United, Delta and Southwest airlines all reporting quarterly losses.

“Never before has our airline, or our industry, faced such a significant challenge,” said chief executive Doug Parker. “We have moved quickly and aggressively to reduce our costs and bolster our liquidity.”

Mr Parker said in a memo that almost 39,000 employees had chosen to take early retirement, paid leave or reduce their work hours. The airline also plans to retire older, less fuel-efficient aircraft this quarter.

American is slated to receive about $10.6bn from the US Treasury, including $5.8bn to support payroll and $4.8bn in collateral-backed loans. The airline said it will end the second quarter with $11bn in liquidity.

UK fashion chains Oasis and Warehouse collapse

Patricia Nilsson in London

Over 1,800 employees at high street chains Oasis and Warehouse will lose their jobs, after administrators failed to find another buyer for the business.

The fashion group operating the brands has sold some stock and intellectual property to retail restructuring group Hilco Capital, but its 92 stores across the UK will close.

“Covid-19 has presented extraordinary challenges which have devastated the retail industry,” said Rob Harding, joint administrator at Deloitte.

It is with great sadness that we have to announce a sale of the business has not been possible and that we are announcing so many redundancies today.

Oasis, which includes Warehouse, is owned by Kaupthing, the “bad bank” running off the assets acquired by Icelandic banks and other investors before the global financial crisis. Last year, it sold the Karen Millen and Coast brands to Boohoo, the online retailer, via a “pre-pack” administration.

ConocoPhillips announces second output cut in under two weeks

Derek Brower in London

ConocoPhillips, the US oil producer, on Thursday announced its second cut to production in less than two weeks, saying its output in June would drop by 460,000 barrels a day — more than a third of the company’s output of 1.3m b/d and greater than the amount most Opec countries pledged to remove in the cartel’s historic supply deal earlier this month.

The announcement came as the US’s largest independent oil producer by market capitalisation reported a $1.7bn loss for the first quarter of 2020, compared with $1.8bn earnings a year earlier. Falling crude prices triggered by the collapse in oil demand as economies locked down to prevent the spread of the coronavirus hit the company, including lowering the value of its near-17 per cent stake in Cenovus Energy, the Canadian oil sands producers.

The company, with a presence across North America’s big oil-producing regions, said it would voluntarily curtail 265,000 b/d in May, including 100,000 b/d from its Surmont oil sands project in Canada. In June, the cuts would increase to 460,000 b/d, with 260,000 b/d of cuts to be made in the Lower 48 and the rest in Canada and Alaska. The output reductions in June are more than double the volume announced by Conoco two weeks ago.

“Future voluntary curtailment decisions across our areas of operations will be made on a month-by-month basis,” the company said, adding that it expected “some level of additional curtailments from infrastructure constraints, actions from partner-operated assets or government mandates”. Authorities in Texas and North Dakota are considering imposing cuts on producers in their states.

While the company’s first-quarter loss exceeded analysts’ expectations, adjusted earnings of $500m yielded earnings per share of $0.45, more than double the consensus forecast. Cash from operations of $1.6bn was slightly beneath expectations. The company kept its dividend of $0.42 per share. Total distributions to shareholders, including $700m in share buybacks, amounted to $1.2bn.

Most Britons think government was ‘too late’ to act, says survey

As many as two-thirds of people in the UK believe the government has acted too slowly in responding to coronavirus, according to a poll that came as ministers prepared their guidance on how the lockdown might be safely lifted.

Over 65 per cent of respondents said they thought Westminster had not moved fast enough to implement the shutdown measures announced on March 23, said the Ipsos Mori survey, as the national lockdown dragged into its sixth week.

These measures included orders for individuals to stay at home, except for exercise, medical trips, essential shopping and work, forcing large parts of the UK economy to close.

Just 2 per cent of respondents said the strict measures had come too soon, while 26 per cent believed the government had got the timing right.

This week, Prime Minister Boris Johnson told the public that the infection rate of the virus is being driven down, but any easing of restrictions will be gradual to avoid the health and economic risks of a second big peak.

Altria withdraws guidance and suspends share buybacks

Altria, the tobacco group behind Marlboro cigarettes, has become the latest company to scrap its full-year earnings guidance and halt share buybacks as the coronavirus pandemic leaves it unsure of how demand will pan out for the year.

The cigarette maker withdrew its outlook for 2020 and also ditched targets for earnings growth in the coming years, pointing to “the uncertainties related to the impact of the Covid-19 pandemic”.

It also said that in light of the pandemic it would rescind a $1bn share repurchase programme that had a balance of $500m remaining, but retained plans to pay a dividend.

The group said its supply chain had been largely unaffected by lockdowns but that it would monitor economic trends that are likely to affect demand over the coming period, with higher levels of unemployment set to push people into buying cheaper brands of cigarettes.

Altria reported a 13 per cent rise in revenue during the first quarter of the year to $6.3bn, driven by a jump in demand and prices of cigarettes. Net earnings were up 39 per cent at $1.5bn.


ECB seeks to loosen lending conditions with fresh measures

Martin Arnold in Frankfurt

The European Central Bank has launched a fresh push to lend to banks at ultra-low rates, after data published earlier on Thursday showed that the eurozone’s economy shrank by the fastest rate on record in the first quarter.

In a move to bolster the European banking system’s access to funds and to avoid a drying up of credit, the ECB said it would lend money at minus 1 per cent to banks and it launched a fresh round of unconditional repurchase operations to inject liquidity into the financial system.

The ECB kept its main deposit rate on hold at an all-time low of minus 0.5 per cent and stuck to its plans to buy more than €1tn of assets this year to shore up financial markets and keep borrowing costs low for households, businesses and governments.

The decision follows a similar move by the US Federal Reserve on Wednesday, and indicates that major central banks have decided to pause and take stock of the many ultra-loose monetary policy measures they have launched in response to the coronavirus crisis.

Coors Light owner sinks to a loss as sales drop 8.4 per cent

Molson Coors, the brewer behind Coors Light and Carling, posted an 8.4 per cent decline in revenue in the first quarter, as the shutdown of bars and pubs reduced almost a quarter of its sales to near-zero.

The company said that it does not expect sales of its drinks in shops to fully offset the loss from on-site consumption in restaurants and bars, despite performing strongly as consumers stocked up their pantries.

The North American brewer said that it made a GAAP net loss of $117m in the first three months of the year, adding that the board was weighing up whether to suspend, lower or temporarily eliminate its dividend.

It expects negative trends in volume, net sales and mix to continue at least through the end of the year and negative trends for drinking in bars to continue as long as social distancing continues to be practised.

Molson Coors chief executive Gavin Hattersley said that: “Like everyone else, the full impact and what our new normal looks like going forward is still uncertain, but coronavirus has had, and will have, a material impact on our business.”

Kraft Heinz posts biggest sales growth since group’s creation in 2015

Alistair Gray

Kraft Heinz has produced its biggest rise in quarterly sales since the mega-deal that created it, after consumers who have turned away from its processed foods in favour of fresher and healthier alternatives turned back to its products during the pandemic.

The group behind Kraft macaroni and cheese, Oscar Mayer meats and Heinz ketchup has long been grappling with changing customer tastes and its deteriorating finances were highlighted earlier this year when its credit rating was downgraded to junk status.

However, Kraft Heinz said on Thursday that it produced net sales of $6.2bn in the three months ended March, a rise of 6.2 per cent from a year ago on an organic basis. It was the biggest quarterly rise since the group was formed in 2015 by the combination of Kraft and Heinz, a deal engineered by Warren Buffett and investment firm 3G. Demand accelerated in March across all categories in the US, the company said.

Kraft Heinz said it expected net sales to rise by a “low to mid-single-digit” percentage in the second quarter, but cautioned that the impact of the pandemic on full-year results was uncertain.

Net income fell from $405m in the year ago quarter to $381m, in part because the figures a year ago were supported by a disposal.

Twitter usage surges during pandemic and revenues top forecasts

Tim Bradshaw in London

Twitter joined Google and Facebook in posting a resilient performance despite advertisers slashing their budgets in March, with first-quarter revenues increasing 3 per cent year on year to $808m even as it swung to a narrow loss.

Like its Silicon Valley rivals, Twitter is benefiting from a surge in usage during the coronavirus pandemic. Twitter’s audience jumped by 24 per cent, with average monetisable daily active users hitting 166m in the first quarter. Twitter attracted more users both in the US and overseas.

Twitter said that its advertising revenue fell 27 per cent between March 11, when lockdowns began in the US, and March 31, when the quarter ended. “The downturn we saw in March was particularly pronounced in the US, and advertising weakness in Asia began to subside as work and travel restrictions were gradually lifted,” Twitter said in Thursday’s letter to shareholders.

Nonetheless, news that Twitter beat Wall Street’s revenue forecasts sent its shares up another 8 per cent in pre-market trading on Thursday to around $33.50, even after closing up 8 per cent on Wednesday.

“We’ve delivered our strongest ever year over year mDAU growth,” said Jack Dorsey, Twitter’s chief executive. “In this difficult time, Twitter’s purpose is proving more vital than ever. We are helping the world stay informed, and providing a unique way for people to come together to help or simply entertain and remind one another of our connections.”

Twitter said it saw a “significant acceleration” in usage in March, with audience numbers stabilising by the end of the month. That increase in usage helped to offset falling ad prices, with cost per engagement falling 19 per cent year on year.

However, Twitter also posted its first quarterly net loss in more than two years at $8.4m, down from net income of $190.8m in the same period a year ago. Costs and expenses increased 18 per cent to $815m.

Twitter said that it had shifted internal resources towards its advertising products, while also reducing hiring.

Coronavirus hits ethnic minorities harder, says London NHS study

Clive Cookson in London

Further evidence that black and minority ethnic groups are suffering disproportionately from Covid-19 in the UK comes from analysis of 520 coronavirus patients in three London hospitals run by Imperial College Healthcare NHS Trust.

The study by Imperial’s infectious disease modelling centre found that, of those patients whose ethnicity was known, 52 per cent were non-white. The comparable figure for last year’s pre-Covid emergency admissions was 45 per cent non-white.

Pablo Perez-Guzman, one of the study’s authors, said:

People of BAME groups in our population were younger and overall had fewer known comorbidities than those of white ethnicity. Despite this, we identified a trend suggesting higher odds of hospital mortality amongst those of black compared to white ethnicity.

Mexico’s economy shrinks signalling a potentially brutal recession ahead

Jude Webber in Mexico City

Mexico’s economy contracted 1.6 per cent in the first quarter of 2020 compared with the previous three months, and 2.4 per cent year-on-year. This reflects the start of what analysts forecast could be the most brutal recession in a century for Latin America’s second biggest economy sparked by the coronavirus pandemic.

Market analysts had forecast a 1.7 per cent contraction compared with the fourth-quarter of 2019. Mexico’s economic fortunes are closely entwined with those of the US, where gross domestic product fell by a bigger-than-expected 4.8 per cent in the first three months of this year.

Mexico has shut down most of its economy since mid-March and although it hopes to reopen key supply chains soon, quarantine is expected to last until the end of May for most of the country. As a result of the shutdown and lack of demand, economists see GDP contracting by as much as 12 per cent this year.

But even before coronavirus, Mexico’s economy was on the ropes. It shrank 0.1 per cent in each of the first, second and fourth quarters of 2019 and in the third quarter, growth was zero. Overall, the economy contracted 0.1 per cent last year.

The government, which is betting on social programmes and small loans to help businesses and people weather the Covid-19 downturn, sees a contraction of as much as 3.9 per cent this year. But President Andrés Manuel López Obrador insists Mexico has “tamed” coronavirus and flattened the infections curve, and that the crisis will be temporary before the economy rebounds.

Private equity group Carlyle reports $1.2bn investment loss

Mark Vandevelde in New York

The Carlyle Group recorded a $1.2bn investment loss and said it was withdrawing all prior financial guidance, as the fallout from the coronavirus pandemic “reduces our ability to accurately forecast near-term financial results”.

The losses were severe enough to completely wipe out the accrued “carry” on three funds, meaning that Carlyle and its executives would receive minimal performance fees or other sweeteners if the investments were realised at current valuations.

“The whole world is managing through this unprecedented time and the human toll is real,” said Carlyle’s co-chief executives, Kewsong Lee and Glenn Youngkin.

Investors typically pay an annual fee on their investments in private equity funds, as well as handing over a share of the profits if certain performance thresholds are met.

Carlyle generated $356m in management fees in the first quarter, comfortably ahead of its cash costs, and said it “continue[s] to effectively manage and operate our business with sufficient liquidity”.

But setbacks on its investment portfolio mean that Carlyle is no longer recognising future performance revenue from three of its funds, and reducing accrued performance revenues across the firm by 34 per cent.

The results provide an early sign of how Carlyle’s $143bn balance sheet, one of the biggest in America’s fast-growing private capital sector, could be impacted by the coronavirus pandemic and an associated shutdown. Similar economic damage is likely to be wrought on the large portion of Carlyle’s investment portfolio that is owned by its clients.

Still, the setback reflects a writedown of assets that could yet recover in value and often do not have to be sold for years.

Comcast boosted by jump in internet usage as people stay home

Anna Nicolaou in New York

Comcast benefited from a surge in demand for high speed internet as millions of people began working from home, yielding its fastest quarterly broadband growth in 12 years.

But the Philadelphia cable giant’s media business weighed on results, as revenues plunged in the double digits for its shuttered Universal theme parks and a film studio with no cinemas to debut its movies.

In the first three months of the year, Comcast added 477,000 high-speed internet customers but lost 409,000 pay-TV customers, as people continued to cancel their cable boxes in favour of online alternatives. This was more than triple its losses a year ago, when Comcast bled 121,000 pay-TV customers.

Comcast said that web traffic on its broadband internet connections jumped 33 per cent in the quarter, as more people worked from home and conducted video calls on Zoom. The company made $5bn in sales from residential internet subscribers, up more than 9 per cent from last year.

However, this was offset by heavy losses at NBCUniversal, the media group that owns the Universal film studio and theme parks, as well its broadcast and cable channels.

With cinemas shuttering across the world during the quarter, revenues at Universal’s movie studio dropped 22 per cent from a year ago to $1.4bn. Its theme parks, which have also been closed due to health concerns, saw sales dive 32 per cent to $869m, while adjusted earnings shrunk to $76m, a small fraction of the $498m they earned in the same period a year ago.

Overall, Comcast delivered a year-on-year decline in both net income and revenues. The company reported $3.3bn in net income on $26.6bn in revenues in the quarter ending in March.

Italy’s GDP falls by sharpest pace on record

Valentina Romei in London

Italy’s economy shrank at its fastest pace in nearly 20 years as output was choked by the government’s stringent measures to contain the spread of coronavirus.

The country’s GDP fell by 4.7 per cent in the first quarter compared with the previous quarter, according to Italy’s Office for National Statistics (Istat), marking the largest contraction since records began in 1996. This is steeper than the contraction seen in the early months of 2009 during the financial crisis.

The fall was just under the 5 per cent forecast by Reuters, and was a less severe contraction than that of Spain and France, which reported a fall of more than 5 per cent over the same period.

Italy’s economy, the eurozone’s third-largest, contracted 0.3 per cent in the last quarter of 2019, which means Italy is now in recession, defined as two consecutive quarters of output contraction — its fourth in just over a decade.

Italy was the first western country to be hit by the pandemic and its lockdown was more stringent and introduced earlier than in most other European countries.

Last week, the cabinet approved a deficit of 10.4 per cent of GDP this year, more than double its peak during the global financial crisis, prompting the credit agency Fitch to cut Italy’s credit rating to just above junk.

Istat said there were risks to data quality as the pandemic continued to pose “obstacles” around data collection.

Oil companies announce 1.6m b/d of production closures since March

Oil companies have announced 1.6m barrels per day of production closures since March when crude prices crashed from above $50 per barrel, in an early sign of the devastation that lower demand due to measures to prevent the spread of coronavirus will wreak on the industry.

The data from energy consultancy Wood Mackenzie comes a day ahead of the official start of 10m b/d in production cuts agreed by Opec and fellow producers including Russia coming into force.

The voluntary curbs on output are an attempt to rebalance the 100m b/d oil market but they are widely thought to be insufficient to counteract the 30 per cent fall in consumption without a pick-up in economic activity or mass closure of production wells.

The 1.6m b/d figure is conservative since it is based only on company guidance and it excludes national oil companies that do not disclose information and smaller-scale producers. A further 0.4m b/d of production development activity has been deferred for this year, Wood Mackenzie estimates.

Capital expenditure across the industry has been slashed by about a quarter for 2020, lowering the level of future supply, data from the group shows. Its data is yet to include the latest cuts to production and capex announced this week.


Britain’s largest car factory to stay closed until at least June

Peter Campbell, Global Motor Industry Correspondent

Nissan will not reopen its Sunderland car plant until at least June, several weeks after other UK sites will have restarted production.

The site is Britain’s largest car factory, employing about 6,000 people.

“We are currently planning a phased resumption of production in early June,” the Japanese carmaker told staff on Thursday.

“During this period the majority of plant employees will remain furloughed, and we are grateful for the government support that has enabled us to take this action,” it added.

Several of Britain’s plants are planning to re-open next month, with Mini and Jaguar Land Rover re-opening some facilities on May 18. Rolls-Royce will open its plant this coming Monday, while Aston Martin will re-start its St Athan site on Tuesday.

Some of Europe’s largest plants — include Volkswagen’s flagship site at Wolfsberg — have already re-started production, though at lower levels than before the lockdown.

20 suitors for collapsed Virgin Australia

Jamie Smyth in Sydney

The administrator of Virgin Australia said 20 parties had expressed an interest in investing in the airline, which collapsed earlier this month when Canberra rebuffed its request for a A$1.4bn (US$920m) bail out.

Deloitte told an online creditors’ meeting that eight parties had signed non-disclosure agreements and already had access to an information memorandum and a data room. Negotiations were continuing with the remaining parties, it said.

Local media have named private equity group BGH Capital and Australian billionaire Andrew Forrest, founder of Fortescue, among the potential bidders for the nation’s second-largest airline. Virgin owes A$6.8bn to an estimated 12,000 creditors.

Vaughan Strawbridge, Deloitte partner, said he was encouraged by the level of sophisticated party interest in the sale of Virgin. He said he was confident the target of achieving a sale by the end of June was achievable.

Deloitte has appointed Morgan Stanley, alongside Houlihan Lokey, to run the sale process.

Taiwan hit by economic slowdown

Kathrin Hille in Taipei

Growth in Taiwan’s economy slowed sharply in the first quarter as the coronavirus pandemic took its toll.

Gross domestic product increased by 1.54 per cent in the three months to March 31 compared with the same period last year, when it grew 1.84 per cent, the government said on Thursday in its advance estimate of quarterly GDP. The latest figure was about 0.3 percentage points less than forecast.

Exports dropped by 2.89 per cent, and imports were down by 4.87 per cent. The cabinet’s statistics agency pointed to a 0.97 per cent drop year-on-year in private consumption particularly in the service sector as people were going out less.

Taiwan has avoided the strict lockdowns applied in China, the US and many European countries as its early border closures and elaborate quarantine and contact tracing programmes have succeeded in containing the outbreak.

The country counts a total of just 429 confirmed cases and six deaths from the disease, and has not registered new infections for the last five days.

Janus Henderson’s assets fall a fifth as it keeps dividend intact

Owen Walker in London

Janus Henderson’s assets dropped by a fifth in the first three months of the year, as the coronavirus pandemic took its toll on the global active fund manager.

The group, which has suffered a steady tide of outflows since it was formed through a mega-merger three years ago, saw its assets under management fall from $375bn to $294bn in the first quarter due to a combination of market moves and client withdrawals. This led Janus Henderson to make an operating loss of £332m.

But the company, which is listed in New York and Sydney, and headquartered in London, maintained its $0.36 dividend and completed $31m of share buybacks in the year to March 31.

“We are managing our expenses carefully and the focus we have had on cost discipline will also support our positioning through this period,” said Dick Weil, Janus Henderson’s chief executive.

Spain’s daily death toll falls to six-week low

Daniel Dombey in Madrid

Spain has reported its lowest coronavirus death toll in almost six weeks, as the country prepares to ease its harsh lockdown and slowly transition to a “new normal” at the end of June or mid-July.

The ministry of health said on Thursday that 268 people had died in the most recent 24-hour period after contracting coronavirus. This was the lowest tally since March 20 — the daily toll peaked on April 2, with 950 deaths — and took the cumulative number of deaths to 24,543 as of 9pm on Wednesday.

The true figure is almost certainly significantly higher, as the official numbers contain only proven and not probable coronavirus cases. The UK has now overtaken Spain as the country with the third highest number of coronavirus deaths after the US and Italy.

The spread of the virus remains low, with a 0.6 per cent increase on the previous day in the number of people who had positive results in PCR tests, taking the total of confirmed cases to 213,435. However, this does not include positive results in less reliable antibody tests. The ministry said 112,050 people have now recovered — over half of all cases.

Spain’s government has outlined a complicated, benchmark-based system to phase out the lockdown, with step by step opening of shops, restaurants, hotels and other establishments.

However, travel outside people’s home provinces will not be permitted until the end of the transition period, and people will be urged to wear masks in public places and have to practise social distance even after the transition is complete. The government hopes the transition will be completed in eight to 10 weeks after it starts on May 11.

UK businesses still trading report slump in revenues

Delphine Strauss in London

A quarter of UK businesses that are still trading have lost more than half their turnover since the start of the coronavirus lockdown, the Office for National Statistics said on Thursday.

A fortnightly survey, tracking the effects of the pandemic on the UK, illustrates how difficult it will be for the government to withdraw its support for businesses, even when it becomes possible to ease social distancing measures and reopen some parts of the economy.

About a quarter of businesses have been forced to close temporarily as a result of the lockdown. But even among those that are still doing business, about 14 per cent said their sales had fallen by up to 20 per cent, one in five had lost between 20 and 50 per cent of sales, and a quarter said sales were down by more than 50 per cent. Only about a third said turnover was unaffected or higher.

Two thirds of all businesses responding to the survey – conducted between April 20 and 26 – said they had applied for support to pay workers placed on furlough through the government’s job retention scheme. This proportion rose to 82 per cent among businesses that had paused trading.

Eurozone economy contracts most on record

Valentina Romei in London

The coronavirus pandemic plunged the eurozone economy into the largest contraction on record as its member countries shut businesses to contain the virus.

Eurozone GDP fell 3.8 per cent in the first quarter compared with the previous quarter, according to preliminary estimates from Eurostat. This is the largest drop since the series began, and is larger than the hit during the financial crisis.

The fall was greater than that experienced by the US economy, which contracted 1.2 per cent, or 4.8 per cent on an annualised rate.

The eurozone’s economic contraction in the first quarter “will pale in comparison with the complete collapse that will surely be recorded in the second quarter,” said Jessica Hinds, European economist at Capital Economics, as restrictions will have been in place for longer than in the first three months of the year.

National figures are available for a number of countries, including Spain and France, which both contracted by more than 5 per cent, the fastest pace on record.

Data for Germany will be released on May 15, but the German Labour Statistics Office said on Thursday that “the corona crisis is likely to lead to the worst recession in postwar history in Germany”.

Across the eurozone, joblessness rose marginally to 7.4 per cent in March, from 7.3 per cent the previous month, marking the first increase in unemployment since 2013, according to Eurostat data also released on Thursday.

Seafox makes takeover approach for Gulf Marine Services

Nathalie Thomas in Edinburgh

Dutch oil services company Seafox International has made a takeover approach for its London-listed rival Gulf Marine Services in one of the first potential signs of consolidation in a sector that is coming under severe strain from depressed oil prices.

Seafox, which already holds a stake of more than 13 per cent in Gulf Marine Services, said on Thursday that it had approached the board of its London-listed rival with a possible cash offer valued at $0.09 a share. Shares in Gulf Marine Services shot up more than 85 per cent after the news on Thursday morning to trade at around 6.98p ($0.08).

Its shares had fallen nearly 55 per cent since the start of the year as the energy services sector came under significant pressure from oil and gas explorers and producers reining in their activities and cutting expenditure in response to weak prices.

Gulf Marine Services owns jack-up vessels used in the offshore energy industry and was founded in the United Arab Emirates in the 1970s. It confirmed receipt of the unsolicited non-binding approach and advised shareholders on Thursday to take no action at present.

German companies put 10m workers on state subsidised leave

Martin Arnold in Frankfurt

More than 10m German workers have been registered to have part of their wages subsidised by the state while they are idled by their employers in response to the coronavirus crisis.

The figure, which was announced by the Federal Employment Agency on Thursday, means that almost a quarter of all German workers have been sent home or put on partial hours during the pandemic.

That is far higher than most forecasts and is equal to almost seven times the number of people who joined Germany’s short-term leave scheme, known as Kurzarbeit, after the 2008 financial crisis.

Despite the vast number of people being put on short-term leave by their companies, Germany still suffered a jump in the number of people losing their jobs. The German unemployed figures rose by 308,000 between March and April to reach 2.64m. That translates into a rise in the country’s unemployment rate from 5.1 per cent in March to 5.8 per cent in April.

The new figures for the number of people registered for Kurzarbeit in Germany match the figures for applicants to a similar scheme in France. They mean that in Europe’s five largest economies more than 35m people are on short-term leave programmes — over a fifth of those countries’ total workforces.

Meanwhile, in Italy, the number of people looking for work dropped 11 per cent in March compared with the previous month. The proportion of people outside Italy’s labour force rose to 35.7 per cent in March from 34.9 per cent in the previous month, and the share of people in employment declined to 58.8 per cent in March from a peak of 59.2 in June.

Japan Airlines posts first loss since bankruptcy exit

Kana Inagaki in Tokyo

Japan Airlines has cancelled its year-end dividend after posting its first quarterly loss since it emerged out of bankruptcy protection and relisted its shares in 2012.

For the January to March quarter, Japan’s second largest carrier posted a net loss of ¥22.9bn ($219bn) as the coronavirus outbreak led to a shutdown of international travel. That compared with a profit of ¥44.2bn a year earlier.

In a statement on Thursday, JAL said it cancelled its fiscal second-half dividend “to secure liquidity at hand.”

The unforeseeable coronavirus effect in the new fiscal year ending March 2021 makes cash flow management based on various scenarios with continuous low demand essential.

In addition to the suspension of international routes, a collapse in domestic travel is set to continue, with the Japanese government expected to extend the state of emergency until at least the end of May.

Still, the company boasts one of the strongest balance sheets among global carriers with an equity ratio — a measure of financial strength — of 59 per cent at the end of March.

Lord Chancellor admits the UK is unlikely to meet 100,000 test target

Laura Hughes in London

Robert Buckland, the Lord Chancellor, has admitted the government expects to fail in its pledge to carry out 100,000 coronavirus tests a day by the end of April.

On Wednesday, the government was still only halfway towards meeting the target set for Thursday. Speaking on the eve of the deadline, the foreign secretary Dominic Raab said daily capacity now stood at 73,000 but just 52,429 tests were carried out.

Mr Buckland told Sky News the public would not be able to see if the government had reached its 100,000 goal until the latest numbers were published on Friday.

“Even if we don’t hit it, and it’s probable that we won’t, we will in the next few days hit that target. We’re up to 52,000 people being tested, the capacity is rising.

I think it was right to set an ambitious target. And you know, sometimes even if you don’t hit the target on the due date the direction of travel is the most important thing.

I believe we’re going to get there and then move beyond it, because we need more.

Russia’s death toll rises above 1,000 as it reports record new cases

Henry Foy in Moscow

Russia reported a new record daily increase in coronavirus cases on Thursday, dealing a blow to hopes that the country’s outbreak was beginning to plateau.

Moscow said 7,099 new confirmed cases had been recorded, bringing its total to 106,498. Overnight, 101 people died of the virus, taking its total death toll to 1,073.

Russia’s president Vladimir Putin this week extended a national lockdown until mid-May and warned that the country was yet to experience the worst of the pandemic, even as other major European countries such as France seek to ease lockdowns.

Moscow, the capital, accounts for roughly 50 per cent of the country’s infections, down from around 80 per cent in the initial weeks of the outbreak, as the virus has spread to almost all of Russia’s regions.

What you may have missed

The French and Spanish economies shrank by the fastest rate on record in the first quarter of 2020 as lockdown measures resulted in an unprecedented freeze in economic activity.

China’s services sector showed stronger-than-expected signs of recovery in April but demand for Chinese products abroad continued to contract.

Royal Dutch Shell cut its dividend for the first time since the second world war as the drop in oil prices and demand triggered by the coronavirus pandemic nearly halved its quarterly earnings.

European and Asian banks recorded hefty loan loss provisions due to coronavirus, as Lloyds Banking Group, Danske Bank, Société Générale, BBVA and Singapore’s DBS suffered a hit to earnings in the first quarter.

South Korea has reported zero new locally transmitted coronavirus cases for the first time in months, in the latest sign that Seoul’s focus on mass testing and intensive contact tracing provides a model for other governments to follow.

UK retailers are increasingly falling between the cracks of various government support schemes, with large companies facing stringent credit rating criteria and banks still reluctant to lend to smaller ones.

The coronavirus outbreak has caused a staggering drop in global energy demand, equivalent to India’s total annual consumption.

US records highest daily Covid-19 deaths, as global total nears 210,000

Steve Bernard in London

The worldwide death toll rose by 6,593 on Wednesday, bringing the total to 209,063.

The global number of newly confirmed Covid-19 cases rose by a further 81,678 yesterday, the total now stands at more than 3.1m.

The US recorded its highest ever death toll in a single day yesterday adding 2,700 fatalities. Thirteen states reported 50 or more deaths bringing the total in the country to 55,225, according to data from the Covid Tracking Project.

The UK continues to report high numbers of daily confirmed cases as a further 4,076 people were diagnosed yesterday. The death toll rose by 795 to 26,097, a figure that now includes an additional 3,811 deaths in England reported since the start of the outbreak.

Brazil continues to be firmly in the acceleration phase as it added a further 6,462 cases, the highest total outside of the US. The Brazilian death toll rose by 448 bringing the number of fatalities to 5,511.

Stocks on track for best months since 1980s

Global stock markets are on track for their best month in decades, after positive results from the trial of a possible coronavirus treatment reinforced investor optimism over the reopening of major economies.

European markets were largely flat in subdued morning trading, with London’s FTSE 100 down by less than 0.1 per cent and the regional benchmark Stoxx 600 index gaining by a similar margin.

Asian shares rose overnight, while futures tied to the S&P 500 pointed to modest gains of around 0.2 per cent later in the session.

The benchmark US index S&P 500 rallied 2.7 per cent after Gilead Sciences, the California-based biotechnology company, said that its potential Covid-19 drug remdesivir had produced positive results in a US study. The findings were tentatively endorsed by Anthony Fauci, the US government’s leading infectious disease fighter.

The burst of investor optimism caps a month that has seen traders disregard historically poor economic data and tremors in the oil markets, juiced by global stimulus the IMF puts at $14tn.

The MSCI All-World Index, a broad measure of developed and emerging market shares, is up 11.7 per cent this month and on track for its best month since records began in the late 1980s.

St James’s Place cuts dividend as assets under management fall

Madison Darbyshire in London

UK wealth manager St James’s Place cut its dividend on Thursday, as assets under management fell during the coronavirus-induced market volatility.

Preliminary results showed assets under management fell nearly 2 per cent to £101.7bn, while net investment returns were down almost 18 per cent over the quarter.

The wealth manager cited market uncertainty in its decision to slice its proposed final dividend by one-third to 20p per share, despite what it called a strong cash position.

SJP said clients had continued to pour money into the market in the first three months of the year, with net inflows of £2.3bn from the start of the year to the end of March 2020, an almost 9 per cent increase from the same time the previous year.

Chief executive Andrew Croft said:

We are not immune to how the unprecedented level of uncertainty may impact the operating environment for the business and our clients for the foreseeable future.

Swiss Re estimates $776m cost from claims and investment losses

Oliver Ralph in London

Reinsurance group Swiss Re said that the coronavirus crisis will cost it at least $776m as it counts the cost of rising claims and turbulence in the investment markets.

The company said on Thursday that it had taken a $476m charge to pay claims relating to Covid-19, mostly for event cancellations, including the Tokyo Olympics.

It also said that market volatility had wiped $300m off the value of the investments it holds to pay claims, although it added that without equity and credit hedging the loss would have been much worse. The figures came as Swiss Re reported a $225m first quarter loss.

“Swiss Re’s business remains resilient despite the financial impact of the crisis on our results,” said chief executive Christian Mumenthaler, adding that “we will weather this situation as a strong partner for our clients.”

Separately, London-listed insurer Lancashire Holdings said that it expected about $35m of claims relating to Covid-19.

Spanish economy shrinks at faster pace than during 2008-09 crisis

Valentina Romei in London

The Spanish economy shrank at the fastest rate on record in the first quarter, as the coronavirus lockdown resulted in an unprecedented blow to the economy.

Spain’s gross domestic output shrank 5.2 per cent in the first quarter compared with the previous one, according to preliminary estimates from the country’s Office for National Statistics (INE). This is the largest fall since the series began in 1995.

The contraction — which was larger than the 4.4 per cent fall forecast by economists polled by Reuters — ends more than six years of uninterrupted growth, most of which was well above the eurozone average.

Spain introduced a more stringent lockdown than many other European countries on March 14 but has now relaxed some of its restrictions. Its economy is more vulnerable to the Covid-19 pandemic because a significant proportion comes from tourism, which has been severely hit.

Spain’s economy fell more than Belgium’s, with a 3.9 per cent contraction, but slightly less than that of France, where output shrank at an unprecedented rate of 5.8 per cent.

Together with the historical plunge for France, Spain’s output contraction anticipates a large blow to the economy across the eurozone, for which data will be published later today.

Nokia knocks down full-year outlook due to supply chain issues

Richard Milne, Nordic and Baltic Correspondent

Nokia cut its full-year outlook as coronavirus causes problems in its supply chain and delivery of telecoms equipment to customers as well as pushing some operators to postpone investment in 5G networks.

The Finnish telecoms equipment maker said on Thursday that revenues in the first quarter decreased by €200m due to Covid-19, mostly due to supply chain issues in China. Revenues fell 2 per cent compared with a year earlier to €4.9bn, just below the average analyst forecast.

Nokia, which has struggled in the early days of 5G against Chinese rival Huawei and Ericsson of Sweden, said it made a small underlying profit of €0.01 per share, up from a loss a year earlier of €0.02. It now expects its full-year earnings per share to be about €0.23, down from a previous forecast of €0.25.

The Finnish group has struggled to convert the increasing scepticism towards Huawei in the US and Europe into strong business performance as telecoms operators around the world start to invest in 5G networks.

Rajeev Suri, Nokia’s chief executive who will step down in September, said the telecoms group had not seen a drop in demand for its products and services in the first quarter. But he added:

As the Covid-19 situation develops, however, an increase in supply and delivery challenges in a number of countries is possible and some customers may reassess their spending plans… We expect the majority of this Covid-19 impact to be in the second quarter and believe that our industry is fairly resilient to the crisis, although not immune.

German infections rise by 1,478

Guy Chazan in Berlin

Germany reported 1,478 new coronavirus cases on Thursday, a slight increase on the previous day’s tally.

According to official data from the Robert Koch Institute in Berlin, the number of people who died of Covid-19 over the past 24 hours rose by 191 to 6,288.

The total number of detected infections increased to 159,119, though 123,500 of them have already made a full recovery.

Danske Bank cuts annual profit forecast after heavy loan losses

Richard Milne, Nordic and Baltic Correspondent

Danske Bank slashed its profit forecast for this year as Denmark’s biggest lender plunged to a net loss in the first quarter on a 10-fold increase in loan impairments due to coronavirus and lower oil prices.

Danske said on Thursday that it made a net loss of DKr1.3bn ($190m) in the first quarter against a profit of DKr3bn a year earlier as loan impairments jumped from DKr357m to DKr4.3bn due to the economic downturn and decline in oil prices.

It added that it was aiming for a net profit this year of at least DKr3bn, down from its initial forecast in February of DKr8bn-DKr10bn.

Danske, which last week proposed no dividend would be paid for last year, said that visibility for 2020 was low due to the coronavirus pandemic but that it remained well capitalised with a core equity tier 1 ratio of 17.6 per cent, above its target of 16 per cent.

Chief executive Chris Vogelzang said Danske had performed well in the first two months before coronavirus hit the business in March. He added:

The key drivers were impairments made mainly because of the assumptions of a worsened macroeconomic scenario, the decline in oil prices and charges against exposure to certain sectors. We also saw the highly turbulent markets result in extraordinarily low trading income.

AstraZeneca and Oxford University combine on potential vaccine

Donato Paolo Mancini in London

AstraZeneca and the University of Oxford are teaming up to develop and distribute a vaccine aimed at preventing infection from coronavirus.

Under the agreement, the company would be responsible for the development and worldwide manufacturing and distribution of the vaccine, known as ChAdOx1 nCov-19, currently being developed by the University of Oxford.

Observers have repeatedly warned that the development of a vaccine alone will not be enough — there will also need to be sufficient manufacturing capacity to deliver it to billions of people around the world.

On Wednesday, GlaxoSmithKline chief executive Emma Walmsley said it would be necessary to have more than one vaccine to meet demand. The company is also developing a potential vaccine candidate with Sanofi of France.

Financial terms for the Oxford-AstraZeneca partnership were not disclosed.

European corporate news round-up

Royal Dutch Shell cut its dividend for the first time since the second world war as the drop in oil prices and demand triggered by the coronavirus pandemic nearly halved its quarterly earnings.

Sales growth at Reckitt Benckiser shot up in the first quarter as the pandemic pushed up demand for its products such as Dettol and Lysol disinfectants and medicines.

Lloyds Banking Group’s first-quarter profits were almost entirely wiped out by the impact of coronavirus, as it announced a 420 per cent increase in provisions for bad loans.

Société Générale’s investment bank was “penalised heavily” by volatile market conditions in the first quarter as the French lender fell to a loss and raised provisions to deal with bad loans.

BBVA, the Spanish-based bank, has recorded a €1.79bn loss in the first quarter after taking €1.43bn in provisions related to the coronavirus crisis and a €2.08bn goodwill impairment charge at its US arm.

Danske Bank slashed its profit forecast for this year as Denmark’s biggest lender plunged to a net loss in the first quarter on a 10-fold increase in loan impairments due to coronavirus and lower oil prices.

J Sainsbury said that the uncertainty around the trajectory of the coronavirus pandemic meant it would defer a decision on its dividend until later in the financial year.

Swiss-based miner Glencore has slashed its 2020 capital expenditure forecast as the pandemic forced the company to suspend production and activity at several of its mines.

Danish brewer Carlsberg said that organic sales declined 7.4 per cent in the first quarter, as it warned that continuing social-distancing requirements would impact consumer behaviour and that volumes would decline further in the next quarter.

Spanish lender BBVA reports €1.8bn loss

Daniel Dombey in Madrid

BBVA, the Spanish-based bank, has recorded a €1.79bn loss in the first quarter after taking €1.43bn in provisions related to the coronavirus crisis and a €2.08bn goodwill impairment charge at its US arm.

The goodwill charge — also due to the implications of the crisis — follows an impairment test at its US unit, BBVA Compass, which the bank has built up over years, most notably with a purchase in 2007, and which has over $80bn in assets and operates 657 branches.

BBVA said operating income for the quarter was up 14 per cent at €3.57bn, its highest for 10 years, while net interest income was up 3.6 per cent at €4.56bn.

Carlos Torres, executive chairman, said:

The recurrence of our pre-provision profit and our solid capital and liquidity position have allowed us to face this crisis from a position of strength and frontload provisions related to the pandemic in this quarter.

Glencore slashes 2020 capex forecast after temporary mine closures

Neil Hume in London

Glencore has slashed its 2020 capital expenditure forecast as the coronavirus pandemic forced the company to suspend production at several of its mines

In a quarterly production update, the Swiss-based miner and commodity trader said it planned to reduce capex to $4.0bn-$4.5bn this year, down from previous guidance of $5.5bn. Analysts had been expected a smaller reduction.

Glencore has been forced to curtail or halt production in a number of countries including Zambia, where its Mopani copper business has been temporarily closed.

It has also pushed back first production from its new Zhairem zinc mine in Kazakhstan until 2021 because of the uncertain outlook.

In Wednesday’s update, Glencore also revised down its cost guidance for its key commodities due to cheaper oil prices, the weakness of key producer currencies against the US dollar and by-product credits.

The company said “volatile and complex” markets had provided opportunities for its trading arm, which was on course to generate earnings within its $2.2bn-$3.3bn long-term guidance range.

Sainsbury’s defers dividend and cancels bonuses

Jonathan Eley in London

J Sainsbury said that the uncertainty around the trajectory of the coronavirus pandemic meant it would defer a decision on its dividend until later in the financial year.

It also said it would not pay any bonuses to its executive team this year, resulting in an effective pay cut of 13 per cent.

The UK’s second-largest supermarket group said that based on a scenario that saw the UK lockdown ending by June but business disruption continuing until September, it would expect underlying pre-tax profit to be at a similar level to the £586m reported on Thursday for the year to March 7 2020.

This includes the impact of about £500m of additional costs, reduced demand for fuel and general merchandise and weaker profits from its banking arm, partially offset by the business rates holiday that lasts until March next year.

Sainsbury’s stressed that this was not a forecast but a guide based on a set of assumptions.

In the seven weeks to April 25, a period that included the ‘panic buying’ spree, Sainsbury’s said grocery sales were up 12 per cent while general merchandise sales were 3 per cent higher.

Lloyds profits collapse as it ramps up loan provisions

Nicholas Megaw in London

Lloyds Banking Group’s first-quarter profits were almost entirely wiped out by the impact of the coronavirus, as it announced a 420 per cent increase in provisions for bad loans.

Pre-tax profit fell 95 per cent year-on-year, to £74m.

The drop was mainly caused by £1.4bn of charges to cover expected credit losses, of which about £1.1bn was directly attributable to the pandemic.

Revenue, which was already under pressure before the crisis thanks to intense competition in the mortgage sector, dropped 11 per cent to £3.9bn.

The company cautioned that “the impact of lower rates, lower levels of activity and higher impairment on the group’s business will continue into the second quarter, but remains difficult to quantify”.

Investors have been braced for big increases in loan provisions across the European banking sector this week, but there has been a wide variation in results as lenders grapple with new accounting rules that require them to book expected losses further in advance than previously. Increases in impairment charges have ranged from 80 per cent at Santander to more than 1,000 per cent at Standard Chartered.

German retail sales record steepest decline in a decade

Valentina Romei in London

German retail sales fell at the fastest pace in more than a decade despite a strong performance for purchases online and food, as non-essential shops shut during the coronavirus pandemic.

The volume of Germany’s retail sales fell 5.6 per cent in March compared with the previous month, the largest decline since 2007, according to the country’s Office for National Statistics (Destatis).

Retail sales contracted despite spending for food and beverages rising 9 per cent and internet spending increasing 13.4 per cent, as shoppers stockpiled food and shifted to online purchases. Sales in pharmacies also went up sharply by 7 per cent.

“Due to the business closings in the Corona crisis, sales in individual retail sectors plummeted in March 2020,” said Destatis. “At the same time, the strong demand for everyday goods led to increased sales in other areas, such as supermarkets and pharmacies”.

Non-food retail sales contracted 10 per cent, marking the largest drop since 1994, while sales of clothing and shoes halved.

EmoticonShell cuts dividend for first time since 1940s

Anjli Raval, Senior Energy Correspondent

Royal Dutch Shell cut its dividend for the first time since the second world war as the drop in oil prices and demand triggered by the coronavirus pandemic nearly halved its quarterly earnings.

Net income adjusted for cost of supply — its preferred profit measure — dropped to $2.9bn in the three months to March 31. This compared with $5.3bn in the same period the previous year. Analysts had estimated $2.3bn.

Oil companies are in crisis mode as lower energy prices and a collapse in demand for fuels and chemicals puts intense pressure on their finances, with severe lockdowns and travel bans in place across much of the world.

Shell, which will still be one of the FTSE 100’s biggest dividend payers, said it would reduce its quarterly payout to 16 cents per share, from 47 cents per share.

Shell was already under pressure before the coronavirus outbreak, with weaker refining and chemical margins and challenging economic conditions forcing the Anglo-Dutch company to slow shareholder distributions, and announce at the start of the year it would probably miss its debt reduction targets.

Since then, Shell has said it would suspend its share buyback programme altogether and announced that capital expenditure would fall to $20bn or less this year, from initial plans for $25bn, in response to the pandemic. It said its operating costs would also decline by $3bn to $4bn.

Reckitt Benckiser sales rise on high demand for Dettol and medicines

Judith Evans in London

Sales growth at Reckitt Benckiser shot up in the first quarter as the pandemic pushed up demand for its products such as Dettol and Lysol disinfectants, Mucinex cold medicine and Nurofen painkillers.

Like-for-like net revenue growth, a key metric for consumer goods groups, reached 13.3 per cent in the first quarter compared with 1 per cent a year earlier. Sales rose 12.3 per cent to £3.5bn, while the group said its performance for the year was set to be “better than original expectations”.

Laxman Narasimhan, chief executive of Reckitt Benckiser, said:

“The exceptional demand has resulted in some customers and consumers facing shortages for some of our products. RB has responded with its typical can-do attitude, ramping up production, streamlining our SKUs [stock-keeping units] and working with customers and suppliers to overcome significant barriers, while incurring additional cost.”

Demand for Dettol and vitamin and mineral supplements pushed up growth in the group’s wellness and health hygiene division to 17 per cent.

Société Générale falls to a loss and raises provisions for soured loans

David Keohane in Paris

Société Générale’s investment bank was “penalised heavily by” volatile market conditions in the first quarter as the French lender fell to a loss and raised provisions to deal with bad loans.

After pulling the release of its results forward by one week, SocGen fell to a net loss of €326m in the first quarter — compared with a profit of €686m in the same period last year — as revenues fell by 16.5 per cent to €5.2bn.

The bank increased its bad loan provisions to €820m, a three-fold increase over the €264m in the same quarter last year. The increase comes “in the context of the Covid-19 crisis and some specific files, including two exceptional fraud files”.

It said that revenues at its global banking and investor solutions business — which encompasses both trading and investor funding — dropped 27.3 per cent in the quarter to €1.6bn, driving the unit to a loss of €537m. It had made a profit of €140m in the same period last year.

SocGen’s equity trading business — long considered one of its strengths — was nearly completely wiped out in the quarter, with revenues down 98.7 per cent to just €9m.

“These activities performed well in January and February,” said the bank of its equity business, but “revenues from structured products activities were severely impacted by the equity markets dislocation in March.”

So far this year, SocGen’s share price has dropped by 50 per cent.

French economy shrinks at fastest rate since 1949

Valentina Romei in London

The French economy shrank by the fastest rate on record in the first quarter as measures to contain the coronavirus pandemic resulted in an unprecedented freeze in activity.

France’s gross domestic product dropped by 5.8 per cent in the first quarter compared to the previous quarter, according to preliminary estimates from the Office for National Statistics (Insee), the biggest fall since records began in 1949.

“GDP’s negative evolution in Q1 2020 is primarily linked to the shut-down of ‘non-essential’ activities in the context of the implementation of the lockdown since mid-March” said Insee.

The drop was driven by an “unprecedented” 6.1 per cent contraction in household consumption and an 11.8 per cent fall in investment. Exports and imports also contracted by about 6 per cent.

Earlier this week Edouard Philippe, prime minister of France, announced plans to reopen parts of the economy from May 11 to avoid the risk of economic “collapse”.

The eurozone’s second-largest economy had contracted by 0.1 per cent in the last quarter of 2019, which means the French economy has already entered a recession.

France’s output fall in the first quarter is larger than the 1.6 per cent fall recorded in the first quarter of 2009 during the global financial crisis.

War-torn Yemen reports first deaths from Covid-19

Simeon Kerr in Dubai

Yemen has reported its first two deaths from Covid-19 amid fears the virus is spreading through the war-ravaged country.

The deaths came as the authorities reported five new cases in the southern port city of Aden, bringing the national total to six, according to Yemen TV reports late on Wednesday.

The UN has described Yemen as the world’s worst humanitarian crisis, where millions rely on aid. The country is already at risk of another cholera outbreak because of flooding as the rainy season starts.

The degraded healthcare system and the population’s weak immune systems could see coronavirus spreading faster and with more deadly consequences than other countries, the UN has warned.

Aid agencies say fighting has escalated despite the Saudi-led coalition’s ceasefire in its war against Iran-allied Houthi rebels that ousted the internationally-recognised government five years ago.

Amundi’s assets fall to €1.53tn as markets tumble

Attracta Mooney in London

Amundi, Europe’s largest fund manager, showed more resilience to the crisis in the first quarter than most listed rivals, but still reported an 8 per cent fall in assets under management to €1.53tn.

Fund houses including GAM, Jupiter and Ashmore, which have also been hit hard by the coronavirus market rout, suffered asset falls of between 15 and 30 per cent during the opening quarter of 2020. BlackRock reported a 12 per cent decline to $6.5tn earlier this month, while assets fell almost 9 per cent to €700bn at Germany’s DWS.

The drop in Amundi’s assets from €1.65tn at the end of 2019 was driven by market and foreign exchange movements.

Yves Perrier, Amundi chief executive, said the company had “adapted quickly” to the crisis. But he cautioned: “The duration of the crisis and its impact on the business remain difficult to assess.”

Adjusted net revenue rose 7 per cent compared with the same quarter last year thanks to higher management fees and a doubling of performance fees.
However, net income fell 18 per cent to €193m after negative financial income of €61m arising from the mark-to-market valuation in March of Amundi’s investment portfolio and seed money.

Mr Perrier this month became the first asset management chief to announce he was giving up part of his pay to support the coronavirus relief effort, donating half of his €2m bonus for 2019 to a Covid-19 solidarity fund.

Online classes exacerbate China’s rural-urban education gap

Qianer Liu in Shenzhen and Yuan Yang in Beijing

When China closed its schools in February, teachers were told to move classrooms online and embrace a high-tech future.

But in Guangxi, one of China’s poorest provinces, Lu Canfeng’s secondary school had to abort their online classes after less than a third of pupils logged on in the first week. “Poor internet signal, lack of mobile phone or other internet devices, and lack of parental companionship and supervision” were the main reasons for abandoning the online classes, Ms Lu said.

But, Ms Lu admitted, “even I have no idea how to make technology and the internet truly related to my teaching”. Instead, she personally delivered textbooks to the students’ homes and hoped for the best.

As Chinese schools start to reopen across the country, rural children will be at an even greater disadvantage as a result of the coronavirus pandemic, warned teachers, parents and analysts.

Read the full report here.

China to exempt South Korean business people from travel restrictions

Edward White in Wellington

South Korea has secured an agreement with authorities in China to help South Korean business people gain exemptions from Beijing’s strict coronavirus travel restrictions.

The South Korean foreign ministry said five Chinese cities and provinces will start allowing fast-tracked entry for some South Korean business people from next month.

China, which initially lobbied governments to keep borders open when the Covid-19 outbreak emerged from Wuhan in January, has since implemented tough border controls blocking most foreigners from entering the country.

And despite South Korea’s success in containing the outbreak and government support to keep airlines afloat, travel restrictions imposed on Koreans by more than 100 countries have severed companies’ access to their sites around the world.

The restrictions have caused headaches for South Korean companies which have a heavy dependence on China as a supplier of intermediary electronic and industrial products used by its tech, car and shipping manufacturers. The restrictions affect both South Korean companies with manufacturing bases in China, and those companies for which China is their biggest export market.

The announcement of improved access for South Koreans comes as the country has reported zero new locally transmitted coronavirus cases for the first time in months.

All arrivals into South Korea are subject to a 14-day quarantine.

However, Ben Cowling, a professor in epidemiology at the University of Hong Kong, expected South Korea, Hong Kong and Singapore might find any relaxation of virus control measures, including some border restrictions, may have to be re-imposed.

“When we relax too quickly there is a significant risk of a resurgence … we are going to have periods of time when measures are stricter and periods that are a bit looser,” he said.

China’s Cnooc cuts output target after oil prices tumble

Christian Shepherd in Beijing

China’s main offshore oil producer Cnooc has slashed its output and spending targets for 2020, as the state-backed company attempts to stem the impact of a global price rout.

Cnooc intends to produce 505m-515m barrels of oil, 15m fewer than the previous range, and lowered capital expenditure targets by Rmb10bn ($1.4bn) to Rmb75bn-85bn, it said in a filing to the Hong Kong stock exchange on Wednesday evening.

“Under the current low oil price environment, the company has…implemented more prudent investment decision making to ensure its long-term sustainable development,” it said.

In the first quarter of 2020, as demand in China slumped due to the Covid-19 pandemic, the company produced 131.5m barrels, a 9.5 per cent year-on-year increase.

Its revenues fell by 5.5 per cent Rmb39.95bn ($5.6bn) over the same period, mainly due to the global price fall, Cnooc said.

DBS profit falls on coronavirus loan loss provisions

Stefania Palma in Singapore

DBS has reported a 29 per cent fall in net profit in the first quarter of 2020 from a year ago as south-east Asia’s largest bank set aside more than S$1bn ($708m) in loan loss provisions to help counter the fallout from coronavirus.

Net profit fell to S$1.17bn while the lender set aside a total of S$1.09bn in loan loss provisions, S$703m of which were earmarked for “risks arising from the ongoing Covid-19 pandemic”. The balance aimed to counter new non-performing exposures reported this quarter.

Piyush Gupta, DBS chief executive, said in a statement that the “economic outlook remains uncertain and credit risks have increased”, but digital investments have helped strengthen the bank. “We will maintain a solid balance sheet with ample capital, liquidity and loss allowance reserves that give us strong buffers to absorb external shocks.”

DBS is the first bank to report results in the city state. Singapore faces a recession as travel restrictions, a fall in global demand and supply chain disruptions brought by the coronavirus pandemic hit the small, open south-east Asian economy.

The bank said it had a S$46bn exposure to eight sectors particularly hit by the economic slowdown, including the oil and gas industry, which accounts for S$23bn of loans.

DBS is among the more than 20 banks with exposure to Hin Leong, the Singapore-based oil trader seeking to restructure almost $4bn of debt after admitting to $800m of undisclosed losses.

Mr Gupta added that credit costs were set to rise to between S$3bn and S$5bn in the next two years, with results comparable to the recession in 2002-03 and the global financial crisis.

The bank’s total income in the first quarter grew 13 per cent from a year ago to S$4.03bn. It reported a quarterly dividend of 33 cents per share, which remained unchanged from the previous quarter. Its core tier one equity ratio sits above regulatory requirements at 13.9 per cent.

Japan’s 3.7% March industrial production decline points to delayed impact

Robin Harding in Tokyo

Japan’s industrial production fell by 3.7 per cent in March, significantly better than consensus forecasts of a 5.2 per cent decline, showing the relatively muted impact of the early stages of the coronavirus epidemic.

Japan did not impose a state of emergency until April, with the economy operating largely as usual, so the main impact in March came from the shutdown in China.

Analysts expect a much greater impact from April, with production at many automobile plants suspended.

The decline was most pronounced in Japan’s production machinery sector, down by 10.2 per cent, which sells much of its output to Chinese factories. The chemicals sector recorded an 11 per cent decline.

By contrast, sectors tied to domestic consumption were less affected, with plastic products down by 2.6 per cent and pharmaceuticals off by 0.6 per cent.

China services sector shows strength, but export outlook is bleak

Don Weinland in Beijing

China’s services sector showed stronger-than-expected signs of recovery in April but demand for Chinese products abroad continued to contract as the global economy is ravaged by the coronavirus outbreak.

The country’s non-manufacturing purchasing managers index, a gauge on service sector activity, rose to 53.2 in April, the National Bureau of Statistics said on Thursday. The reading beat analysts’ expectations of 52.5. A reading over 50 indicates expansion; below 50 is a signal of contraction.

Manufacturing PMI expanded slightly at 50.8. The composite PMI that includes manufacturing and services hit 53.4, up from 53 in March.

But the reading on new export orders was 33.5, a sign that global demand for Chinese products had been hit by the outbreak in Europe and the US.

“Global demand is likely to remain weak due to high unemployment rates in major economies,” Iris Pang at ING said in a note to investors on Thursday.

Economic activity collapsed in China during February and March, when the outbreak stopped hundreds of millions of people from leaving their homes. The stall in activity caused China’s economic growth in the first quarter of the year to contract for the first time since the 1970s.

S Korea reports no new local coronavirus cases for first time since February

Edward White in Wellington

South Korea has reported zero new locally transmitted coronavirus cases for the first time in months, in the latest sign that Seoul’s focus on mass testing and intensive contact tracing provides a model for other governments to follow.

The country reported four new cases of Covid-19 on Thursday, all of which are attributed to people who had recently arrived into the country. The number marked the lowest increase since the outbreak worsened in February and down from a peak of more than 900.

A further 137 people were classified as having recovered from the virus, taking the total tally to 9,059 out of a total caseload of 10,765.

Despite the success, health officials in Seoul continue to urge caution over the possibility of new waves of the virus. An extended public holiday, starting on Thursday, has raised concern that adherence to preventative public health measures might be increasingly lax.

Responding quickly to potential new clusters remains a central pillar of the country’s exit strategy.

Hundreds of private epidemiologists are contracted to bolster public health officials as they investigate contacts of confirmed cases. A rapid response team within the Korea Centers for Disease Control is deployed whenever there is a risk of a new cluster emerging, accelerating the tracing process to suppress new outbreaks.

And as the country moves to ease its social distancing requirements, detailed guidelines have been released to ensure continued caution in all social interactions.

Still, the country is on track to ease its social distancing requirements in early May with schools and workplaces expected to return to mostly normal.

Colombian authorities hold Venezuelan migrants in Bogotá

Gideon Long in Bogotá

Hundreds of Venezuelan migrants who are trying to leave Colombia and get back to their homeland are stuck on the outskirts of Bogotá because the Colombian authorities will not let them travel due to coronavirus.

The migrants are stranded on buses at a toll booth on the northern edge of the city. They were stopped as they tried to leave for the border city of Cúcuta, 550km away.

The Colombians say Venezuela is only allowing 300 migrants to cross back in to Venezuela each day, so authorities are holding migrants close to Bogotá to avoid a build-up of people in Cúcuta.

Hundreds of Venezuelan migrants are trying to return having lost their work due to the virus lockdown. Many say they cannot pay their rent in Colombia whereas at least in Venezuela they have family and a roof over their heads.

With flights and buses grounded, some Venezuelans are walking to the border, creating a potential health hazard in the towns and villages they pass.

In recent years, the exodus of migrants from Venezuela has been the biggest on the planet, eclipsing even the flow of Syrians through the Mediterranean, which has slowed after a decade of war. The UN and national migration agencies say 5m people have left Venezuela since 2015, dwarfing the exodus of Rohingya Muslims from Myanmar or migration from war-torn South Sudan.

Over a third – 1.8m – have come to Colombia, and 1m do not have permission to stay. Many eke out a living in the informal labour market, selling sweets and snacks on the streets or working cash-in-hand in odd jobs.

News you might have missed

The Federal Reserve kept its main interest rate close to zero on Wednesday, as officials weighed up the impact of the heavy dose of liquidity and stimulus already delivered to the US economy in the past two months.

Twitter has said it is allowing developers and researchers to study conversations on the social media platform around disinformation about the coronavirus, the spread of the disease and emergency response to the pandemic.

The World Health Organization has defended Sweden’s approach to tackling Covid-19, saying it had implemented “strong measures” to tackle the virus. The Swedish government has been criticised for not imposing a formal lockdown, unlike the majority of countries in Europe.

The UK has become the country with the highest coronavirus death toll after the US and Italy as it records in its daily national figures those who have died in care homes and the wider community.

The IMF has approved Costa Rica’s request for $504m in assistance to deal with health expenses and staunch balance of payments needs amid the coronavirus crisis.

Florida will allow restaurants and stores in all but three counties to reopen next week, as the state begins the process of restarting its economy.

Corporate round up

Tesla eked out an unexpected after-tax profit in the first quarter of the year despite a hit to its production and vehicle deliveries from the coronavirus crisis, lifting its shares 8 per cent in after-market trading on Wednesday.

Facebook said it had seen “signs of stability” in its business this month following a sharp fall in advertising revenues in March because of the coronavirus crisis, in unexpectedly upbeat news that boosted shares by more than 10 per cent.

Microsoft shrugged off the effects of the coronavirus crisis with surprisingly strong results in the latest quarter, as a jump in cloud-related business more than offset a hit to some of its traditional software sales.

Coronavirus shelter-in-place measures had been good news for eBay’s marketplace, the company said, but lockdowns have been a drag on other areas of its business. eBay reported first quarter revenues of $2.4bn, a 2 per cent decline on the same period last year, though above Wall Street estimates.

Boeing’s credit rating has been downgraded by S&P Global Ratings on lower earnings and cash flow. The largest global ratings agency dropped the aerospace manufacturer one notch to BBB-/A-3 from BBB/A-2, which remains investment grade.

ANZ suspends dividend as profit drops

Jamie Smyth in Sydney

ANZ Bank suspended its dividend and reported a 51 per cent fall in interim profit to A$1.55bn ($1bn) on Thursday as the coronavirus crisis caused a rise in credit impairment charges.

The bank said it would incur credit impairment charges of A$1.67bn for the six months to the end of March, of which A$1bn were provisions related to the impact of Covid-19. ANZ wrote down the value of its Asian associates by A$815m, largely due to the damage wrought by the virus in those markets.

ANZ said 14 per cent of mortgage holders with A$36bn in loans had so far requested assistance under a scheme that provides up to six months’ suspension on repayments.

David Gonski, ANZ chairman, said the bank would defer a decision on the 2020 interim dividend until there was greater clarity regarding the economic impact of Covid-19.

“This decision is not about our current financial position and ANZ has not received any concerns from APRA [Australia’s banking supervisor] regarding our level of capital,” he said.

“The board agrees with the regulator’s guidance that deferring a decision on the 2020 interim dividend is prudent given the present economic uncertainty and that making a decision at this time would not have been appropriate.”

ANZ paid an interim dividend of 80 cents per share in the same period last year.

Australia’s prudential regulator this month asked lenders to limit payouts and preserve capital to support their customers during the downturn but left the final decision to the banks. However, this week National Australia Bank paid a dividend of 30 cents per share, even as it raised fresh capital, arguing that many shareholders relied on dividends for income.

ANZ capital buffers were lower than analysts had expected with a common tier one equity ratio of 10.8 per cent, sitting just above the “unquestionably strong” benchmark set by regulators.

UBS said the market would probably focus on the weaker than expected capital numbers.

“Dividend deferral appears prudent until there is more certainty on the outlook for the economy and asset quality,” said Jonathan Mott, UBS analyst.

China reports 4 new coronavirus cases, no new deaths

Chinese health authorities reported four new coronavirus cases to the end of Wednesday, all of which were found in people who had returned from overseas.

Authorities in China have sought to limit a potential second wave of Covid-19 cases in citizens returning to the country from abroad by introducing travel restrictions and tightening checks at land borders.

The new cases take the total tally to 82,862 in mainland China, with 4,633 reported deaths linked to Covid-19.

There were 33 new cases of people found to be infected with coronavirus but not showing any symptoms.

Mexico’s Interjet suspends membership of IATA clearing house

Jude Webber in Mexico City

Mexican airline Interjet said it had “temporarily suspended” its membership of IATA’s clearing house, which provides settlement services for the airline industry, because of a cash crunch, but added that did not mean it had been grounded.

The airline’s troubles began before the coronavirus crisis but the collapse of air travel has intensified pressure.

Interjet has 65 aircraft in total but it was not immediately clear how many were leased.

“Because of the need to meet payments to a supplier who was seeking to make payments through the IATA Clearing House (ICH), Interjet took the decision to temporarily suspend its participation in that clearing house,” the airline said in a statement. It said it remained a member of IATA.

A source close to the company said Interjet was suffering “because of the coronavirus contingency”, which was also affecting its peers, and that faced with the abrupt decline in tourism and travel, it had decided to return leased planes to avoid continuing to pay for them while they were grounded.

It was not immediately possible to verify this information nor to ascertain how big a cash crunch Interjet was facing. An Interjet spokesman declined to comment.
Interjet, which was founded in 2005, said in the statement that for its first 10 years it had operated without being an IATA member without any problems.
“The company is continuing national operations,” it added.

UK car plant production falls by a third in March

Peter Campbell in London

Production at Britain’s car plants fell by more than a third in March as shutdowns halted output at every major site.

In response to the figures, the Society of Motor Manufacturers and Traders on Thursday called for a “package of measures”, including stimulating demand, to help plants restart.

So far Aston Martin, BMW and Jaguar Land Rover have announced limited re-openings during May, but most of the UK’s plants have not announced a restart date.

Output in March fell 37.6 per cent compared with a year earlier to 78,767 vehicles, according to SMMT figures published on Thursday.

Shipments to China rose by 2.3 per cent as the world’s largest car market re-opened, but exports to all other regions, as well as production for sales at home, fell sharply.

The SMMT calculates the industry will have lost £8.2bn in revenues if factories remain closed until the middle of May. Some plants across Europe, including Volkswagen’s flagship facility at Wolfsberg, have already reopened.

SMMT chief executive Mike Hawes called for a “package of measures” including a “demand-side measure to help encourage customers back into the market”.

Asia-Pacific stocks gain as coronavirus drug trial stokes optimism

Asia-Pacific stock markets climbed on Thursday following Wall Street gains on optimism over a potential drug treatment for coronavirus, even as the US revealed its worst economic decline since 2008.

Japan’s benchmark Topix was up 2 per cent and Australia’s S&P/ASX 200 added 0.8 per cent.

The S&P 500 rallied 2.7 per cent after Gilead Sciences said it had been notified of “positive” data from a trial of its potential coronavirus treatment drug, remdesivir. Anthony Fauci, a leading member of the White House coronavirus task force praised the findings.

S&P 500 futures pointed to a 0.1 per cent gain later on Thursday.

Figures released on Wednesday showed the US economy shrank at a 4.8 per cent annualised rate in the first three months of the year, its sharpest drop since the global financial crisis and a larger contraction than forecast by economists, as the coronavirus pandemic stalled growth.

The Federal Reserve warned of lasting “medium-term” economic damage from the pandemic as it said it was prepared to take additional steps to support the US economy, but left its main interest rate unchanged.

West Texas Intermediate, the US crude benchmark, which has been hit by wild swings as the pandemic curbs demand, was up 6.3 per cent at $16.01 a barrel in Asia trading.

Record daily increase takes US death toll above 55,000

Peter Wells in New York

A record number of people died from coronavirus in the US over the past 24 hours, taking the nation’s death toll over 55,000.

The daily death rate was 2,700, according to data compiled by the Covid Tracking Project on Wednesday afternoon.

That represents a relatively quick increase in recent days. The daily increase of 1,095 on Sunday was the lowest since April 2.

Deaths in New York, the hardest-hit state overall, increased by 377 over the past day to 18,015 overall. That has brought its daily rate close to New Jersey’s, which increased by 328 over the past 24 hours, from a record 398 on Tuesday, and to 6,770 overall.

A total of 55,225 people in the US have died since the outbreak began. Covid Tracking Project does not count so-called presumptive deaths in New York City, which is why its overall tally is lower than the often-cited data from Johns Hopkins University.

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