US records smallest increase in deaths since late March
Matthew Rocco in New York
The US has recorded the smallest number of coronavirus-related deaths over a 24-hour period since late March, as the spread of the virus continues to abate.
There were 786 new fatalities attributed to Covid-19 on Monday, according to the Covid Tracking Project. It was the lowest daily tally since March 30 and down from the 839 deaths counted during the previous 24 hours. Reporting of deaths tends to be lower nationwide on Mondays because of slower record keeping at the weekend. The total number of deaths since the start of the pandemic rose to 84,640.
The Covid Tracking Project does not include 5,000 estimated non-hospital deaths calculated by New York City, which Johns Hopkins University uses in its count.
Daily infections also fell, as the number of new positive tests increased by 19,866 – the smallest rise in about a week and the second-smallest since the end of March. The total number of confirmed cases sits just below 1.5m.
Australia ‘deeply disappointed’ with China barley tariff as spat worsens
Jamie Smyth in Sydney and Sun Yu in Beijing
Australia said on Tuesday it may appeal against China’s decision to slap punitive tariffs on imports of Australian barley to the World Trade Organization, but said it was not interested in tit-for-tat trade war. Tensions between the two countries have escalated following Canberra’s call for an inquiry into the origins of coronavirus.
Simon Birmingham, Australia’s trade minister, said he was “deeply disappointed” by Beijing’s decision to impose duties of up to 80 per cent on barley produced in Australia for up to five years — a move farmers say threatens to cripple an A$2bn ($1.3bn) a year industry.
“We reserve all rights to appeal this matter further and are confident that Australian farmers are among the most productive in the world, who operate without government subsidy of prices,” Mr Birmingham said.
“Australia is not interested in a trade war. We don’t pursue our trade policies on a tit-for-tat basis,” he added.
China’s Ministry of Commerce confirmed late on Monday it would impose 73.6 per cent anti-dumping and 6.9 per cent anti-subsidy duties on Australian barley from May 19, saying imports of the grains had “materially damaged local industry”.
The move came less than a week after China suspended imports of red meat from four Australian abattoirs, a move which analysts said was probably linked to Canberra’s role in leading calls for an independent inquiry into the origins of Covid-19, which has killed 310,000 people worldwide.
Australia was among the most active and earliest supporters of a global inquiry into the virus with Scott Morrison, its prime minister, saying last month that “the world would want to have an independent assessment of how all this occurred, so we can learn the lessons and prevent it from happening again”.
China’s president Xi Jinping told the annual meeting of the WHO on Monday that Beijing would support a “comprehensive review of the global response” to the pandemic, but just hours later it confirmed its decision to impose tariffs on Australian barley.
Asia-Pacific stocks rise as vaccine trial stokes optimism
Asia-Pacific stocks climbed on Tuesday, tracking a Wall Street rally as the first US Covid-19 vaccine trial showed positive results and after oil prices rose as demand picked up.
In early trading, Japan’s Topix gained 1.5 per cent, the Kospi in South Korea jumped 2.1 per cent and Australia’s S&P/ASX 200 was up 0.8 per cent.
Overnight, the US benchmark S&P 500 rallied 3.2 per cent to close at its highest since early March and the tech-heavy Nasdaq Composite jumped 2.4 per cent.
Those gains came after biotech company Moderna said its potential Covid-19 vaccine boosted participants’ immune systems to the same, or higher, levels of protection than coronavirus patients who had recovered from the virus.
US oil prices continued higher, with West Texas Intermediate up 4.4 per cent at $33.23 a barrel on signs of rising demand as countries began reopening their economies following months of strict lockdowns.
China reports 6 new coronavirus cases as Jilin count rises
Health authorities in China reported six new confirmed coronavirus cases to the end of Monday, with more infections reported in a province that has reimposed lockdowns and sacked officials over a new outbreak.
The north-eastern province of Jilin reported two new cases, taking the total number of infections to 36 since the new outbreak began two weeks ago prompting cities in the province to halt transport links in a bid to control the spread of the virus.
Hubei, the province where the virus is thought to have originated, reported one confirmed Covid-19 patient, while the remaining cases in mainland China were imported.
Those new infections take the tally of confirmed cases to 82,960 with 4,634 deaths linked to Covid-19.
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Donald Trump on Monday said he had been taking hydroxychloroquine, even though the drug that the US president has previously controversially touted can have serious side effects.
Baidu, China’s dominant search engine, reported falling sales in the first quarter as the pandemic dented its advertising revenue.
More than 50 per cent of some of Europe’s biggest industrial and technology companies expect business conditions to improve in the short term, but one third are postponing investment.
Spain will require people to wear masks in confined spaces such as shops and in public when it is not possible to maintain a two metre distance, the government said on Monday night.
The United Arab Emirates will from Wednesday widen its night time curfew ahead of the Eid holiday marking the end of the holy fasting month of Ramadan, when families and friends traditionally gather.
European Commission president Ursula von der Leyen has welcomed the Franco-German proposal for a €500bn coronavirus recovery fund.
New York will send 320,000 coronavirus test kits to its nursing homes to help them comply with a new state requirement that they test all staff at least twice a week for the virus.
Uber has announced it will cut 3,000 more jobs, close or consolidate 45 global offices, and reduce its investments in several “non-core” projects as it deals with what chief executive Dara Khosrowshahi described as the “damn virus”.
Brazil overtakes UK to have third-highest number number of cases
Andres Schipani in São Paulo
Brazil has overtaken the UK to become the country with the world’s third-highest number of coronavirus infections even as President Jair Bolsonaro continues to downplay the seriousness of the pandemic.
Brazil registered over 13,000 cases in the past day alone bringing the total tally of coronavirus infections to over 254,000.
Latin America’s largest country is now trailing only the US and Russia for being the world’s worst-hit country as the virus continues its rapid spread.
Brazil announced there had been 674 fatalities in the past 24 hours, bringing the total to 16,792 deaths.
Mr Bolsonaro has repeatedly said that 70 per cent of Brazil’s population of 211m would eventually be infected with coronavirus and “there’s no running away from that”.
S Korea shares climb on coronavirus optimism, shrug off Huawei risk
Edward White in Wellington and Song Jung-a in Seoul
South Korean shares gained on Tuesday on positive sentiment over the easing of coronavirus lockdowns, as investors shrugged off the risk to several of the country’s tech groups from a dispute between the US and China.
The broad Kospi 200 index was up more than 2 per cent in morning trading in Seoul, with heavyweight Samsung Electronics jumping more than 3 per cent and LG Electronics and SK Hynix also gaining more than 2 per cent.
The boost for Korean equities followed Wall Street’s best close since early March after a positive statement from US biotech company Moderna, which is in the early stages of human trials for a Covid-19 vaccine.
The gains in Seoul came even though South Korea’s largest electronics groups are bracing themselves for fallout from Washington’s move to cut off Huawei’s supply of key computer chips.
Samsung, the world’s biggest maker of computer chips, smartphones and displays, faces losing business if Huawei’s demand for electronic displays and memory chips is damped.
SK Hynix, the second-biggest producer of memory chips, is a key Huawei supplier with revenue exposure in the high single digits, according to Goldman Sachs analysis.
In smartphones, both Samsung and fellow Korean group LG compete with Huawei but analysts say they have little chance of taking market share from the Shenzhen-based group, particularly in the China market where the Korean groups have for years struggled against Chinese competitors.
Samsung, however, is making a push into 5G network hardware, and could be poised to snatch some international market share from Huawei if the US moves result in curbing the Chinese group’s offshore ambitions.
Samsung, SK Hynix and LG declined to comment.
Japanese couples put off parenthood as coronavirus fears mount
Kana Inagaki in Tokyo
Tokyo resident Eri had a miscarriage in March, just as Japan’s coronavirus crisis was gathering pace. As she begins her fourth in-vitro fertilisation attempt this month, she is torn between her desire for a child and fears about the virus.
“If the outbreak does not come under control, I’m scared of getting pregnant,” she said.
The 36-year-old social worker is not alone. Concern is mounting that the pandemic is deterring couples from parenthood, a trend that is adding to the demographic and economic challenges facing a fast-ageing society where births were at a historic low even before Covid-19.
While the impact on straightforward conceptions is unclear, doctors say there has already been a sharp fall-off in IVF since April after the Japan Society for Reproductive Medicine recommended patients be given an option to delay treatment as Covid-19 infections rose.
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US set to distance itself from WHO call to help poor countries with Covid-19
David Pilling in London and Demetri Sevastopulo in Washington
The US is preparing to publicly disassociate itself from a World Health Organization resolution that will support poor countries’ access to a Covid-19 vaccine or treatment.
Many governments, particularly in Africa, fear they will be squeezed out by richer countries unless they can force companies that discover anti-Covid therapies to share their intellectual property with manufacturers able to produce them cheaply at scale.
African ambassadors in Geneva, where the WHO is based, said US diplomats had sought to persuade them to support a dilution of language in the resolution, but that they had refused.
Talks are continuing, several people familiar with the . Although the US will make its objections clear, the resolution is expected to pass. The White House declined to comment on the negotiations.
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Trump threatens to withdraw from WHO
Demetri Sevastopulo in Washington
President Donald Trump has threatened to withdraw from the World Health Organization unless it demonstrates independence from China, in an escalation of his attack on the body.
In a letter to Tedros Adhanom Ghebreyesus, the director-general of the WHO, Mr Trump said he would take one of several significant actions unless the organisation made a commitment to reform within 30 days.
“If the World Health Organization does not commit to major substantive improvements within the next 30 days, I will make my temporary freeze of United States funding to the WHO permanent and reconsider our membership in the organisation,” he wrote.
The threat comes as Mr Trump increasingly blames China for the global spread of the Covid-19 and accuses the WHO of being complicit in helping China hide the true facts of the outbreak which originated in Wuhan.
Tencent-backed Sea Group receives a boost as lockdowns push customers online
Mercedes Ruehl in Singapore
Shares in Sea Group, the south-east Asian gaming and ecommerce group backed by Tencent, jumped 12 per cent on Monday in the US after the company reported a strong shift to online, including digital payments, during the coronavirus crisis.
The company’s fast-growing digital financial services arm, SeaMoney, recorded more than $1bn in total payment volume as customers in south-east Asian countries under lockdown took up its mobile payment service.
In Indonesia, the largest market for SeaMoney, the amount of consumers using digital wallet services to pay for products on the company’s ecommerce platform Shopee grew from 30 per cent in January to 40 per cent in April.
“We see significant growth ahead in the digital payments and digital financial services segment, and we see that growth accelerating as the coronavirus crisis drives more consumer activity online,” said Sea Group founder and chairman Forrest Li.
The technology company has three main segments, Garena in online games, Shopee in ecommerce, and SeaMoney in online payments, all of which experienced growth during the first three months of 2020. The company disclosed some April growth figures which showed continuing acceleration for each of the three businesses.
Overall revenue for the quarter was $913.9m, slightly below expectations but up 57.9 per cent year-on-year. Net losses fell 59.3 per cent on a yearly basis to $280.8m over the same period.
El Salvador’s president announces plans for gradual reopening
Jude Webber in Mexico City
El Salvador’s President Nayib Bukele announced plans for a gradual reopening of Central America’s smallest country from June 6 after the Supreme Court suspended his controversial weekend decree extending a quarantine lockdown without approval from the legislature.
Legislators were on Monday night attempting to hammer out new emergency legislation to contain Covid-19 but the president said the National Assembly had no power to issue any such decree unless it was at the behest of the president and he would veto it.
Speaking at a news conference, Mr Bukele said he had met business leaders and would send guidelines to legislators for a gradual reopening from June 6.
Wearing a mask and a baseball cap, he said he would veto legislators’ emergency legislation.
“The current quarantine ends on May 21 because the law is in force but we hope that the Assembly approves 15 days of additional quarantine which would end on June 5 to begin reopening the economy on June 6,” the presidency tweeted.
Qantas to offer passengers face masks as it prepares to resume flights
Australian airline Qantas has outlined a series of measures including masks for passengers, hand sanitiser stations and disinfectant wipes as it prepares for travel restrictions to be eased.
The airline said masks would be provided to all passengers on Qantas and Jetstar flights, but the face coverings would not be mandatory. An enhanced aircraft cleaning regimen would focus on high contact areas and passengers would be given sanitising wipes to wipe down areas such as the armrests and tray tables, Qantas said.
Boarding will be staggered, passengers would be asked to limit the amount of time out of their seats and crew would offer a simplified service and catering to minimise contact.
“From the early rescue flights we operated right into Wuhan and then more recently bringing Australians back from places such the US and Europe, we have a lot of experience at creating a safe cabin environment for passengers and crew,” said Alan Joyce, Qantas Group chief executive.
Airlines have been forced to cancel flights and ground their fleets as countries locked down to slow the spread of Covid-19, but they are now examining ways to limit the risk of infections onboard to resume operations.
Dr Ian Hosegood, the group’s medical director said it was not necessary to apply social distancing measures on aircraft as there was a “low transmission risk on board”.
Australia has gradually reopened its economy as the number of coronavirus cases has slowed, but travel restrictions between some states remain in place with 14-day quarantines for non-essential travellers.
Qantas this month extended flight cancellations to the end of July, adding that some flights could resume domestically, as well as to New Zealand, if restrictions were eased. Australia and New Zealand, which have some of the strictest rules on entry to their countries and a low number of new coronavirus cases, have discussed operating a “trans-Tasman travel bubble” to allow movement across the Tasman Sea.
India case count mounts above 100,000 even as Modi eases lockdown
Amy Kazmin in New Delhi
India’s confirmed coronavirus infection count has exceeded 100,000, even as Prime Minister Narendra Modi’s government is now easing the conditions of the country’s eight-week lockdown in a bid to revive the battered economy.
Of the 100,328 Indians known to be infected, 3,157 have died and nearly 39,200 have recovered, while India’s overstretched health care system is wrestling with more than 57,900 active cases.
Most coronavirus cases have been concentrated in a handful of big cities, including the financial capital, Mumbai — the city hardest hit by the virus — Ahmedabad and New Delhi, the capital.
But concern is growing about the rising number of cases reported in small towns and rural areas, in some cases carried by migrant workers, now returning to their villages across India after weeks stranded in cities and industrial areas without work or wages.
In the small town of Khandwa in Madhya Pradesh, 90 people have been confirmed as infected with the virus in the past 24 hours. Other rural districts of Madhya Pradesh, Bihar and Odisha, where many of the migrant workers who labour in other parts of India come from, have reported a surge in cases in recent days.
Amitabh Kant, the chief executive of the Niti Aayog, the government’s public policy think-tank, has downplayed India’s coronavirus caseload, which has risen steadily despite a draconian lockdown imposed on March 24.
“It’s not total no of +v cases but the mortality and recovery rates which are critical. We are faring well on both,” Mr Kant tweeted on Tuesday morning.
However, public health experts believe the death toll of the virus could be higher than reported, given that many people die at home, and family members do not report illness or fatalities to authorities for fear that they will be ordered into unpleasant institutional quarantine facilities.
India is also facing a new challenge this week, as a super cyclone, Amphan — the most powerful storm to brew in the Bay of Bengal for decades — is expected to slam into the country’s east coast on Wednesday.
The last time a storm of this magnitude hit India was in 1999, when a super cyclone killed 9,000 people.
South Korea hit by new virus scare at major Seoul hospital
Edward White in Wellington and Kang Buseong in Seoul
South Korean health officials are urgently tracing the contacts of nurses from one of Seoul’s biggest hospitals after a group fell ill with coronavirus, dealing a potential blow to the country just after it suppressed a virus outbreak in the capital.
At least four nurses from Samsung Medical Center were confirmed to have Covid-19 on Tuesday morning, the hospital told the Financial Times, marking the first time medical staff from one of the country’s largest general hospitals have been infected with the virus.
The cases follow a rapid effort by health officials this month to trace and isolate a cluster of more than 100 people linked to Itaewon, a bustling nightlife district in the capital. The country reported just 13 new cases on Tuesday, taking the total caseload to 11,078 with 263 deaths.
The latest potential cluster also comes as social distancing measures are set to be relaxed in South Korea with a staged return to school to start from Wednesday.
Asia’s fourth-largest economy has garnered international praise for its handling of the pandemic after deploying a system of mass testing, tracing and distancing to fight off what was for a time the worst outbreak outside China. But health experts have warned that the country continues to face risks over new outbreaks emerging as human interactions increase.
Viktor Orban under fire for coronavirus response
Valerie Hopkins in Budapest
Hungary’s premier Viktor Orban declared victory over Covid-19 on Saturday, announcing that from Monday the lockdown would be lifted in Budapest.
But as the capital, which has been the centre of the coronavirus pandemic in Hungary, emerges from two months of restrictions, Mr Orban faces twin problems: a struggling health system and a newly emboldened opposition.
On Sunday, opposition MP Timea Szabo posted a video on her Facebook page of an interview with a widow whose husband died after he was sent home from hospital immediately after surgery, because beds were being freed to make room for Covid-19 patients.
Ms Szabo concluded that the human capacities minister Miklos Kasler’s “decision to empty hospital beds and delay surgeries cost lives”.
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Covid-19 guidelines bar Thai film industry from shooting love scenes
John Reed in Bangkok
Thailand’s film industry has been barred from shooting love scenes, fight scenes, and other “scenes that require close contact and access” under new government guidelines meant to prevent the spread of Covid-19.
Film crews will also be limited to no more than 50 people, with no spectators present, under ministry of culture guidelines announced this week.
Under the measures, outlined by Yupha Thawiwattanakit Bowon, deputy permanent secretary of culture, on Sunday, presentations of “fight scenes, love scenes, embracing, kissing (or) speaking loudly” will have to be filmed with the help of camera angles or special effects.
Film crews will be required to have a handwashing station with soap, alcohol gel or antiseptic, a temperature screening point, seat people 1.5 to 2 metres apart, and have good ventilation when shooting indoors.
Ms Yupha said that ministry officials would be conducting spot checks and that film crews that failed to follow disease control measures would be ordered to stop.
Thailand has one of south-east Asia’s largest film industries, and produces films in genres ranging from historical epics to comedies, crime dramas, and horror movies.
Shrinking South Korea oil storage capacity rattles Asia refiners
Song Jung-a in Seoul
South Korea’s Jeju island is famous for the haenyeo, the sea women who dive for seaweed and shellfish in the waters off the volcanic coast, but a new sight has become common bobbing offshore: oil tankers.
The country, the world’s fifth-largest oil importer, is fast running out of commercial storage space, leaving some of Asia’s biggest refiners scrambling for alternatives as the coronavirus pandemic batters energy demand and feeds a glut in global supply.
“We are in an unprecedented crisis,” said Kim Woo-kyung, at the country’s largest refiner, SK Energy.
South Korea has the fourth-largest commercial storage capacity in Asia, and is a popular spot to store crude and fuels thanks to its proximity to the region’s big oil buyers including China and Japan.
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EU car sales plummet in April
Peter Campbell in London
Car sales in the EU fell by three-quarters in April, with every single country seeing a double digit decline as dealerships and factories were closed due to coronavirus.
With most showrooms across the EU closed for the entire month, the number of new cars sold fell from 1,143,046 units in April 2019 to 270,682 units last month, according to figures released on Tuesday by manufacturers’ group ACEA.
Plants across Europe were shuttered in March as coronavirus spread throughout the continent, leading to government-issued lockdowns and disrupting supply of parts to factories. Though some facilities have slowly reopened, demand across the region is expected to take months to recover.
Italy and Spain suffered the steepest declines, with April sales down 97.6 per cent and 96.5 per cent.
The least affected markets were Denmark, which fell 37 per cent, and Sweden, which dropped 37.5 per cent. Every other country saw a decline of more than 50 per cent, with around half seeing drops of more than 70 per cent.
The UK, which booked a 97.3 per cent drop in its new car market, is not in the EU.
Sales across Europe had been falling before the pandemic struck, and have dropped 38.5 per cent between January and April when compared with the same period a year earlier.
Three of the four largest EU markets – Italy, Spain and France – have seen sales fall by 50 per cent in the first four months, while Germany has dropped by a third.
2,600 jobs at risk at energy supplier Ovo
Nathalie Thomas in Edinburgh
Ovo, one of Britain’s three largest energy companies, is planning to cut more than a quarter of its workforce as it said the coronavirus pandemic had hastened plans to integrate the household supply business it acquired earlier this year from rival SSE.
The Bristol-headquartered company said it hoped to achieve 2,600 job cuts “largely through voluntary redundancy” over the course of this year, although the group will be trying to push through its plans in a climate where unemployment is mounting and the Bank of England has warned Britain is heading towards its deepest recession in 300 years.
Ovo had already furloughed 3,400 workers at the start of April as the UK’s decision to enter lockdown the previous month had caused work such as fitting digital smart meters in homes to nearly dry up.
Ovo was founded just over a decade ago by the former City trader Stephen Fitzpatrick to challenge the dominance of a group of energy suppliers once referred to as the “Big Six”.
The £500m deal for SSE’s domestic supply business in Britain, which was completed in January, propelled it into the top flight of suppliers along with British Gas-owner Centrica and Eon. Ovo had a combined workforce of around 10,000 following the acquisition.
Greencore scraps dividend with little consumer appetite for food-to-go
Judith Evans in London
The UK’s largest sandwich maker Greencore has scrapped dividend payments for the next year after lockdown cut sharply into appetite for its food-to-go products.
Greencore said it would cancel its full-year dividend payout for 2020 and interim payout for 2021 after adjusted operating profit dropped 14.3 per cent to £38.3m in the six months to March, mainly because of the effects of coronavirus in the final weeks of that time. The 2020 interim dividend had already been scrapped.
The company also makes other forms of convenience food, such as ready meals and cooking sauces. But sandwiches, sushi, salads and other foods eaten on the go make up almost two thirds of Greencore’s business, and appetite for these has slumped: demand is almost 60 per cent below last year’s levels, the company said, with Greencore’s revenues currently about 40 per cent down on last year.
The company has furloughed a “substantial proportion” of staff and ceased production at three sites. Revenues in the first half of the year were up 1.6 per cent to £712.7m, however.
Patrick Coveney, chief executive, said:
We have implemented a broad range of actions to mitigate the impact of Covid-19 on our business and to position us for growth as the pandemic eases.
UK corporate news round-up
Compass Group, the catering services company, aims to raise £2bn of new equity in the largest UK share sale in the year to date, to strengthen the company’s liquidity after revenues fell by about 46 per cent in April.
Chilean mining conglomerate Antofagasta reduced its final dividend recommendation for last year by 16.3 cents to 7.1 cents per share, since quarantine measures could restrict the company’s ability to operate, if expanded beyond Greater Santiago, the capital.
Ovo, one of Britain’s three largest energy companies, is planning to cut more than a quarter of its workforce as it said the coronavirus pandemic had hastened plans to integrate the household supply business it acquired earlier this year from rival SSE for £500m.
Tobacco company Imperial Brands said that Covid-19 has had a small impact on the business to date but it expects the effect to be greater in the second half of the year due to lower sales from duty free, consumers shifting to cheaper brands and retailers drawing down on inventories. It said that it has reduced its dividend by a third to accelerate debt payments.
Topps Tiles, the flooring retailer, swung to a loss in the first half of the year after its stores were forced to close near the end of March.
Antofagasta reduces final dividend on quarantine risk in Chile
Neil Hume in London
Antofagasta will pay a much smaller than expected final dividend as the Chile focused copper producer looks to conserve cash.
The London-listed miner said new restrictions imposed by Santiago in response to a significant increase in coronavirus cases was the trigger for the decision
“The evolution of the health emergency in Chile could result in an increased risk of an escalation in quarantine provisions which could restrict the company’s ability to move its workforce to and from its operations,” the company said in statement.
Due to this “heightened uncertainty”, Antofagasta said it had decided to conserve cash and revised its recommended final dividend for 2019 to 7.1 cents per share, down from 23.4 cents previously. It added that:
As conditions in Chile evolve, the board will continue to monitor the progression of Covid-19 and its impact on the business, and any future dividend decisions will be made considering the prevailing situation at that time, noting the company’s priorities remain maintaining a strong balance sheet, investing in the business, supporting its local stakeholders and increasing returns to its shareholders.
UK jobless claims rise by most on record
UK claims for jobless benefits jumped by the most on record in April as the lockdown snarled the country’s economy, according to figures released on Tuesday.
The country’s claimant count jumped by 856,481, or 69 per cent, in April compared with the previous month to 2.1m, with the sharpest increases in the south-west and south-east of England, according to the Office for National Statistics.
Separate provisional data show that the number of paid employees in the UK fell sharply in April, giving an early indication of the scale of outright job losses resulting from the coronavirus lockdown.
The ONS said the number of people paid by employers through the Pay As You Earn scheme fell by 1.6 per cent between March and April, and by 1.2 per cent year-on-year, after five years of steady growth. Median pay also fell, down by 0.9 per cent year-on-year.
The figures are early estimates based on real time data collected by HM Revenue and Customs, and published by the ONS on an experimental basis. They give a sense of the scale of job cuts made on top of the much larger numbers of employees – 7.5m at the last count – who have been placed on furlough, but are still on their employers’ payroll.
European stocks extend rally
A broad rally in global stock markets pushed into a second day on Tuesday, as investors welcomed positive signs of a possible Covid-19 vaccine and a co-ordinated European response to the pandemic.
London’s FTSE 100 opened up 1 per cent, while Germany’s Dax was 1.1 per cent higher. Futures trade pointed to gains of around 0.5 per cent for the S&P 500 on Wall Street.
News that biotech company Moderna’s potential Covid-19 vaccine had delivered positive results in early small-scale human trials has significantly boosted investor sentiment this week, which was already bullish on signs economies are reopening and central banks could have more ammunition waiting in the wings.
On Monday, the Stoxx 600 regional benchmark index rose 4.1 per cent, while the S&P 500 on Wall Street gained 3.2 per cent as global stocks enjoyed their best session since early April.
Analysts said evidence of a co-ordinated European fiscal response to the coronavirus pandemic has also cheered investors, after Germany and France joined forces to push for a €500bn EU recovery fund. The spreads between Italian, Spanish and Portuguese 10-year bond yields and their German equivalents tightened following the news.
UK to hit cars imported from countries lacking trade deal with 10% duty
Jim Pickard in London
The price of food and cars imported from countries without a UK trade deal will rise sharply under a new trade regime set out by trade secretary Liz Truss on Tuesday morning.
The plans, which would apply both to imports from the EU and from outside the bloc, would slash tariffs on a large range of products but introduce 10 per cent duties on cars, and levies on beef, butter and poultry as well as protections for the ceramics industry.
In an early morning announcement the Department for International Trade said Britain would scrap all levies on £30bn of imports as part of its new “MFN (most favoured nation) tariff regime” called the UK Global Tariff.
This is the basis on which the UK will trade with other countries unless and until it has struck new trade agreements with them by the end of the Brexit transition period on December 31.
For the EU, for example, London is hoping to replicate the existing zero-tariff arrangement it enjoys from being part of the customs union – although talks last week hit an impasse.
Under the MFN tariff regime products with tariffs currently below 3 per cent will see those reduced to zero, including fridge-freezers and dishwashers, Christmas trees, mirrors and scissors.
Loan cap for midsized British companies to increase to £200m
Jim Pickard in London
The Treasury has announced that its loan scheme for “squeezed middle” companies will be altered to allow loans of up to £200m instead of the current cap of £50m.
Ministers announced on Tuesday morning that the higher loans will be available from next week under the changes to the Coronavirus Large Business Interruption Loan Scheme (CLBILS), first revealed by the Financial Times last week.
Tata Steel, Britain’s biggest steelmaker, is among the companies to have complained that the £50m threshold was far too low.
The Treasury said that companies receiving help either through CLBILs or the Bank of England’s Coronavirus Corporate Financing Fund would be asked not to pay dividends and to exercise pay restraint.
Thai government approves bankruptcy ‘rehabilitation’ plan for Thai Airways
John Reed in Bangkok
Thai Airways International said that it would continue operating flights and run its business as usual, shortly after Thailand’s government approved a plan to allow the business to restructure under bankruptcy protection.
Prime Minister Prayuth Chan-ocha’s cabinet approved a rehabilitation plan that will see Thailand’s flag carrier file for bankruptcy and restructure, after rejecting a proposed 54bn ($1.7bn) bailout for the airline.
Thai Airways’ entry into administration makes it one of the airline industry’s highest profile casualties to date of the coronavirus pandemic.
Mr Prayuth said that while undergoing restructuring, Thai Airways would receive no financial aid from the government and its 20,000 staff would keep their jobs. The company said:
Although Thai’s reform plan will be implemented and exercised through the business reorganisation chapter under the bankruptcy law, Thai will not be dissolved or go into liquidation or… be declared bankrupt.
The airline said that its air tickets were still valid for travel. Thailand’s airspace remains closed to most commercial flights until the end of May as part of the kingdom’s efforts to contain the spread of Covid-19.
Pakistan’s supreme court rules virus is ‘not a pandemic’
Farhan Bokhari in Islamabad
Pakistan’s supreme court has ordered the lifting of the remaining restrictions imposed earlier on businesses to halt the spread of coronavirus, paving the way for a return to normal.
In a binding decision, the court said the virus “apparently is not a pandemic in Pakistan” questioning why fighting it was “swallowing so much money”.
The supreme court’s order on Monday means that businesses will pick up some of their revenue which peaks in the days leading up to the post- Ramadan Eid-ul-Fitr festival on the coming weekend.
So far, the number of confirmed coronavirus infections have reached over 43,000 while more than 900 people have died of the disease in Pakistan. Just over 12,000 have recovered.
Prime minister Imran Khan has used these statistics to push back against a total lockdown on the grounds that there have been relatively fewer deaths from Covid-19 in Pakistan than in Europe or the US.
Pakistan’s economy, which is under austerity measures in order to satisfy the terms of a $6bn IMF loan that was secured last year, has been badly hit. The IMF and Pakistani officials say the economy will contract by 1.5 per cent in the current financial year which ends in June.
Airlines in South Korea to restore some international routes
Song Jung-a in Seoul
South Korean airlines are preparing to resume some of their international routes which have been suspended due to coronavirus, as travel restrictions ease in many parts of the world.
National carrier Korean Air plans to resume flights to Washington and Seattle as well as to Vancouver and Toronto next month, about 50 days after they were halted. It will open 32 of its 110 international routes in June.
Second-ranked Asiana Airlines also plans to reopen 13 international routes next month to operate 27 of its 73 international routes in total. The resumed flights are mostly to Chinese cities, Asiana said.
“We cannot just wait [for things to improve] indefinitely so we are preparing to resume some flights in case other countries lift entry bans,” said an Asiana spokesman.
Other low-cost carriers in South Korea have also started taking bookings for some international routes. The moves are part of their efforts to boost earnings after the country’s airlines all suffered operating losses in the first quarter amid the unprecedented industry crisis caused by the pandemic.
Korean Air and Asiana posted operating losses of Won56.6bn ($46m) and Won208bn respectively in the first three months of this year, hit by low travel demand. Shares of Korean Air and Asiana jumped 8 per cent and 5 per cent respectively on Tuesday, outperforming a 2.3 per cent gain in the country’s benchmark Kospi Composite index.
Russia approaches 300,000 Covid-19 cases
Henry Foy in Moscow
Russia reported another 9,263 cases of Covid-19 on Tuesday as the country’s total infections rose to just under 300,000.
The country has the world’s second highest number of coronavirus infections after the US, but government officials say that the rate of infection has now stabilised.
Russia said 115 more people died of the virus overnight to take its total death toll to 2,837, a far lower number of deaths per cases than the global average and all other major countries.
Under pressure to restart the country’s paralysed economy, president Vladimir Putin lifted a national lockdown last week. It has been 18 days since Russia recorded fewer than 8,000 new cases in a 24-hour period.
Singapore’s lockdown is raising risk of catching dengue fever
Stefania Palma in Singapore
Singapore reported 451 new coronavirus cases on Tuesday, as the second wave associated with migrant workers begins to dissipate, however the government has warned the lockdown is raising the risk of catching dengue fever.
Tuesday’s numbers were higher than Monday’s count of 305 additional patients, but far below the high triple-digit daily tally recorded earlier this month. Migrant workers living in dormitories still account for the majority of new infections.
But the city state is also facing a jump in dengue virus transmission. The National Environment Agency reported 529 dengue cases last week, up from the 300 to 400 weekly cases identified in the first four months of 2020.
“As we enter the warmer months ahead, the increased risk of higher transmission of dengue is a concern,” the NEA said in a statement. “With more people staying home, there is a higher risk of disease transmission within housing estates, especially in areas where the population of the Aedes mosquito vector — a day biter — is high.”
The NEA’s dengue-prevention efforts during Singapore’s near total lockdown, which will remain in place until June 1, include using SMS messages to alert residents in cluster zones and ramping up surveillance at construction sites that have remained closed during the lockdown.
Two contractors will be charged in court for not meeting pest control requirements, the NEA said.
UK government warns jobless rate could rise further
Sebastian Payne in London
The UK government has warned the unemployment rate could rise significantly, even after the number of people claiming out-of-work benefits soared to 2.1m in April.
Even though that was an increase of 856,500, work and pensions secretary Therese Coffey told the BBC that coronavirus had created an “unprecedented emergency” for the jobs market that would see the rate of unemployment “increase significantly.”
Ms Coffey said there were a “substantial number of vacancies” in the UK jobs market that had to be filled, adding:
There’s an aspect of retail. There are quite a lot of vacancies or employment wanted in our agricultural sector to help in our near future. Those very much need to be filled as well.
The minister also said that the NHS app for tracking coronavirus was being delayed to ensure a pilot scheme taking place on the Isle of Wight could be fully monitored. The government admitted on Monday it would miss its target of a roll out by “mid May” and the app may not be fully available for some weeks. She said:
It’s important that the trial, the pilot in the Isle of Wight, is allowed to run its full length that’s needed – rather than perhaps the target deadline the health secretary has set.
Ms Coffey added that nationwide roll out of the app was not a condition for reopening schools on June 1.
Claiming that a network of human contact tracers would be in place by then, she said:.
I think it’s better to get the app as good as we can make it rather than rush out an app and have to change it.
Pier 1 Imports scraps rescue sale in favour of wind-down
Troubled US home furnishing retailer Pier 1 Imports, which entered bankruptcy protection in February, plans to wind down its operations after coronavirus scuppered its hopes of a rescue deal.
The retailer, which started out in 1962 as a single California store selling imported bean bags and incense to customers keen on exotic homewares, said it would “begin an orderly wind-down of the company’s retail operations as soon as reasonably possible,” pending court approval.
Having filed for Chapter 11 bankruptcy protection in February after it suffered from heavy competition from Amazon, Ebay and discounters such as TJ Maxx, Pier 1 said it would now sell all of its inventory and remaining assets and exit its 541 stores.
“This decision follows months of working to identify a buyer who would continue to operate our business going forward,” said Robert Riesbeck, chief executive.
“Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of Covid-19, hindering our ability to secure such a buyer and requiring us to wind down.”
Pier 1 had a market capitalisation of about $3bn in 2014 but began showing signs of strain at the end of that year, when it warned on profits and announced a 5.7 decline in December sales, compared to the previous year.
By December 2018 the group had parted company with former chief executive Alasdair James, after a turnaround plan he was in charge of failed to deliver meaningful improvements to the business.
In its February bankruptcy filing, Pier 1 announced it would close up to 450 stores but said it had also secured a $256m lending facility that would see it through its attempts to find a buyer.
The group said on Tuesday, however:
Ultimately, due to the combination of a challenging retail environment and the new reality and uncertainty of a post-COVID world, the company and its advisors determined that an orderly wind-down is the best way to maximize the value of Pier 1’s assets.”
Russian prime minister returns to work after Covid-19 recovery
Henry Foy in Moscow
Russia’s prime minister Mikhail Mishustin has returned to his post after an almost three-week absence to recover from Covid-19 infection.
Since Mr Mishustin stepped down on April 30, Russia’s number of coronavirus cases has almost trebled to 300,000, and the government has come under increasing pressure to find a way to ease a lockdown that analysts estimate will knock 6 per cent off Russia’s gross domestic product this year.
Mr Mishustin’s return to head up the government means his stand-in, Andrei Belousov returns to his role as first deputy prime minister.
President Vladimir Putin has tasked his cabinet with the difficult job of both stamping out the growth in Covid-19 infections that has made Russia the world’s second-most affected country, and reopening a paralysed economy that has seen unemployment double.
The Kremlin said on Tuesday that Mr Putin had signed a decree nullifying an earlier decree that had appointed Mr Belousov as Mr Mishustin’s replacement.
UK excess death count since Covid-19 crisis began hits almost 55,000
Official figures showed that just under 55,000 more people have died across the UK than the average of the past five years since the coronavirus pandemic struck in March.
Excess death registrations in England and Wales rose another 3,081 in the week ending May 8, according to the Office for National Statistics, although the figure was flattered by VE day celebrations which closed registrations for the Friday of that week.
The ONS said the figure of 12,657 deaths registered in that week would probably have been about 20 per cent higher if it had been a normal working week.
Nick Stripe, head of life events at the ONS, told the BBC: “We would have probably been above 15,000 [deaths registered] if it had not been for the VE day bank holiday”.
Death registrations were down by just over 5,000 from 17,953 the previous week ending May 1.
For the first week since the pandemic began, deaths in hospitals were back to normal levels and recording of deaths as linked to Covid-19 rose. There were still 2,247 more deaths than average for the week in care homes.
For the first week since the epidemic spread across the UK, more deaths were linked on death certificates to Covid-19 than the total number of excess deaths.
Beijing accuses Trump of coronavirus ‘smear’ campaign
Thomas Hale in Hong Kong
China has hit back at US President Donald Trump’s threat to withdraw from the World Health Organisation, accusing Washington of attempting to shift the blame for its own handling of the coronavirus crisis.
Beijing’s foreign ministry spokesman Zhao Lijian, said on Tuesday that the US was trying to “smear” China, in comments reported by state media.
The Chinese government was responding to a letter from US President Donald Trump in which he threatened to withdraw from the WHO unless it showed it was independent from China.
Yesterday, President Xi Jinping had sought to cast China in a positive light in a speech at the annual meeting of the WHO, pledging $2bn over two years towards the global response to the pandemic.
This week’s tensions follow rising international criticism of China’s role in the origins of the coronavirus pandemic.
German investor confidence in economic outlook improves sharply
Investors are growing more bullish about a German economic rebound as governments steadily lift the lockdowns they imposed to contain the pandemic, according to a survey of investors published on Tuesday.
The Zew poll of German investors found that sentiment about the outlook for Europe’s coronavirus-stricken economy had surged to its highest level in years, even as their assessment of the current economic climate continued to deteriorate to its lowest point for over a decade.
“Optimism is growing that there will be an economic turnaround from summer onwards,” said Achim Wambach, Zew president. “According to the financial market experts surveyed, economic growth is expected to pick up pace again in the fourth quarter of 2020.”
But Mr Wambach added that most investors still believe a full economic recovery from the pandemic will take two years. “Only in 2022 will economic output return to the level of 2019,” he said.
The Zew survey of 202 analysts and investors last week found they anticipated a sharp economic rebound now that lockdowns are being eased. Sentiment about the outlook for the German economy rose by 22.8 points month-on-month to reach a five-year-high of 51 in May.
However the gauge of sentiment about the current economic situation in Germany fell by 2 points to a new record low of minus 93.5. Investors’ outlook for the eurozone economy also rebounded – albeit slightly less strongly – to 46 points, while their assessment of the current eurozone economic climate dipped even deeper to minus 95.
“As many European countries have started to ease their lockdowns, the outlook, albeit still uncertain, is turning less uncertain,” said Florian Hense, economist at Berenberg. “Both activity and sentiment have started to recover, and should gather more pace by the day.”
EU pushes back against attacks on WHO
Michael Peel in Brussels
The EU has denounced “finger pointing” against the World Health Organization after President Donald Trump threatened to end US funding of the global health body over its pandemic response.
“This is the time for solidarity, not the time for finger pointing or for undermining multilateral co-operation,” Virginie Battu-Henriksson, a foreign affairs spokesperson for the European bloc, told reporters on Tuesday.
The European Union backs the WHO in its efforts to contain and mitigate the Covid-19 outbreak and has already provided additional funding to support these efforts.
The EU is pushing for the annual meeting of WHO members on Tuesday to launch an “impartial, independent and comprehensive evaluation” into the international handling of the coronavirus health emergency.
Mr Trump on Monday accused the global health body of neglecting to share information about the initial Covid-19 outbreak in China, failing to press Beijing sufficiently for answers, and of making “grossly inaccurate or misleading” claims about coronavirus. The WHO has previously denied the allegations.
Walmart sees ‘unprecedented demand’ as sales surge
Alistair Gray in New York
Walmart said “unprecedented demand” for essential products during the pandemic had caused sales to surge, although the world’s biggest retailer joined other large companies in withdrawing financial guidance for the year.
Walmart’s like-for-like revenues in the US jumped 10 per cent, led by sales of food, consumables, health and wellbeing and some general merchandise. Ecommerce sales in the country leapt 74 per cent to an undisclosed level.
While the crisis is a big business opportunity for Walmart, it has also put the retailer in the public spotlight over the treatment of workers, including health and safety in stores and its absence policies. In its results statement, Walmart said it had incurred costs related to Covid-19 of $900m, including higher wages for staff and enhanced safety measures in stores.
The company also withdrew full-year guidance despite the quarterly sales surge. Walmart produced revenues of $134.6bn in the three months to the end of April, 8.6 per cent more than a year ago. Net income jumped from $3.91bn the same period a year ago to $4.074bn.
Shares in Walmart are up 8.3 per cent for the year compared with a 8.7 per cent decline in the S&P 500 index. They gained another 4.6 per cent in pre-market trading.
Kohl’s reports sales slump, but says about half its stores have reopened
US department store chain Kohl’s has reopened about half its stores across the country, but suffered a 44 per cent decline in first-quarter net sales as non-essential businesses closed in an effort to curb the spread of the coronavirus pandemic.
The Wisconsin-based company reported net sales of $2.16bn, that was down from $3.8bn in the year-ago quarter and missed Wall Street expectations for $2.18bn.
Kohl’s digital sales climbed 24 per cent and accelerated to 60 per cent in the month of April even as the company closed all its stores on March 20 and temporarily furloughed 85,000 associates later that month. The company reopened 50 per cent of its stores by May 4, but did not highlight how many of its workers were rehired.
However, higher shipping costs driven by a jump in online sales, along with markdowns and the establishment of a reserve for excess seasonal inventory weighed on the company’s gross margin, which fell sharply to 17.3 per cent, from 36.8 per cent in the first quarter of 2019.
Kohl’s swung to a net loss off $541m or $3.50 a share, compared with a profit of $62m or 38 cents a share. Adjusting for one-time items, its loss of $3.20 a share was worse than expectations for a loss of $1.80.
The pandemic has taken a heavy toll on the retail industry with Neiman Marcus, JCPenney and JCrew among the big names to have filed for bankruptcy protection. Kohl’s said it ended the quarter with $2bn in cash on hand.
Two-thirds of investors think stock markets will fall, BofA survey shows
A majority of investors believe the global stock market rally will swing into reverse, with a second wave of coronavirus cases topping their list of worries.
About two-thirds of fund managers polled in a monthly Bank of America survey said that the rise in stocks is a bear market rally — a strong but doomed bounce — against a background of dire economic data.
Robust efforts by central banks and governments around the world to dull the economic impact of coronavirus have helped to avert a full-blown financial crisis and fuelled a sharp rise in global stock markets over the past two months.
Only 10 per cent of those surveyed expect a rapid V-shaped economic recovery from the pandemic, echoing warnings from US Federal Reserve chair Jay Powell that a rebound in the US economy is likely to be protracted. Most believe that the development of a vaccine to address coronavirus would fuel a swift bounce.
Financial markets were hit hard in late February and most of March, when lockdowns kicked in across major economies in an effort to slow the spread of coronavirus. Since then, though, the FTSE All-World index has risen by about 30 per cent — comfortably a large enough jump to be classified as a bull market. The technology-focused Nasdaq Composite index is in positive territory for the year.
10m UK workers now receiving government wage subsidies
The number of workers now receiving wage subsidies from the UK government has reached 10m, according to the latest figures from the Treasury.
There are 8m people who have received £11.1bn so far through the employee furlough scheme, according to officials. Another 2m claims have been made through the self-employed scheme worth £6.1bn.
A Treasury spokesman indicated that the self-employed scheme, which is set to finish at the end of June, could be extended at some point. Rishi Sunak, the chancellor, has already extended the main furlough scheme to the end of October.
Asked about extending the self-employed scheme, the spokesman said:
The chancellor said last week we are looking at the scheme in the round…but our immediate focus is on making sure the money gets out the door….we haven’t ruled anything out on it.
Mr Sunak said – at the time he unveiled the self-employment scheme – that it would provide “parity of support” for employees. But the spokesman said that the policy was a “blunter instrument” than the main furlough scheme because it allowed the self-employed to keep working while still receiving the state subsidies.
Singapore takes steps towards reopening economy
Stefania Palma in Singapore
Singapore will gradually reopen schools and select businesses starting on June 2, marking the next step towards resuming economic activity after weeks under a near-total lockdown.
Companies in sectors such as finance, insurance and logistics that meet safety and distancing requirements may reopen next month, but staff who can work from home should continue to do so, said Chan Chun Sing, minister for trade and industry. About a third of Singapore’s workers will return to their work places – up from 17 per cent – allowing more than three-quarters of economic activity to resume, he added.
This year’s graduating cohorts will return to school full time while other primary and secondary student groups will be home schooled every other week.
Gan Kim Yong, health minister, said Singapore’s reopening involved three phases, the first of which would last at least four weeks, or two coronavirus incubation cycles. The second – involving a broader resumption of social and economic activity – would probably last several months, followed by a long-term third stage marking a “new normal” until a vaccine or treatment is found.
The health ministry said Singapore will progressively reopen its borders “to conduct essential activities overseas and to allow safe travel for foreigners entering or transiting through Singapore”, independent of the three phases of economic revival. The city state is considering piloting “green lane arrangements” for essential travel with countries with the same or lower risk of community transmission as Singapore.
US new housing construction rate tumbles in April
The rate of new home construction in the US tumbled in April by the most on record as social distancing measures put in place during the coronovirus pandemic and a sharp surge in unemployment hit the housing market hard during the key spring selling season.
New housing starts tumbled 30.2 per cent last month from March to an annualised 891,000, according to the Commerce Department, compared with economists’ expectations for a drop to 927,000. That marked the biggest monthly decline since records going back to 1959 and the lowest level since February 2015.
The report also showed building permits for new homes — considered to be a leading indicator of the property market — fell 20.8 per cent month-on-month to an annualised 1.074m.
“While residential construction has been considered essential activity in many states during lockdowns, social distancing measures, plunging confidence and soaring unemployment have still taken a severe toll on residential activity,” said Gregory Draco, economist at Oxford Economics. He noted that this wiped out five years of gains for the market.
Covid-19 to force up to 60m into extreme poverty, World Bank chief says
Jonathan Wheatley in London
Up to 60m people will be pushed into extreme poverty by the coronavirus crisis, erasing efforts over the past three years to alleviate poverty in the world’s poorest countries, said David Malpass, president of the World Bank Group.
He said the bank expected world economic output to contract by as much as 5 per cent in 2020. “Families have lost loved ones, millions of livelihoods have been destroyed and healthcare systems are under strain worldwide,” he said.
The World Bank Group has made available $160bn in grants and low interest loans over 15 months to help poor countries tackle the crisis. Mr Malpass said 100 countries, home to 70 per cent of the world’s population, had already been granted emergency finance.
However, he said, “while the World Bank is providing sizeable resources, it won’t be enough.” He expressed frustration at a lack of engagement by commercial lenders in a debt service suspension initiative announced last month for 73 of the world’s poorest countries by the G20 group of rich countries.
Extreme poverty is defined by the World Bank as living on less than $1.90 a day.
US stocks nudge lower
Stocks on Wall Street nudged lower at the open, with the S&P 500 falling 0.2 per cent and the tech-heavy Nasdaq unchanged.
In Europe, London’s FTSE 100 was down 0.7 per cent in afternoon trading while Frankfurt’s Xetra Dax was 0.2 per cent lower.
The subdued moves meant equities were largely holding on to Monday’s sharp gains, after investors welcomed several developments that boosted hopes for a strong economic recovery once lockdown curbs were lifted.
US expands pharmaceutical manufacturing capabilities
Hannah Kuchler in New York
The US government is investing up to $812m in expanding domestic pharmaceutical manufacturing, amid concerns that the country is too reliant on China and India for vital ingredients for drugs.
Drugmaker Phlow Corporation is leading the partnership to provide active pharmaceutical ingredients immediately during the Covid-19 pandemic to prevent drug shortages – and will build a new factory in Virginia for the future.
Alex Azar, Secretary of State, said it was a “significant step” to rebuild domestic ability to protect the country from health threats. “The Covid-19 pandemic has reminded us how health threats or other sources of instability can threaten America’s medical supply chains, potentially endangering Americans’ health,” he said.
The four-year deal with Biomedical Advanced Research and Development Agency, known as Barda, is worth $354m. It can be extended for up to $812m over a total of 10 years.
Spanish government clinches deal to extend sweeping lockdown powers
Daniel Dombey in Madrid
Spain’s government has said it has reached agreement with an opposition party on prolonging the extraordinary legal order underpinning the country’s coronavirus lockdown, virtually assuring victory for prime minister Pedro Sánchez in a crucial parliamentary vote on Wednesday.
Mr Sánchez called at the weekend for a month-long extension until the end of June for the so-called state of alert, which grants his government powers to rule by decree and limit the freedom of movement.
The pro-market Ciudadanos party has now agreed to support a further extension in Wednesday’s vote – but only for 15 days – during which time the minority coalition government has committed to studying measures and “if necessary legislative reforms” to manage the health crisis without the state of alert.
Political opposition to the state of alert has grown during the two-month lockdown, which has now been relaxed for most of Spain, with Mr Sánchez’s critics arguing that its sweeping powers have given the government too much sway and are no longer required.
In Tuesday’s deal with Ciudadanos, the Socialist-led government also agreed to give taxpayers more time to settle their obligations to the treasury, to speed up benefit payments to people on temporary leave schemes and to consider the extension beyond the state of alert of subsidies to self-employed people. The agreement is the second such accord in two weeks between the government and Ciudadanos, which has only 10 members in the 350 chamber of deputies, but can provide crucial casting votes.
Number of daily deaths continues to fall
Steve Bernard in London
A further 3,138 people died of the disease caused by coronavirus yesterday. This is the lowest daily rise since March 30, according to data from the European Centre for Disease Prevention and Control.
The US death toll rose by 786 — the lowest daily total for seven weeks — bringing the death toll to 84,640. The country also recorded 19,866 infections yesterday, pushing the national total to just shy of 1.5m.
Globally, the number of newly confirmed Covid-19 cases rose by 86,704 yesterday, the worldwide total now stands at 4.75m.
The UK reported its lowest daily death toll since March 25 as 160 fatalities were recorded, bringing the total to 34,796. The number of new infections also rose by 2,711, the smallest increase in seven weeks.
Brazil remains the worst affected country outside of the US by daily deaths and cases. Monday’s death toll of 674 pushed the country’s total since the pandemic began to 16,792. It also reported 13,140 new infections, increasing the total to 254,220 and surpassing the UK.
EU finance ministers approve €100bn job retention fund
EU finance ministers have signed off a €100bn scheme to help fund job-retention programmes during the pandemic, even as governments stepped up their sparring over far larger recovery plans.
The EU initiative to support short-term working schemes, known as SURE, was approved by ministers during a videoconference where they also discussed a Franco-German proposal for a €500bn programme of grants to be financed by EU borrowing.
German finance minister Olaf Scholz presented the proposal, which officials said encountered resistance from countries including the Netherlands, Austria, and Denmark, whose governments want any such initiative to be limited to supplying loans.
Commission president Ursula von der Leyen will next week present her own recovery fund plans as part of a blueprint for the EU’s next multiannual budget, known as the MFF.
Mr Dombrovskis said that Brussels would propose a large programme of grants and of loans, amounting to extra EU financing “exceeding a trillion euros”.
“Of course in this case we talk about both loans and grants. But in any case that is the level of ambition we are talking about in our recovery instrument proposal,” he said.
The Dutch and Austrian ministers said during the videoconference, which was not public, that the focus “should be on responding to actual needs and not expanding the MFF”, an EU official said.
US opposes poor nations bypassing patents to secure Covid-19 vaccine
Michael Peel in Brussels
The US has rejected language in a World Health Organization resolution that backs the rights of poor countries to ignore patents in order to gain access to a Covid-19 vaccine or treatment.
Washington dissociated itself on Tuesday from elements of a motion passed by WHO members that it said sent “the wrong message to innovators who will be essential to the solutions the whole world needs”.
The US criticism comes as poor countries in Africa and elsewhere fear they could be squeezed out of access to anti-coronavirus therapies, unless companies that discover them are forced to share intellectual property to allow large-scale manufacture.
Washington did not vote against the resolution proposed by the EU and others but instead issued a statement repudiating the wording of several parts of it, including three paragraphs relating to emerging Covid-19 therapies. These included references to the so-called Doha Declaration, in which World Trade Organization ministers said governments could overrule intellectual property in a public health emergency.
“The United States recognizes the importance of access to affordable, safe, high-quality, and effective health products and the critical role that intellectual property plays in incentivizing the development of new and improved health products,” the US objection note said. “However, as currently drafted, [the three paragraphs] send the wrong message to innovators who will be essential to the solutions the whole world needs.”
UK tourism industry pushes for October holiday to encourage staycations
Alice Hancock in London
Tourism bosses have called on the government to add an extra bank holiday in October and increase marketing funding as part of a drive to encourage the UK public to holiday at home this year.
Patricia Yates, acting chief executive of VisitBritain, told MPs on Tuesday that the sector faced billions in lost revenue due to coronavirus lockdowns and would need domestic tourism to make up for the shortfall in international visitors.
“To get British tourism up and running this summer and this summer is hugely important you are going to need that domestic audience,” Ms Yates said. But, she added, “the worrying thing we see is the lack of confidence in the British public about travelling”.
The UK government’s message to ‘Stay Home’ had been so effective that a VisitBritain survey showed that only 19 per cent of British consumers were considering booking a domestic holiday. In Italy, which has begun to open up bars and cafes, 43 per cent planned to take a staycation this summer.
Spending by domestic tourists was £91.6bn in 2019, but VisitBritain estimates that the coronavirus crisis could wipe as much as £22bn from that figure this year as demand plummets and businesses face steep reopening costs in order to comply with government health and social distancing guidance.
US airlines United and Southwest say demand improving
Two of the largest US airlines have seen an uptick in demand and a slowdown in ticket cancellations, as states lift stay-at-home orders and the number of new coronavirus cases abates.
United Airlines said on Tuesday cancellation rates are down and there has been a “moderate improvement in demand” in the US and some international destinations for the remainder of the second quarter, according to filings with the securities regulator.
Likewise, Southwest Airlines said that it has “recently experienced a modest improvement in passenger demand, bookings, and trip cancellations”. As of May 18, Southwest recorded more bookings than cancellations since the start of the month, it added.
Airlines, cruises and hotels are a few of the industries feeling the biggest impact from the coronavirus pandemic, which brought global travel to a near halt and forced United, Southwest and their peers to sharply cut back on flights.
United registered a 95 per cent decline in gross bookings in April compared with the year-ago month, as cancellation rates reached “unprecedented highs”.
With demand on the mend, United expects scheduled capacity for July to be down approximately 75 per cent versus last year, compared with a 90 per cent cut to capacity for May and June.
Southwest estimated that capacity in June will decrease between 45 and 55 per cent. In May, its capacity is expected to be down 60 to 70 per cent.
Shares in the airlines trimmed their gains in recent trading, with Southwest up 1.9 per cent and United nursing a 0.5 per cent gain.
Dimon says regulatory constraints could limit lending during pandemic
Laura Noonan in New York
America’s biggest and most profitable bank JPMorgan Chase has warned that regulations could hamper its ability to lend to clients through the coronavirus crisis.
Addressing shareholders at the bank’s annual meeting, chief executive and chairman Jamie Dimon said that even though JPMorgan had ample capital and liquidity, if the outlook worsened “the current regulatory constraints may nonetheless limit additional actions we can take to help our clients”.
The bank has already seen a surge in demand from clients for extra loans, and offered payment holidays and other fee breaks to 1.5m account holders who can no longer meet their commitments.
Mr Dimon said the bank could “shield our capital and liquidity buffers by restricting our activities”, but would not do that. “Our actions during this crisis are essential to keep the global economy going, and will be judged for years to come,” he said.
He also used his opening remarks to call for a historic change to the “body politic” in America after the coronavirus crisis highlighted that “too many people are being left behind” in the US economy.
“America is still the most prosperous nation, the world has ever seen,” Mr Dimon added. “It has and will continue to be a beacon of hope for the world, and the world’s best and brightest.”
US plans to set up $600bn ‘Main Street’ lending programme by end of May
James Politi in Washington
Jay Powell, the chair of the Federal Reserve, and Steven Mnuchin, the US treasury secretary, said a $600bn lending facility to help “Main Street” America would be set up by the end of the month, amid pressure from lawmakers to make the funding flow more rapidly to struggling medium-sized businesses.
“It’s a really complex undertaking and people are working literally around the clock and have been for weeks to get it ready by the end of this month,” Mr Powell said on Tuesday morning as he testified before the Senate banking committee in a virtual hearing.
The “Main Street lending programme” is one of the cornerstones of the $2.2tn stimulus package enacted by the US in March to support the economy in the midst of the coronavirus pandemic. Backed by $75bn in equity from the US Treasury department, it was intended to offer loans to businesses with up to $5bn in revenue and 15,000 employees that lacked access to other sources of funding. However, more than two months after the programme was authorized, it has yet to get off the ground, and faces concerns that its eligibility criteria might be too strict to help broad swaths of the US economy.
Germany’s finance minister evokes Hamilton in call for reform in the EU
Guy Chazan in Berlin
Olaf Scholz, Germany’s finance minister, said the EU should embark on far-reaching fiscal reform, saying Europe was approaching its Hamilton moment.
In an interview with the German weekly Die Zeit, he said Alexander Hamilton, the first US Treasury Secretary, who in 1790 turned the US into a fiscal union by converting state debt to federal debt and backed it with federal taxes and a foreign loan, could become a “historical model” for the EU.
“It is very clear to all of us that we can’t leave everything in the EU as it is right now,” he said. “We can only endure in the world of the 21st century if we stand together, and a more integrated fiscal policy could be an important step on this path.”
Quoting Winston Churchill’s famous phrase that one should “never let a good crisis go to waste”, he said Europe should exploit the turmoil caused by the coronavirus pandemic to “grow into a proper union”.
“As we integrate more closely, the temporary issuance of debts on a European level should not be a taboo,” he said. The EU should think about raising its own revenues, say from a common financial transaction tax or a Europe-wide emissions trading scheme for air and sea traffic, he added.
Mr Scholz was speaking a day after German chancellor Angela Merkel and French president Emmanuel Macron unveiled a proposal for a €500bn coronavirus recovery fund, which would be raised by the European Commission borrowing on capital markets.
Asked if he was worried that other EU member states might block the Franco-German proposal, Mr Scholz said the Europeans “should free ourselves from the idea that we can only make progress in Europe when the Holy Spirit comes over us and we all suddenly wake up with the same opinion”.
“That’s not realistic. Someone must take the lead – and then win round the others.”
Czech Republic reports biggest jump in new cases in three weeks
James Shotter in Warsaw
The Czech Republic on Tuesday reported its biggest jump in new coronavirus infections in three weeks, as the central European country pushes ahead with plans to reopen its economy.
One-hundred eleven people in the central European country tested positive for the novel virus, only the second time since April 22 that the sum of daily infections has hit three figures. In total, 8,604 people have been infected and 301 have died, according to data from Johns Hopkins University.
Czech media reported that the spike in new infections was due to an outbreak in a mine in the Karvina region, and health minister Adam Vojtech said that there might be higher numbers of new cases in the coming days as large numbers of miners are tested.
The Czech Republic was one of the quickest countries to impose wide-ranging restrictions on public life in a bid to contain the pandemic, but over the last month has been reopening its economy. Shops, cafés, hotels and restaurants have now reopened, and masks are no longer obligatory outdoors, although they must still be worn in confined spaces.
Canada and US agree to extend border closure by 30 days
The US and Canada have agreed to close the border to non-essential travel for an additional 30 days, prime minister Justin Trudeau said amid the ongoing coronavirus pandemic.
The agreement would now keep border protections in place until June 21; it was previously set to expire on Thursday after a 30-day extension was announced in April.
“This is an important decision that will keep people in both of our countries safe,” Mr Trudeau said during his daily press briefing in Ottawa.
Mr Trudeau added the move was the “right thing” and said decisions are being made on a “week-to-week” basis. He said: “the situation is changing rapidly and we’re adjusting constantly to what is the right measures for Canadians, to get that balance right between keeping people safe and restoring a semblance of normality and economic activity that we all rely on”.
The US has been the hardest hit, with more than 90,000 deaths, compared with nearly 6,000 fatalities in Canada, according to data from Johns Hopkins University.
Spanish daily death toll remains below 100 for third day
Daniel Dombey in Madrid
The daily death toll from the coronavirus remained below 100 for a third consecutive day, data on Tuesday showed as death rates and infection rates have tumbled since the peak of the outbreak in Spain.
According to the latest data, published on Tuesday, 83 people died in the last 24 hours, compared with about 950 during the peak in early April. The figures exclude people who died exhibiting signs of Covid 2, but without being tested.
Meanwhile, the spread of the virus is slowing. In the most recent 24 hour period, fewer than 300 people had positive results for the virus infection tests, signifying a day-on-day increase of just 0.13 per cent. In so-called PCR tests, 232,000 people have had positive results, the most reliable indication of infection.
The slowing death and infection rates come as prime minister Pedro Sánchez has all but secured victory in a vote to extend the powers underpinning Spain’s coronavirus lockdown.
Under the accord agreed with the pro-market Ciudadanos party on Tuesday, the government will retain sweeping powers to rule by decree and limit freedom of movement until June 7 — during which time it will work on alternative measures to manage the pandemic. Parliament will vote on the issue on Wednesday, with Ciudadanos’ 10 deputies likely to decide the result.
Tight capacity behind UK’s March move to abandon widespread testing
Laura Hughes in London
Angela McLean, the government’s deputy chief scientific adviser, has confirmed the decision to abandon widespread community testing in mid-March was because of limited testing capacity.
The UK is facing questions over why ministers decided to halt its test, track and trace system on March 12 and instead concentrate testing resources on hospitals instead.
Speaking at the daily Downing Street briefing, Professor Mclean said: “The advice that we gave certainly took account of what testing was available. It was the best thing to do with the tests that we had. We could not have people in hospital with Covid symptoms not knowing whether or not they had Covid.”
Professor McLean also said the UK would seek to emulate the track and trace contact tracing system enforced in South Korea and suggested an update on the timetable for such a roll-out could be made on Thursday.
“We need to look to our near neighbours and also countries further away to learn what works and how long it takes to see if something is working or not working,” she said.
The two I would draw particular lessons from would be South Korea, where I feel they’ve made inspiring use of all kinds of different contact tracing in order to control infection to an extent that they are now down to a handful of new cases every day, and when they say new cases they mean people they have found in the community because of their contact tracing efforts.
I think that is an experience that we are aiming to emulate. The other country I would look to is Germany, where the importance of testing has always been so clear and that is a place from where we have learned that we need to grow our testing facility, and have grown our testing facility.”
Professor McLean said: “Running a rapid and reliable testing system is an entirely operational issue, and the scientific advice is you need a rapid and reliable testing system.”
Asked if that was now the case, she said: “I think it is getting better.”
UK environment secretary calls for furloughed workers to help pick fruit
Laura Hughes in London
UK environment secretary George Eustice made a plea for furloughed workers to “lend a hand” and help pick fruit in order to “supplement their income”.
After his appearance at the daily Downing Street briefing, the government’s new “Pick For Britain” web site appeared to have crashed. “The service is unavailable”, the web site said.
Mr Eustice said: “Every year large numbers of people come from countries such as Romania or Bulgaria to take part in the harvest, harvesting crops such as strawberries and salads and vegetables.”
We estimate that probably only about a third of the people that would normally come are already here, and small numbers may continue to travel.
But one thing is clear and that is that this year we will need to rely on British workers to lend a hand to help bring that harvest home.
New York to test hospital visits as daily death toll drops
Joshua Chaffin in New York
New York’s coronavirus daily deaths are roughly back to where they were at the outset of crisis governor Andrew Cuomo said during a press briefing where he announced a pilot programme to again allow visitors at hospitals.
The state reported 105 coronavirus deaths over the past 24 hours, a level last seen in late March. In a further sign of the state’s progress at containing the pandemic, Mr Cuomo said New York would test allowing visitors at hospitals, having previously been banned in order to prevent the spread of infection, thus leaving many coronavirus victims to suffer in isolation.
Still, Mr Cuomo sounded the alarm about a mysterious inflammatory disease, linked to Covid-19, that is appearing in children. New York now has 137 confirmed cases of the disease, with many more suspected. He called that tally “just the tip of the iceberg” and said he expected more such cases to emerge across the world.
The governor also warned companies against taking bailout money from the federal government and then cutting their workforce, saying it would be a “scandal and a fraud”.
Meanwhile, a day after reports of promising results in a coronavirus vaccine trial, Mr Cuomo also urged the federal government to begin preparing policies to ensure that any such treatment is made readily available to citizens around the world.
Mr Cuomo — who has carried on a hot-and-cold relationship with the Trump administration throughout the pandemic — took a veiled swipe at the president on Tuesday as he demanded more aid for his state, and others, to plug yawning fiscal gaps.
“You can’t just tell the states: ‘Go reopen. Figure it out!’ And then not supply them with the funding to do it,” he complained, as he restated his demand for a $500bn fiscal package for states.
In comments that appeared directly aimed at Mr Trump, he also insisted that it was now incumbent on government to be more capable and effective, saying: “You have to be smart. You’re not going to tweet your way through this.”
Pence says he is not taking hydroxychloroquine
Mike Pence is not taking hydroxychloroquine, the antimalarial drug that US president Donald Trump has touted as a Covid-19 treatment and said he is taking himself.
“My physician hasn’t recommended that, but I wouldn’t hesitate to take the counsel of my doctor,” Mr Pence told Fox News following the Space Council Meeting. “Any American should do likewise.”
His remarks come after Mr Trump on Monday said he has been taking hydroxychloroquine for nearly two weeks to protect himself from Covid-19. The US Food and Drug Administration last month warned hydroxychloroquine and chloroquine, another antimalarial drug, could cause heart problems.
Mr Pence said on Tuesday: “I would never begrudge any American taking the advice of their physician,” and added “early in this process, the FDA approved what’s called off-label use where physicians could prescribe hydroxychloroquine in terms they deemed appropriate”.
Ohio shifts from stay-at-home order to ‘strong recommendations’
Ohio will no longer require residents to follow coronavirus-related restrictions, instead recommending that people and businesses adhere to health guidelines.
Governor Mike DeWine announced on Tuesday that the state would turn its stay-at-home order into “strong recommendations” that include social distancing, limiting gatherings to 10 people or less, sanitising guidelines for businesses and remaining home when possible.
The new advisory in Ohio – one of many states where shutdowns drew protests – also lifted restrictions on non-essential travel and recommends that high-risk residents stay home as much as they can and avoid crowded places.
“What this comes down to now is that each of us has a responsibility to each other to slow the spread. No other time in our lives will our individual actions play a greater role in saving the lives of so many of our fellow citizens,” Mr DeWine said in a tweet.
Wall Street pulls back as energy and financial shares slide
US stocks fell on the heels of its biggest rally since early April, driven lower by a sell-off in energy and financial shares.
The S&P 500 closed near session lows to slide 1 per cent on Tuesday. The tech-heavy Nasdaq Composite fared the best, down 0.5 per cent, while the Dow Jones Industrial Average shed 1.6 per cent.
Stocks had wavered for much of the session as investors digested a batch of earnings reports from retail giants Walmart and Home Depot. Walmart’s quarterly sales jumped as consumers stocked up on household goods. Home Depot also booked an increase in revenue.
A late sell-off on Wall Street came after an article from Stat News, a health news publication, noted a lack of data available on a potential vaccine for coronavirus. Moderna, the drugmaker behind the vaccine project, said preliminary results from the first phase of its clinical trial were positive – news that fuelled a market rally on Monday. Moderna’s announcement included data from the first eight volunteers to receive the vaccine as part of the trial.
Also on Tuesday afternoon, Donald Trump said during a cabinet meeting that he feels “differently now about that deal than I did three months ago”, referring to the US-China trade deal.
The yield on the 10-year Treasury dropped 0.05 percentage points to 0.693 per cent.
West Texas Intermediate crude settled 2.1 per cent higher at $32.50 a barrel. Brent edged 0.5 per cent lower to $34.65.
US economy forecast to shrink 11.2% in second quarter – CBO
The US economy is forecast to shrink more than 11 per cent this quarter in response to coronavirus-related disruptions and leave more than 25m Americans without a job by the end of September, according to the most recent analysis prepared for the country’s lawmakers.
That contraction in output versus the first quarter and rise in the unemployment rate witnessed this year will end the longest economic expansion in US history and could rank as the most severe since the government began keeping quarterly records soon after the conclusion of the second world war.
The US economy is forecast to contract in the June quarter by 11.2 per cent from the end of March, according to forecasts from the Congressional Budget Office released on Tuesday. That would equate to a drop of 37.7 per cent compared with the second quarter of 2019, and compares with the annual rate of minus 4.8 per cent in the first three months of the year, which represented the steepest decline since the financial crisis.
The CBO’s new forecasts are slightly better than what they projected in April, for a quarter on quarter decline of 12 per cent and a 40 per cent annual contraction. The quarterly growth rate is expected to rise 5 per cent in the third quarter, and then edge up a further 2.5 per cent in the final three months of the year.
The US economy is forecast to shrink 5.6 per cent in calendar 2020, which is better than the mean of minus 5.9 per cent expected by Wall Street economists in a Refinitiv survey. Growth of 4.2 per cent in 2021 is better than the 2.8 per cent pencilled in by the CBO in April. Economists expected 4.7 per cent in 2021.
The CBO’s new forecasts incorporate the economic forecasts of stimulus programmes enacted by the federal government in March and April and “that legislation will partially mitigate the deterioration in economic conditions”.
“In particular, greater federal spending and lower revenues will cause real GDP and employment to be higher over the next few years than they would be otherwise. The effects of the legislation on economic activity will be largest in the second and third quarters of 2020 and smaller thereafter,” the CBO said.
The number of unemployed people is forecast to hit 25.1m by the end of September, compared with 23.6m at the end of June and 5.8m at the end of 2019. By comparison, during the financial crisis, 7.9m were out of work between the end of 2007 and end of 2009, the CBO said.
That equates to unemployment rates of 15.1 per cent and 15.8 per cent at the end of the June and September quarters, respectively.
US daily death rate jumps back above 1,000
The US daily death rate jumped back above 1,000, pushing the total number of fatalities since the pandemic began in the country to more than 86,000.
A further 1,430 people in the US died from Covid-19-related illness over the past 24 hours, according to data compiled on Tuesday by the Covid Tracking Project.
The previous two days had seen back-to-back increases of fewer than 1,000 — the first time that had happened since the end of March — but Covid Tracking project points out that Monday data tend to be low, because of a slowdown in reporting over the weekend, but the numbers tick back up on Tuesday.
The increase was led by New Jersey and Illinois, the second- and sixth-worst hit states, respectively, which saw 151 and 145 deaths over the past day.
New York had the third highest daily increase in deaths, of 114, but remains the hardest-hit state overall with 22,843 deaths.
Since the pandemic began in the US, 86,070 people have died from the virus.