Norway’s unemployment rate hits highest since WWII
Richard Milne in Oslo
Norway’s unemployment rate has more than quadrupled in the past two weeks to reach its highest level since the second world war as the coronavirus outbreak and plunge in oil prices tests western Europe’s largest petroleum producer.
The number of unemployed has jumped from 65,000 on March 10 to 291,000 on Tuesday, resulting in an unemployment rate of 10.4 per cent, according to Norway’s labour and welfare administration (Nav).
“This is the highest unemployment rate in Norway since the second world war,” said Sigrun Vageng, director of labour and welfare at Nav.
The unemployment rate has effectively doubled in each of the past two weeks with 142,000 joining the ranks of the jobless in Norway in the past seven days.
Norway’s currency has plummeted to record lows against the US dollar and euro while the government and central bank have unveiled billion-krone rescue packages for the economy and companies.
BoE admits coronavirus disruption worse than stress test scenario
Matthew Vincent in London reports:
A Bank of England committee has admitted that the initial impact of coronavirus disruption on the financial sector will be worse than envisaged in the last UK bank stress tests.
In a summary of its last two emergency meetings, the UK central bank’s Financial Policy Committee said on Tuesday: “The disruption from Covid-19 would likely be more severe than the stress test in the first phase.”
In its 2019 test, the Bank of England’s adverse scenario envisaged a global recession, with “sharp falls in UK asset prices”, and a 30 per cent depreciation in sterling, leading to higher inflation.
However, the FPC said the impact of coronavirus on UK banks would “ultimately be less protracted and lead to less output loss overall over the course of two years” than imagined in the test.
It also noted that the big UK banks have “Tier 1” capital levels that are three times higher than before the global financial crisis, and UK households and companies still had undrawn borrowing facilities of around £140bn and £260bn respectively. A Bank of England decision to release the “buffer” capital that lenders must normally hold would support up to £190bn of bank lending to businesses, the committee added – which is 13 times the net lending to businesses last year.
Last week, the FPC agreed to cancel the 2020 UK bank stress test to help lenders focus on meeting customer needs during the economic crisis.
Aston Martin, McLaren and Lotus shut plants
Peter Campbell, Motor Industry Correspondent, reports
Aston Martin, McLaren and Lotus have all closed their plants following UK government orders of a nationwide lockdown.
They were the last remaining facilities open in Europe, after major manufacturers from Volkswagen to Toyota shuttered facilities last week in attempts to contain the spread of the coronavirus and also because of falling demand and disruption to their supply chains.
Luxury and supercar manufacturers have been less affected, partly because demand has remained stable, and also because they are able to hold more parts stock, and have workers spaced further apart than in high-volume production sites.
The UK’s luxury carmakers owned by international groups — such as VW’s Bentley or BMW’s Rolls Royce — had already closed last week, while Ferrari and Lamborghini were both forced to close their sites in Italy after the spread of the disease in that country.
Lotus told staff on Monday evening, in the wake of Prime Minister Boris Johnson’s announcement that everyone bar crucial workers must stay at home, that its site will close.
McLaren’s announcement came on Tuesday morning, while Aston Martin’s announcement was made around lunchtime.
Estimated hit to airlines revised upwards to $250bn
Peggy Hollinger, International Business Editor reports:
The world’s airlines face losing more than $250bn in revenue — a more than 40 per cent fall on 2019 — due to the widening global crackdown on travel as countries fight against the spread of the coronavirus.
The forecast is the third estimate in less than a month from Iata, the global trade body, which only days ago estimated the hit at $113bn — already a revision of the initial $30bn expectation at the start of the crisis.
The difference is a dramatic extension of travel restrictions in recent days covering roughly 98 per cent of passenger revenues, said Brian Pearce, Iata’s chief economist. Capacity was expected to be some 90 per cent down in Europe alone, and a number of airlines in the region could be vulnerable to collapse.
The announcement comes as Ryanair, Europe’s biggest low cost airline, grounds its entire fleet from today and as governments around the world consider rescue packages for the aviation industry. The UK is expected to unveil its package, possibly as early as today.
Mr Pearce said the industry also faced a slower recovery than had been experienced in previous pandemics.
We have never seen a pandemic coincide with a deep global recession, which is now expected … it will almost certainly … delay recovery. It will be a much more gradual slope.”
Saudi Arabia reports first death
Ahmed Al Omran in Riyadh writes:
Saudi Arabia announced its first death from the coronavirus as the kingdom reported a jump in the number of confirmed cases on Tuesday.
A health ministry spokesman said a 51-year-old male from Afghanistan with pre-existing conditions died after visiting the emergency room of a hospital in the holy city of Medina with advanced symptoms.
205 new cases were reported on the first day after Saudi Arabia started imposing a night-time curfew, bringing the total number of cases in the kingdom to 767.
UK spending review delayed with no date set
Sebastian Payne in London
The UK’s comprehensive spending review, due to take place this autumn, has been delayed due to the coronavirus outbreak, the chancellor said at the cabinet’s weekly meeting.
The next spending round, which sets the budget for Whitehall departments for the next three years, was due to follow Rishi Sunak’s first Budget that he gave two weeks ago. It was expected to loosen the Treasury’s fiscal rules to allow the government to increase spending. No new date has been set.
The government remains “focused on responding to the public health and economic emergency”, Mr Sunak told the cabinet on Tuesday.
Chris Whitty, chief medical officer, updated ministers on the virus outbreak and Boris Johnson reiterated that it was “vital that the public followed the instructions issued by the government on the need to stay at home”.
Tuesday’s meeting was the first time that the cabinet gathered virtually. Four people were present in Downing Street: the prime minister, health secretary Matt Hancock, cabinet secretary Mark Sedwill and Professor Whitty. Other ministers joined the meeting through Zoom, a popular secure video conferencing service.
Moscow mayor warns Russian cases higher than statistics show
Henry Foy in Moscow reports:
Moscow’s mayor has warned Vladimir Putin that Russia’s low coronavirus case count does not tell the full picture, telling the president that “a serious story is unfolding”.
Russia announced 57 new cases on Tuesday to take its total to 495, far lower than other major European countries. Its official statistics have drawn scepticism from some experts who question its methodology and scale of testing.
“We see that quite a lot of people are at home, who came from abroad, they are simply not tested,” Sergei Sobyanin told Mr Putin at a meeting of senior officials. “But really [the number of] those who are sick – it is much more.”
“All regions [of the country] without exception, regardless of whether they have patients, no patients, everyone needs to prepare,” he said.
Poland imposes sweeping restrictions on movement
James Shotter in Warsaw reports:
Poland has ratcheted up its restrictions on movement and gatherings in an effort to slow the accelerating spread of coronavirus.
Poland’s prime minister Mateusz Morawiecki said that under the new rules, which will apply from today until April 11, people would only be allowed to leave their homes for essential work, visits to the doctor or pharmacy, to buy food, or to walk the dog.
Gatherings of more than two people will be banned, although families who live together will be excluded, and the ban does not prevent people from travelling to help relatives in need.
Mr Morawiecki told an online press conference:
We are taking this decision to buy ourselves time … We are buying time for all of us, to prepare the health system better … to prepare the next hospitals for all eventualities.
Mr Morawiecki said that Poland would also introduce “electronic measures” to ensure that people were abiding by quarantines.
Poland was one of the first countries to close its borders, limit gatherings and order non-essential shops to close. But in recent days, other countries, such as the UK and Germany, have gone further in limiting gatherings, and Poland’s move brings it in line with such countries.
Olympics should be postponed by a year, Abe says
Leo Lewis and Kana Inagaki in Tokyo
Prime Minister Shinzo Abe has proposed to the International Olympic Committee that the Tokyo 2020 games be postponed by one year, ending weeks of mounting criticism and marking the first time the event has been called off during peacetime.
Mr Abe suggested the delay during a lengthy phone call on Tuesday with IOC president Thomas Bach. The proposal will be discussed at a meeting of the IOC’s executive board later on Tuesday.
“In order to ensure that athletes can play under the best conditions and to make it a safe Games for the audience, I have proposed that (the IOC) consider an approximate delay of one year,” Mr Abe told reporters after the call, adding that Mr Bach “agreed 100 per cent” with his suggestion.
In light of the spread of the coronavirus infections worldwide, Mr Abe said it would be difficult to carry out the event by the end of the year.
“We agreed that the Tokyo Olympics and Paralympics would be carried out by the summer of 2021 at the latest,” he said. “We will firmly carry out our responsibilities as a host nation.”
888 revenues jump as punters shift to online gambling
Alice Hancock, Leisure Industries Correspondent, reports:
Shares in the online gambling company 888 jumped 34 per cent in lunchtime trading in London, after the company said that average daily revenue in 2019 was 18 per cent ahead of the previous year and that customers turning to online poker and casino would offset some of the losses incurred by the lack of betting on sports events.
Several betting companies including Flutter, the owner of Paddy Power, and GVC, owner of Ladbrokes Coral, have warned that the mass cancellation and postponement of sports events would hit earnings by up to £150m this year.
However, 888 is less exposed to sports than its two larger rivals. Its sports brand accounted for 16 per cent of revenues last year compared with a 78 per cent reliance on sport at Flutter.
888 estimated that the potential impact of sports cancellations would be “up to high single digit millions of dollars”.
It also warned that with “people spending more time at home and with potentially increased stress from economic uncertainty”, gambling companies would have to be more vigilant to gambling harm.
US stock futures signal higher open on Wall Street
US stock futures hit their upper trading limit on Tuesday signalling Wall Street was set to rebound at the open.
S&P 500 futures jumped 5 per cent to hit their upper trading limit and were recently up 4.1 per cent. Nasdaq 100 futures were up 3.9 per cent.
US equities declined on Monday after Democrats blocked an almost $2tn economic stimulus package for the second time. However, reports that an agreement was close helped boost optimism on Wall Street on Tuesday.
Sentiment was also boosted by the Federal Reserve’s latest effort to bolster the economy, after the central bank pledged to buy government bonds in unlimited amounts.
Markets in Europe and Asia advanced with the Stoxx 600 up 4.6 per cent and the FTSE 100 up 4.2 per cent. Meanwhile, the CSI 300 climbed 2.7 per cent and the Hang Seng increased 4.5 per cent in overnight trade.
GM follows rival Ford as it draws $16bn credit facility
Peter Campbell, global motor industry correspondent
General Motors is drawing its $16bn credit facility as it looks to shore up finances while its heartland car plants are closed in North America.
“This is a proactive measure to increase GM’s cash position and preserve financial flexibility in light of current uncertainty in global markets resulting from the Covid-19 pandemic,” the company said on Tuesday.
The funds will supplement the company’s strong cash position of approximately $15bn to $16bn expected at the end of March.
The carmaker withdrew its financial guidance for the year, the latest business to cancel its outlook because of the uncertainty about when its operations will, if ever, return to normal.
Ford last week drew its $15.4bn facility and scrapped its dividend to preserve cash.
GM, Ford and Fiat Chrysler last week closed their plants across North America. Every plant in Europe has also closed, although GM exited that market several years ago.
GM chief executive Mary Barra said: “We are aggressively pursuing austerity measures to preserve cash and are taking necessary steps in this changing and uncertain environment to manage our liquidity, ensure the ongoing viability of our operations and protect our customers and stakeholders.”
Iran orders public sector employees to return to work
Monavar Khalaj in Tehran reports:
Iran’s president Hassan Rouhani has said that the public sector should resume work as state-run organisations reopened on Tuesday.
Of the government’s 2.5m employees, about 1.2m working in education and related fields have been operating on a limited basis or not at all as schools and universities remain closed. They will continue to do so until educational institutions reopen in early April. Those in “sensitive jobs” such as doctors have continued to work.
But Mr Rouhani said on Tuesday that a third group of government employees who have not been working in recent days due to public holidays should return to work in shifts. “Each time one-third of them should do the job and the remaining two-thirds could be on leave,” he said.
This group — roughly 500,000 in number — includes the employees of some banks or staff of different ministries such as telecommunications and the foreign ministry.
The president’s comments came as the country celebrated the New Iranian Year on March 20. Despite appeals by officials for Iranians to stay home, about 8.5m Iranians travelled for vacations.
A health ministry spokesperson told reporters on Tuesday that the Islamic republic was set to begin a new plan to further restrict social contacts between Iranians, with details to be released either today or tomorrow.
Iran’s health ministry said on Tuesday that fatalities reached 1,934 from 1,812 on Monday while 24,811 individuals tested positive.
ArcelorMittal says Ukraine lockdown risks triggering ‘disaster’
Roman Olearchyk in Kyiv reports:
ArcelorMittal, Ukraine’s top investor and owner of the country’s largest steel mill, is urging the country’s government to stop short of declaring a state of emergency.
The company said it was “really worried about the possible toughening of restrictive measures”, which could happen in a vote in parliament on Thursday.
If the work of the majority of large companies in the country is stopped, [if] business is deprived of its sales channels, it will become a social disaster. Millions of Ukrainians risk losing jobs fast, and the budget can lose a large part of its income.
Exports of steel, agriculture commodities, foods and programmed software account for the lion’s share of Ukraine’s hard currency earnings.
Though ArcelorMittal stands to lose in case of a full shutdown of its Ukrainian steel factory, its concerns are shared by many in the broader foreign investment and business community.
On Monday, the Kyiv-based European Business Association and other lobby groups said a full shutdown would mean “millions of Ukrainians will lose their jobs”.
Pakistan texts high-risk citizens in ‘corona alert’ messages
Farhan Bokhari in Islamabad
Pakistan’s health officials are texting high-risk citizens to adopt precautionary measures immediately as cases rise more than 11 times higher than a fortnight ago, a government official said.
Pakistani troops meanwhile fanned out across the country on Tuesday to support the civilian administration in enforcing a lockdown.
The “corona alert” messages, in English and urdu, advise mobile phone owners who have been picked by the history of their use and visits to locations where cases of coronavirus have been detected.
Six people have died from the virus while cases have risen to more than 890.
The use of mobile phones to track high-risk users has been adopted by other countries as the spread of the virus has overwhelmed healthcare officials.
Chevron slashes spending and halts share buybacks
Derek Brower, US energy editor, reports:
US oil producer Chevron is making sweeping cuts to its spending plans for this year and will ditch its share-buyback programme, the latest supermajor to retreat in the face of collapsing oil prices and the coronavirus hit to global crude demand.
Capex will fall by $4bn, or 20 per cent, to $16bn with reductions across the portfolio, the company said. On an annual run-rate basis, the reductions in upstream spending imposed now will equate to a 30 per cent drop compared with the budget announced in December. The $5bn annual share buy-back programme would be suspended, it said.
Chevron said it would “continue to execute” plans to reduce operating costs by more than $1bn by the end of the year.
Half of the capex cuts will be made in the US’s prolific Permian shale, which three weeks ago Chevron made the centrepiece of a growth strategy that would have delivered $75bn to $80bn in payments to shareholders over the next five years.
Although Chevron said total production would be roughly flat this year compared with 2019, its Permian oil output will be 20 per cent, or 125,000 b/d, below guidance by the end of 2020.
Chevron chief Mike Wirth said the company’s spending cuts would allow it to “preserve cash, support our balance sheet strength, lower short-term production, and preserve long-term value”.
Like other oil producers, Chevron has been battered by a halving of the oil price since early January. Its shares have fallen by about 55 per cent since the start of the year. Total and Shell both announced capex cuts and share buy-back suspensions yesterday.
Ryanair offers use of aircraft for emergency transport
Peggy Hollinger in London reports:
Ryanair, Europe’s biggest low-cost airline, has offered its aircraft to EU governments for emergency transport of people and goods as it grounds its fleet for two months in the wake of restrictions on international travel.
The group, which has more than 300 aircraft in its fleet, said it would also work with European authorities to return stranded passengers despite the grounding as governments battle the spread of the coronavirus. But these would be minimal and take place under strict hygiene conditions.
“At this time, no one knows how long this Covid shutdown will last,” said Ryanair’s chief executive Michael O’Leary.
The experience in China suggests a 3-month period for the spread of the virus to be contained and reduced. We will do everything we can to keep our aircraft, our crews, and our engineering teams operational so that when Europe defeats this Covid-19 pandemic, we are ready to return to flying.
Ryanair’s decision to ground its fleet comes as authorities in the UK are preparing a support package for the aviation and aerospace sectors. This could include the state taking stakes in airlines, or some form of loan secured on airline assets such as airport take-off and landing slots.
Ryanair’s low-cost rival easyJet on Monday still operated some 100 flights, a significant reduction on the 2,000 that would be normal for this time of year. The group is reviewing its flight schedule on a daily basis and a person with knowledge of the situation said it was possible there would be no flights by the end of the week.
Restrictions placed on English prisons include ban on visits
Bethan Staton in London reports:
Prisons in England and Wales will from Tuesday limit inmate movements and suspend visits to staunch the spread of the coronavirus.
News of the restrictions came via the Prison Officers Association, which on Tuesday said it praised the justice ministry’s “sensible decision” to clamp down on prisons.
The rules will allow prisoners out of locked cells only for showers, phone calls and exercise. Visits, education and workshop activities will be suspended.
The restrictions, though “inevitable”, should “be accompanied by extra communication, making sure people have activities in their cells, phones to family, and compassion”, tweeted Frances Crook, the chief executive of the Howard League for Penal Reform, a prison rights charity.
A handful of confirmed cases have prompted concern over the spread of coronavirus in prisons, where poor health infrastructure and confinement could worsen the impact of an outbreak.
Twelve countries turn to IMF for financial assistance
Simeon Kerr in Dubai
A dozen countries in the Middle East, North Africa and central Asia have approached the IMF for financial assistance to help limit the human and financial cost of the coronavirus.
Jihad Azour, the IMF’s regional director, said the fund was considering a request from the Kyrgyz Republic for emergency financing, which would likely form the first disbursement since the outbreak. A few other requests would be considered in the coming days.
“Now, more than ever, international cooperation is vital to prevent lasting economic scars,” he wrote in a blog post.
Mr Azour said the pandemic has caused blows of lower demand, reduced trade, disrupted production, a fall in consumer confidence and tighter financial conditions. Oil exporters face the additional hit of crude prices plummeting by more than 50 per cent since the health crisis began.
The challenge is especially daunting for conflict-torn states, such as Iraq, Sudan and Yemen, where health systems are weak and their economies vulnerable to substantial price increases for medical and other goods.
Belgium in ‘heart of the pandemic’, officials say
Jim Brunsden in Brussels
Belgium has said it is living through “the heart of the pandemic” after the number of deaths linked to the virus jumped by close to 40 per cent.
The government’s crisis centre said on Tuesday that the death toll for those who had tested positive for coronavirus had risen by 34 in the past 24 hours to a total of 122. The number may have been pushed up by a lag in when some deaths were reported, the authorities said.
“Unfortunately, the figures we have just seen show us in a very painful way that we are today fully in this emergency situation, in full pandemic,” said a spokesman for the crisis centre.
Urging people to respect lockdown conditions, he said: “We have one chance now to act, because we are in the heart of this pandemic.”
The number of people hospitalised because of the virus rose to 1,859 on Monday, an increase of 256 compared with the previous day, the health ministry said. The rate of new hospitalisations slowed for the third successive day but the number of those going into intensive care — 59 — was higher than recent days.
More than 500 die in Spain in past 24 hours
Daniel Dombey in Madrid
More than 500 people have died in Spain in the past 24 hours after contracting the coronavirus, figures released on Tuesday show.
Spain, with almost 40,000 cases of the virus, is the worst affected European country after Italy.
The Ministry of Health said that 2,696 people have died, a 23 per cent increase on Monday’s toll of 2,182. The total of 39,673 cases represents a 20 per cent climb over the past 24 hours, while the number of people in intensive care rose by 12 per cent to 2,636. At present, 3,794 people have recovered.
Madrid remains the worst affected region with 12,352 cases, 1,050 people in intensive care and 1,535 deaths.
UK housebuilder Taylor Wimpey calls a halt to construction
George Hammond, Property Correspondent, reports:
Taylor Wimpey, one of the UK’s largest housebuilders, is shutting down all of its construction sites in response to the coronavirus.
The government’s stricter measures, announced by the prime minister on Monday night, do not include the closure of building sites, and Taylor Wimpey is the first housebuilder to announce such a move.
Barratt Developments is also in the process of closing its 400 or so sites across the UK, according to the company, which is yet to make an announcement on the closures. Rival housebuilder Redrow said on Tuesday it would keep sites open, albeit with stricter precautions.
Taylor Wimpey, which built 15,520 homes last year, has also drawn down its revolving credit facility of £550m in order to bolster its cash position, suspended its annual dividend and scrapped its financial guidance as a result of the virus’ spread.
The government’s advice on construction sites had been “anything but clear” said Brian Berry, chief executive of the Federation of Master Builders. He added:
Mixed messages are spreading further anxiety at a time when hundreds of small builders face immediate lost earnings, having to make their staff redundant, and seeing their companies go to the wall.
Labour MP David Lammy called on the government to “shut down construction sites and make sure other non-essential work is not happening”.
French finance minister compares crisis to Great Depression
Victor Mallet in Paris
The economic impact of the coronavirus pandemic is “comparable only to the great recession of 1929”, French finance minister Bruno Le Maire said on Tuesday.
He declined to predict how much the French economy would shrink as a result of the crisis, but said industry was only operating at 25 per cent of its normal level. “Each week of extra lockdown, each additional month of the epidemic, worsens the growth outlook,” he said. “The chemicals industry is working well, but the motor industry has almost stopped.”
Mr Le Maire and French President Emmanuel Macron have said they will do whatever it takes to save the country’s jobs and businesses, including nationalising fragile companies, providing state-financed loan guarantees and temporary unemployment benefits, and postponing tax and social security payments.
Mr Le Maire also said the crisis had exposed Europe’s excessive trade dependence on other countries and should be used as opportunity to remedy the failings of global capitalism. “In the long term,” he said, “we cannot depend on Asia, on China for goods that are strategic for us.”
Ineos to build hand sanitiser plants in UK and Germany
Michael Pooler reports:
The chemicals manufacturer Ineos is to build hand sanitiser plants at its existing sites in the UK and Germany within the next 10 days, with capacity to produce 2m bottles a month to help combat the spread of the coronavirus.
The company controlled by billionaire Sir Jim Ratcliffe said it would concentrate on meeting the needs of frontline medical and care services, with the product to be issued free of charge to NHS hospitals for the duration of the Covid-19 outbreak.
A shortage of hand gels in Europe has led to beer brewers, gin distilleries and high-end perfume makers converting production to make sanitiser, after the World Health Organization advised people to regularly wash their hands with alcohol-based products.
Ineos is one of the main European producers of the two key raw materials for hand rubs – isopropyl alcohol (IPA) and ethanol. It will produce 250ml pump pots of hand sanitiser and smaller 50ml pocket bottles at its sites in Middlesbrough, northern England, and Herne in Germany.
Federal Swiss government clashes with cantons over restrictions
Sam Jones in Zurich reports:
Switzerland’s federal government has pushed back on calls from its cantons for a stronger clampdown on public life in the wealthy alpine state, as cases of the novel coronavirus surged past 8,000.
Switzerland’s constitution is designed to give its 26 cantons and their residents as much liberty from Bern as possible: but in a stark illustration of the way the global pandemic is upending political and social norms, some of the country’s most conservative — and smallest — constituencies are those demanding tougher restrictions be imposed by a hesitant central government.
Shops selling non-essential goods have been ordered to close, alongside restaurants, bars and other public spaces. Gatherings of more than five people, even outdoors, are prohibited. But many feel the measures do not go far enough.
On Tuesday, Bern turned down a request from doctors in Verbier to place the local area under special measures. Despite ski slopes being closed, Verbier and surrounding villages are still thronging with wealthy second-home owners from Geneva and France, doctors said.
Bern has already told the cantons of Ticino and Uri that some of their measures are too stringent. The Ticino cantonal government ordered all non-essential factories and production lines to close as of this Monday. The Federal Ministry of Justice has told the canton the move is illegal and cannot be enforced.
A restriction ordered by the canton of Uri telling those over 65 to stay at home is also outside the local government’s power to enforce, ministry officials said at the weekend.
Goldman Sachs predicts 9 per cent decline in eurozone economy
Martin Arnold in Frankfurt:
Goldman Sachs has slashed its growth forecast for the eurozone, warning that the region’s coronavirus-crippled economy is likely to contract by 9 per cent this year and that budget deficits are likely to mushroom in many countries.
The US investment bank said in a note to clients on Tuesday morning that it expected the eurozone economy to shrink by 4 per cent in the first quarter and 11.4 per cent in the second. Its economists blamed “strict containment measures, anecdotal evidence of steep declines in domestic activity and a global recession” for the sharp decline in forecasts.
The deepest contractions would be in Italy and Spain, which Goldman predicted would shrink by 11.6 per cent and 9.7 per cent this year respectively. It added that Germany’s economy would contract by 8.9 per cent, the UK by 7.5 per cent and France by 7.4 per cent.
The Wall Street bank forecast that Germany and France would make a swifter recovery than their southern counterparts because they have announced “significantly more fiscal support for the economy” and they rely less on harder-hit tourism than on manufacturing, which is likely to rebound faster.
European PMIs understate depth of crisis, economists say
European business activity crumbled in March, according to figures that point to a deep recession ahead.
But economists warn that worse is yet to come, as the PMI surveys were compiled before much of the continent went into lockdown and are likely understating the breadth of the breakdown in economic activity.
“The PMI plummeted in March, of course it did. Only a foolish optimist would have expected otherwise,” said ING senior economist Bert Colijn.
The survey likely still understates March activity as more restrictive measures came into effect after the survey was conducted. It also doesn’t tell us much about the depth of the decline
Jack Allen-Reynolds, senior economist at Capital Economics, said the slump was so bad “that at any other time it would look like a spreadsheet error.”
Given that survey responses were collected between March 12-23, before some of the lockdown measures had been implemented, if they remain in place the data for April will be far worse.
European markets gain ground as sentiment strengthens
European investors shrugged off weak economic data, as a more upbeat sentiment rippled across international markets.
The benchmark European Stoxx 600 index gained 4.85 per cent in early trading on Tuesday, while London’s FTSE 100 gained 4.26 per cent, continue its rise even after new data showed UK business activity is shrinking at a record pace.
Frankfurt’s Dax index gained more than 6 per cent in spite of data showing activity in Germany’s private sector shrank at a rapid rate in March. Similarly, Paris’s benchmark Cac 40 index secured gains of 5.12 per cent after new data showed France had seen its biggest decline in output on record.
Investors are rushing back to stocks after the Federal Reserve’s announcement yesterday that it will buy unlimited amounts of government debt to keep the economy going and jobs safe.
US stock futures markets pointed to a 5.1 per cent rise for the S&P 500 benchmark later in the day, the maximum amount the futures index is permitted to rise.
UK hotels to shut as part of lockdown
Alice Hancock in London reports:
The UK’s enforced lockdown has been extended to hotels, except those that have permanent residents or that host key workers, the government said.
Along with restaurants, pubs, hairdressers, cafes and workplace canteens, hotels are being asked to shut from Tuesday in order to slow the spread of coronavirus.
B&Bs, campsites, hostels and caravan parks are also included in the government’s ban except “where people live in these as interim abodes whilst their primary residence is unavailable”. Key workers, which include frontline health service staff and food industry employees, are also able to stay in hotels that remain open.
Despite hotels being closed, takeaway and delivery services in restaurants have been permitted to remain in operation as they are deemed a crucial way for people to access hot food.
Analysts at Bernstein downgraded their base case for global hotel occupancy on Monday from a 50 per cent drop in revenues from international travellers and a 10 per cent drop in domestic trade to an 80 per cent drop “nearly everywhere”.
Business activity in the UK shrinks at record pace
Valentina Romei reports:
UK business activity contracted at a record rate, according to a closely watched survey that provides the first and most comprehensive indication of the extent of the hit to the economy caused by the coronavirus.
The IHS Markit flash UK purchasing managers’ index for services plunged to 35.7 in March from 53.2 in the previous month. The figure is the lowest since the survey began in the 1990s and it points to a sharp deterioration of the domestic economy.
The latest PMI figures were compiled in advance of the UK government’s decision to order pubs, restaurants and other leisure businesses to close by midnight on 20th March and before Monday’s announcement of the closure of all non-essential shops.
Services account for about 80 per cent of the economy and their fall in activity dragged down the composite index, an average of manufacturing and services, to 37.1 in March, also the lowest ever recorded and down from 53 the previous month.
The flash PMI also signaled a fall in employment across the manufacturing and services sectors to a level not seen since July 2009.
Chris Williamson, chief business economist at IHS Markit, said:
The surveys highlight how the COVID-19 outbreak has already dealt the UK economy an initial blow even greater than that seen at the height of the global financial crisis. Any growth was confined to small pockets of the economy such as food manufacturing, pharmaceuticals and healthcare. Demand elsewhere has collapsed, both for goods and services, as increasing numbers of households and businesses at home and abroad close their doors.
Slovakia to use mobile phone data to enforce quarantine rules
James Shotter in Warsaw reports:
Slovakia is to pass a law to allow the use of data from mobile phones to ensure that citizens are observing the quarantine rules introduced to fight the coronavirus outbreak.
The country’s new prime minister, Igor Matovic, who took office at the weekend, said that his government would discuss the measure today, before presenting it to parliament.
The step would be the latest in a series of radical moves that Slovakia has taken to try and stem the spread of the outbreak, which has so far infected 204 people in the central European nation.
Slovakia has closed it borders, banned international rail and air travel, introduced strict quarantines for Slovaks returning from abroad, as well as for those who have been in contact with people infected by the novel virus. It has also closed schools and non-essential shops.
Indian neighbourhoods draw up their own rules
Amy Kazmin in New Delhi reports:
With a curfew now in force across large swaths of India, various middle-class residential neighbourhood societies and apartment complex boards are taking matters into their own hands to decide who and what will be allowed to enter their colonies and compounds.
The government has permitted essential services — including groceries, pharmacies, and e-commerce companies — to continue operating to ensure that a population now confined to their homes can obtain the necessities of daily life.
But powerful residential societies are now setting terms and conditions for their own areas, amid growing public panic about the spread of the virus. These bodies appear torn between a desire to shut themselves in and exclude all outsiders — and the reality of their dependence on vendors to provide doorstep delivery of fresh fruit, vegetables and milk.
In some neighbourhoods, societies have remained relatively open, allowing vendors carrying fruits, or milk suppliers deliver directly to homes and apartments. Elsewhere, food vendors have been allowed but newspaper deliveries have been stopped, after virulent Whatsapp rumours that coronavirus was spreading through newspapers.
Some neighbourhoods and buildings have locked their gates and are attempting to seal themselves off from the outside world, barring all outsiders from entering, raising questions about how they will obtain essential supplies during a curfew due to last until March 31, at least.
Debates have also raged in many neighbourhood about whether maids and other domestic helpers, such as essential caregivers, should be permitted to enter. In the absence of clear government guidelines, it appears to be every neighbourhood — or apartment complex — for itself.
European markets shrug off weak economic data
European markets have shrugged off weak eurozone production data, as a more upbeat sentiment rippled across the globe.
The benchmark European Stoxx 600 index gained 3.84 per cent since the opening bell on Tuesday, while London’s FTSE 100 gained 3.67 per cent.
Frankfurt’s Dax index shed some of the 6 per cent it gained in the first hour of trading, but held on to a 4.8 per cent rise in spite of data showing activity in Germany’s private sector shrunk at a rapid rate in March.
Similarly, Paris’s benchmark Cac 40 index secured gains of 3.39 per cent after IHS Markit’s purchasing managers’ index for France announced the country’s biggest decline in output on record, from 51.9 points last month to 30.2 in March.
British public overwhelmingly support lockdown measures
Sebastian Payne, Whitehall Correspondent, reports:
The UK has woken up to a new reality this morning, with the country in lockdown, all non-essential shops shuttered and significant limits introduced on gatherings and the movement of citizens. It’s the first time in the country’s recent history that such stringent restrictions on individuals have been introduced.
But the country is very supportive of Boris Johnson’s decision to bring in these new measures. According to a snap poll by YouGov, a huge 93 per cent of Britons support the prime minister’s latest efforts to tackle the spread of coronavirus.
The vast majority of all age and social groups support the lockdown, but women are more likely to support it than men. The same is true for older people: 80 per cent of those over 65 compared to 60 per cent of those 18-24 year olds.
The nation is also feeling positive about surviving the lockdown. Two thirds of the people think it will be “easy” to get through the initial three weeks, compared to 29 per cent think it will be “hard”. Those numbers could begin to shift if the restrictions remain in place for longer.
But one area of division is whether the police have enough powers to enforce the tough new restrictions. 39 per cent of Brits think their powers are sufficient to see through the lockdown, but 39 per cent think they are not. Again, older people are more likely to say they need more powers whereas young people think their current powers are enough.
Eurozone business activity ‘collapses’ in March
Valentina Romei reports:
Business activity crashed to a record low in the eurozone as the coronavirus health emergency morphed into an economic crisis.
The IHS Markit flash composite purchasing managers’ index for the eurozone plunged to 31.4 in March from 51.6 in the previous month. This is the lowest reading since the series began in the late 1990s.
“Business activity across the eurozone collapsed in March to an extent far exceeding that seen even at the height of the global financial crisis” said Chris Williamson, chief business economist at IHS Markit. “Steep downturns were seen in France, Germany and across the rest of the euro area as governments took increasingly tough measures to contain the spread of the coronavirus”.
The PMI index for services dropped to 28.4 in March from 52.6 in February, the lowest level ever recorded, pointing to a near shutdown of the domestic economy.
The manufacturing sector contracted at a marginally slower pace with a corresponding index falling to 44.8, the lowest since the financial crisis.
The composite index is a weighted average of activity in the manufacturing and services sectors and a reading below 50 indicating the majority of businesses reporting a deterioration compared to the previous month. The PMIs are the first and most comprehensive measure of the impact of the coronavirus crisis on the economy since the outbreak in the region at the end of February.
The preliminary data were based on responses collected between March 12-23.
Biggest rise yet in global cases as US infections surge
Steve Bernard in London reports:
Monday saw the largest single daily rise in the number of Covid-19 cases. 41,371 cases were diagnosed yesterday and the global total has now reached 382,552. The death toll rose by a record 1,873 to stand at 16,578.
For the second day running the US was hardest hit, adding 10,168 cases, the highest rise in a single day outside of China.
Italy once again saw a fall in the number of new cases, adding 4,789 cases on Monday, down from 6,557 two days earlier. Spain however, saw a large spike in cases yesterday adding 6,368 to stand at 35,212.
The daily number of recoveries rose slightly yesterday with 3,442 more people free from the virus. The total now stands at 102,069.
Iran rejects MSF assistance building hospitals
Najmeh Bozorgmehr and Monavar Khalaj in Tehran report:
Iran has said it does not need Médecins Sans Frontières (MSF) to set up makeshift hospitals in the country following opposition by hardline forces to the presence of foreign doctors in the country.
Domestic media reported that a nine-member team from the Geneva-based humanitarian medical organisation had arrived in the central city of Isfahan – one of the worst-hit provinces – this week to set up makeshift hospitals.
However, some hardline groups expressed concerns over their presence, alleging that the US could use it as an opportunity to collect information about Iran’s health sector.
“Any moment that Iran needs, we will use capabilities of international humanitarian organisations such as Médecins Sans Frontières which intend to assist the country … and we welcome that,” said Hamidreza Jamshidi, secretary of Iran’s national headquarters to fight coronavirus on Tuesday.
“For now, we do not need makeshift hospitals. We may need it in three or 10 days but we have enough beds now,” he added.
Iran’s supreme leader Ayatollah Ali Khamenei claimed on Sunday that the spread of coronavirus in Iran could be a form biological warfare by the US. He warned against providing what he saw as opportunities for any further collection of information.
It is not clear yet if the MSF group has already left the country or not.
Mr Jamshidi said many of Iran’s 140,000 hospital beds remain empty, while makeshift hospitals set up across the country by the armed forces have yet to be heavily used. Iran is expecting a new wave of casualties in the coming weeks.
Goldman tells clients to invest in gold amid Fed’s bond buying spree
Neil Hume in London reports:
Gold was higher again on Tuesday after Goldman Sachs told clients it was “time to buy the currency of last resort.”
Jeffrey Currie, head of commodities research at the bank, said the decision by the US Federal Reserve to buy unlimited amounts of government bonds would fuel concern currency “debasement concerns” and boost the price of the yellow metal.
We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policy-makers act to accommodate shocks such as the one being experienced now.
Like other asset classes, gold was hit hard in the scramble for US dollars, falling more than 12 per cent from its early March peak of around $1,700 a troy ounce as investors liquidated positions.
That pressure was exacerbated by the steep decline of the oil price, which saw big producer nations like Russia shift from being net buyers of gold to a “possible” net seller, according to Goldman.
However, with those stresses easing after the US Federal Reserve opened swap lines with other central banks and launched unlimited quantitative easing, gold has discovered its lustre.
It rose more than 4 per cent on Monday and was up a further 2 per cent to $1,583 on Tuesday.
German business activity plummets in March
Martin Arnold reports:
Business activity in Germany has contracted sharply in March due to the coronavirus outbreak, according to a closely watched survey, which found the number of companies saying they were still expanding output had plummeted.
The IHS Markit composite purchasing managers’ index for Germany fell from 50.7 points last month to 37.2 in March, its biggest fall on record, underlining how the sudden shutdown of swaths of the economy has caused many European businesses to grind to a halt.
By dropping further than expected below the crucial level of 50, under which the majority of companies surveyed are reporting a shrinking of activity, the data show how the German economy has been crippled by the unprecedented efforts to tackle the pandemic.
Germany has responded to the rapid spread of the virus by imposing a nationwide ban on gatherings of more than two people, except for families and household members, while requiring people to keep 1.5m apart in public.
Olaf Scholz, the German finance minister, said on Monday the German economy would shrink by 5 per cent this year as the pandemic spreads in the country where it has infected more than 26,000 people and left 110 dead.
The composite PMI for France, the eurozone’s second-biggest economic, fell by an even larger amount than Germany when it was released earlier on Tuesday, dropping from 52 points last month to 30.2 in March.
Mayor of London urges people to avoid rush hour trains
Sadiq Khan, the Mayor of London, has urged the public to avoid rush hour transport in the capital, as scenes of overcrowding continue despite the government’s efforts to restrict movement.
Mr Khan said staff illness and self-isolation meant Transport for London cannot run more services than it is at present, and told commuters to stagger their use of the Underground to help avoid crowding.
The Mayor added that many of those still travelling would be working in the gig economy.
“A proper package of support for these workers would alleviate this situation and help public transport, and I’ve raised this with the government,” he said.
Sports Direct ordered to close stores
Jim Pickard in London reports:
The government has ordered Sports Direct to close down its stores – after the sportswear retailer sought to claim that it was providing a crucial service – amid lingering confusion in some quarters about the UK government’s new clampdown on movement.
Boris Johnson on Monday night bowed to pressure and announced the closure of all non-essential shops, ordered people to stay at home and said the police would get new powers to disrupt gatherings of more than two individuals.
Michael Gove, the Cabinet Office secretary, said on Tuesday morning that people should work from home “wherever possible” to stop the spread of the virus.
There were reports on Tuesday morning that commuters were still enduring packed conditions on some carriages on the London Underground.
In circumstances where it was still necessary to move out of the house – such as a plumber visiting a vulnerable elderly person – they should maintain a distance of at least two metres, Mr Gove told the BBC Radio 4 Today programme.
Mr Gove said work was still continuing on construction sites but the way that builders did their jobs would alter to take account of the virus. The minister also hinted that the government is close to announcing its package of measures for up to 5m self-employed people.
Mr Gove urged people to stay indoors as much as possible, saying: “The most important thing is to restrict social contact.”
Thailand to impose state of emergency
John Reed in Bangkok reports:
Prayuth Chan-ocha’s Thai government will on Thursday declare a state of emergency under a decree giving it broad powers to fight the coronavirus outbreak, including the right to censor media.
Mr Prayuth said in a TV address on Tuesday that he would be enacting the 2005 Royal Decree on Emergency Situations, which will also give the prime minister the right to impose a nationwide curfew, restrict travel and prohibit public gatherings.
Mr Prayuth, the former military dictator who was elected prime minister last year after an election marred by accusations of vote-rigging, has come under criticism on Thai social and online media for his government’s piecemeal response to the pandemic.
Thailand has not yet imposed a nationwide lockdown of the kind seen in other countries, but Bangkok’s regional government has closed most malls and other public places.
Separately on Tuesday Thailand’s powerful military released a video showing General Apirat Kongsompong strolling through Bangkok wearing protective gear, set to the soundtrack of the song “Heroes Tonight”.
Sweden’s financial regulator urges banks to stop dividend payments
Richard Milne, Nordic and Baltic Correspondent
Sweden’s financial regulator urged banks to stop paying dividends to help protect the Scandinavian country’s financial system from the effects of the coronavirus outbreak.
The Financial Supervisory Authority said on Tuesday morning that it expected banks and other credit institutions to halt shareholder payouts, putting particular pressure on Handelsbanken, one of Sweden’s largest lenders that is due to hold its annual meeting on Wednesday and has yet to change its dividend proposal.
The other big Swedish banks – SEB and Swedbank – have delayed their annual meetings and said they are considering cutting their dividends. Nordea, the other large bank active in Sweden, recently moved its headquarters to Finland, but also announced plans to delay its annual meeting.
Countries around the world have suspended their dividends due to coronavirus as they seek to conserve cash. In the Nordics, the need to shore up balance sheets has come alongside heavy political and regulatory pressure on companies to suspend payouts as economies deteriorate rapidly.
“It is important that companies now act responsibly and strengthen their resilience in this critical situation,” said Erik Thedeen, head of the Swedish regulator.
French private sector activity tumbles at sharpest pace on record
Martin Arnold reports:
Business activity in France has plummeted at a record pace this month, according to a closely watched survey that gives the clearest indication so far of the blow dealt to Europe’s economy by the coronavirus pandemic.
The IHS Markit purchasing managers’ index for France fell from 51.9 points last month to 30.2 in March, its biggest fall on record, underlining how the sudden shutdown of large parts of the economy to combat the virus has caused many European businesses to grind to a halt.
By dropping further than expected below the crucial level of 50, under which the majority of companies surveyed are reporting a shrinking of activity, the data underline how the French economy has been crippled by the unprecedented efforts to tackle the pandemic.
President Emmanuel Macron last week declared France to be “at war” with the virus, which has infected more than 20,000 people and killed 860 in the country. In response, France shut schools, restaurants, and non-essential shops, while severely restricting people’s movement.
Paris has announced a €45bn aid package to help businesses and employees hit by the virus and France’s finance minister Bruno Le Maire has warned of a looming recession and said he was willing to nationalise large companies to protect them from bankruptcy.
While economists have been slashing their eurozone growth forecasts to deeply negative levels, there has still been very little data to show how hard the coronavirus crisis has hit the economy. So Tuesday’s PMI data are likely to be studied even more closely than usual.
The previous record monthly fall in the French PMI was a 5.5 point drop in December 2018 at the height of the “gilets jaunes” protests that brought parts of the country to a halt.
Arab gulf states ramp up enforcement measures as cases rise
Simeon Kerr reports from Dubai
The Arab Gulf states are ramping up enforcement of curfews, quarantine and stay at home edicts as coronavirus cases rise to more than 1,900.
Kuwait on Sunday evening arrested nine expatriates in a suburb of the capital for breaking a daily nationwide curfew between 5pm and 4am, referring them for deportation.
The United Arab Emirates warned that violations of orders to stay at home would prompt legal action, including fines and prison terms. The government has asked people only to leave their residences to go to work or to collect food and medicine.
Dubai Police arrested a European man for posting a video of himself at the beach in contravention of the authorities’ instructions and Oman’s police force on Monday warned people not to gather in public spaces, including beaches, dunes and mountains. The sultanate reported 18 new infections among nationals, bringing its tally to 84.
In Qatar, where the number of cases has surpassed 500, two people were arrested for breaking home quarantine measures, while in Bahrain, legal action will be taken against groups of five gathering in public spaces, including fines or jail terms of at least three months.
German economy minister dismisses eurozone ‘coronabonds’ idea
Guy Chazan in Berlin reports:
Peter Altmaier, the German economy minister, has rejected the idea of eurozone “coronabonds” to raise money to help fight the economic fallout of the pandemic.
“I urge caution when supposedly new, ingenious concepts are presented which often enough are just long discarded ideas that have come back from the dead,” he told Handelsblatt.
He said the discussion about eurobonds was a “phantom debate”.
Some EU leaders have floated the idea of so-called coronabonds which could be issued by an existing European institution, such as the European Stability Mechanism, to help deal with the economic consequences of the crisis. But Germany is one of a number of eurozone countries that remain sceptical of such an idea, and anything that smacks of pooling risk.
Mr Altmaier said that recent action by the ECB and the various emergency measures adopted by European governments had sent “a strong signal for the stability of the euro”.
Asked what he thought of Spanish prime minister Pedro Sanchez’s proposal for a new Marshall Plan for Europe, he said that although European solidarity was important, the key task was to “strengthen the competitiveness of EU economies”. “Innovation is more important than subsidies,” he said.
Norwegian Air Shuttle completes first stage of government rescue
Richard Milne reports
Norwegian Air Shuttle has fulfilled the first part of its three-stage government rescue package as the embattled low-cost airline tries to stave off collapse.
Norwegian should receive the first tranche of NKr300m ($27m) in new financing after finding two Nordic banks to guarantee 10 per cent of the scheme with Norway’s government backing the other 90 per cent.
Norwegian, which entered the coronavirus crisis with more debt relative to its profitability than any other listed airline, admitted that the other two parts of the rescue – worth a collective NKr2.7bn – were “crucial” to its survival.
“The current state of the capital markets in combination with the challenging times for the airline industry limit the options available,” it added.
It said it was in discussions with the government over the precise criteria for the remaining money. Norway’s centre-right government said on Thursday that Norwegian would get NK1.2bn if it reduced interest rates and repayments from its existing creditors, and another NKr1.5bn if it raised additional equity.
Norwegian has said that the NKr3bn would help it until June but that it could require more help after that. The airline has grounded nearly all its aircraft and temporarily laid off 90 per cent of its staff due to the collapse in demand from the coronavirus.
Markets in rally mode as tumult in equities persists
Hudson Lockett in Hong Kong, Leo Lewis in Tokyo and Adam Samson in London write:
Global equities markets have swung higher as the turbulence that has taken hold over the past few weeks has shown little sign of abating.
European bourses jumped at the opening bell, with the continent’s Stoxx 600 rallying 3.6 per cent. London’s FTSE 100 rose 2.7 per cent, while Frankfurt’s DAX advanced 6 per cent.
The more upbeat sentiment rippled from Asia where equities markest posted significant gains as traders assessed the US Federal Reserve’s pledge to buy an unlimited amount of bonds in its bid to prop up the world’s biggest economy.
However, investors were sceptical that the Federal Reserve’s pledge to buy an infinite quantity of Treasuries would lead to a sustained rebound for battered global markets, pointing to few signs the Covid-19 outbreak is slowing and a $2tn US fiscal package still stalled in Congress.
“This is the Fed’s ‘whatever it takes’ moment,” wrote analysts at Invesco, referring to then-European Central Bank governor Mario Draghi’s 2012 pledge to save the euro. That was, they noted, “one of the most aggressive monetary easing programmes in the history of central banking”.
US stock futures markets pointed to a 4.3 per cent rise for the S&P 500 benchmark later in the day. Overnight on Wall Street the S&P 500 ended another volatile session with a 2.9 per cent loss while the Europe Stoxx 600 fell 4.3 per cent.
Signs of crowding on London transport despite lockdown
There has been evidence of overcrowding on London’s transport network this morning, despite the government’s efforts to shut down the country to protect against the spread of the pandemic.
Prime minister Boris Johnson said that only people who could not work from home should continue to travel to their workplace. Key workers such as health and care staff are exempted, so too are people working in construction and manufacturing.
Nicola Smith, who identifies as a health worker, has tweeted a picture of a crowded Central line tube train during Tuesday’s rush hour.
Transport for London is running a sharply reduced service, but union leaders have warned that it is impossible to practice social distancing on board the trains given how many people are still commuting into the city.
Signs the pandemic is weighing on global hiring
Valentina Romei in London reports:
The coronavirus outbreak is already hitting jobs across all major economies, according to new figures from recruitment site Indeed.
In the UK, job postings in travel and accommodation dropped by 22 per cent between January 31 and March 18 compared with a year earlier, the data showed. Over the same period, there were 12 per cent fewer positions in the food and beverage sector, while the retail sector saw 4 per cent fewer job adverts.
Still, a sharp increase in postings was registered for warehouse-based workers – which the company said reflected many supermarkets gearing up to provide home deliveries for an increasing number of customers. Overall UK job postings were down 4.5 per cent.
Italy – the first western country to be affected by the outbreak – was the worst-performing market across the 11 tracked by Indeed, with a 12 per cent fall in job postings over the same period, but France and Germany also registered sharp contractions.
UK companies hold off trying to calculate virus impact
The UK’s listed companies announce earnings and regulatory disclosures at 7am London time every morning, but things seem a little quieter than normal today.
While several retailers including Games Workshop and Mulberry have put out announcements detailing store closures, there are few signs of companies trying to quantify their lost earnings.
The UK’s financial regulator this weekend asked listed companies to delay publication of their preliminary results for “at least two weeks”, to give them more time to accurately assess the impact on their businesses, and reduce pressure on staff.
Writing in the Lombard column, the FT’s Cat Rutter Pooley said the move was sensible:
By observing the moratorium, even those that do not need it will give their weaker peers some precious breathing space to assess their balance sheets and government support programmes. That could prevent unwelcome surprises later and unnecessary collapses.
European stock futures jump after sell-off
Equities markets across Europe were set to rise sharply on Tuesday, reversing direction from significant falls in the previous session.
Stoxx 600 futures zipped 4.8 per cent higher around 30 minutes before the opening bell in major European markets. German Dax futures rose 5.4 per cent, with UK FTSE 100 futures up 4.5 per cent.
Markets came under pressure on Monday in yet another volatile trading session. The Stoxx 600 shed 4.3 per cent, with Wall Street’s S&P 500 down 2.9 per cent.
A series of key surveys of business executives covering Europe’s biggest economies is due later this morning. The figures are expected to be bleak, but provide economists and investors with a reading on just how bad the situation has become.
These purchasing managers’ indices are released well before official economic data and are among the earliest gauges to provide insight into activity levels.
The FT economics team will be covering them on this live coverage page. France, the eurozone’s second biggest economy, kicks things off at 8.15am London time, followed by Germany 15 minutes later. UK data are due at 9.30am.
Europe: what you might have missed
The Chinese government will begin relaxing restrictions on travel to and from Hubei province, the centre of the global coronavirus pandemic, on Wednesday.
South Korea has expanded financial support for the country’s struggling companies and volatile markets to Won100tn ($79.6bn) as the global pandemic threatens growth in Asia’s fourth-largest economy.
Britain’s mobile phone networks will send a text message to all of the country’s mobile phone users on Tuesday morning on behalf of the government urging people to stay home.
Any person who fails to comply with coronavirus quarantine procedures when entering China can be tried as a criminal, the country’s top legal bodies said on Tuesday.
New York City, which has overtaken Seattle as the biggest coronavirus hotspot in the US, has seen 28 per cent of its tests coming back positive, suggesting the virus has been circulating in America’s largest city for weeks.
Chinese government to ease travel restrictions on Hubei province
Tom Mitchell in Singapore and and Christian Shepherd Beijing report:
The Chinese government will begin relaxing restrictions on travel to and from Hubei province, the centre of the global coronavirus pandemic, on Wednesday, in a major milestone in the country’s battle against the disease.
The Hubei Health Commission announced on Tuesday that the liberalisation will initially apply to all areas of the province except for Wuhan, the provincial capital, where the travel ban will stay in place until April 8.
The announcement comes two weeks after President Xi Jinping visited Wuhan, in a signal that the Chinese government felt it had reached a turning point in the “people’s war” against the coronavirus.
Asia stocks rally following Fed’s bond pledge
By Hudson Lockett in Hong Kong and Leo Lewis in Tokyo
Asia-Pacific stocks rallied after the US central bank vowed to buy whatever amount of government bonds necessary to shield the economy from the impact of the coronavirus pandemic.
However, investors were sceptical that the Federal Reserve’s pledge to buy an infinite quantity of treasuries would lead to a sustained rebound for battered global markets, pointing to few signs the Covid-19 outbreak is slowing and a $2tn US fiscal package still stalled in Congress.
In Asian trading on Tuesday Japan’s benchmark Topix and Australia’s S&P/ASX 200 climbed 2.1 per cent 4.1 per cent, respectively. South Korea’s Kospi gained 6.6 per cent while China’s CSI 300 and Hong Kong’s Hang Seng added 1.4 per cent and 3.7 per cent, respectively. US stock futures markets pointed to a 3.8 per cent rise for the S&P 500 benchmark later in the day.
Overnight on Wall Street the S&P 500 ended another volatile session with a 2.9 per cent loss. The US dollar, which has surged amid the coronavirus crisis, weakened in Asia trading following the Fed’s announcement.
Arrivals in China face criminal charges if they fail to comply with quarantine
Christian Shepherd reports from Beijing
Any person who fails to comply with coronavirus quarantine procedures when entering China can be tried as a criminal, the country’s top legal bodies said on Tuesday, making clear that the measure also applied to foreigners.
Nationality should have no bearing on legal decisions about who should be held accountable for jeopardising national health quarantine measures at the border, China’s supreme people’s court and procuratorate said in a statement.
The announcement comes as China focuses its efforts to fight the coronavirus on its borders, as transmission within the country has dwindled to near zero.
As part of efforts to guard against a second wave of the outbreak caused by new infections imported into China, the capital city of Beijing has rerouted airlines to neighbouring hubs for screenings and imposed mandatory 14-day quarantines in centralised hotels for all new arrivals.
Hong Kong developer warns tourism ‘at a standstill’
Primrose Riordan reports from Hong Kong
A property company founded by Hong Kong’s wealthiest tycoon has warned that its rental returns and the market value of its properties would be squeezed this year due to the coronavirus and the ongoing political unrest in the city.
Henderson Land, which was previously headed by Lee Shau-kee, is now run by his two sons, Peter and Martin Lee.
“The tourism, hotel and aviation industries have almost come to a standstill,” Henderson Land said in its annual results.
Forbes said in February that the senior Mr Lee had edged out Li Ka-shing as the richest man in the city, with an estimated fortune of $30.4bn.
Henderson Land’s net profit fell 26 per cent in 2019 to HK$14.6bn (US$1.9bn) compared with the year before.
The company attributed the drop to US-China trade tensions and the political crisis that gripped Hong Kong in the latter half of 2019.
Brazil coronavirus cases near 2,000
Andres Schipani in São Paulo
Brazil’s confirmed cases of coronavirus grew on Monday to 1,891 with 34 fatalities.
It has the highest number of cases in Latin America and experts have said the region’s largest country appears on track to have an Italy-like curve of infection.
The steady rise of those infected with Covid-19 — a week ago there were only 234 — comes as President Jair Bolsonaro is being heavily criticised over a lack of decisive action in the face of the pandemic.
He stepped up his verbal attacks on state governors saying “people will know that they have been deceived” by them after they ordered non-essential businesses to shut their doors to stem the outbreak.
But according to a Datafolha poll released on Monday, 54 per cent of respondents rated the governors’ response to the pandemic as “great” or “good” against just 34 per cent for Mr Bolsonaro, who early on Monday, issued a decree allowing employers to suspend employees for up to four months with no pay, but not fire them, only to backpedal hours later amid an outrage.
Later in the day, he agreed to release R$85bn (US$16bn) for Brazilian states to fight the outbreak.
South Korea boosts support for companies and markets
Song Jung-a reports from Seoul
South Korea has expanded financial support for the country’s struggling companies and volatile markets to Won100tn ($79.6bn) as the global pandemic threatens growth in Asia’s fourth-largest economy.
The expanded stimulus package, which builds on a Won50tn financial support plan unveiled last week, is a “special pre-emptive step to protect our companies and people’s jobs”, President Moon Jae-in said in an emergency economic meeting on Tuesday.
The package includes an extra Won29.1tn financial support for troubled small and mid-sized companies, a Won20tn bond market stabilisation fund and a Won10.7tn stock market stabilisation fund. Financial support will also be provided to big companies suffering from liquidity shortages.
Mr Moon expressed concern that South Korea’s export-driven economy will be hit hard by slowing global demand. “The global economy is in trouble. It is hard to predict when it will be over,” he said. “Our companies, the backbone of our economy, are also in big trouble.”
He said urgent steps were needed to cushion the blow to local companies as they suffer from liquidity shortages amid deteriorating earnings and lower credit ratings due to disruptions to global supply chains and slowing exports.
UK to send text messages to urge people to stay home
Nic Fildes reports from London
Britain’s mobile phone networks will send a text message to all of the country’s mobile phone users on Tuesday morning on behalf of the government urging people to stay home.
The move is unprecedented for the British telecoms industry but follows the example of other countries that have sent regular warnings to people of restrictions to stem the spread of the coronavirus.
The government has held talks with the technology and telecoms industry about alert systems using smartphones and mobile networks.
Such systems are often deployed in crisis situations such as earthquakes.
Australia’s Xinja Bank secures $256m investment
Jamie Smyth reports from Sydney
Emirates’ World Investments said on Tuesday it would invest up to A$433m (US$256m) over the next two years in Xinja Bank, an Australian start-up digital bank.
The investment, one of the largest made in an Australian start-up, was agreed despite the ongoing coronavirus crisis, which has led to a funding squeeze for many businesses.
Emirates’ World Investments, an investment group based in Dubai, said it would invest A$160m immediately and make the remaining A$273m available in several tranches.
Eric Wilson, Xinja founder and chief executive, said the large scale investment was a great outcome for the company, which has expanded aggressively since launching in Australia in January and now has attracted 29,000 customers.
Xinja has attracted deposits worth A$400m in less than eight weeks by offering attractive interest rate on savings of 2.25 per cent.
It has temporarily stopped taking new customers for its savings account following the Reserve Bank of Australia’s move to slash rates to a record low of 0.25 per cent.
Mr Wilson said Xinja is maintaining its 2.25 per cent deposit rate for existing customers.
Myanmar reports first cases of coronavirus
John Reed reports from Bangkok
Myanmar has reported its first two coronavirus cases, after weeks of claiming that it was free of the disease.
Myanmar’s health ministry said late on Monday that a 36-year-old Myanmar man returning from the US and a 26-year-old Myanmar man returning from the UK had tested positive for the coronavirus.
“We will investigate all the people who were in close contact with these two men,” the statement, quoted by AFP, said.
Myanmar, with a population of 54m, is one of Asia’s poorest countries, and health officials said that its recent claim to be coronavirus-free was due to a lack of testing.
Zaw Htay, Aung San Suu Kyi’s government spokesman, claimed earlier this month that the diets and lifestyles of people in Myanmar, including their use of cash money rather than credit cards, were preventing the spread of the disease.
Washington state tells residents to stay at home
Hannah Murphy reports from San Francisco
Washington has become the latest in a string of US states to issue a stay-at-home order to residents to curb the coronavirus pandemic.
Governor Jay Inslee said that all Washingtonians would be required to stay at home for at least two weeks unless they need to pursue “essential activities”.
All businesses except “essential businesses” are to be closed in the state, which became the epicentre of the West Coast outbreak following the discovery of multiple cases at a nursing home just outside of Seattle.
Washington is now the 16th state under lockdown, after New Mexico, Indiana, Massachusetts, Michigan, Ohio, Oregon, West Virginia and Wisconsin all made similar announcements on Monday.
New Zealand reports 43 new coronavirus cases
New Zealand said it is examining four suspected cases of “community transmission” as the country reported 43 new coronavirus cases on Tuesday morning.
Ashley Bloomfield, the director-general of health, said the total number of cases in the country had risen to 155. He said New Zealand will now include cases identified through clinical diagnosis in its tally alongside those identified through positive test results.
Overseas travel remained the “main driver” of new cases in New Zealand, but four of the cases reported on Tuesday did not appear to be linked to anyone with a travel history or other confirmed cases. Health authorities are using contact tracing to discover possible connections to other cases.
New Zealand has closed its borders to foreign visitors.
Jacinda Ardern, the country’s prime minister, announced on Monday that New Zealand would enter “Covid-19 alert level 4 eliminate” from midnight on Wednesday, which involves closing non-essential businesses and instructs people to stay at home to stem the spread of the virus.
Dr Bloomfield said it was best to enter this stage “sooner rather than later” to break the chain of community transmission.
Six people are being treated in hospital for Covid-19 and all are in a stable condition, Dr Bloomfield said.
South Korean new virus cases rise again despite tougher controls
By Edward White
The pace of new infections in South Korea has picked up again as the country tightens controls on overseas arrivals and large church groups.
Seventy-six new cases were reported on Tuesday, up from 64 cases a day earlier. The total caseload now stands at 9,037 with 120 deaths.
New infections have been mostly on a downward trend this month but there have been several flare-ups linked to churches, nursing homes and a call-centre, as well as arrivals from Europe and the US.
Seoul has in recent days started implementing mandatory testing on all new arrivals from Europe and some health experts have called for the measure to be expanded to people landing in the country from the US.
Still, the number of patients recovering continues to outpace new infections with 341 additional recoveries recorded on Tuesday, taking the tally to 3,507, according to the Korea Centers for Disease Control and Prevention.
Ecuador delays bond interest payments
Gideon Long reports from Bogotá
Ecuador’s finance minister said the country will make a $325m eurobond amortisation payment on Tuesday as planned, but will delay the payment of around $200m in interest on other bonds due this week, taking advantage of a 30-day grace period to give itself more time.
In a sign of how cash-strapped the country is in the wake of the Covid-19 outbreak and a sharp drop in oil prices, Richard Martínez said his government would try to reschedule debt repayments with all its creditors.
“We’re going to open a dialogue with our commercial, bilateral and multilateral creditors to come up with a good agreement for the Republic that will allow us to reduce the pressure over the course of the year while at the same time maintaining access to sources of financing,” he told an online news conference on Monday night.
He said the decision to repay the $325m should ensure Ecuador receives around $2bn in financing in the coming weeks, including a $500m disbursement from the IMF in late April.
In addition, he said Ecuador had secured more than $100m in help from the World Bank ($26m), the Inter-American Development Bank ($25m) and the Latin American development bank CAF ($51m) specifically to deal with Covid-19.
The delayed interest payments are on bonds due in 2022, 2025 and 2030.
Ecuador has the second-highest number of confirmed coronavirus cases in Latin America, behind Brazil, and the highest per capita. Local authorities say 981 people have tested positive and 18 have died.
It is the only country in South America that uses the dollar as its currency, limiting its scope to address the sharp drop in prices for oil, which accounts for more than half of the country’s export revenue. Furthermore, it is struggling to meet the terms of a $4.2bn loan agreed with the IMF last year.
The spread between Ecuadorian bonds and US Treasuries has soared in recent weeks reaching the kind of levels typically associated with default. On Sunday night, Congress urged the government to delay its debt repayments.
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Johnson to Britons: ‘You must stay home’ Boris Johnson brought the shutters down on Britain on Monday night, as he announced the closure of all “non-essential shops”, told people to stay at home and warned that the police would enforce tough new measures to stop the spread of coronavirus.
France toughens its lockdown France has again tightened the rules governing the country’s lockdown by raising the fines for people who go out without a legal reason, limiting outdoor exercise even further and closing all open-air markets.
South Africa orders 21-day lockdown South African president Cyril Ramaphosa ordered a 21-day nationwide lockdown for Africa’s most industrialised country, in the most drastic measures on the continent so far to tackle the spread of the virus.
Senate fails to advance stimulus bill for second time Democrats have for the second day in a row stopped a nearly $2tn economic stimulus package from advancing in the Senate, as lawmakers from both parties continue to disagree over how to prop up a US economy battered by the spread of coronavirus.
IMF concedes coronavirus will push world economy into recession The IMF has belatedly recognised that the coronavirus crisis will plunge the world economy into recession. In a statement after a call with G20 finance ministers, Kristalina Georgieva, who heads the fund, said the outlook was now “negative”.
China reports 1 new coronavirus case in Wuhan
Chinese health authorities reported a new case of coronavirus in Wuhan, the city where the outbreak began, after four days of no new local infections in the mainland.
There were 78 new cases in the mainland to the end of Monday, up from 39 a day earlier. Of those infections, 74 were imported by people returning from overseas. The new cases took the total to 81,171.
There were seven new deaths, to bring the total fatalities to 3,277.
The number of coronavirus patients discharged from hospital rose to 73,159.
Asia-Pacific stocks climb despite US falls
Asia-Pacific stocks rose on Tuesday even after a pledge for unprecedented buying of government bonds by the US Federal Reserve failed to steady Wall Street as investors awaited the passage of an economic stimulus package.
Australia’s S&P/ASX 200 was 2.3 per cent higher while the Topix in Japan was up 2.8 per cent. In South Korea, the Kospi gained 2.3 per cent.
US stock futures also rose, with the benchmark S&P 500 set to gain 1.3 per cent when markets reopen.
The S&P 500 ended Monday 2.9 per cent lower as investors awaited a fiscal stimulus package to support the country’s economy during the outbreak. That fall came despite the Fed unleashing its most forceful efforts to date, pledging to buy government bonds in unlimited amounts and to provide a backstop to the US corporate debt market.
Democrats on Monday stopped a $2tn economic stimulus package from advancing in the Senate for a second time, insisting it include stricter limits on how big businesses use the rescue funds.
More than 42% of the US now under ‘stay at home’ orders
Peter Wells reports from New York
New Mexico has become the latest state to issue a stay at home order, bringing the proportion of the US population under lockdown now and in coming days to more than 40 per cent.
The order from the south-western state, which comes into effect at 8am on March 24, means the number of US states ordering residents to stay at their residences more than doubled on Monday to 15. Indiana, Massachusetts, Michigan, Ohio, Oregon, West Virginia and Wisconsin made such announcements earlier in the day.
The 15 states where those orders are effective or about to come into effect cover just over 42 per cent of the population in the 50 states and District of Columbia.
The number of confirmed coronavirus cases in the US has soared to more than 41,000 as of Monday, 579 of whom have died, according to Johns Hopkins University. That is more cases than any country after China and Italy, and the number of people who test positive is expected to continue to rise rapidly as the US ramps up the ability to test people with symptoms.
New York is the hardest-hit state, with the number of confirmed cases rising by 5,707 in the past 24 hours, Governor Andrew Cuomo announced on Monday, bringing the total number of cases to 20,875.
Some individual cities and counties have issued stay at home orders, even though the states have not. As such, the proportion of the population affected by those restrictions probably exceeds 42 per cent.
Texas, the US’s second most-populous state, does not have a stay at home order in place, but local media reported the capital, Austin, was expected to take this route tomorrow, following in the footsteps of Dallas and Waco.
New York City area sees 28% of all tests coming back positive
Peter Spiegel reports from New York
New York City, which has overtaken Seattle as the biggest coronavirus hotspot in the US, has seen 28 per cent of its tests coming back positive, suggesting the virus has been circulating in America’s largest city for weeks.
Deborah Birx, the co-ordinator of the White House’s coronavirus task force, said the 28 per cent rate for the New York City area far outstrips the national average of less than 8 per cent.
“So to all of my friends and colleagues in New York, this is the group that needs to absolutely social distance and self-isolate at this time,” said Dr Birx. “Clearly the virus had been circulating there for a number of weeks to have this level of penetrance into the general community.”
Earlier in the day, Andrew Cuomo, the New York governor, said the state had recorded 5,707 new cases in the past 24 hours, with 4,300 of them in either New York City or suburban Westchester County. New York City now has 20,875 cases, more than all but five countries.