Coronavirus latest: UK calls spread of Covid-19 in care homes a ‘challenge’


A quarter of Canadian companies seek loans to weather Covid-19

More than one in four Canadian businesses requested loans in the first quarter to cover operating costs due to lost income from Covid-19, with a further quarter of those companies seeing their requests denied, according to an official survey.

Despite government programmes to back business lending, Statistics Canada said only 77 per cent of businesses that asked for credit to cover losses during the pandemic had their loans fully or partially approved — based on a “crowd-sourced” online survey of 12,600 companies.

A fifth of businesses that pay rent deferred those payments.

The survey showed a widespread drop in revenues due to falling demand, with half of businesses reporting revenues down 20 per cent or more year-on-year in the first three months of 2020 — and one-third seeing a more-than 40 per cent hit.

The economic fallout of the pandemic showed a sharp split by sector. Around 40 per cent of agriculture, forestry, and utilities businesses recorded growth or steady income, while travel, entertainment, and food services companies suffered greater losses.

The survey also showed signs of businesses adapting to new trading conditions, with two-fifths adding new ways to sell or communicate to customers in the quarter and 3 per cent making new products. Nearly two-thirds said they could re-start normal operations within a month, when permitted.

India to allow stranded migrant workers to travel home

Amy Kazmin in New Delhi

Prime Minister Narendra Modi’s government has decided that millions of migrant workers stranded in cities and industrial areas far from their rural community will be permitted to return to home if they wish, as India prepares to ease its draconian six-week lockdown.

In an official order, New Delhi said that the return of stranded migrant workers will have to be organised in batches by officials from their home states in conjunction with authorities in the states where they are presently located.

“Sending and receiving states may consult each other and agree to movement by road,” the order said. It also said all those stranded migrants who wish to return to their homes must be screened and only those showing no symptoms of illness would be permitted to leave.

Millions of migrants were left stranded far from home when India abruptly suspended all public transport on March 22, just days before it announced a strict national lockdown. Many undertook arduous – and sometimes fatal – treks to try to get back to their homes, but millions remain stuck, mostly dependent on food handouts to survive.

Amid rising desperation – and fears of social unrest – some states, including Uttar Pradesh, and Madhya Pradesh, have already begun bus services to help ferry stranded migrants back to their homes.

US refiner Valero Energy sinks to $1.9bn loss in the first quarter

Derek Brower, US energy editor

Valero Energy, one of the US’s biggest oil refiners, on Wednesday reported a $1.9bn net loss in the first quarter of 2020 and said it would reduce planned capital expenditure by 16 per cent, amid a “very challenging start to the year” as coronavirus lockdowns came into force and sapped fuel demand.

The company also reported a $2bn after-tax charge related to the lower price of its inventory in the first quarter. Total revenue of $22.1bn for the quarter was down from $24.3bn a year earlier but easily topped analysts’ expectations, according to S&P CapitalIQ data.

“It’s been a very challenging start to the year with significant impacts to families, communities and businesses world-wide brought on by the Covid-19 pandemic,” said Joe Gorder, Valero’s chief executive.

Valero’s shares are down 40 per cent since the start of the year but on Wednesday rose in pre-market trading by about 3.3 per cent to $59.81. Valero said its refinery throughput amounted to 2.8m barrels a day in the first quarter, in line with the same period a year earlier, partly reflecting market conditions before lockdowns were put in place.

US futures jump on positive results for Gilead’s possible Covid-19 drug

Hannah Kuchler in New York

US futures jumped after Gilead said its possible drug for the coronavirus had positive results in a US study, after shares in the California-based biotech fell last week when an accidental early publication of results revealed a trial in China had been unsuccessful.

Nasdaq 100 futures were up about 2 per cent and S&P 500 futures were up 1.9 per cent following the news. Shares in Gilead were halted and then rose almost 9 per cent in pre-market trading after the company said it was aware of “positive data” from the study run by the US National Institutes of Allergy and Infectious Diseases. The NIAID did not respond to a request for comment.

“We understand that the trial has met its primary endpoint and that NIAID will provide detailed information at an upcoming briefing,” Gilead said.

The company also released results from its own study, which appeared to show patients did just as well after a five day course of the drug, than after ten days. However, this study did not have a control arm comparing patients on remdesivir to patients who were not taking it and is not peer-reviewed.

Merdad Parsey, chief medical officer at Gilead, said that study “complements” the placebo controlled study by NIAID. If patients do not require a ten day course of the drug, “it could significantly expand the number of patients who could be treated with our current supply of remdesivir”, he said.

India backs contact tracking app for workers to go into office

Amy Kazmin in New Delhi

India has ordered central government employees to download its coronavirus contact tracking app so as to check how low an exposure risk they are before going to the office every morning, as the country prepares to ease a six-week lockdown.

The instructions came in an order from the ministry of personnel on Wednesday, a day after an official in Niti Aayog, the government’s main policy think-tank, tested positive. New Delhi unveiled the Aarogya Sethu, or Bridge to Health, app which alerts people whether they have come close to someone who later tests positive for Covid-19.

While privacy activists have expressed concern about the use of the data, Narendra Modi, the prime minister, has appealed to Indians to put the app on their phones. As of April 25, the app has been downloaded 75m times.

It is clear that the use of the app will not be optional for civil servants working in the central government. Officials must check it before setting out for work, and should only report for duty if the app confirms they are at “safe” or “low risk” status.

Any civil servants whose status report shows them at “moderate” or “high risk” of infection, based on recent proximity to another infected person as detected by Bluetooth, will be required to stay home and self-quarantine for 14 days, the order says.

Wall Street on track to open higher

US stocks were set to open higher, while oil prices rebounded on hopes that a glut in global crude markets was easing.

Futures tied to the S&P 500 were 1.3 per cent higher with less than an hour to go before the opening bell, while European and Asian markets advanced.

Investors are gaining a better idea of the impact of Covid-19 on the US economy through a packed schedule on Wednesday. Figures just released showed US GDP contracted in the first quarter at the fastest rate since 2008, while the Federal Reserve will conclude its two-day policy meeting later in the afternoon.

Earnings from Alphabet and Boeing helped support sentiment before the opening bell, while Microsoft and Facebook will report later in the day.

Futures added to their earlier gains after Gilead Sciences said it “is aware of positive data” relating to a trial of coronavirus treatment drug Remdesivir. Still, it is worth viewing medical hopes with caution. An optimistic report on a Gilead drug boosted risk sentiment globally in mid-April before flopping in its first trial.

Mastercard reports jump in credit card spending

Robert Armstrong in New York

Spending by Mastercard’s customers rose 8 per cent in the first quarter, despite the coronavirus, driving revenue growth of 5 per cent, adjusting for currency.

In the US, spending growth on Mastercard credit cards, at 7 per cent, outran debit card spending, which increased by 5 per cent. Both debit and credit spending were particularly strong in Europe, rising by 12 per cent in local currencies.

Both revenues, at $4bn, and earnings per share, at $1.83, were slightly ahead of Wall Street’s expectations. Despite rising revenue, net income of $1.7bn declined by 7 per cent from the same period last year, hit by rising expenses and investment losses.

Mastercard repurchased 4.7m shares for $1.4bn in the quarter, but said that it had temporarily suspended its buyback programme until visibility into the economic situation improves.

Shares in the company rose 3 per cent in early trading on Wednesday. They have declined by over a fifth since the virus first began to impact markets in late February.


US economy suffers sharpest contraction since financial crisis

Mamta Badkar in New York

The US economy contracted in the first quarter at the fastest rate since 2008, marking an end to the longest expansion on record as the lockdowns aimed at curbing the coronavirus pandemic caused widespread disruption.

Gross domestic product, or the value of all goods and services produced by the economy, shrank at a 4.8 per cent annualised rate in the first three months of the year, according to the preliminary estimate from the Bureau of Economic Analysis published on Wednesday. That marked the first quarterly contraction in six years and compared with economists’ forecasts for a 4 per cent decline in output.

American consumers, who had been a driving force in the economy, retrenched spending as state governments nationwide began to announce lockdowns last month in an effort to curb the spread of coronavirus, and businesses laid off millions of workers. Retail sales fell 8.7 per cent in March, the most since records began in 1992.

However, as lockdowns only began in earnest in mid-March, economists have cautioned the worst is yet to come for the US economy.

Boeing to cut production as it posts $641m quarterly net loss

Claire Bushey in Chicago

Boeing has said it will cut production rates for nearly its entire portfolio of commercial aeroplanes, signalling that its workforce will shrink in size as the coronavirus pandemic throttles global demand for jets.

The areospace company posted a $641m net loss in the first quarter compared with $2.1bn in net income for the same period last year. Revenue fell more than a quarter to $16.9bn. Boeing also reported a flurry of charges totalling $2.3bn.

The 737 Max will have a “slower than planned” ramp-up once production resumes, increasing to 31 per month in 2021. The wide body 787 Dreamliner will halve production, while the 777 and 777x will go from five craft a month to three in 2021. The company will continue to make 767s and 747s at the same rates.

The aerospace manufacturer closed plants in Washington state, South Carolina and suburban Philadelphia for weeks due to the spread of Covid-19. Though they have since reopened, the company’s airline customers continue to suffer from plummeting demand for air travel, prompting them to defer deliveries on jets.

UK to help support vulnerable gamblers during lockdown

Alice Hancock in London

The UK’s gambling industry regulator is funnelling £9m towards charities that deal with vulnerable players as fears rise about a spike in betting-related harm during the coronavirus lockdown.

The money, which comes from fines issued by the Gambling Commission to operators that have flouted rules around anti-money laundering and monitoring of problem gamblers, will be directed by the charity GambleAware to treatment centres and support services around the UK.

Since the beginning of this year, the industry has paid £27m in settlements over regulatory action.

Regulars are gambling more often under lockdown and turning to more addictive forms of online betting such as casino games and slots due to the lack of sport, the Gambling Commission indicated on Monday.

However, charities such as GamCare said that they had not seen an uptick in calls for support, adding that it fears that fewer people will ask for help while they are in constant proximity to their families.

UK extends visa scheme for health staff

Robert Wright in London

A scheme to ensure staff in the UK’s National Health Service were free from worries about their immigration status during the coronavirus outbreak has been extended to new groups of staff, including midwives, social workers and medical radiographers.

Priti Patel, home secretary, announced the step on Wednesday as she appeared before a virtual sitting of the House of Commons’ Home Affairs Committee.

She also announced that the families of members of NHS staff who died of coronavirus would automatically be offered indefinite leave to remain in the UK.

However, members of the committee criticised Ms Patel for her failure to bring into the scheme some manual workers such as hospital porters and cleaners and for excluding staff in the social care sector.

Yvette Cooper, the Labour MP who chairs the Home Affairs committee, said it seemed “very unfair” to social care workers that they were not included in the scheme.

The scheme automatically grants a year’s visa extension, without payment of any fees, to any of the staff included whose visas are due to expire before October 1.

The provision covers mainly staff from outside the European Economic Area – the EU plus Norway, Iceland and Liechtenstein – who are on Tier 2 visas for skilled professionals.

Yum profits tumble as pandemic hits businesses

Yum Brands, the owner of fast food franchises KFC, Taco Bell and Pizza Hut, reported a 68 per cent decline in its quarterly profit as its restaurants worldwide were hit by efforts to slow the coronavirus pandemic.

“First-quarter results reflect two different realities,” said David Gibbs, chief executive of Yum Brands. “We began the year with momentum across many of our businesses, however as the quarter progressed we were heavily impacted by the unfortunate spread of Covid-19.”

The Louisville, Kentucky-based company either closed stores or limited its restaurants to take-out or delivery as countries around the world announced lockdowns in response to the outbreak. Globally, about 7,000 restaurants had closed by mid-March.

Overall revenues climbed 1 per cent from a year ago to $1.26bn in the three months ending in March, ahead of analyst expectations for $1.2bn.

Worldwide same-store sales fell 7 per cent from a year ago, with sales at KFC chain and Pizza Hut down 8 and 11 per cent respectively. However, Taco Bell bucked that trend and reported a 1 per cent increase in same-store sales.

Net income however fell to $83m or 27 cents a share, down from $262m or 83 cents a share in the same quarter a year ago. Adjusting for one-time items, earnings of 64 cents a share, missed analysts’ expectations by a penny.

President Xi declares Wuhan’s victory over coronavirus

Christian Shepherd in Beijing

China’s president Xi Jinping has declared victory over coronavirus in the central province of Hubei and its capital Wuhan, where the pandemic began.

“After arduous and extraordinary efforts, Hubei and Wuhan have achieved a decisive result in their defensive battle [against Covid-19],” Chinese state media reported Mr Xi telling the Communist party’s politburo standing committee on Wednesday.

Mr Xi also warned officials not to drop their guard, warning that risks from “imported” cases and a resurgence of Covid-19 remain severe.

Earlier on Wednesday, China’s parliament announced that its delayed annual legislative meeting would be held in Beijing in late May, in the clearest sign yet of the leadership’s confidence that it has contained the outbreak.

UK first secretary admits Covid-19 in care homes is a ‘challenge’

Laura Hughes in London

Dominic Raab has admitted the spread of coronavirus in care homes is a “challenge that we must grip”, as he stood in for the prime minister at Wednesday’s PMQs.

The first secretary said he would not “shy away” from admitting it was a challenge, after the latest figures showed much of the increase in deaths came from care homes. Mr Raab was deputising for Boris Johnson after the prime minister and his fiancée announced the arrival of a “healthy” baby boy on Wednesday morning.

Sir Keir Starmer, Labour leader, described the total numbers of fatalities in the UK as “truly dreadful”.

He said:

Six weeks ago on March 17 the Government’s chief scientific adviser indicated the Government hoped to keep the overall number of deaths from coronavirus to below 20,000.

He said that would be ‘good’ by which in fairness to him he meant successful in the circumstances. But we’re clearly way above that number and we’re only partway through this crisis and we’re possibly on track to have one of the worst death rates in Europe.

On Monday, the Prime Minister said in his short speech that many were looking at our apparent success in the UK. But does the First Secretary agree with me that far from success these latest figures are truly dreadful?

Mr Raab responded:

This is an unprecedented pandemic, a global pandemic, and I think in fairness we shouldn’t criticise either the CMO or the deputy CMO for trying to give some forecast in response to the questions that many in this chamber and many in the media are calling for.

Sir Keir also asked when the government would “fix” the issue of inadequate supplies of personal protective equipment (PPE) for frontline NHS staff.

Mr Raab admitted there were “challenges on the front line” and ministers are doing “absolutely everything” they can to make sure those workers get the equipment that they need.

Calling for ministers to publish an exit strategy, Sir Keir said the public “need to know what’s going to happen in the next phase.”

Mr Raab responded:

He’s asked for a time frame and a date, we can’t give it until we have the Sage evidence. If he thinks there’s things that we could be announcing, whether it’s workplaces which he referred to, schools, or otherwise, feel free to propose those things.

Disadvantaged UK schoolchildren cannot expect to receive laptops yet

Bethan Staton in London

The UK will take a phased approach to reopening schools as the coronavirus lockdown eases, but government-promised tech support for disadvantaged children may not be available until June.

Gavin Williamson on Wednesday told the UK’s parliamentary committee for education that he could not yet give a date for when schools might reopen, but that he expected children to return in a phased manner, and “with as much notice as possible”.

“We are working very closely with the whole sector in terms of actually when is going to be the best time to bring schools fully back into operations,” the UK’s education secretary said.

Schools in the UK have since mid-March been open only for a small number of vulnerable pupils or the children of key workers. Concerns over education disadvantage have charged the debate about when students should return. Concern has mounted over technological inequality that has left some children unable to access online learning tools, a centrepiece of national strategy to continue education from home.

Although the government has launched a scheme to provide tech facilities for disadvantaged children, Mr Williamson told MPs that laptops promised under the programme would not be available for most children until late May or June.

He added that there were no plans to reopen schools in the summer holidays, pouring cold water on one proposal for narrowing the attainment gap.

The government is looking at a “range of interventions” to support disadvantaged students who may have fallen behind during the period of shutdown, he said.

Care home patients make up half of Scotland’s Covid-19-related deaths

Mure Dickie in Edinburgh

More than half of coronavirus-related deaths in Scotland in the week to April 26 occurred in care homes.

The weekly statistics compiled by the National Records of Scotland, which offer the most up-to-date view of coronavirus mortality in the UK, highlight the toll taken by care homes and their status as a battleground in attempts to control Covid-19.

Total deaths in care homes in which coronavirus was mentioned as a factor reached 886 by April 26, up 349 from a week before, the figures revealed on Wednesday. Scotland’s total coronavirus-linked deaths hit 2,272 over the same period, up 656.

The proportion of deaths in care homes has risen sharply in recent weeks. Up to April 12, just a quarter of coronavirus deaths were in such facilities, compared with 62 per cent in hospitals.

Hugh Pennington, emeritus professor of bacteriology at the University of Aberdeen, told a Scottish parliament committee on Tuesday that more needed to be done to stop coronavirus getting into care homes.

“I would classify care homes where there have been cases of the virus as almost super-spreading environments where the virus is going on the rampage,” Prof Pennington said.

China’s tech sector gets a ‘shot in the arm’ from Covid-19 recovery

China’s technology manufacturing industry has rebounded at a “surprisingly” vigorous pace, research shows, suggesting that at least some portions of the economy could stage a rapid recovery from the Covid-19 slump.

After bottoming in February, the world’s second-biggest economy has picked up since March, with the tech sector leading way, US investment bank Morgan Stanley has said in a note to clients.

The acceleration in production in the tech sector has “proceeded at a surprisingly fast pace and the worst should be behind us”, wrote Katy Huberty, equity analyst at Morgan Stanley. She pointed to data that show air quality in Zhengzhou, site of some iPhone manufacturing, worsened to above the seasonal trend for most of April, suggesting production has been higher than in previous years.

“Every secular technology growth trend is getting a shot in the arm because of the Covid-19 shock,” she added, pointing to the increase in demand for cloud computing and work from home technologies.

Smartphone demand has staged a V-shaped recovery, in March increasing 22 per cent year-on-year. iPhone sales increased fivefold, from 500,000 to 2.5m.

Ms Huberty wrote:

Technology vendors are encouraged by the pace at which China’s production has ramped up post the Covid-19 shock and this has reinforced their belief in locating the production of their high volume products in China.

UK competition watchdog warns private schools over collusion

Andrew Jack in London

The Competition and Markets Authority has warned private schools to avoid collusion by exchanging plans around fee reductions discounts as a result of the impact of coronavirus.

In a letter to independent schools organisations, Howard Cartlidge, senior director, cartels, at the regulator, said:

We have become aware that individuals at some schools may be engaging in discussions with each other about the level of discounts and/or refunds on school fees.

Citing past action against the sector in 2006, he said the authority would “not tolerate” such practices and that schools failing to comply would face fines and risked undermining public trust in the sector.

Barnaby Lenon, chair of the Independent Schools Council, said the letter was “a helpful warning” and he agreed with it. “Schools are not allowed to collude on future fees and as far as I know have not been doing so,” he said.

Robert Verkaik, co-founder of Private School Policy Reform, a think-tank, said:

Those parents who have spent tens of thousands of pounds to send their children to an independent school will be rightly very angry if some of the schools are working against their interests by setting uncompetitive fees. Many private schools today are really multimillion-pound corporations masquerading as charities.

Spotify subscriber growth tops view and search for ‘chill’ music rises

Anna Nicolaou in New York

Spotify added more new subscribers than forecast in the first three months of the year, during which the music streaming company noted a rise in searches for “chill” and “instrumental” music as coronavirus lockdowns took hold across the world.

The dominant music streaming company added 6m subscribers in the first quarter to reach 130m paying customers, ahead of the 129m Wall Street analysts had forecast.

Spotify shares climbed more than 4 per cent in pre-market trade. The company’s stock has fared better than the broader market, dropping 5 per cent this year, compared with an 11 per cent fall in the S&P 500.

While Netflix has been boosted by lockdowns that kept people at home, the coronavirus effect on music streaming has been less clear. Some analysts expected that fewer people commuting to work might mean less time spent using Spotify.

Spotify on Wednesday confirmed that music listening had changed during the pandemic. “Morning routines have changed significantly,” Spotify said in a letter to investors. “Every day now looks like the weekend.”

However, despite some “notable” declines in daily use in Italy and Spain in late February, Spotify said there was little overall impact to its subscriber and user numbers, and that music consumption had mostly recovered by the end of March.

Total users, which include those who do not pay for Spotify, rose to 286m, just below Wall Street forecasts for 287m.

Spotify runs advertisements on its free service, but advertising only makes up about one tenth of its revenues. The company said that its advertising revenues during the final three weeks of March were more than 20 per cent lower than it had previously forecast. “We are fortunate that as a business we are able to operate with very little disruption,” said Spotify.

The company, which hands out most of its revenues in royalty payments to the music industry, reported an operating loss of €17m in the quarter on €1.85bn in revenues.

Spain lays foundation for full reopening of economy by end of June

Daniel Dombey in Madrid

Spain is preparing to take the first steps towards phasing out its coronavirus lockdown, a process the government hopes will be completed by the end of June.

On Wednesday, as the health ministry reported figures that continued to show a relatively low level of deaths and infections, authorities in Madrid said that a huge temporary hospital in the city’s main conference space would close this week. The industry ministry said that it was seeking gradually to reactivate tourism but that a return to international travel would require EU-wide agreement on common procedures for transport.

The health ministry said 325 people had died in the past 24 hours after contracting coronavirus, an uptick on the previous day’s tally of 301, but one the ministry said was partly because of regional data coming in late. To date, the official coronavirus death toll is 24,275 people, the third highest in the world.

Such figures refer to proven rather than probable deaths. In an indication that the true number is considerably higher, the Madrid regional government said that since the start of the crisis, 5,811 people had died in the region’s care homes after contracting coronavirus, but only 1,130 were “confirmed cases” and thereby added to the national tally. The remaining 4,681 people displayed symptoms of Covid-19 before dying but were not tested.

The incidence of coronavirus, together with available hospital beds, and the preventive measures taken, will be key factors in determining Spain’s province-by-province transition out of the lockdown. The government hopes the process will be completed in as little as eight weeks and no longer than 10 weeks. During the transition, nationwide travel will still be banned and people will have to remain in their home provinces, despite the gradual reopening of restaurants, hotels and public places.

Libor transition delayed by Covid-19 ‘challenges’

Matthew Vincent in London

Regulators have announced a delay in the transition away from the tainted Libor lending benchmark, citing “challenges presented by the current operating environment” as Covid-19 lockdowns continue.

The UK’s Financial Conduct Authority and Bank of England said that the cut-off date for new loans referencing sterling Libor has been pushed back to the first quarter of 2021, from the third quarter of 2020 previously. However, the overall end date for the publication and use of Libor – December 31 2021 – remains in place.

In a joint statement with the Risk-Free Rate Working Group – comprising banks, broker-dealers and asset managers – the regulators said:

There will likely be continued use of Libor-referencing loan products into Q4 2020 in particular, to maintain the smooth flow of credit to the real economy.

Libor is being phased out following a series of scandals that damaged trust in the benchmark lending rate, which underpins roughly $400tn of products globally. In recent years, banks and brokers have had to pay nearly $10bn in penalties for trying to manipulate the rate, and Libor’s reliability has been further questioned given the diminishing number of transactions it is based on.

Maritime industries battle to cope with coronavirus restrictions

Sailors and ship guards face testing times due to the outbreak of the novel coronavirus, as basic necessities struggle to reach vessels and seaborne security risks rise while private security contractors deal with more onerous operating conditions.

“I am stuck on board and frankly speaking it seems the world has forgotten about us,” said a sailor working for the Evergreen Group, a Taiwanese shipping conglomerate, who wished to remain anonymous. “We are not allowed to go ashore – it has already been three months – and even the basic necessities such as toothpaste, chocolate and so on are difficult to get”.

The employee said that a third less cargo is being transported than usual, while the only port allowing crews to embark and disembark at present is Hong Kong. About 100,000 sailors typically change over each month. Evergreen Marine did not respond to the request for comment.

Boarding restrictions due to coronavirus and the deployment of tankers as floating crude storage, meanwhile, have created new problems for the maritime security industry.

Dimitris Maniatis, chief commercial officer at Diaplous, one of the largest maritime security providers, said that his company has deployed additional floating armories since guards could not board from certain ports and it bought 2,700 rapid testing kits.

“There’s a lot of business. We did crazy numbers in March and April”, he said. “It’s because the smaller, private maritime security companies couldn’t keep up with the new situation”.

Worries about the spread of coronavirus have made it harder for ships to keep up their guard, as seaborne oil and product storage undergoes rapid growth. A container ship near Benin was seized by pirates earlier this month, after the government suspended the deployment of its security forces on merchant vessels out of fear of them catching the virus from crews, Mr Maniatis said.

GE hit by knock-on from global aviation crisis

Industrial conglomerate General Electric reported a sharp slowdown in orders in its aviation business during the first quarter of the year as the global clampdown on air travel took its toll.

The group’s aviation division – which makes engines and other aircraft parts – saw orders slide 14 per cent to $7.5bn in the three months to the end of March, compared to the previous year. The global aviation industry is in the midst of an unprecedented crisis as government efforts to stem the spread of coronavirus have triggered a collapse in demand.

Lawrence Culp, GE chairman and chief executive, said:

The impact from Covid-19 materially challenged our first-quarter results, especially in Aviation, where we saw a dramatic decline in commercial aerospace as the virus spread globally in March.

Profits in the aviation segment fell 39 per cent to just over $1bn. The group’s healthcare division fared better, however, with profits rising 15 per cent to $896m on the back of a surge in orders for products used to diagnose and treat Covid-19.

For the business as a whole, industrial free cash flow – a key measure, which Mr Culp has focused on rebuilding – slid 81 per cent to minus $2.2bn, worse than the minus $2bn figure anticipated by analysts polled by Factset. Total revenues of $20.5bn were down 8 per cent on last year but broadly in line with expectations.

Adjusted earnings per share were $0.05 for the quarter, compared to $0.13 last year and just shy of the $0.08 anticipated by analysts. The company pulled its full year guidance earlier this month.

Mr Culp sought to paint a more positive picture for the period ahead, saying that while the virus poses “many unknowns” in the immediate future, the company would rebound. “There will be another side—planes will fly again, healthcare will normalise and modernise, and the world still needs more efficient, resilient energy”.

Good morning Americas: Here’s a round-up of Europe’s morning

Bosch, Europe’s largest auto supplier, warns of a ‘significantly steeper’ recession for the auto industry than in the financial crisis more than a decade ago.

The threat of negative US oil prices is still present as traders look to offload crude contracts for June delivery, say UBS analysts. Myles McCormick and Harry Dempsey in London

The UK sets up a new clinical trial initiative to fast-track potential treatments for Covid-19 patients, with six drugs initially put into the programme. Clive Cookson in London

Europe takes a hit: Business and consumer confidence has been crushed, with the European Commission figures revealing a plummet in April at a record rate. Spain’s retail sales dropped at a record pace in March. In the UK, meanwhile, industrial production is running just above half of its capacity while sentiment in the services sector has dropped to an all-time low in April as businesses shut down. Martin Arnold in Frankfurt and Valentina Romei in London report

Easing the lockdown: Poland cautiously sets dates in May for shopping centres, museums, hotels and pre-schools to re-open. Beijing loosens border controls for most domestic travellers. James Shotter in Warsaw and Yuan Yang in Beijing report

Baby boy for Johnson household: Boris Johnson, the UK prime minister, and his fiancée Carrie Symonds have given birth to a healthy baby boy in a London hospital.

Polish pre-schools, shopping centres and hotels to re-open in May

James Shotter in Warsaw

Poland is to re-open shopping centres and hotels from May 4, and allow pre-schools and kindergartens to open their doors from May 6, as the central European nation eases the restrictions put in place to fight the effects of the coronavirus pandemic.

The measures include a partial reopening of museums and libraries from May 4. But they could be reversed if signs appear that the epidemic, which has infected 12,415 and killed 606 Poles, was getting out of control, the prime minister said on Wednesday.

“We can see what is happening in Spain, Italy and France, and also in Belgium and Holland, where the number of people infected per million inhabitants is several times higher than in Poland,” Mateusz Morawiecki said.

“This is in a certain sense a warning for us to adjust our system of loosening restrictions to the preparedness of our health service, and the extent to which we have managed to get coronavirus under control.”

The move follows parks and forests being re-opened two weeks ago. Poland has also loosened restrictions on the number of people who can be in shops at any one time.

Business and consumer confidence crushed in Europe

Martin Arnold in Frankfurt

European business and consumer confidence plummeted at a record rate in April due to the coronavirus crisis, according to the EU’s main economic indicator, which fell close to the all-time lows of the financial crash a decade ago.

After recording “an exceptionally strong fall in confidence among consumers and in all the business sectors” the European Commission said its economic sentiment indicator fell by 28.8 points to 65.8 in the EU.

The fall was likely to have been even more severe as the survey could not be carried out in Italy, which imposed a severe lockdown on its inhabitants after suffering the heaviest death toll caused by coronavirus.

Among the largest eurozone economies, the sentiment indicator fell the most in the Netherlands, where it was down 32.6 per cent, while Spain’s dropped 26 per cent, Germany was down 19.9 per cent and France declined 16.3 per cent.

The EU warned “in many countries the response rate was lower this month than usual,” adding that the results of the survey “may be less accurate and comparable across countries than usual”.

Confidence among companies in the services sector fell by 32.7 per cent to its lowest ever level. Confidence in the industrial sector was down by a record 19.2 per cent, but remained above all-time lows seen in 2009.

Industrial activity at half capacity as confidence falls to record low

Valentina Romei in London

UK industrial production is running just above half of its capacity while sentiment in the services sector has dropped to an all-time low in April as businesses shut down in an attempt to limit the spread of coronavirus.

The economic sentiment indicator for services dropped to minus 58.8 in April, from minus 9.3 in March and the lowest since records began in 1997, according to data from the European Commission.

According to the survey, 70 per cent of businesses in the services sector, excluding retail, are struggling with insufficient demand.

The fall in sentiment was the most pronounced in the services sector – which accounts for roughly 80 per cent of the economy—but was widespread across all sectors and consumers.

The index for manufacturing dropped to minus 45.3 in April, the lowest since the financial crisis. The retail sector also reported a sharp deterioration, coupled with falling consumer confidence.

According to the survey, the manufacturing sector is running at 57.7 per cent of its capacity, down from an average of more than 80 per cent last year. The current order-books cover 3.4 months of production, down from an average of more than 4 in the last three years.

Despite a large government package to support job retention, the services employment index dropped to minus 48.3 in April, a figure which is just shy of the minus 49 seen during the financial crisis and a near record-low since records began in 1985.

UK establishes new clinical trial initiative for Covid-19 treatments

Clive Cookson in London

The UK has set up a new clinical trial initiative to fast-track potential treatments for Covid-19 into patients. Six drugs will initially enter the programme, called Accord (Accelerating COVID-19 Research & Development).

The first is bemcentinib from BerGenBio, a Norwegian biotech company. It will begin testing this week in 120 Covid-19 patients in six NHS hospitals. Half will receive the drug, which was developed as a cancer treatment but has shown antiviral activity in preclinical tests, while the other half form a control group receiving standard care.

The next two drugs will be MEDI3506 and acalabrutinib, both from AstraZeneca of the UK.

Drugs that do well in Accord trial will move on to larger studies such as the Recovery trial that has already recruited 8,000 participants.

Threat of negative US oil prices still present, say UBS analysts

Myles McCormick and Harry Dempsey in London

The possibility of benchmark US oil prices returning to sub-zero levels next month cannot be ruled out as traders look to offload crude contracts for June delivery, according to analysts at Swiss investment bank UBS.

The West Texas Intermediate May contract last week plunged to lows of minus $40 a barrel, with investors effectively paying to have oil taken off their hands. The unprecedented drop came as the coronavirus pandemic triggers a collapse in demand while production levels remain robust, leading to a shortage in storage capacity.

“I cannot exclude that we will get again into negative territory,” said Giovanni Stanuovo, UBS commodities analyst, speaking on a media call.

He said that there had been “lessons learned” from the last-minute scramble to offload May contracts. But growing pressure on storage facilities coupled with a significant amount of investors still exposed to June contracts meant a repeat of last week’s unprecedented drop remained a possibility.

Mr Staunovo said that investors should be cautious about rushing to buy oil futures contracts – even those with a later delivery date – since storage costs could be high, while prices remain depressed.

Time is not your friend at the moment. If the price doesn’t rise, you lose every month a significant amount of investment.

Beijing loosens border controls for most domestic travellers

Yuan Yang in Beijing

Beijing has ended its mandatory quarantine period of 14 days for those coming into the city from low-risk areas, meaning travellers can pass freely into the capital from most of China apart from Wuhan.

Beijing’s municipal deputy secretary Chen Bei made the remarks to state media on Thursday, the same day the government announced it would hold its annual “Two Sessions” parliamentary meetings starting May 21. The two moves suggest the local government of Beijing, previously China’s most tightly protected city during the epidemic, is confident in stemming new coronavirus cases.

Mr Chen emphasised that other current protective measures would remain in place, such as the need to prove identity when entering residential compounds. Over the past week, the city government has also made its newly developed “Health Kit” app a must-have for entering public spaces such as shopping malls, replacing the patchwork of different apps on offer before.


UK prime minister welcomes birth of baby boy

Laura Hughes in London

Boris Johnson and his fiancée Carrie Symonds have announced the arrival of a baby boy, just a day after the prime minister returned to the helm of government to work on the UK’s coronavirus strategy.

On Tuesday, Downing Street refused to say if the prime minister would be participating in Prime Minister’s Questions on Wednesday. The reason for his absence is now clear.

A spokesman for the couple said: “The prime minister and Ms Symonds are thrilled to announce the birth of a healthy baby boy at a London hospital earlier this morning. Both mother and baby are doing very well.

“The PM and Ms Symonds would like to thank the fantastic NHS maternity team.”

Sir Lindsay Hoyle, Speaker of the House of Commons, said:

On behalf of everyone in the House of Commons, may I say congratulations to the Prime Minister and Carrie Symonds on the birth of their son. Such happy news amid so much uncertainty – 2020 is certainly a year they will never forget.

Bosch warns of ‘significantly steeper’ recession for auto industry

Bosch, Europe’s largest auto supplier, has warned of a “significantly steeper” recession for the sector than during the financial crisis more than a decade ago, in one of the starkest forecasts from within the industry since the start of the Covid-19 outbreak.

The German supplier is expecting at least a 20 per cent decrease in automotive production in 2020, its chief financial officer said on Tuesday. Its business contracted by 1.5 per cent in 2009.

Chief executive Volkmar Denner, speaking to reporters, cautioned against “knee-jerk” policy reactions to the coronavirus pandemic, including a roll-back of globalisation.

“Across-the-board isolationism of the kind demanded by certain populist politicians cannot be the solution,” he said, while predicting that the economic turmoil caused by prolonged lockdowns could lead to social unrest.

New tariffs on international trade cost the company, which ships 300m parts per day, almost €100m in 2019, Mr Denner added.

France tightens controls on foreign investment

Victor Mallet in Paris

France will tighten controls on foreign investment to protect companies hit by the economic impact of the coronavirus pandemic, reducing the threshold for foreign holdings subject to restrictions from 25 per cent of a business to 10 per cent until the end of the year.

“In this crisis period, certain businesses are vulnerable,” finance minister Bruno Le Maire told LCI television. “Technologies are exposed and could be bought at low prices by foreign competitors and I won’t let that happen,” he said.

The restrictions, which apply to non-European purchases of stakes in large companies in strategic sectors, will be broadened to include biotech groups.

France had already broadened the reach of the rules and lowered the shareholding threshold from one third to 25 per cent at the start of the year. Investors must submit their plans to the government and reveal any links to a foreign government. The rules were tightened partly to deter unwanted Chinese acquisitions of French tech companies.

French companies have been hard hit by the Covid-19 pandemic and the lockdown in France since March 17. Some 890,000 businesses are paying 11.3m temporarily laid off employees – more than half the private sector workforce – with the help of a €24bn government “partial unemployment” scheme.

Global deaths pass 200,000

Steve Bernard, Senior Data Journalist

The worldwide death toll rose by 6,365 on Tuesday, pushing the total through 200,000.

The total number of confirmed cases broke through 3m, as a further 76,652 people were diagnosed with the Covid-19 virus.

The US added 24,458 cases as its total confirmed cases passed 1m. A further 2,198 people lost their lives bringing the total to 52,466, according to data from the Covid Tracking Project.

Brazil is firmly in the acceleration phase as it saw a jump in the number of deaths on Tuesday of 520, bringing the death toll to 5,083. Ecuador is the next hardest hit country in the region with 871 deaths recorded.

The number of global recovered cases rose by 31,989 yesterday, leaving a total of 953,309 free from the virus.

Russia reports record deaths of over 100

Henry Foy in Moscow

Russia reported a new record daily death toll from coronavirus on Wednesday, as total infections rose to almost 100,000 people.

Moscow said 105 people died overnight from Covid-19, a sharp increase in deaths that takes the total killed to 972. The country recorded 5,841 new coronavirus cases on Wednesday, meaning 99,399 people have been infected.

While the growth in cases has slowed in percentage terms over the past week, Russia has overtaken China and Iran to become the world’s eighth most affected country.

President Vladimir Putin on Tuesday extended a national lockdown until May 11 and said the worst was likely still to come, warning “a hard and difficult path lies ahead”.

Germany’s Covid-19 outbreak shows further signs of slowing

Guy Chazan

Germany reported 1,304 new coronavirus cases on Wednesday, well below the peak of the outbreak in the early days of April.

According to official data from the Robert Koch Institute in Berlin, the number of people who died of Covid-19 over the past 24 hours rose by 202 to 6,115. The total number of detected infections increased to 157,641, though 120,400 of them have already made a full recovery.

The latest figures offer fresh evidence that German health authorities have succeeded in slowing the spread of the virus – though the daily increase in confirmed infections saw a slight uptick.

Iran lifts restrictions to trade ‘justice shares’ to ease economic woes

Najmeh Bozorgmehr in Tehran

After about one decade of giving “justice shares” in top state-owned companies to around 50m Iranians, the Islamic republic decided to start lifting restrictions on the stocks and accrued dividends as of Wednesday in a bid to ease economic pressure on people.

“These shares have come to people’s help at this time of economic hardships,” president Hassan Rouhani said in a cabinet meeting which was broadcast live on the state television. “These shares belong to companies which are profitable.”

Iran says millions of jobs have been at risk because of Covid-19 which analysts say has fueled extreme poverty in particular amongst those who rely on daily wages. Iran’s economy is also struggling with the US sanctions.

It was not immediately clear how much the value of justice shares are in total but Mr Rouhani said each shareholder’s stocks were worth up to 10m rials ($62 at the open market rate) and that around 5m rials in some dividends were already paid in cash in previous years.

The move comes at a time Tehran Stock Exchange is performing well — with more than 200 per cent growth of its main index over the past year — that has attracted many retail investors to the market.

Bourse officials warned this week against a bubble burst. But the government of Mr Rouhani has rejected any major risks and has announced that it will accelerate the privatization programme through the capital market.

Italian bond yields rise after downgrade

The Italian government’s borrowing costs rose after Fitch downgraded the country’s credit rating to a single notch above “junk” in an unscheduled update.

“The downgrade reflects the significant impact of the global Covid-19 pandemic on Italy’s economy and the sovereign’s fiscal position,” Fitch said in a statement on Tuesday evening.

Italy’s benchmark 10-year bond yield rose 0.07 percentage points to 1.805 per cent.
The premium investors demand to hold Italian debt over Germany’s widened, as the spread between Italian 10-year government bonds and German Bunds of the same maturity rose to 2.29 percentage points.

Spanish retail market hit by record decline due to coronavirus closures

Valentina Romei in London

Spain’s retail sales dropped at a record pace in March, providing the first economic data on the impact of the closure of non-essential shops and businesses in the nation due to coronavirus.

The volume of retail sales dropped by 15.3 per cent in March compared to the same month last year, marking the largest drop since records began in 2001, according to data from Spain’s national statistics office.

This is the first economic data covering the retail sector during the coronavirus period in Spain. Previous indicators measuring sentiment have pointed to a large fall in economic activity in manufacturing and services but did not cover the retail sector.

Spain is expected to be one of the hardest-hit major world economies, according to data from the IMF, as a result of its higher reliance on tourism and its stringent lockdown measures.

Spain’s retail sales fell at a record pace despite an 8.4 per cent rise in food spending, as purchases of non-food items dropped by 32 per cent. The statistics office also reported a drop in employment for the retail sector which was steepest in smaller shops.

What you may have missed

Australia’s government said it would press ahead with its diplomatic push for an inquiry into the origins of the coronavirus despite a furious reaction from Beijing, which has accused Canberra of teaming up with Washington to mount “a political campaign” against China.

European countries which have begun to ease their coronavirus lockdowns are experiencing a tentative uptick in some forms of economic activity, early data suggest, although the movement of people and goods across the continent remains largely depressed.

Brazil’s supreme court has authorised a police investigation into President Jair Bolsonaro, heightening tensions and raising the prospect of further political turbulence in Latin America’s largest democracy.

Donald Trump has issued an executive order to force meat-processing factories to remain open, as concerns mount about the US food supply chain after the closure of several big plants because of Covid-19 outbreaks.

Standard Chartered’s pre-tax profits fell in the first quarter as the emerging markets-focused bank increased its expected loan losses by more than 1,000 per cent due to the economic impact of coronavirus. However, it pointed to “encouraging early signs” of a recovery in China.

Airbus’s chief executive said the coronavirus pandemic had led to the “gravest crisis” the industry has known as the aircraft manufacturer reported a net loss in the first quarter.

Samsung Electronics warned of a larger hit to its earnings from the coronavirus pandemic in the coming months, as the crisis pummels global demand for electronic devices.

Hiscox ponders raising equity ahead of price rises

Oliver Ralph in London

UK listed insurer Hiscox is considering raising fresh equity to allow it to take advantage of an expected rise in wholesale prices due to the coronavirus crisis.

Hiscox said on Wednesday that while it had enough capital to meet claims payments, it wanted to make sure it had enough in reserve to take advantage of potential price rises in US wholesale and reinsurance markets. The company, which has already cancelled its dividend, did not say how much it was thinking of raising.

Hiscox has been at the centre of a controversy around the non-payment of claims on UK business interruption policies. The company says that coronavirus claims are not covered by its policies, but a vocal action group has appointed lawyers and secured litigation funding to take Hiscox on.

Last week Hiscox said that it expected to pay a total of $150m in claims arising from the Covid-19 outbreak. But according to analysts at Morgan Stanley, business interruption claims – if successful – could cost the company between $19m and $121m per month.

Singapore reports sharpest quarterly drop in employment since Sars

Stefania Palma in Singapore

Singapore has reported the sharpest quarterly drop in employment since the Sars virus outbreak of 2003 as the city state faces an economic recession caused by fallout from coronavirus.

The manpower ministry said preliminary estimates showed the pandemic’s “early impact” on jobs, adding labour market conditions were likely to worsen in the upcoming quarter, given the sharp fall in demand globally as well as in Singapore where companies were having to adjust to the city state’s near total lockdown.

Total employment, excluding foreign domestic workers, in the first quarter of 2020 fell by 19,900, marking the largest quarterly drop since the second quarter of 2003, when total employment decreased by 24,000, the manpower ministry said.

It attributed the contraction — which hit the services sector the hardest, as well as manufacturing and construction — to a “significant reduction in foreign employment”.

Unemployment rates also rose quarter on quarter from 2.3 per cent to 2.4 per cent as of March, but remained lower than the level reached during the Sars epidemic in 2003 when unemployment rose to 4.8 per cent and the global financial crisis in 2009 when unemployment touched 3.3 per cent. The healthier employment figures this time could be due to relief schemes Singapore has rolled out in response to the outbreak, the ministry said.

Next says sales drop ‘faster and steeper’ than it feared a month ago

Patricia Nilsson

Next has said a coronavirus-induced tumble in sales has been “faster and steeper” than it had anticipated just a month earlier as the pandemic wreaks havoc on the UK retail sector.

Sales of full-price clothing in shops plummeted 52 per cent between January 26 and April 25, with online sales down by close to a third, Next said on Wednesday.

FTSE 100 retailer Next warned that the aftermath of the pandemic will be felt for “longer than first anticipated” with retailers facing lower sales “even after full lockdown measures have been lifted”.

Even in the best-case scenario, Next is now bracing for a 30 per cent drop in full-price clothing sales this year. The fall would be 10 percentage points deeper in the worst-case scenario the group modelled in a “stress test”.

The company said the modelling was not official guidance, saying “a pandemic of this scale has simply not been experienced by a modern global economy. No amount of information about the past can accurately guide us in our deliberations on the future”.

Next, which employs more than 40,000 people, reopened its online business two weeks ago in a “very limited” capacity, after it had halted its web operations to protect warehouse workers during the coronavirus pandemic. It has previously warned of a £1bn hit to revenues because of coronavirus.

Corporate news round-up

Retailer Next said that the fall off in sales since the lockdown has been “faster and steeper” than anticipated in its March stress test and the company is now modelling lower sales for the second half of the year. The maximum decline in its previous stress test was 25 per cent.

Barclays reported that bad loan provisions surged to £2.1bn in the first quarter, almost fivefold of £448m in the same period last year and far exceeding analyst expectations of £923m, as lockdowns across the world threaten to push swaths of its clients into default.

Housebuilder Persimmon said that there was a good level of customer enquiries through the lockdown period, an encouraging sign that demand for new houses will be resilient. Its builders will return to sites this week, after the government was clear that it wanted construction companies to restart building operations.

Dixons Carphone, an electronics retailer, reported that online sales recovered two-thirds of sales lost from bricks-and-mortar stores and that it had secured a further £266m revolving credit facility, although it decided not to pay a full-year dividend.

Trainline, the transportation ticket sales platform, said that its lenders have waived the debt covenants for its £350m revolving credit facility until August 2021.

DWS, the asset management arm of Deutsche Bank, has held its €1.67 per share dividend unchanged, after it reported that adjusted pre-tax profits were down by a third and investors pulled €6.1bn from long-term funds in the first quarter, relative to the previous quarter.

AstraZeneca said that revenues rose to $6.4bn in the first quarter, up 16 per cent on the previous year, while noting the outlook is “highly uncertain” due to coronavirus. The company is testing Calquence, a drug used to treat leukaemia, in a Phase II trial to suppress inflammation of the lungs and other organs experienced by some Covid-19 patients.

WPP, the world’s largest advertising company, said like-for-like sales dropped 7.9 per cent in March, prompting it to cut more costs, as clients hold back spending on advertising.

Finnair looks to raise €500m in rights issue

Richard Milne in Oslo

Finnair is planning a €500m rights issue to prop up its balance sheet due to the dramatic effect of coronavirus on the airline industry.

The Finnish government, which owns 56 per cent of Finnair, supports the plan, the flag carrier said on Wednesday.

Chief executive Topi Manner said:

The coronavirus has had an unprecedented impact especially on global aviation and also on Finnair. We want to ensure with this share issue that Finnair is a competitive airline also in the future by significantly strengthening the equity.

The news came as Finnair said it hoped a recovery in air traffic would start in July, far earlier than regional rivals Norwegian and SAS who think it will take place in 2021 with a return to normal only in 2022.

Finnair said it could not judge the pace of the recovery yet so had no outlook for the second half of the year. It repeated its warning that it would suffer a significant fall in revenues and a large loss this year as it faces what Mr Manner called the worst crisis “in the entire 100-year history of commercial aviation”.


Barclays hit by large jump in provisions for soured loans

Stephen Morris

Barclays became the latest European bank to post a vast increase in loan provisions, as the global lockdown to slow the spread of coronavirus threatens to push swaths of its clients into default.

First-quarter credit impairment charges surged almost fivefold to £2.1bn from the same period last year, far exceeding the £923m analysts had forecast, the London-based bank said on Wednesday. 

The charge pushed down net profit 42 per cent to £605m in the period, compared with expectations for £810m. The Covid-19 blow was partially offset by a 77 per cent rise in trading revenues — the “best-ever quarter” since 2014 — as the investment bank benefited from high volumes in turbulent markets.

The stress was particularly acute at Barclaycard — the credit card business that operates in the UK, US and Germany — which accounted for £885m of the virus-related loan-loss reserves. Similarly, the consumer arm, Barclays UK, saw net profit plunge 60 per cent to £175m.

“The impact of Covid-19 came late in what was until that point a good quarter,” chief executive Jes Staley said in the announcement. “Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging.”

Global stocks and crude oil rise

European stocks were on pace for a third day of gains on Wednesday, while oil prices rebounded on hopes that a glut in global crude markets may be easing.

Futures tied to the FTSE 100 and Dax each rose 0.3 per cent, following a positive session in Asia.

European equities have gained this week as some of the region’s major economies push ahead with plans to carefully reopen their economies following weeks of lockdown. Notably, the French government on Tuesday said its businesses would be allowed to reopen from May 11, with some exceptions.

In energy markets, US oil gauge West Texas Intermediate rose 12 per cent to $13.90 per barrel, while the less volatile Brent was up 3 per cent at $21 per barrel.

The recovery in oil prices followed a report from the American Petroleum Institute, an industry group, that US oil inventories increased by less than 10m barrels in the week ended April 24, less than forecast.

Analysts polled by Bloomberg forecast data due later on Wednesday from the US Energy Department will show US crude stocks increased 11.7m over that period, after a 15m barrel rise the previous week.

Online sales at Dixons Carphone help offset hit from store closures

Jonathan Eley in London

Dixons Carphone said its home electricals ecommerce operation has recouped two-thirds of the sales lost to stores closed in the UK, although it still does not intend to pay a dividend for the year to May.

Online sales grew 166 per cent in the UK in the five weeks to April 25, the group said in a trading update. In Greece, where stores are also closed, online sales grew almost sevenfold.

Stores in Scandinavia are still open, with the result that overall electricals sales fell by a relatively modest 3 per cent in the five-week period. That compares to 8 per cent growth in the 11 weeks to March 21, before the UK lockdown began.

Mobile phone sales are no longer disclosed on a same-store basis following the decision to close all 531 standalone Carphone Warehouse stores.

The group said it had secured additional lending facilities and would save money by not declaring a final dividend in respect of the year about to end. Senior management have also taken a 20 per cent pay cut and will receive no bonuses this year.

Airbus chief says coronavirus has caused ‘gravest crisis’

Airbus’s chief executive said the coronavirus pandemic had led to the “gravest crisis” the industry has known as the aircraft manufacturer reported a net loss in the first quarter.

Airbus reported a consolidated net loss of €481m, against a €40m profit for the same period a year earlier, and adjusted earnings before interest and taxes fell 49 per cent to €281m. Consolidated revenues slipped 15 per cent year on year to €10.6bn, reflecting 40 fewer aircraft delivered in the first quarter, the planemaker said.

“We saw a solid start to the year both commercially and industrially but we are quickly seeing the impact of the Covid-19 pandemic coming through in the numbers,” said chief executive Guillaume Faury. “We are now in the midst of the gravest crisis the aerospace industry has ever known.”

The manufacturer did not give new guidance because of what it described as “limited visibility”.

The global aviation industry has been particularly badly hit by the Covid-19 pandemic as travellers stay home and countries introduced strict entry restrictions, forcing airlines to ground fleets and delay or cancel orders of new aircraft.

The manufacturer reported negative cash flow of €8.03bn, which included a €3.6bn fine paid to regulators in France, the UK and the US over a bribery scheme.

This month Mr Faury told the workforce of 133,000 that the planemaker was “bleeding cash”, which threatened the existence of the company.

The manufacturer said this month it would cut aircraft production by a third, slashing production of the A320 single-aisle jet from 60 to 40 a month, reducing the output of A350s to six a month from 10 previously and produce just two A330 jets a month from expectations of 40 a year.

Standard Chartered ‘encouraged’ by China as profits exceed expectations

Primrose Riordan in Hong Kong

UK-based bank Standard Chartered said it was seeing “encouraging early signs” of a recovery in China as it posted pre-tax quarterly profits and operating income above analyst estimates.

Standard Chartered pre-tax profits dropped nearly 12 per cent in the first quarter on the same period last year to $1.2bn, but the figure was above company-compiled consensus estimates of $828m. Its operating income for the quarter also came in above analyst expectations at $4.3bn, compared with forecasts of $3.8bn, a 13 per cent rise on the same period the year before.

While the bank warned it was “not possible to reliably quantify” the impact of the virus on its future performance, it struck a more upbeat tone than its competitors and said it expected “a gradual recovery” from the pandemic and for the global economy to move out of recession in the later part of the year led by emerging markets.

“We are seeing encouraging early signs of that happening in China,” Standard Chartered said as it released the results.

The bank said its fall in profits was due to “substantially” higher expected losses on loans, driven by the economic pain brought on by the outbreak of the virus.

Standard Chartered increased its provisions for bad loans by over 1,100 per cent to $956m from $78m in the same quarter last year.

Oil prices rise as Asian stocks enter bull market

Hudson Lockett in Hong Kong

Oil prices rebounded and stocks across Asia entered a bull market on hopes that a glut in global crude markets caused by the coronavirus pandemic may be easing.

In Asia trading on Wednesday, West Texas Intermediate, the US crude oil benchmark, climbed more than 13.7 per cent to $14.03 after the American Petroleum Institute, an industry group, reported that oil inventories increased by less than 10m barrels in the week ended April 24. Analysts polled by Bloomberg had forecast a rise of 12m barrels.

The US oil benchmark has been rocked in recent weeks by a coronavirus-driven collapse in demand and a lack of storage in the key delivery hub of Cushing, Oklahoma.

Signs of optimism in oil markets bled over into global equities. Australia’s S&P/ASX 200 added 1 per cent, South Korea’s Kospi rose 0.6 per cent and Hong Kong’s Hang Seng was up 0.2 per cent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 0.4 per cent. Japan’s market is closed for a public holiday.

The gains pushed the widely followed MSCI Asia Pacific index 20 per cent up from its recent lows, meeting the technical definition of a bull market.

Blackstone snaps up 10% stake in Crown Resorts for $360m

Jamie Smyth in Sydney

Blackstone has swooped to buy a 10 per cent stake in Australian gaming company Crown Resorts for A$551m ($360m), taking advantage of financial stress in a sector exposed to the coronavirus crisis.

The US private equity giant purchased the stake in Crown from Melco Resorts and Entertainment, a Macau-based company controlled by Hong Kong magnate Lawrence Ho that temporarily shuttered its casinos in February in the Chinese territory due to travel and social distancing restrictions. Blackstone paid Melco A$8.15 per share for the 9.99 per cent stake, according to a statement from Crown.

The sale by Mr Ho, a former business partner of Crown’s biggest shareholder, James Packer, represents a rapid retreat by Melco from Australia. Melco bought a 10 per cent stake in Crown in May last year at a price of A$13 per share and signalled it would buy an additional 10 per cent stake later in the year. But in February it abandoned plans to extend its stake in Crown citing a need to deploy its capital on core assets due to the coronavirus crisis.

Melco has encountered regulatory hurdles in Australia, where the New South Wales state gambling and liquor authority began investigating whether Melco was a suitable partner for Crown and whether the transfer of shares had breached Crown’s licence conditions.

A provision in Crown’s licence for a new casino in Sydney bans the involvement of Stanley Ho, Mr Ho’s father, and some companies associated with the family.

Australia renews calls for inquiry into origins of coronavirus outbreak

Jamie Smyth in Sydney

Australia’s government said on Wednesday it would press ahead with its diplomatic push for an inquiry into the origins of the coronavirus despite a furious reaction from Beijing, which has accused Canberra of teaming up with Washington to mount “a political campaign” against China.

Scott Morrison, Australia’s prime minister, also flagged the need for the nation’s economy to become more self-sufficient following a warning delivered by Beijing’s ambassador in Canberra this week that Chinese consumers may start to boycott Australian products due to the deteriorating diplomatic relations between the nations.

Mr Morrison told reporters his government would continue to call for an independent inquiry, which was in Australia’s interests and that of the wider international community to ensure lessons could be learned from the Covid-19 outbreak.

He also defended his government’s call for a ban on wildlife ‘wet markets’, saying this was not targeted at China, as these marketplaces selling exotic animals existed in many nations, including Indonesia.

“This is a virus that has taken more than 200,000 lives across the world. It has shut down the global economy. The implications and impacts of this are extraordinary. Now it would seem entirely reasonable and sensible 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,” said Mr Morrison.

Mr Morrison said Australia would support a European Union motion on wet markets, which is due to be debated at the World Health Organisation next month.

Asked about Australia’s economic dependency on China, the nation’s largest trading partner with A$200bn in two-way annual trade, he said Canberra should seek to have an economy that is as “self sufficient” and “competitive” as possible”.

Diplomatic relations between Canberra and Beijing have deteriorated sharply since 2017 when the conservative government passed a raft of foreign influence legislation in response to a scandal involving donations by a Chinese businessmen to an MP.

These have ratcheted up even further since Mr Morrison issued a call for independent inquiry into the origins of the coronavirus outbreak in Wuhan earlier this month.

Vale posts lower-than-expected profits and cuts production forecast

Andres Schipani in São Paulo

Vale, the world’s biggest iron ore producer, posted lower-than-expected profits on Tuesday due to a sharp depreciation of the Brazilian currency and stoppages at one of its most important mines and lowered its forecast production guidance due to coronavirus.

The Rio de Janeiro based-company reported net income of $239m, significantly higher than the $1.64bn loss reported in the same period last year. Adjusted Ebitda was $2.88bn in the first quarter of 2020, which was below a Refinitiv consensus forecast Ebitda of $3.18bn, but a jump from the $652 loss in the same quarter last year.

The company said earnings had been affected by the partial stoppage at Brucutu, its largest operation in Minas Gerais, as well as lower nickel and copper prices and a tumbling currency.

The real has fallen around 30 per cent since the beginning of the year driven by concerns about the government’s handling of the coronavirus pandemic and local political and economic factors.

Although Vale said it had been “weathering the Covid-19 outbreak with limited impact to its operations”, it announced it had already been forced to temporarily halt its operations in its Teluk Rubiah port terminal in Malaysia, to reduce the functioning of its Voisey’s Bay nickel mine in Canada for seven weeks, and to delay the retrofitting of its coal-processing plant in its Moatize facility in Mozambique.

The company explained that in view of considering “the uncertainties and potential impact” of the pandemic, it had slashed its full-year production guidance to 310m-330m tonnes, down from 340m-355m tonnes.

China’s parliament to open in May after a 2-month delay

Ryan McMorrow in Beijing

China’s annual legislative session will finally open on May 21, after a two-month delay brought about by the coronavirus outbreak that began in the central city of Wuhan.

The National People’s Congress and its sidekick, the Chinese People’s Political Consultative Conference, are traditionally held every year in the first two weeks of March, but the outbreak forced Beijing to delay the meetings for the first time since the Cultural Revolution.

Although it is heavily scripted and largely ceremonial, the “two sessions” is one of the few chances for more than 5,000 members of the Communist party rank and file to collectively voice their opinion to the leadership. It also involves large crowds of people — both delegates and journalists — gathering indoors in tight spaces.

The scheduling of the meeting indicates Beijing believes it has the coronavirus outbreak largely under control after a second wave of infections emerged in China’s northern Heilongjiang province and southern Guangdong.

The Chinese capital continues to adopt some of the country’s most strict restrictions, including widespread temperature checks, limited restaurant seating, and other social distancing measures that many hope will be eased after the politically important meeting comes to an end.

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From the US

The US Small Business Administration has given out more than $52bn of its new small business rescue funding, a sign that the programme is picking up speed after being beset by technical glitches on Monday.

Starbucks said it expects the financial hit from coronavirus to intensify in the current quarter in the latest sign corporate America is not expecting a recovery from the crisis any time soon.

Google’s growth slowed sharply in the first quarter as the coronavirus crisis ate into some of the most important categories of online advertising, according to figures released on Tuesday.

Ford expects to lose more than $5bn before interest and taxes in the second quarter as fewer vehicles are sold globally, said Tim Stone, chief financial officer.

President Donald Trump is preparing to order meat-processing plants to remain open, amid mounting concerns about the US food supply chain with a number of large plants closing as workers contracted coronavirus.

From Europe

France reported a further 367 coronavirus deaths in the past 24 hours, 313 in hospitals and 54 in old people’s homes and other care homes, as six weeks of confinement continued to restrict the spread of the epidemic.

British Airways is looking at cutting almost 30 per cent of its 42,000 workforce as its parent company IAG warned that a return to 2019 passenger levels will take several years.

From the rest of the world

The IMF has approved $3.4bn in emergency funding to Nigeria, Africa’s biggest economy, in what is the fund’s largest disbursement to assist a country on the continent to deal with the coronavirus pandemic.

Investor gloom over Mexico has deepened with 99 per cent of respondents in a market survey by Credit Suisse believing the government is not doing enough to protect the economy from coronavirus.

Virtual rate cut forces Nintendo gamers into riskier assets

Leo Lewis in Tokyo and Robin Wigglesworth in Oslo

Savers at the Bank of Nook are being driven to speculate on turnips and tarantulas, as the most popular video game of the coronavirus era mimics global central bankers by making steep cuts in interest rates.

The estimated 12m players of Nintendo’s cartoon fantasy Animal Crossing: New Horizons were informed last week about the move, in which the Bank of Nook slashed the interest paid on savings from around 0.5 per cent to just 0.05 per cent.

The abrupt policy shift, imposed by an obligatory software update on April 23, provoked fury that a once-solid stream of income had been reduced to a trickle with the stroke of a raccoon banker’s pen.

Read more here.

Samsung Electronics forecasts weaker Q2 earnings due to virus

Song Jung-a in Seoul

Samsung Electronics has forecast weaker earnings for the second quarter after a fall in first-quarter net profit and its expectation that the coronavirus pandemic will batter global demand for electronic devices.

Net profit at the South Korean tech giant fell 3.15 per cent year on year to Won4.9tn ($4bn) in the first three months of this year while sales rose 5.61 per cent to Won55.3tn. Operating profit increased 3.43 per cent to Won6.45tn.

“Looking ahead to the second quarter, the company expects the memory business to remain solid, but overall earnings are likely to decline from the previous quarter because Covid-19 will significantly impact demand for several of its core products,” the company said on Wednesday.

The world’s largest producer of computer chips, smartphones and electronics displays has also warned of uncertainties clouding its outlook in the second half of the year.

“The duration and impact of the pandemic remain unknown,” the company said.
Samsung expects memory-chip demand to remain “robust” for servers and PCs due to an increased number of people working from home, but it forecasts sales of smartphones and TVs will fall “significantly” as the pandemic leads to store and plant closures globally. It also expects earnings from OLED (organic light-emitting diode) screens to decline due to falling smartphone sales.

Operating profit at the semiconductor division fell from Won4.12tn a year earlier to Won 3.99tn while that in the mobile division increased from Won2.27tn to Won2.65tn. Operating losses at the display division narrowed from Won560bn to Won290bn.

Fitch Ratings on Monday affirmed the company’s credit rating at double A minus with a stable outlook while IC Insights on Wednesday forecast the memory chip market this year would be unchanged from 2019. The market researcher expects strong growth to return to the memory chip market in 2021 and 2022.

China slowdown puts Xi in political bind

Don Weinland in Beijing

When Xi Jinping became Chinese president in 2013, he inherited a decades-long goal to ensure the country had achieved widespread prosperity on the eve of the Communist party’s 100th anniversary next year.

Known as xiaokang shehui, a term often translated as “moderately prosperous society” and comparable to the western concept of middle class, the plan called for doubling gross domestic product from 2010 to 2020 and the eradication of extreme poverty.

But economists said the outbreak of coronavirus and the collapse of economic growth for the first time in decades had dashed the Communist party’s hopes of declaring victory by the end of this year. And for Mr Xi, the country’s most powerful leader since Mao Zedong, it could prove a politically embarrassing and damaging miss.

Read more here.

Asia-Pacific stocks nudge higher

Asia-Pacific stocks edged higher in early trading on Wednesday, following on from a choppy session on Wall Street as optimism over European countries easing lockdowns failed to sustain gains.

The Kospi in South Korea nudged up 0.2 per cent and Australia’s S&P/ASX 200 added 0.3 per cent.

Overnight on Wall Street, the S&P 500 closed 0.5 per cent lower after swinging between positive and negative territory as US stocks failed to maintain the optimism seen in Europe.

The European benchmark Stoxx 600 gained 1.5 per cent, while London’s FTSE 100 rose 1.9 per cent as France and Spain detailed plans to gradually ease their lockdowns.

US oil prices moved higher in early Asia trade on Wednesday, with West Texas Intermediate, the US crude benchmark, up 8.8 per cent at $13.42 a barrel. WTI crude has been rocked by extreme price swings over the past week as the Covid-19 pandemic slashes demand sparking concerns that unwanted supply will overwhelm storage capacity.

Brazil Covid-19 death toll climbs above 5,000, surpassing China

Andres Schipani in São Paulo

Brazil on Tuesday surpassed China in the number of deaths from coronavirus as a political crisis clouds the fight against the pandemic.

The health ministry of Latin America’s largest country has reported 5,017 fatalities — compared to China’s latest official tally of 4,633 — and 1,156 under investigation. There were 474 deaths in the last day alone.

The total number of coronavirus cases topped 71,886, with 5,385 new cases in the last 24 hours. The largest clusters for cases are in the states of São Paulo, Rio de Janeiro, Ceará, Pernambuco and Amazonas, where in its capital Manaus mass graves are reportedly being dug to bury lines of coffins.

Even as the number of cases rise, Brazil’s attention has shifted to a political crisis centred around President Jair Bolsonaro, who has repeatedly downplayed the pandemic as “hysteria” and Covid-19 as a “sniffle”.

On Monday, Brazil’s supreme court authorised a police investigation into the president over political interference in police work following shocking revelations from his former justice minister.

The crisis has split the country, with the latest poll showing that 49 per cent of respondents thought Mr Bolsonaro was unfit to run the country.

Questioned by reporters after the latest death toll was released on Tuesday night, Mr Bolsonaro replied: “So? Am sorry. What do you want me to do? I am Messiah, but I do not perform miracles,” he said, in a reference to Messias, which is his own middle name.

US may test airline passengers from Brazil for coronavirus

Demetri Sevastopulo in Washington

Donald Trump is considering requiring airline passengers from Brazil to be tested for coronavirus, amid concerns that travellers could exacerbate the pandemic in Florida, which has been less hit than other big US states.

Speaking after a meeting with Ron DeSantis, Florida’s Republican governor, Mr Trump said he was looking “very strongly” at whether he should require passengers from South America, including Brazil, to be tested for the virus.

“We’re looking at doing it on the international flights coming out of areas that are heavily infected … Brazil is getting to that category,” Mr Trump told reporters. “We’re looking at it very strongly.”

Sitting beside Mr Trump in the Oval Office earlier on Tuesday, Mr DeSantis said he was concerned about a possible influx of infected travellers from Brazil and that airlines should bear responsibility for testing all their passengers.

“Brazil and some of those places which have a lot interaction with Miami, you’re gonna probably see the epidemic increase there as their season changes. We could be way on the other side, doing well in Florida, and then you could just have people kind of come in,” Mr DeSantis said in an exchange before their private meeting.

Florida has just under 33,000 of the more than 1m confirmed cases of coronavirus in the US. The death toll in the state hit 1,171 on Tuesday, which was relatively low for a state of 21.4m people.

US death toll rises by 2,198

Matthew Rocco in New York

The number of deaths attributed to coronavirus in the US rose by 2,198 over the past 24 hours, as confirmed infections surpassed the 1m mark.

The US has completed nearly 5.8m tests with just over 1m of them positive, according to the latest data compiled by the Covid Tracking Project. A total of 52,525 people have died.

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