Brazil heads for recession after fall in first-quarter GDP
Andres Schipani in São Paulo
Brazil’s economy shrank in the first quarter of this year, paving the way for a recession as the country became a global coronavirus hotspot in the wake of a botched response to the pandemic from right-wing President Jair Bolsonaro.
Gross domestic product in Latin America’s largest economy plunged by 1.5 per cent in January to March versus the last quarter of 2019, official data showed.
“The same thing happened in Brazil that happened in other countries affected by the pandemic, which was a drop in services to families due to the closure of establishments,” said Rebeca Palis at the national statistics institute, IBGE. “Durable goods, vehicles, clothing, beauty salons, gyms, accommodation, food have all suffered a lot from social isolation.”
Compared with the same period last year, the economy shrank 0.3 per cent. “Even if the quarantine is lifted, economic recovery will be very slow in Brazil. Lots of companies will fail, lots of people will be unemployed,” warned Luana Miranda, a researcher at the Brazilian Economy Institute.
Official data on Thursday showed 4.9m Brazilians lost their jobs in the three months through April, pushing the number of people out of work to 12.8m after lockdowns to fight the pandemic started in late March.
“We expect Brazil to experience a sharp contraction of activity in 2020, concentrated in the first half of 2020, which is likely to lead to a significant further deterioration of the already weak labour market,” said Alberto Ramos, Latin America economist at Goldman Sachs, who forecast that the country’s economy would shrink 7.6 per cent in this year.
“In recent weeks Brazil became one of the global hotspots for new infections and so far there is no clear indication when the curve peak will be reached,” he added. The number of infections topped 438,000 on Thursday.
President Bolsonaro has frequently downplayed the seriousness of the virus, putting him in conflict with state governors and alarming business.
McLaren to cut 1,200 jobs as Covid-19 prompts restructuring
McLaren will cut 1,200 jobs in a major restructuring after coronavirus shut down the company’s showrooms and prevented it from racing.
The group, which operates an automotive business making supercars as well as a racing division and a unit selling engineering technology, employs around 4,000, mainly based in the UK.
Up to three-quarters of its staff are based within the automotive division, which makes around 4,000 supercars a year. The rest are split between its technology and racing units and back office functions.
“Like many other businesses, McLaren has been severely affected by the current pandemic,” the group said on Tuesday.
“The cancellation of motorsport events, the suspension of manufacturing and retail activities around the world and reduced demand for technology solutions have all led to a sudden impact on the group’s revenue generating activities”.
McLaren is attempting to raise £250m in a bond offering to help shore up its finances, offering a mortgage of its space-age headquarters in Woking and a fleet of heritage cars to secure the deal.
But the move has ignited the ire of investors in a £525m bond issued in 2017, who claim the assets were already put up by the company on their bond.
Last year the business made a pre-tax loss of £28m, a significant reduction on the £67m loss a year earlier, with revenues that were 18 per cent higher at £1.5bn.
The group made operating earnings of £177m, and had net debt of £572m at the end of 2019. The company is due to release first quarter trading figures later this week.
“This is undoubtedly a challenging time for our company, and particularly our people, but we plan to emerge as an efficient, sustainable business with a clear course for returning to growth,” said McLaren Group’s executive chairman Paul Walsh.
The worldwide number of Covid-19 cases surged through 5m yesterday, as a further 106,122 confirmed infections were reported, which represents the highest daily increase since the pandemic began. A further 4,755 people died of the disease caused by coronavirus yesterday. This figure is in line with the weekday average of the past seven days. The global death toll now stands at 326,844.
An early trial for a vaccine co-developed by CanSino Biologics has found it is safe and effective at producing an immune response in humans, according to a paper published in The Lancet medical journal on Friday. The study of 108 patients between 18 and 60 found that the vaccine produced neutralising antibodies and a response in the participant’s T-cells, a type of white blood cell.
The antimalarial drug that Donald Trump, the US president, said he is taking has been linked with increased rates of death and heart problems in Covid-19 patients, according to a study published in The Lancet. The study’s authors found that hydroxychloroquine, and the closely related drug chloroquine, did not benefit people suffering from Covid-19, but may have serious side effects.
Hertz, the car rental group backed by US billionaire Carl Icahn, is set to file for bankruptcy, joining a growing list of illustrious companies forced out of business due to the coronavirus pandemic. The Florida-based company was preparing to file for Chapter 11 bankruptcy after it failed to meet a payment deadline.
John Deere warned of a drop in full-year profits and sales of agricultural and industrial equipment as a result of coronavirus lockdowns, but said its quarterly earnings fell less than feared. The tractor maker expects global agriculture and turf equipment sales to fall between 10 to 15 per cent in fiscal 2020 ending in November from a year ago.
Aurify Brands, which manages franchises for fast food chain Five Guys, has struck a deal to save the US arm of Belgian bakery chain Le Pain Quotidien. The deal, which will see the US business become a franchise by a licensee, should result in a reduction in the number of stores, but it will also lead to a renegotiation of leases, which in some cases represent 20 per cent of sales.
The Bank of England said money market conditions have become “more stable” since the height of the coronavirus crisis – enabling it to end one of its emergency liquidity measures. On Friday morning, the central bank said it would discontinue its three-month contingent term repo facility as of next week, with the final transactions scheduled to take place on May 28.
Toyota is the latest carmaker to reopen plants in Europe as the coronavirus lockdowns across the continent ease. The Japanese company will resume manufacturing at Derby in the UK and Kolín in the Czech Republic next week. It has already restarted its engine factory in Deeside, Wales. The Burnaston plant near Derby will restart activities on May 26.
BP is halving the number of top managers as the coronavirus pandemic accelerates a strategy shift under its new chief executive, Bernard Looney, to transform the UK energy major into a “smaller and nimbler” company. The pool of managers will be cut from 250 people to around 120, with many who held leadership positions under former chief Bob Dudley leaving the company in the next few month.
The Spanish government has given the go-ahead for Madrid and Barcelona to begin phasing out the country’s harsh lockdown after a two-week long stand-off with authorities in the capital. As of Monday, people in both cities can meet in groups of up to 10 and travel within their provinces, while bars and restaurants will be allowed to serve clients outdoors.
Brussels said its coronavirus recovery plan would be closely linked to annual recommendations the EU makes to member states to underpin the bloc’s growth strategy.
Valdis Dombrovskis, European Commission executive vice-president for economic policy, said there would be “a clear link” between “country-specific recommendations” the EU publishes each year and the “recovery and resilience facility” Brussels will unveil next week as part of its pandemic response.
The annual recommendations, part of Brussels’ broader programme of reviewing national budgets, would “provide guidance to member states” in preparing their recovery plans, which would be used by governments to support requests for EU funds, Mr Dombrovskis explained.
“It’s basically the same concept, that we would be financing reform and investment packages of member states,” he said.
Mr Dombrovskis and Paolo Gentiloni, the EU’s economy commissioner, said the proposals were not about pressuring governments to enact reforms favoured by Brussels but about adding financial muscle to national efforts to meet “shared priorities”. The plan “will provide firepower, more firepower to the semester process”, Mr Gentiloni said.
Brussels’ recovery fund plans are expected to draw inspiration from Franco-German proposals for a €500bn fund unveiled this week. Paris and Berlin back the idea of EU borrowing to finance recovery spending, leaving it to Brussels to present detailed proposals.
Brussels’ latest set of country-by-country recommendations have been entirely rewritten because of the pandemic. The bloc called on capitals to prioritise healthcare spending, but added that member states must remain wedded to the EU’s medium-term goals of a green and digital transformation.
Brussels confirmed all eurozone countries were expected to breach the currency bloc’s budget rules this year as they ramp up spending to combat the economic downturn, but said it would not instigate enforcement proceedings.
The US has not made a “final decision” on whether to permanently withdraw World Health Organization funding, after freezing support for the global health body last month. The president, Donald Trump, wrote on Twitter on Saturday that funds were “frozen” but “numerous concepts” were being considered, including “partial” funding for the WHO.
Mr Trump’s predecessor, Barack Obama, offered a rare public rebuke of the current administration on Saturday, telling graduating students that the coronavirus crisis has “fully, finally torn back the curtain on the idea that so many of the folks in charge know what they are doing”. He added: “A lot of them aren’t even pretending to be in charge.”
Canada’s prime minister, Justin Trudeau, said his government is working with Air Canada after the flag carrier announced plans to lay off half its staff. Air Canada furloughed 16,500 workers in March, and yesterday said it would lay off about 20,000 people after seeing its traffic collapse by 95 per cent as a result of the Covid-19 pandemic.
Gavin Williamson, the UK education secretary, has said “we owe it to the children” to get students in England back to school amid strong resistance from teaching unions. He insisted that proposals for the phased return of schools is based on the “best scientific advice with children at the very heart of everything we do”.
Giuseppe Conte, Italy’s prime minister, said that the country is taking “a calculated risk” in loosening its lockdown restrictions that had to be taken to avoid further damage to its economy. Mr Conte on Saturday provided further details of a decree published earlier in the day that said Italians would be able to travel freely around the country from June 3.
Crowds flocked to beaches around Greece on Saturday, the first day restrictions on swimming were lifted. Beaches around Athens were packed as temperatures soared to 42 degrees Celsius. Umbrellas were spaced 4 metres apart and sunbeds were tied down, while drones reminded people to stay 1.5 metres apart. Alcohol and music were banned.
Hungary will lift its lockdown in Budapest starting on Monday, two months after it began, prime minister Viktor Orban announced in a Facebook video on Saturday. “The number of people who have been infected is low and the number of infections is also favourably low…because we all behaved responsibly,” he said.
Germany’s Bundesliga has become the first major football competition in Europe to restart after a suspension of fixtures due to the coronavirus pandemic. Five matches including a derby between Borussia Dortmund and Schalke 04 mark the restart of the league. Stadiums are empty, coaches are wearing face masks and handshakes are banned.
Thailand has extended its ban on incoming passenger flights to June 30, in a move certain to have repercussions for the kingdom’s tourism-reliant economy. The Civil Aviation Authority of Thailand said state and military aircraft, humanitarian, medical and repatriation flights are exempted from the ban, as are cargo flights.
Kenya has banned the movement of people, except truck drivers carrying freight, across its borders with neighbouring Somalia and Tanzania for 30 days from midnight on Saturday. In the last week, there has been an increased number of imported cases from people crossing the borders into Kenya with 43 new cases arriving from Tanzania and Somalia.
Saudi Arabia’s sovereign wealth fund snapped up stakes worth at least $7.7bn in US and European blue-chip companies this year as it hunts assets at knockdown prices during the coronavirus pandemic. The largest investments by the Public Investment Fund include a holding in UK energy major BP worth $827.8m, and a stake in Boeing valued at $713.6m.
Wall Street followed European and Asian bourses lower as hopes for a quick economic recovery from the coronavirus crisis faded and figures showed that almost 3m more Americans filed for unemployment benefits last week.
The S&P 500 dropped almost 1 per cent when Wall Street opened, a day after Jay Powell, chair of the US Federal Reserve, warned that a US “recovery may take some time to gather momentum”. The tech-heavy Nasdaq Composite slipped 0.7 per cent.
New figures released by the US labour department on Thursday showed 2.98m Americans filed for unemployment benefits for the first time last week, taking the total to 36m in eight weeks.
“Hard on the heels of . . . Powell’s downbeat comments on the US economy come initial jobless claims that are worse than expectations,” said Neil Birrell, chief investment officer at Premier Miton. “Equities have been struggling since Powell spoke and there is nothing in these numbers to provide respite.”
Mr Powell’s bleak prognosis was echoed by Bank of England governor Andrew Bailey, who said during a Financial Times conference that there would be “some scarring” in the UK economy from the crisis, although it is uncertain how much.
The gloomy remarks come at a time when optimism about the relaxation of lockdowns across Europe is tempered by fresh virus outbreaks in countries such as South Korea and China.
In Europe, London’s FTSE 100 tumbled 3.3 per cent, while Frankfurt’s Xetra Dax fell 2.7 per cent and the region-wide Stoxx Europe 600 dropped 2.7 per cent.
Traders have also had to contend with a re-emergence of tensions between the US and China. President Donald Trump this week ordered the US government’s main pension fund not to invest in Chinese stocks, with officials citing the risk of sanctions over China’s handling of coronavirus. Beijing warned Washington against a financial fight.
“Given the political incentive, Mr Trump may not be bluffing when he threatens to impose more tariffs as the ‘ultimate way’ to make China pay for the cost on America of the coronavirus outbreak,” said Chi Lo, Greater China economist at BNP Paribas Asset Management.
The US dollar has strengthened as market sentiment has turned sour.
“The Fed poured cold water on the notion of a pivot towards negative interest rate policy . . .[and] the market has started to rethink the risks surrounding US-China trade tensions,” said Mark McCormick, global head of FX Strategy at TD Securities. “This backdrop reinforces our bullish USD stance.”
Hong Kong’s benchmark Hang Seng fell 1.5 per cent, while Japan’s Topix index closed down 1.9 per cent. Australia’s S&P/ASX 200 shed 1.7 per cent, after the announcement that the country’s unemployment rate had jumped to 6.2 per cent, the highest level in five years.
South Korea’s Kospi index dropped 0.8 per cent after at least 120 people were confirmed as infected with Covid-19 this week in an outbreak linked to a nightlife district in Seoul.
Oil prices rose after the International Energy Agency predicted that the drop in demand for crude this year would not be as severe as initially thought and supply is expected to drop to a nine-year low.
Brent crude, the international benchmark, was up 3.1 per cent to $30.09 per barrel, while West Texas Intermediate, the US marker, rose 3.2 per cent to $26.09 a barrel.
Londoners must ‘reimagine’ their way to travel round the capital
Bethan Staton in London
Transport for London plans to run a full capacity network for 13-15 per cent of passengers as the government gradually eases coronavirus restrictions.
The capital’s network on Monday announced its plan for socially distant public transport, which included asking Londoners to walk or cycle where possible and employers to help their staff avoid travel at peak times.
TfL plans to “progressively build up service levels to as close to pre-pandemic levels as possible”, said Mike Brown, London’s transport commissioner, but added that all Londoners would have to “reimagine the way in which they travel”.
“We will not be returning to the transport network that existed before the virus,” he said. “As the government has set out, the advice is that people should – for now – continue to work from home where they can and avoid public transport wherever possible.”
The public transport network plans to increase service levels to 85 per cent on buses and 70 per cent on the Tube and Overground by May 18, but social distancing requirements mean that even when running at 100 per cent capacity only 13-15 per cent of normal passengers will be able to travel safely.
The fall in passenger numbers has had a “devastating” effect on TfL’s finances, it said, noting that 80 per cent of its income derives from fares and commercial revenue.
Sanitiser points will be introduced alongside an enhanced network-wide cleaning regime while frontline staff will be offered facemasks.
Lowest number of daily Covid-19 deaths on a Sunday in six weeks
Steve Bernard in London
The lowest number of daily deaths on a Sunday for the past six weeks were recorded yesterday, as 3,656 people died of the disease caused by coronavirus, bringing the death toll to 276,947. Figures tend to be lower at weekends due to delays in reporting fatalities.
In the US, a further 979 people died on Sunday, the second-lowest daily rise since April 1. The total number of Covid-19 deaths since the pandemic began has risen to 74,270, according to data from the Covid Tracking Project.
Globally, the number of newly confirmed coronavirus cases surpassed 4m yesterday, as an additional 72,393 infections were recorded, according to data from the European Centre for Disease Prevention and Control.
Brazil was once again the country with the highest daily death toll outside of the US. It registered 496 fatalities yesterday, although this number is down from the peak of 751 just two days earlier. The number of newly confirmed cases was only surpassed by US and Russia as a further 6,760 infections were recorded, bringing the total to 162,699 in the hardest-hit country in Latin America.
Russia continues to struggle to contain the spread of the virus as an additional 11,656 cases were confirmed. This is the ninth straight day that it has reported 10,000 or more new cases. The total number of cases in the country has now hit 221,344 surpassing both Italy and the UK. Only Spain and the United States have more confirmed cases of Covid-19.
Explore data about the pandemic to better understand the disease’s spread and trajectory in the live-updating and customisable version of the FT’s Covid-19 trajectory charts.
UK recommends face masks as it moves to ease lockdown
Sebastian Payne in London
The UK government is recommending the use of face masks as part of its gradual strategy for ending the nation’s lockdown.
But it also confirmed that social distancing measures will last for at least a year.
A 50-page document entitled ‘Our Plan to Rebuild’, released on Monday, stated there would not be “a quick return to ‘normality’” from the Covid-19 shutdown.
Instead a phased approach lasting several months would begin this week.
From Wednesday, citizens in England will be allowed to leave their households as often as they want for both exercise and leisure. But socialising with people in other homes remains forbidden for the rest of May.
The most immediate change from Wednesday is the advice to use face coverings in situations where social distancing cannot be observed, including on public transport.
The document said:
If you can, wear a face covering in an enclosed space where social distancing isn’t possible and where you will come into contact with people you do not normally meet.
This is most relevant for short periods indoors in crowded areas, for example on public transport or in some shops.
The document also warned that the only long-term solution for coronavirus was “a vaccine or drug-based treatment”.
But the government also said:
A mass vaccine or treatment may be more than a year away. Indeed, in a worst-case scenario, we may never find a vaccine.
The new revised lockdown guidelines state that citizens in England can travel in their cars to the beach or countryside:
People may drive to outdoor open spaces irrespective of distance, so long as they respect social distancing guidance while they are there, because this does not involve contact with people outside your household.
Coronavirus thwarts Commerzbank’s plan to sell Polish mBank
Olaf Storbeck in Frankfurt
Commerzbank ditched its plan to sell its majority stake in mBank after the Polish lender’s share price fell by more than 50 per cent this year.
“Under the current market conditions which are dominated by the coronavirus crisis, a transaction doesn’t seem feasible at reasonable terms,” the German lender announced on Monday. mBank has been one of the most profitable units of Commerzbank, generating a 12.5 per cent return on equity in 2019.
Commerzbank earmarked its 69.3 per cent stake in the Polish lender for sale and wanted to use the proceeds to cover €1.6bn in restructuring costs. However, due to regulatory changes over the past months, the pressure on Commerzbank to shrink its balance sheet and release capital to finance its restructuring has eased.
“Our strong capital position gives us the leeway to implement our Commerzbank 5.0 strategy and make the planned investments without the need to sell mBank,” said Bettina Orlopp, chief financial officer at the German bank.
Commerzbank’s share price fell 2.6 per cent to €3.16 in afternoon trading.
General Mills boosts outlook on ‘unprecedented’ demand for food at home
General Mills boosted its outlook as consumers began to eat more meals at home after orders to stay at home took effect and restaurants closed or limited meals to take-out and delivery in response to the coroanvirus pandemic.
The food manufacturer behind Cheerios, Yoplait yogurt and Annie’s pizza and pasta, said it now expects organic sales in its fiscal fourth quarter ending in May to “increase double digits versus the prior year” driven by North America and its pet food business.
For the year, it expects organic sales, which strip out currency effects and the impact of divestitures, to exceed its previous guidance of between 1 to 2 per cent growth.
The rosier outlook came as the company said consumers are “embracing food at home like never before”. At-home food accounts for 85 per cent of General Mills’ business, while so-called away-from-home food accounts for the remaining 15 per cent.
General Mills said its North American retail business and its European and Australia segments saw an “unprecedented increase in consumer demand for food at home”. US retail sales in March and April climbed 45 per cent and 32 per cent, respectively, from a year ago, the company said citing data from Nielsen.
However, General Mills said it experienced a “substantial decline” in its away-from-home food demand since the start of the pandemic, driven by the restaurant and education channels.
Blue-collar UK men more likely to die of coronavirus
Delphine Strauss in London
Men in some blue-collar jobs have been more than twice as likely to die with coronavirus as the wider population, according to figures published on Monday by the Office for National Statistics.
The ONS analysis covered 2,494 deaths involving Covid-19 in the working age population of adults aged 20-64 – all those registered up to April 20 in England and Wales. Two-thirds of these deaths were among men, with 9.9 deaths per 100,000, compared with 5.2 deaths per 100,000 for women.
But the death rate was much higher for men working in what the ONS terms “low-skilled elementary occupations”, where the mortality rate rose to 21.4 per 100,000. Within this group, the worst affected were security guards, with a mortality rate of 45.7 deaths per 100,000.
Men working in construction and the service sector were also about twice as likely to have died as the wider population.
The analysis will fuel anger among unions at the UK government’s call for workers in sector such as construction and manufacturing – largely unable to work from home – to return to workplaces as early as this week, even though the government has not yet published detailed guidance on how businesses are expected to maintain social distancing.
Among other occupational groups, factory workers and drivers also appeared worse affected than others, with a mortality rate of 15.5 per 100,000 for men working as process, plant and machine operatives. In this group, deaths were concentrated among drivers of taxis and buses.
The ONS said its analysis did not necessarily show that a higher death rate was due to higher exposure to the virus while at work, since it did not take into account other factors such as ethnicity, place of residence or deprivation, or the occupations of other household members.
Belgium allows shops to open in latest steps towards easing lockdown
Javier Espinoza in Brussels
Belgium eased into its latest phase of restarting its economy by allowing all “non-essential” shops to open from Monday as hospital coronavirus admissions fell.
Shoppers queued outside stores such as flat-pack furniture retailer Ikea and fashion chain Primark, with customers learning to adhere to rules that include limiting the number of people inside shops.
Measures include a maximum of 30 minutes per store per person and shoppers have been advised to avoid touching items they do not wish to purchase.
Citizens are urged to use their common sense.
“If it is crowded in a shop, go back home,” prime minister Sophie Wilmes said on Monday. “Priority should be given to care workers, the elderly and the less mobile.”
Transport services were due to be back to running pre-pandemic timetables but plans were interrupted by a strike staged by Brussels public transport operator Stib.
Saudi Arabia to slash oil production by an extra 1m b/d
Anjli Raval in London
Saudi Arabia will cut its oil production by a further 1m barrels a day, taking its total output to 7.5m b/d in June, as the kingdom seeks to provide further support to a crude market battered by the fallout of the coronavirus outbreak.
An energy ministry official said that it had directed the state oil company Saudi Aramco to reduce its output for the month of May as well, below the 8.5m b/d it had agreed in conjunction with global producers last month.
Opec and Russia agreed to collective cuts of 9.7m b/d, in the biggest ever curbs that were backed by the US. But the announced supply curbs that took effect in May have failed to significantly bolster crude prices that have fallen by more than half since January.
In a statement the official said:
The kingdom aims through this additional cut to encourage Opec+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets.
Brent crude, the international oil benchmark, increased by 1 per cent to $31.32 a barrel.
BA will have to review plans in light of ‘surprise’ policy, IAG’s Walsh says
Bethan Staton in London
Boris Johnson’s announcement of a 14-day quarantine for air arrivals in the UK has come as a “surprise”, the head of British Airways parent group said, and would hinder recovery from an unprecedented downturn in aviation.
Willie Walsh, the chief executive of International Airlines Group, on Monday told the transport select committee that BA would be forced to review its plans to restart passenger operations in the light of a policy that would significantly dent capacity.
“We had been planning to resume on a pretty significant basis of flying in July. I think we’ll have to review that,” he said. “I don’t think anybody believed that the UK government would actually implement [a quarantine] if they were serious about getting the economy moving again.”
Mr Walsh defended BA’s decision to cut up to 12,000 jobs, telling MPs that the airline was dealing with the “most significant crisis that the industry has faced” and had “probably exhausted every avenue that I can think of at this stage to shore up our liquidity”.
Restructuring is solely driven by the fact that we are in the deepest downturn the aviation industry has ever seen.
Mr Walsh said he understood from the prime minister’s comments on Sunday that only air travel, and not other forms of travel into the UK, would be affected by the quarantine measures.
Maybe the prime minister would be able to clarify the science behind that, it seems strange to me.
UK quarantine policy must be ‘short term’, says airport group chief
Bethan Staton in London
The group operating London Stansted, Manchester and East Midlands airports has warned that any quarantine on people arriving in the UK will have a significant impact on the aviation industry.
Following Boris Johnson’s announcement on Sunday of a 14-day quarantine for passengers arriving in the UK, Manchester Airlines Group chief executive Charlie Cornish warned the policy could “only be a short-term measure”.
“Any quarantine is going to affect the whole aviation sector significantly,” Mr Cornish said. “To protect the UK travel industry, we need to know how the quarantine will work, how long it will last and how businesses will be supported during this further period of near-zero demand.”
The group had been working on solutions to allow people to travel safely by air, he said, adding it was “essential” that the government deliver its plan to restart the aviation industry by the end of May.
Under Armour revenues tumble on virus lockdowns
Athletic wear maker Under Armour said revenues fell by more than a fifth in the first quarter as its stores closed in response to the coronavirus pandemic, but reported signs of recovery in Asia.
Revenues fell nearly 23 per cent from a year ago to $930.2m, missing Wall Street expectations of $949m. The company attributed about 15 percentage points of that decline to the effects of Covid-19.
In North America, its biggest market, revenues tumbled 28 per cent to $609m, while overseas sales fell 12 per cent.
Under Armour began closing stores in China — which accounts for about half the Baltimore-based company’s sales in Asia — in late January. By the end of the quarter about 80 per cent had reopened. However, stores in North America, Latin America and EMEA stores began to close in mid-March and remain shut at present.
“We are seeing some early signs of recovery in our APAC region,” said Patrik Frisk, chief executive officer, said. “This unanticipated shock to our business has been acute, forcing us to make difficult decisions to ensure that Under Armour is positioned to participate in the eventual recovery of demand,” he added.
Retailers have been particularly hard hit by the coronavirus lockdowns and last month, Under Armour announced temporary layoffs for workers at its US and outlet stores, and an additional 600 at its American distribution centres.
The company swung to a loss of $589.7m or $1.30 a share, compared with a profit of $22.5m or earnings of 5 cents a share in the year ago quarter. The adjusted loss of 34 cents a share, worse that estimates for a loss of 19 cents.
Starbucks becomes latest business in UK with plans to open
Alice Hancock in London
Starbucks will reopen 15 per cent of its UK stores from Thursday for drive thru and collection as businesses begin to show signs of starting up again.
The decision comes after George Eustice, the environment minister, encouraged takeaway and delivery food outlets to open their doors again, saying on Friday that they were “made for social distancing”.
Starbucks said it will be keeping staff members and customers two metres apart, encouraging regular 20-second hand washes and only permitting contactless payments. All drinks will be served in disposable cups and plexiglass screens have been installed at pay points, it added.
KFC, Burger King and Pret are among other food-to-go outlets that have opened in the past two weeks.
Greggs plans to reopen a small number of stores a week, the the Newcastle-based bakery chain said over the weekend. Its initial plan for a phased return to business was postponed after an over-enthusiastic response from customers.
Many UK hospitality executives and restaurant owners have warned that, despite the government suggesting that they may be able to reopen from the beginning of July, demand and social distancing measures are likely to make it impossible to run a viable business.
US stocks likely to follow falls in European equities
Wall Street is set to open lower following European counterparts, as the S&P 500 futures point to losses of 0.7 per cent, after closing higher on Friday despite grim unemployment data.
European equities dropped as stocks in the travel and energy sectors were hit, even as many countries across the continent moved to relax their government-imposed coronavirus lockdowns.
The FTSE 100 was down 0.2 per cent, while Germany’s Dax reversed its early gains to fall 0.7 per cent.
Travel and energy stocks sank as the UK planned to put a 14-day quarantine requirement in place for the majority of arrivals to the country and oil prices slipped.
Shares in easyJet fell by as much as 8 per cent, as Heathrow Airport and British Airways owner IAG warned that the quarantine restrictions will heap further pressure on the battered aviation industry.
Brent crude, the international benchmark, was down 3.0 per cent at $30.05 a barrel and West Texas Intermediate, the US marker, fell 2.6 per cent to $24.09 per barrel.
European stock markets reversed earlier gains as investors’ optimism, fuelled by the lowest Covid-19 mortality rates since March reported in several European countries – including Spain, France, Italy and the UK – and the recent steps taken by governments to restart economic activity, could not be sustained.
Small numbers of new jury trials to recommence in England and Wales
Jane Croft in London
A small number of new criminal trials in England and Wales will start next week after prosecutions ground to a halt in late March because of coronavirus.
Ian Burnett, the Lord Chief Justice of England and Wales, announced that new jury trials will begin in certain courts from May 18 using special arrangements to ensure social distancing in courtrooms.
Jury trials were stopped on March 23 after concerns were raised about the safety of trials where lawyers, jurors and defendants often hear cases in a small courtroom for hours on end.
Lord Burnett said that jury numbers will remain at 12, despite speculation that the pandemic could lead to a reduced number of jurors – possibly as low as seven – hearing cases. The number of jurors has only been reduced previously for some cases during the second world war.
The courts – which will include London’s Old Bailey and Cardiff Crown Court – will introduce measures including providing an overspill courtroom which allows reporters and others to see the hearings by video link and providing a separate courtroom – rather than a small room – for juries to use for their deliberations.
Only small numbers of trials are expected to take place initially but further courts around the country are being assessed to see whether they have enough space to hear new trials.
Switzerland relaxes its lockdown as the hospitality industry reopens
Sam Jones in Zurich
Restaurants, cafes, shops and museums opened across Switzerland on Monday morning, as the country relaxed all but the most stringent of its restrictions on public life put in place two months ago to curb the spread of Covid-19.
Swiss health authorities reported just 39 new coronavirus infections on Monday, bringing the country’s total to 30,344. 1,543 people in the country have lost their lives to the disease.
Switzerland is the first country in western Europe to allow its hospitality industry to begin widespread trading again. Austria will follow suit later this week, with restaurants and cafes allowed to open there from Friday.
Bern is cautiously confident it has the pandemic now under control. The government has been under intense pressure in recent weeks from influential lobbying groups and regional governments worried about the economic toll the lockdown has wrought.
Businesses opening their doors again to the public today must have in place safety precautions approved by local health authorities: restaurants, bars and cafes can seat no more than 4 people at a table and all tables must be at least 2 metres apart.
Many restaurants in Zurich – Switzerland’s largest city and business hub – have yet to open. Some are delaying opening their doors until at least June, while others, however, were already busy with people on Monday lunchtime, with queues of people outside – spaced apart by markers on the pavement – waiting to be seated. Shops in the centre of the city were moderately busy.
France takes tentative steps out of two months of lockdown
Victor Mallet in Paris
France cautiously emerged from its coronavirus lockdown, with hundreds of thousands of commuters heading into the big cities for the first time in two months as shops and businesses reopened.
Reports emerged of overcrowding at some railway and metro stations in northern Paris at 6am after flooding from heavy rain delayed trains on the normally busy metro line 13, but passengers – all of whom must wear masks – later reported that the congestion had eased.
“The first day is so far going OK,” Jean-Baptiste Djebbari, junior transport minister, told CNews television.
Many restrictions on movement remain to slow the spread of the Covid-19 virus, especially in the Paris region where public parks remain closed.
The French are no longer required to carry permits to leave their homes, but restaurants, bars and large museums will not reopen before June. Voyages of more than 100km are forbidden except for essential purposes.
Non-essential retailers in Greece open for business again
Kerin Hope in Athens
Greece allowed most retailers to reopen on Monday in the second stage of a gradual easing of its eight-week lockdown but advised customers to wear face masks while shopping.
The citizens’ protection agency said more than 65,000 companies would resume business while 150,000 furloughed workers were expected to return to their jobs.
Furniture, clothing, footwear, watches and jewellery, and children’s toy stores reopened, one week later than shops and services deemed essential, after the number of new coronavirus cases declined in Athens and other cities.
Final-year students returned to high schools to prepare for university entrance exams next month, under social distancing measures with each class limited to 15 students sitting several metres apart.Primary schools would stay closed for the remainder of the school year, the education ministry said.
Owners of businesses and workers are allowed to travel by ferry to the Greek islands, which were closed to non-residents during the lockdown, in a move to accelerate preparations for the tourist season.
Greece will be ready by July 1 to host foreign tourists provided that international airlines resume flying to the country, said prime minister Kyriakos Mitsotakis.
Spain’s Covid-19 daily death toll drops to two-month low
Daniel Dombey in Madrid
Spain’s daily coronavirus death toll has slowed to a two-month low as the lockdown that has endured for that time was relaxed for much of the country.
The ministry of health said on Monday that 123 people have died in the most recent 24-hour period after contracting coronavirus. This was the lowest death toll since March 18, barely three days after the lockdown was imposed.
The number of people dying every day in Spain is no longer above historical rates, separate data on excess mortality from the Carlos III health institute show, after having been more than twice as much as normal during April.
The Spanish government is beginning to relax the lockdown for 51 per cent of population, who live in areas where, as of Monday, gatherings of up to 10 people are permitted and restaurants and bars can serve diners and drinkers outdoors.
However, Madrid and Barcelona, two of the worst hit areas by the pandemic, have not yet been allowed to participate in this first stage of the phaseout of the lockdown.
One big enduring concern in Spain is the 48,320 health professionals who have tested positive for coronavirus.
They represent 21 per cent of all those who have had positive results in so-called PCR tests, the most reliable indicator of whether someone has Covid 19. However, the overall daily increase in the number of people testing positive is down to 0.17 per cent, compared with rises of around 35 per cent a day in March.
Property investment in Hong Kong plummets 74 per cent
Primrose Riordan in Hong Kong
Real estate investment in China, Hong Kong and Singapore plummeted in the first quarter, as transaction volumes fell as much as 74 per cent as the coronavirus pandemic hammered Asian economies.
Hong Kong’s property sector was the most severely affected, according to data from JLL. Investment in South Korea and Japan though was similar or slightly higher year-on-year, JLL said.
With some economies in the region relaxing restrictions imposed to control the virus, JLL said it did not expect things to worsen much.
“As business activities in mainland China have gradually returned to normalcy in March, and some economies in the region have managed to avoid a complete lockdown, we believe a material drop off from this quarter level would be unlikely,” said JLL’s Regina Lim.
South Korea delays reopening schools as fears rise over new cluster
Edward White in Wellington and Song Jung-a in Seoul
South Korea has been forced to delay reopening schools, which it had planned to do this week, as efforts to relax social distancing restrictions are being hamstrung by a new virus outbreak in Seoul.
The move comes as officials try to track down around 5,000 people who were potentially exposed to the virus last weekend at nightclubs and bars in Itaewon, a bustling nightlife district.
Park Baek-beom, the vice education minister, said the decision was “inevitable” amid mounting concern over a new wave of Covid-19 infections. A staged re-start of classes will now start from May 20.
“We will actively take measures to protect students, placing our top priority on securing their safety,” he said. “We urge the public to co-operate a little more to ensure that students can study in a safe environment.”
The outbreak, which followed days of no locally reported transmissions earlier in May, has resulted in at least 85 new infections and has highlighted the risk of countries trying to escape economically crippling lockdowns.
International praise for South Korea’s handling of Covid-19 has become a source of national pride.
But the country is in the spotlight for a lack of protection for sexual minorities after intense media coverage identified venues in Itaewon popular with the LGBT+ community as points of transmission in the latest outbreak, sparking a surge in online abuse.
Bank of Ireland warns of ‘material’ coronavirus impact
Arthur Beesley in Dublin
Bank of Ireland warned coronavirus will have a “material impact” on its 2020 performance after the pandemic hit its markets “fast and hard”.
Ireland’s second-largest lender by market capitalisation said the amount of new loans it would issue this year could drop by half compared to 2019.
The group’s shares dropped by more than 6 per cent to €1.55 on Monday morning.
Francesca McDonagh, chief executive, said:
The economic outlook for our core markets in Ireland and the UK has deteriorated, with reduced levels of activity across our businesses. The economic effects will have a material impact on the group’s 2020 financial performance.
This would be not only because of a decline in lending activity, but also because of increased writedowns and a lower net interest margin – the difference between what it charges borrowers and what it pays out on deposits – the bank said.
New lending in 2020 would be between 50 per cent and 70 per cent of 2019 levels, the bank explained.
It also reported a pre-tax loss for the January to March period of €241m, contrasting with a €123m profit in the first quarter of 2019.
This came after the bank took a €266m accounting charge to reflect a worsening economic outlook. It warned customers to expect more such impairment costs over the course of 2020.
Bank of Ireland, under a government scheme, has given 86,000 customers loan payment breaks since mid-March.
The group said in a presentation accompanying its trading statement that it had a “strong capital position entering this crisis” and “strong funding and liquidity to support customers”.
Ukrainians able to visit parks but capital remains severely restricted
Roman Olearchyk in Kyiv
Ukrainians will be able to visit parks and playgrounds in small groups but should remain mostly at home and wear masks in public as the country begins to relax some of its Covid-19 restrictions.
Schools, most public transport and passenger air travel will remain shut but some businesses such as dentist practices, hair salons, law firms and stores within shopping malls are allowed to open, the government said on Monday.
Tighter restrictions, many of which were first introduced in mid-March, remain in place in the regions hardest hit by the pandemic, including the capital city Kyiv and Chernivtsi region bordering Romania.
Pointing to 1,871 total cases in Kyiv, including 66 new ones confirmed in the past 24 hours, the city’s mayor urged residents to remain vigilant ahead of a possible easing of restrictions starting on Tuesday.
“If the dynamics of the disease continues to increase this way, any easing will not be logical and could lead to a boom of infections,” Vitaliy Klitschko said.
“And then there will be a need to introduce an even tougher quarantine,” the mayor added.
Ukraine has as of Monday recorded 15,648 confirmed Covid-19 cases including 408 deaths. Concern looms that the healthcare system will not be able to cope with a sharp spike of cases. Nearly a fifth of all confirmed cases are medical personnel, many of whom have complained of a shortage of protective equipment.
FTSE 100 approaches 6,000 mark as European stocks gain
European equities had a strong start to the week after the UK government set out a three-stage plan to get the country back to work, following moves across the continent to relax lockdowns.
The FTSE 100 gained as much as 1 per cent in early trading to come close to breaking the 6,000 mark. It last struck that level during daily trading on April 30 when it touched 6,151. The benchmark index was recently 0.4 per cent higher.
On Sunday evening, Boris Johnson said the lockdown would be eased slightly, urging construction and manufacturing sites to resume operations.
The continentwide Stoxx 600 and Germany’s Dax rose 0.2 per cent, as investors were encouraged by the steps to return European economies to a higher level of activity.
WeWork to persist with Japan expansion despite pandemic
Kana Inagaki in Tokyo
WeWork will stick to its expansion plans in Tokyo even as the SoftBank-backed property group has been hit hard by the coronavirus outbreak.
Operations in Japan will seek to turn a monthly profit during the 2020-2021 fiscal year, the chief executive of SoftBank’s telecoms business said at an earnings briefing on Monday.
“Under the current environment, there is increasing customer demand to diversify or minimise their office space so many seats were sold in April,” Ken Miyauchi said at an online news conference. “We believe we can continue to expand operations [in Japan].”
The occupancy rate for WeWork’s Tokyo offices averaged 80 per cent for the January to March quarter compared with the office space provider’s occupancy rate of 64 per cent globally at the start of April.
The bullish outlook came even as relations between WeWork and the Japanese technology group have soured as SoftBank walked away from a previously agreed $3bn deal to buy shares from WeWork investors.
Last month, SoftBank disclosed a newly recognised non-operating loss of ¥700bn ($6.5bn) on its investment in WeWork. The property group has been hit hard by the Covid-19 outbreak with some tenants refusing to pay rent or requesting the termination of their month-to-month lease agreements.
China threatens US with ‘countermeasures’ in latest tit-for-tat exchange
Tom Mitchell in Singapore
China’s foreign ministry has threatened unspecified “countermeasures” in response to Washington’s recent move to limit the duration of visas given to Chinese journalists working in the US.
The threat is the latest in a series of tit-for-tat exchanges that has resulted in the expulsion of 60 Chinese journalists from the US, and about 15 US journalists from China.
The spat was triggered after China’s foreign ministry expelled three Beijing-based Wall Street Journal reporters in February in reprisal for what Chinese authorities said was a racist headline on a comment piece about the coronavirus, which emerged in the central Chinese city of Wuhan in January.
On Friday, the US Department of Homeland Security said most Chinese journalists working in the country would have to renew their visas every 90 days — compared to the unlimited, single-entry visas they currently hold.
Most foreign reporters based in China have to renew their visas every 11 months. But some US, Canadian, Japanese and UK journalists have been repeatedly issued only six-month, three-month or even one-month visas over the past year after Chinese officials expressed displeasure with their reporting.
Speaking at a press briefing on Monday, foreign ministry spokesman Zhao Lijian denounced what he called “the US side’s continuous escalation of political pressure on the Chinese media under the pretext of reciprocity”.
Russia reports record daily increase in Covid-19 infections
Henry Foy in Moscow
Russia reported a record daily increase in coronavirus infections and the total death toll from the virus rose past 2,000 on Monday, highlighting its position as Europe’s Covid-19 hotspot.
The increase pushed Russia past Italy as the fourth-most affected Covid-19 country, with the fastest growing number of infections after the US.
Confirmed cases came to 221,344 while coronavirus deaths rose to 2,009, the government said on Monday.
President Vladimir Putin is due to meet with senior officials on Monday to discuss the extension of a national lockdown, which is due to end on Tuesday. Some government officials have warned that the pandemic may not peak until June.
Britons can meet both parents outside, foreign secretary says
Sebastian Payne in London
Dominic Raab appeared to contradict Downing Street’s advice on Sunday by stating citizens could meet up with both of their parents in the park, albeit in a socially distanced manner, Sebastian Payne writes.
“If you are out in the park and you are two meters apart, and use some common sense and you socially distance, you can meet up with other people,” the foreign secretary said in an interview on Monday.
No 10 had said that Britons could only meet one person outside under the revised lockdown guidelines.
The foreign secretary added that citizens could also meet their parents in the garden of their homes from Wednesday while maintaining social distancing but could not enter their homes.
Pubs, restaurants and hair salons to stay closed until at least July 4
Jim Pickard in London
British citizens will not be able to visit a pub or restaurant or have a haircut until July 4 “at the very earliest”, the foreign secretary said.
The foreign secretary said early July would be the “earliest” that sectors such as hospitality and hairdressers would be reviewed, Dominic Raab said on Monday.
“Obviously the proximity in those two sectors…is something where we don’t think we’re ready yet, given where we are with the virus,” he told Sky News.
Mr Raab told the Today programme it was impossible to remain in the lockdown indefinitely and described the prime minister’s announcement on Sunday evening as a “roadmap” out.
Mr Raab said that as people returned to work or spent more time outside it was vital that they stayed “alert” – in line with the government’s revised advice.
“It’s important for us as a country to avoid a situation where…we allow the virus a second spike,” he said.
Those who could work from home should continue to do so, Mr Raab said. Those who could not do so would go back to work but would have to abide by various new restrictions – to enable “Covid-secure working”.
Guidance for UK workers and commuters to come into force in two days
Jim Pickard, chief political correspondent
New workplace and public transport guidance for British citizens will not come into force until Wednesday, foreign secretary Dominic Raab has clarified.
People who could not work from home – such as manufacturing – should return to the workplace from Monday, Downing Street said on Sunday.
“Anyone who can’t work from home, for instance those in construction and manufacturing, should be actively encouraged to go to work’.””
General advice will be published on Monday afternoon with more detailed sector-specific guidance to be produced on Tuesday, Mr Raab said.
The intervention will infuriate union leaders and Labour MPs who had complained that prime minister Boris Johnson had indicated that the changes would come into effect almost immediately – before employers had time to read the fine details.
Len McCluskey, leader of Unite the Union, said the government should have published the guidance before saying anything about relaxing the lockdown.
“The prime minister’s response last night was confusing and almost disbelieving,” Mr McCluskey said. “I’m wondering why we didn’t see the 50-page documents and guidelines that are about to come out before there was any indication about going back to work.”
Indian bond yields jump after rise in government’s borrowing target
Benjamin Parkin in New Delhi
Indian sovereign bonds sold off sharply after the government raised its borrowing target for the year in light of the coronavirus pandemic.
India said late last week that it would plan to borrow Rs12tn ($158bn) in the current financial year, which started in April, up from its previous target of Rs7.8tn.
The yield on 10-year bonds rose more than 0.2 percentage points to 6.23 per cent, the biggest jump since 2017, according to Bloomberg. The yield moves inversely to the price.
Analysts said the extra borrowing, a response to an expected loss of tax revenue, was at the lower end of what was likely needed and was expected to prompt an intervention from the Reserve Bank of India.
“We expect the RBI to reveal its hand soon enough to support the financing of the deficit,” said Suyash Choudhary, head of fixed income at IDFC asset management company.
Auto sales in China tick up in tentative sign of recovery
Auto sales in China, the world’s largest car market, rose in April for the first time in 21 months, in a sign of recovery spurred by government stimulus for the struggling sector.
Automobile sales in April, driven mostly by commercial vehicle sales, rose by 4.4 per cent year-on-year, the first time since 2018 the sector has notched growth, China Association of Automobile Manufacturers (Caam) said.
The Covid-19 pandemic plunged sales in February and March to 79 and 43 per cent of 2019 levels respectively. That set China on course for a third consecutive year of shrinking annual sales, Caam estimates.
The government responded by extending tax breaks and subsidies to support the sector.
Caam warned, however, of lasting pressure on the sector from residual impacts of the virus, adding that the association had hoped for April’s rebound to be higher due to built up February and March demand being released.
Despite the rebound, passenger vehicle sales were still 2.6 per cent below the year before. New energy vehicles – a category including battery powered electric vehicles and hybrids – fell by 26.5 per cent compared to 2019, extending a downturn that began last July.
Corporate round-up: Heathrow, Dignity and Henkel
London Heathrow Airport, which on Monday reported a 97 per cent drop in passenger traffic in April, said 200,000 people passed through its terminals for the month, the same number that it would typically serve in a day. Many were on the 218 chartered repatriation flights. Until lockdowns are lifted demand will stay low, the UK’s busiest airport said. Cargo volumes, which helped bring supplies of personal protection equipment with 1,788 cargo only flights at Heathrow, were still 60 per cent lower.
“Aviation is the lifeblood of this country’s economy, and until we get Britain flying again, UK business will be stuck in third gear,” the chief executive John Holland-Kaye said.
The government needs to urgently lay out a roadmap for how they will reopen borders once the disease has been beaten, and to take an immediate lead in agreeing a Common International Standard for health in aviation that will allow passengers who don’t have the infection to travel freely.”
Dignity, the UK’s only listed provider of funeral related services, performed 20,000 funerals in the first 13 weeks of the year, a rise of about 1 per cent. The group said on Monday: “Should 2020 witness a large number of incremental deaths, beyond the 600,000 originally anticipated by the Office for National Statistics, then it is possible that 2021 and 2022 could experience a lower number of deaths than in 2019. The group will not speculate on the most likely outcome.” As a result of the crisis, the group scrapped limousine use while church services also stopped.
Since early March, shares in Dignity have more than halved, to trade currently at 247p, reflecting a price-to-earnings ratio of less than four times.
Since the end of the quarter, the UK has witnessed in excess of 20,000 deaths in a single week, the highest since the beginning of 2000.
Düsseldorf-based Henkel, maker of Persil washing powder and Loctite glue, reported a 0.8 per cent decline in group sales to €4.9bn. It reiterated what it said on April 7 when it removed the guildance it had given in its annual report, saying on Monday: “a reliable and realistic evaluation of the future business performance of Henkel is currently not possible”.
Even with the pandemic affecting all areas of life, chief executive Carsten Knobel said, “we achieved an overall robust sales performance in the first quarter”.
European stocks poised to edge higher
European stocks were set to make a moderate gain when markets open, after the UK government set out a three-stage plan to get the country back to work, following moves to relax lockdowns across the continent.
FTSE 100 futures pointed to gains of 0.68 per cent at the open, while the Dax in Frankfurt is pitched to open up 0.38 per cent.
Futures for the S&P 500 were almost flat with gains at 0.05 per cent.
Oil prices slipped lower. Brent crude, the international benchmark, was down 1.87 per cent at $30.39 a barrel and West Texas Intermediate, the US marker, fell 2.02 per cent to $24.24.
Vietnam set to resume rice exports to the Philippines
Primrose Riordan in Hong Kong
The Philippines is set to take delivery of hundreds of tonnes of rice after Vietnam approved the resumption of rice exports to Southeast Asian nations, a Philippine government official said.
Vietnam is the world’s third-largest rice exporter after India and Thailand, but suspended exports in March due to food security concerns caused by Covid-19.
The Philippines relies on Vietnam as its biggest source of rice imports and its leaders were concerned by the move.
“We welcome the decision by Vietnam to resume its rice export policy and taking into account the difficulties faced by various stakeholders during this crisis,” Philippines Agriculture Secretary William Dar said in a statement.
Mr Dar’s department said Vietnam’s trade minister promised it would deliver 400,000 metric tonnes of rice contracted in April.
Asia stocks rise as China’s central bank hints at more support
Hudson Lockett in Hong Kong
Equities began the week on the front foot as signs of support measures from China’s central bank helped investors put to one side concerns that new coronavirus outbreaks could undermine efforts to restart the global economy.
In Asia-Pacific trading on Monday, Japan’s benchmark Topix index was up 1.6 per cent, Hong Kong’s Hang Seng climbed 2 per cent and Australia’s S&P/ASX 200 rose 1.7 per cent. China’s CSI 300 of Shanghai- and Shenzhen-listed stocks gained 0.2 per cent.
Investor sentiment was bolstered by the People’s Bank of China’s announcement over the weekend that it would lower real lending rates and “place support for [the] recovery of the real economy in a position of greater priority”.
Jeffrey Halley, senior Asia-Pacific market analyst at Oanda, said the PBoC’s move signalled its “intention to engage in more powerful policies to counter the slide in Chinese growth from the Covid-19 pandemic”. That “should be enough” to extend the recent rally in global equities, he added.
Read more here
New Zealand restaurants and cinemas reopen as restrictions are relaxed
Jamie Smyth in Sydney
New Zealand will begin reopening restaurants, cinemas and most retail businesses from Thursday following a further relaxation of social distancing restrictions implemented following the coronavirus outbreak, the government said on Monday.
The easing of restrictions to alert level two will enable internal travel to resume, families and friends to meet and school to reopen from next week. However, bars will have to wait a further 10 days before reopening on May 21, said Jacinda Ardern, New Zealand’s prime minister.
“The upshot is we will have opened most businesses in New Zealand in 10 days, and sooner than many other countries around the world,” Mr Ardern told reporters.
“So we can get the economic benefit of getting our health response right.” New Zealand acted early to fight the spread of the virus by implementing one of the world’s strictest lockdowns, sealing its international borders and limiting internal travel. The tough action has enabled authorities to dramatically slow the spread of the virus — just three new cases were reported on Monday — and target elimination of the pathogen from the Pacific nation.
Ms Ardern said the “go early, go hard approach” had borne fruit and authorities had won a few battles against the virus, although not yet the war. She said alert level two would usher in a new normal that would allow people to break out of “our bubbles”, although social gatherings should still be limited to 10 people and distancing safeguards remain.
Under alert level two businesses should maintain physical distancing of one metre between groups of customers. Restaurants and other hospitality businesses should keep groups separated and provide each group with a single server, if possible. Professional and community sports, including rugby union, can resume as long as adequate contact registers are kept.
Disneyland Shanghai reopens after more than three months
Christian Shepherd in Beijing
Disneyland Shanghai reopened on Monday to a limited number of visitors after more than three months of coronavirus-induced closure.
Among measures required by authorities to allow the park to reopen were visitors being kept at 20 per cent of full capacity, mandatory advanced online ticket booking, temperature checks and enforced social distancing, according to Shanghai state media outlet The Paper.
Sections of the park remain closed, including the children’s play area and all indoor theatre venues. Restaurants in the park are also limiting the number of visitors allowed to enter at one time.
Disney will be monitoring the success of its decision to reopen the park. The company suspended its dividend last week while revealing the coronavirus crisis had wiped as much as $1.4bn from its quarterly operating profit.
It said operating profit at its parks, cruises and resorts unit shrunk to $639m, down 58 per cent from the same period last year.
India makes first moves to restart its public transport system
Amy Kazmin in New Delhi
India is taking the first tentative step to reviving suspended public transport services this week, as Indian Railways restarts a handful of long-distance train services linking the capital, New Delhi, to 15 other cities.
The new trains — which will start in New Delhi and run to major cities including Mumbai, Bangalore, Chennai and then return — will start running from Tuesday, with online bookings opening on Monday afternoon.
But they represent just a miniscule fraction of the 14,300 trains that typically carry 30m passengers a day, highlighting India’s gradual approach to easing its lockdown.
India will also continue to operate up to 300 special trains a day exclusively for migrant workers who have been trapped for weeks without work or wages in big cities and industrial areas since the lockdown began.
Over the past week, several hundred thousand migrants have returned to their home states, on the first passenger trains to operate since March 22.
India suspended all domestic public transport services — including flights, long-distance and suburban trains, urban metro services, and local buses and even taxi services — in late March, as part of its draconian lockdown imposed to stop the spread of coronavirus.
The lack of long train and bus services to get them home after the lockdown prompted thousands of desperate migrants to undertake arduous treks on foot or bicycle to try to get back home.
As part of its gradual easing over the last week, India has also permitted taxis and local buses to operate in areas with few or no coronavirus cases.
India’s lockdown is threatening its mango harvest
Ben Parkin in New Delhi and Andrea Rodrigues in Mumbai
The arrival of juicy mangoes in April and May provides a tonic to India’s searing summer temperatures. In global export markets such as the Middle East, UK and US, Indian mangoes command a premium over varieties from Latin America and elsewhere.
But mango farmers and distributors have faced myriad difficulties this season as India’s decision to enter lockdown in late March to stem the spread of Covid-19 upended agricultural and food supply chains.
They have struggled with a lack of labour to harvest mangoes, trucks to transport them to markets and ultimately weak demand due to a dearth of buyers.
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China reports cluster of new cases in Wuhan
Christian Shepherd in Beijing
China on Monday reported 17 new cases of coronavirus, after two new small-scale clusters of infections were discovered, including one group in Wuhan, the city where the pandemic began.
Seven of the cases were imported on a flight to Beijing that stopped in Inner Mongolia’s Hohhot for screening, Chinese state media reported. The remaining 10 were local transmissions. Five cases were discovered in a single residential community in Wuhan. The remaining five were in northeast China, which has faced a handful of outbreaks in recent weeks.
The top Chinese Communist party official in northeast Jilin province called for a “wartime footing” on Sunday after a cluster of Covid-19 infections was discovered in the city of Shulan.
Bayanqolu, the province’s party boss, told a meeting on Sunday evening that cadres must “deeply absorb lessons” from the Shulan outbreak and prepare for a “war of attrition” against a resurgence.
Mike Pence will not self quarantine, spokesman says
Primrose Riordan in Hong Kong
US vice president Mike Pence is not in quarantine and plans to return to work at the White House on Monday, his spokesman announced on Sunday, contradicting press reports that he would self-isolate after one of his top aides tested positive for Covid-19.
“Vice president Pence will continue to follow the advice of the White House Medical Unit and is not in quarantine,” Mr Pence’s spokesman Devin O’Malley said in a statement.
“Additionally, Vice President Pence has tested negative every single day and plans to be at the White House tomorrow.”
Mr Pence’s press secretary Katie Miller tested positive for the virus on Friday.
Three senior US officials are in quarantine. At the weekend, Dr Anthony Fauci, one of the top US health officials, entered “modified quarantine” after coming into “low risk” contact with someone who had contracted the virus.
Other officials in quarantine include Stephen Hahn, the commissioner of the Food and Drug Administration, and Robert Redfield, director of the Centers for Disease Control and Prevention.
The US accounted for more than a third of global daily deaths from the virus last week.
Saudi Arabia slashes budget as virus and oil-price fall ravage economy
Ahmed Al Omran in Riyadh
Saudi Arabia announced further cuts to its budget as the kingdom struggles to cope with the severe economic impact of coronavirus and low oil prices.
The finance ministry said early on Monday that it would curb expenditure by nearly SR100bn ($26.6bn), by cancelling or delaying operating and capital spending for multiple government departments and reducing allocations for major projects.
The ministry also said it would also raise value-added tax by 10 percentage points from 5 per cent to 15 per cent from July and would no longer pay cost-of-living allowances that state employees have been receiving since 2018.
“These measures aim to protect the kingdom’s economy to overcome the unprecedented global coronavirus crisis and its financial and economic consequences with minimum possible damage,” finance minister Mohammed al-Jadaan said in a statement published by the official Saudi Press Agency.
The number of confirmed coronavirus cases in the kingdom has jumped in recent weeks to 39,048m — the majority of those infected are foreign workers — while the death toll from the disease stands at 246.
At least 75 cases now linked to South Korean party district
Edward White in Wellington
Seoul’s mayor Park Won-soon told local radio on Monday that 75 confirmed infections are now linked to at least one person who potentially came into contact with as many as 1,500 other partygoers last week in Itaewon, a popular nightlife district in the capital.
Officials are still trying to reach thousands more people who are believed to have been potentially exposed. Contact tracing efforts have been hamstrung by many people using false names on establishments’ entry logs.
South Korea has reported its steepest daily increase in new coronavirus infections in more than one month as the new cluster in Seoul threatens a broader easing of the country’s social distancing measures.
The Korea Centers for Disease Control reported 35 new cases on Monday, marking a sharp turnround from a week ago when the country had several days of no local infections.
Over the weekend Seoul’s mayor shuttered the city’s bars and nightclubs — with an order that bans them from hosting crowds of people — and Moon Jae-in, the president, warned that similar situations could arise in other enclosed, crowded areas.
The case is a blow to the government in South Korea — which has won international praise for mass testing, high-tech contact tracing and social distancing to combat what was, for a time, the worst outbreak outside of China — and has prompted experts to question whether the country’s easing of restrictions was rushed.
Japan set to consider fresh package of stimulus measures
Robin Harding in Tokyo
Japan’s ruling parties are expected to start debate this week on a fresh package of coronavirus stimulus measures with the aim of passing another supplementary budget during the current parliamentary session.
Fumio Kishida, policy chief of the Liberal Democratic party, said last week that the crisis was entering a “new phase” and the ruling coalition would commence work on another package of economic support expected to include help for students and Japan’s regions.
According to local press reports over the weekend, the package may also include support for people struggling to pay rent and assistance for small businesses to pay wages.
Japan has only just completed its first supplementary budget for the fiscal year to March 2021. That ¥25.7tn ($240bn) package, which includes ¥100,000 handouts for everybody in the country, passed the Diet on April 30.
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Spain’s government has clashed with several of the country’s regions over its decision to restrict the scope of the relaxation of its harsh eight-week lockdown.
Brussels is considering suing the German government after the country’s constitutional court issued an explosive ruling calling into question the supremacy of EU law and the actions of the European Central Bank.
Retail and property chiefs have warned that the UK government’s business bailout package of reliefs, grants and loans will not be sufficient to stop the “imminent collapse of many businesses”.
Iran’s supreme leader Ayatollah Khamenei has called on public health officials to reconsider a closure of mosques and holy sites during Ramadan.
Italy’s prime minister has said the country’s lockdown could end earlier than planned as Rome attempts to mitigate a brutal recession caused by nearly two months of freezing the economy.
Boris Johnson changed his message and outlined plans to ease lockdown
Business lobby group the British Chambers of Commerce has called for detailed advice on how companies should protect their workers, as the government encourages staff in industries such as construction and manufacturing to go back to work as soon as Monday.
Keir Starmer, the leader of the UK’s opposition Labour party, has said Boris Johnson’s speech setting out a roadmap to a gradual reopening of the UK economy “raises more questions than it answers”.
The UK has been an outlier in its open borders policy to date, but Boris Johnson said that he was “serving notice” that it will soon be time to impose quarantine on people coming into the UK by air. There was no word on sea or rail travel.
UK Prime Minister Boris Johnson outlined plans to encourage those who can to go back to work. The prime minister used the example of those in manufacturing or construction who he said should be “actively encouraged” to return to their workplaces, although he warned against the use of public transport if possible
Asia-Pacific stocks start the week with gains
Asia-Pacific equities rose at the start of a new week after US stocks rallied on Friday despite 20.5m workers losing their jobs in April.
In early trading on Monday, Japan’s Topix was up 0.6 per cent, the Kospi in Seoul gained 0.4 per cent and Australia’s S&P/ASX 200 added 0.3 per cent.
On Friday, the US benchmark S&P 500 rose 1.7 per cent, even as the US unemployment rate surged to 14.7 per cent, taking the index to levels last seen in September. The technology-heavy Nasdaq Composite gained 1.6 per cent.
S&P 500 futures pointed to a 0.3 per cent rise when Wall Street opens on Monday.
New virus outbreaks in South Korea, Germany and China have highlighted the challenges of keeping Covid-19 in check as countries begin restarting their economies.
New York issues new rules for nursing homes
New York will require twice-weekly testing for staff at nursing homes and prevent hospitals from releasing Covid-19 patients to those facilities.
Under a new rule announced on Sunday, hospitals will not be allowed to discharge patients to nursing homes unless they test negative for the virus.
Governor Andrew Cuomo has faced criticism over a controversial policy that prohibits nursing homes from refusing to re-admit residents who tested positive for coronavirus or were suspected cases. New Jersey has a similar policy.
Mr Cuomo said officials had been concerned early in the pandemic about running out of hospital beds. He also said nursing homes should refer patients to other facilities if they could not care for them.
Hospitalisations have been on the decline in recent weeks, recently reaching their lowest rate since mid-March. Most of the temporary beds at an events centre in Manhattan and a US Navy hospital ship went unused. The ship, the USNS Comfort, departed New York City at the end of April, and the field hospital at the Javits Center closed on May 1.
New York, the state hit hardest by the pandemic, reported on Sunday another 207 fatalities attributed to coronavirus, bringing the state’s total to 21,478.
More than 5,000 people in New York nursing homes have died. Mr Cuomo called nursing homes “ground zero” for the virus and said the state was testing as many residents as possible.
US infection count mounts to 1.32m, but daily infections and fatalities slow
Matthew Rocco in New York
The number of confirmed US cases since the pandemic began has risen to 1.32m and the death toll has climbed to 74,270, data compiled by the Covid Tracking Project revealed on Sunday.
Out of 277,894 new tests, 7.8 per cent came back positive for the virus, down from 8.4 per cent a day earlier and the lowest level since mid-March.
There were 21,712 confirmed infections and 979 additional fatalities in the past 24 hours. The death toll was the lowest since May 4 — a day when data may have been impacted by a system outage in New Jersey. Excluding that date, it would have been the lowest number of deaths recorded since April 1.
States including Florida and California will take further steps this week to reopen their economies.
In Florida, barber shops and salons can open on Monday, and Palm Beach County is set to join “phase one” of the state’s plan by also opening restaurants and retail locations with limits on capacity. Palm Beach County, along with the counties of Broward and Miami-Dade, had been excluded from Florida’s restart because of the higher number of Covid-19 cases there.
California governor Gavin Newsom has said he will lay out guidelines this week on when counties can allow dine-in service at restaurants, and when other businesses can resume operations. The state allowed retail businesses to open for kerbside pickup at the end of last week.
Migrant workers in India crushed to death as they try to return home
Amy Kazmin in New Delhi
A group of 15 Indian migrant workers, who were making an arduous trek from an industrial zone back to their native villages in Madhya Pradesh, was crushed to death by a goods train early Friday morning, after they fell asleep on the tracks.
The fatal accident highlights the continuing plight of millions of desperate Indian labourers, who have been left stranded without work or wages in India’s big cities and industrial areas for the duration of the country’s on-going lockdown.
In a tweet, Prime Minister Narendra Modi described himself as “extremely anguished” over the loss of life due to the accident.
With nearly all regular public transportation services suspended in India since March 22, thousands of migrants have undertaken long and difficult journeys on foot, or by other illicit and sometimes dangerous means, in a desperate bid to reach the comfort of their distant home villages.
Many have died along the way as a result of exhaustion, heat stroke, hunger dehydration and sometimes fatal accidents.
Recently, 14 migrant workers even were found hidden inside a cement mixer as they sought to get home.
There has been a mounting outcry over the plight of migrant workers amid growing concerns about the potential for social unrest, prompting Indian Railways last weekend to begin running special point-to-point train services to take migrant workers back to their home states.
But tickets for the trains, organised between the governments of the sending and receiving states, remain hard to get hold of, given the limited services and huge pent up demand.
As a result, many migrants are continuing to set out on foot. Earlier this week, the southern state of Karanataka — home of the IT hub Bangalore — decided not permit the special trains to operate in the state, after complaints from the construction industry that the mass exodus of migrant workers would lead to a massive labour shortage once companies were ready to resume operations.
The decision led to a massive public outcry, especially from powerful labour unions, which accused authorities of treating workers like bonded labourers. The Karnataka state government has since reversed its decision, and has now agreed to permit the special trains to operate, allowing many frustrated migrant workers to leave.
Turkey’s death toll from coronavirus could be as much as 25 per cent higher than the government’s official figure, adding the country of 83m people to the raft of nations that have struggled to accurately capture the impact of the pandemic.
Ankara has previously rejected suggestions that municipal data from Istanbul, the epicentre of country’s Covid-19 outbreak, showed that there were more deaths from the disease than officially reported.
But an analysis of individual death records by the Financial Times raises questions about the Turkish government’s explanation for a spike in all-cause mortality in the city of almost 16m people.
The FT findings show 3,377 more deaths in Istanbul when compared with the average for the same period in March and April over the previous five years.
Nationwide, all-cause mortality data for Turkey are only available with a lag of more than a year. But the Istanbul figures suggest that the true Turkey-wide toll is 25 per cent higher than the official figure, which stood at 2,706 on April 26.
“These figures indicate under-reporting of Covid-19-related deaths,” said Onur Altindag, an economist specialising in health at Bentley University in Massachusetts, US. “There are clear patterns of excess mortality in Istanbul, which is not surprising.”
Mr Altindag stressed that there was no evidence of deliberate misreporting, adding that accurate coronavirus mortality data was “a notoriously difficult task even for countries with the most advanced death registries”.
Previous analyses by the FT have suggested that the death toll in the UK is double the official figure, while the worldwide figure could be 60 per cent higher than reported.
The true death toll has become a subject of heated debate in Turkey, a deeply polarised country where there is profound mistrust between opposition groups and the government.
Doubts about the figures have been stoked by the government’s sometimes harsh response to those who have questioned the data — including the arrest of several hundred people for “provocative” social media posts — and its reluctance to publish regional breakdowns.
The FT’s analysis lends credence to warnings from the Turkish Medical Association (TTB), a trade union, that the official death toll is under-reported. Deaths from coronavirus are only officially counted following a positive test, and the TBB says that, while testing levels have increased, they are still not high enough.
Yet the analysis also supports President Recep Tayyip Erdogan’s claim that Turkey has a much lower death rate than many European countries and several US states. It corroborates official assertions that the country has reached a “turning point” in the outbreak, with the number of new daily deaths on the decline.
Details of deaths in Istanbul are available almost in real time through a central government website. A comparison of this year’s data with previous years shows a marked spike in deaths that began in mid-March, less than a week after Turkey’s first confirmed case of Covid-19.
Some of these deaths could be explained by a reluctance among people who are sick with other ailments to go to hospital to seek treatment amid the pandemic. But expert consensus worldwide is that the impact of that phenomenon is usually dwarfed by deaths from coronavirus.
Stephen Evans, a statistical epidemiologist at the London School of Hygiene and Tropical Medicine, said that all-cause mortality was important for examining the true impact of the outbreak. “You actually need to look at total deaths, and not just deaths ascribed to Covid-19,” he said.
Turkey’s government has repeatedly rejected assertions that the Istanbul figures point to a higher-than-reported death toll from coronavirus in the country. Responding to an article published last month by the New York Times, Turkey’s health minister Fahrettin Koca insisted that the Istanbul data set was a registry of burials in the city rather than a registry of deaths.
He said that travel restrictions aimed at stopping the spread of coronavirus meant that Istanbul residents who would normally be buried in their ancestral homeland were instead being laid to rest in the metropolis, leading to higher than usual burial numbers.
Ekrem Imamoglu, the opposition mayor of Istanbul, disputed this, claiming that 30 to 35 per cent more people were dying than usual in the city.
The FT analysis supports Mr Imamoglu’s assertions. It shows that, both before and after the onset of the virus outbreak, people who died in Istanbul but were buried elsewhere were usually logged in the city’s records.
Asked to comment on the findings, Turkey’s health ministry directed the FT to comments made by Mr Koca during a press conference last week.
The health minister accused some people of trying to “play politics” with the crisis and rejected claims that the official death toll could be incorrect.
He said that there had been a small increase in nationwide all-cause mortality this year, which was lower than the official coronavirus death count. “Where are they, these imaginary deaths?” he said.
But Kayihan Pala, a public health expert and a former opposition parliamentary candidate, said deaths due to some other common causes could have dropped during the pandemic. “We also need to examine the secondary effects of measures taken against coronavirus,” he said. “For example, because of the decrease in traffic, deaths linked to traffic accidents may have fallen.”
How the FT analysed Turkey’s real death toll
The FT examined 15 Turkish media reports of deaths from both before and after the coronavirus outbreak. All of the cases were people who died in Istanbul and were buried elsewhere in Turkey.
In 11 out of the 15 cases, we found that those who died had been logged in the Istanbul records, even though they were buried in other provinces. This raises questions about official claims that the Istanbul data shows burials in the city, rather than deaths.
For example, Cengiz Koc, the father of an official from Turkey’s ruling party, died of a heart attack in Istanbul in February and was buried in Konya. His death appears in the Istanbul data.
The same recording practice has continued since the onset of the coronavirus outbreak, both for Covid-19 deaths and those from other causes.
Nafiye Ilce, a woman in her nineties who died in Istanbul in late April, was buried in Amasya province but appears in the Istanbul records.
The FT only examined data for Turkey’s largest city. Bentley University’s Onur Altindag, who has analysed data for 10 other provinces across Turkey, said he found “little evidence” of a similar upsurge in mortality rates in those regions, suggesting that the problem of under-reporting may be limited to Istanbul.
But recent death records for Ankara and Izmir — Turkey’s second and third-biggest cities — are not publicly available. The government has resisted calls to publish a daily city-by-city breakdown for confirmed coronavirus cases and deaths.