Coronavirus latest: Americans increase spending in June even as incomes slide


Florida reports record jump in deaths for four days in a row

Florida reported more than 250 coronavirus deaths on Friday, setting a state record for the fourth day in a row.

A further 257 people died from the disease, the state’s health department reported on Friday morning, edging past yesterday’s peak of 253.

Nearly 1,000 deaths have been reported by Florida health officials over the past five days, which has pushed its average rate over the past week to a record 171 a day. The total number of resident and non-resident fatalities in the state since the pandemic began is 6,966, the seventh-highest toll among US states.

Florida, as well as other major sunbelt states like California, Texas and Arizona, have reported record daily increases in deaths this week, even though the new infections have eased back from peak daily levels earlier this month.

The Sunshine State reported a further 9,007 people tested positive over the past 24 hours, from 9,956 on Thursday and the sixth day in a row daily new cases have been fewer than 10,000.

Authorities reported more than 97,600 tests were conducted over the past day, with 10.57 per cent of those coming back positive – the lowest proportion in at least two weeks. 

A number of state testing sites began to close down yesterday due to the onset of Hurricane Isaias, which is making its way to the Florida coast.

US business group slams possible exclusion of Covid liability shield

James Politi and Courtney Weaver in Washington

The largest lobby group for corporate America has slammed the possible exclusion of a liability shield for businesses from the next US fiscal stimulus package, amid signs that the White House would no longer insist on it in talks with congressional Democrats.

Neil Bradley, the chief policy officer at the US Chamber of Commerce, said on Friday it was “impossible to understate what an enormous mistake” it would be for the relief bill not to protect companies from coronavirus litigation.

“The entire business community, universities and colleges, and local school boards across the country are all united in support for a liability safe harbor for those who adhere to public health guidelines. Inclusion of a safe harbor is critical to reopening schools and restoring our economy,” he added.

Mitch McConnell, the Republican Senate majority leader, had said no agreement could be reached without it, but the Trump administration does not necessarily see it as a deal-breaker.

“Liability protections remain a very high priority but I won’t comment on ongoing negotiations,” one White House official told the Financial Times.

Congressional Democrats have been opposed to the inclusion of a liability shield in the stimulus package. They have argued that this would give a green light for businesses of all sizes to bring workers back to their jobs in unsafe conditions, without any legal recourse if adequate health and safety standards are not met.

Nasdaq jumps after bumper earnings for Big Tech

Blowout quarterly results for tech giants propelled US stocks higher, even as much of the rest of the economy reports a deep blow from the pandemic.

The tech-heavy Nasdaq 100 index jumped 1.7 per cent at the opening bell after four of the largest US tech companies posted resilient quarterly results late on Thursday.

Facebook led the gains with a 7 per cent increase. Apple rose about 6 per cent, while Amazon climbed 5.7 per cent. Alphabet, the parent of Google, slipped 4 per cent after it disclosed the first decline in sales ever reported by the internet group.

The US benchmark S&P 500 stock index added 0.3 per cent. Chevron and ExxonMobil reported heavy quarterly losses on Friday, with shares in the oil majors slipping about 4 per cent and 0.4 per cent, respectively.

Americans increase spending in June

US consumers lifted spending in June, even as parts of the country dealt with a flare-up in coronavirus cases.

Personal consumption expenditures were up 5.6 per cent against the prior month, the Bureau of Economic Analysis said on Friday. That compared with an 8.5 per cent gain in May and economists’ forecast of 5.5 per cent growth. The data showed that spending on clothing and footwear, health care and food services picked up.

Incomes dropped 1.1 per cent, as the government’s direct payments delivered in response to the pandemic continued at a lower level versus May. The BEA said increased compensation related to the reopening of businesses partially offset the decrease in benefits. Personal income was down 4.4 per cent in May.

The core personal consumption expenditures (PCE) index – the Federal Reserve’s preferred measure of inflation – was up 0.9 per cent year on year, down from the 1 per cent rise in May.

Jaguar Land Rover to cut another £1bn as losses mount

Peter Campbell

Jaguar Land Rover has pledged to cut another £1bn from costs this year after booking a £413m loss in the three months to June and predicting it will remain in the red for the quarter to September.

In March, Britain’s largest carmaker announced 1,000 job losses as part of generating £1bn in cost savings. On Friday the group added another £1bn to its cutbacks, but declined to give details on any further job losses.

The group made a £413m pre-tax loss in the three months to June, after car sales fell 42 per cent to 74,096, and a 44 per cent drop in revenues to £2.9bn.

JLR lost £500m in the first three months of 2020 as coronavirus forced it to close showrooms and factories across the world.

Caterpillar profit slides as pandemic hits demand

Caterpillar’s quarterly earnings slumped and sales fell by almost one-third as a drop in business investment brought on by the pandemic’s economic fallout knocked the maker of bulldozers and backhoes.

Caterpillar, considered an economic bellwether and known for its large machinery, said on Friday weaker end-user demand and changes in dealer inventories weighed on sales volume during the June quarter. Dealers cut machine and engine inventories by $1.4bn, compared with a $500m increase in the year-ago period.

The company booked revenues of $10bn, down 31 per cent from $14.4bn in the second quarter of last year. Analysts were looking for a larger drop in sales to $9.38bn.

Caterpillar’s mining, construction and energy and transportation segments each posted a decline in machine retail sales for the three-month rolling period ended in June. Sales were down 23 per cent globally, led by a 40 per cent decrease in North America. Sales rose 7 per cent in Asia Pacific.

Second-quarter profit per share fell to 84 cents from $2.83 but eclipsed analysts’ forecast of 68 cents. The results included pre-tax remeasurement losses equal to 19 cents a share related to settlements of pension obligations.

Caterpillar, which withdrew its 2020 guidance in March, said its financial results for the remainder of the year will be impacted by economic uncertainty due to coronavirus. The company did not reinstate its outlook.

“We will adjust production as conditions warrant and are prepared to respond quickly to any positive or negative changes in customer demand,” said chairman and chief executive Jim Umpleby.

Caterpillar also said it has “continued to take actions to reduce costs and prioritise its spending to provide for investment in services and expanded offerings”.

Shares in Caterpillar rose 1.3 per cent in after-hours trading.

Exxon posts deep losses even as oil major slices costs

Myles McCormick

ExxonMobil fell to a $1.1bn loss in the second quarter as sweeping cost cuts failed to offset the effects of an oil price crash that has floored producers and sent revenues tumbling.

The loss compares with a profit of $3.1bn in the same quarter last year, underlining the extent of the damage inflicted on the biggest American oil company by the coronavirus pandemic and Saudi Russian price war, which sent US oil prices tumbling into negative territory in April. Total revenue slid 54 per cent to $33bn.

However, the loss was significantly better than the $2.5bn analysts had pencilled in after the company warned earlier this month that weaker oil and gas prices would hit its upstream business hard.

“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes,” said Darren Woods, Exxon chief executive. “We responded decisively by reducing near-term spending and continuing work to improve efficiency by leveraging recent reorganisations.”

Like its rivals, Exxon has sought to dial back expenditure to cope with the downturn. It managed to cut capital and exploration expenditure by about $2bn compared with the first quarter.

“The company has identified significant potential for additional reductions and is undertaking a comprehensive evaluation across the businesses on a country-by-country basis,” Exxon said.

The loss per share in the first quarter amounted to 70 cents, compared with expectations on Wall Street for about 60 cents.

Fiat Chrysler slumps to €1bn loss as Covid-19 deals heavy blow to US

Peter Campbell

Fiat Chrysler fell to a €1bn loss in the second quarter after profits in its American heartland were all but wiped out, but said that profits and cash flows “significantly improved” during June.

Car sales for the Jeep and Alfa Romeo owner dropped 63 per cent to 424,000 vehicles, with revenues declining 56 per cent to €11.7bn.

In North America, the company’s only significant profit driver, earnings fell to just €39m, a decline of €1.5bn compared with the same quarter a year earlier. Sales in the region fell close to two-thirds to 225,000.

The fall in its US earnings was compounded by its struggling European and Latin American regions falling back into loss.

Maserati, the company’s luxury brand, slimmed its loss by €20m to €99m, while losses in Asia-Pacific deepened to €59m.

The company said the pandemic has “further underlined the compelling logic” for its €44bn merger with France’s PSA, which is being investigated by European competition authorities and is expected to close next year.

The group has suspended financial guidance for the year but increased its outlook for the North American market this year to 15m vehicles sales, up from 12.5m three months ago.

The FCA expects “recovering profitability and positive industrial free cash flows” in the second half, driven by a recovering North American market.

Store reopenings fail to soften steep fall in sales at Under Armour

Sara Germano in New York

Under Armour reported sharply lower sales despite the reopening of most stores where its athletic gear is sold, with the pandemic continuing to weigh on the company’s results.

Sales in its most recent period fell 41 per cent to $708m, driven by a steep downturn in North America, its largest market. Under Armour reported a loss of $183m for the three months ended in June.

Although revenues fell more steeply than expected, the company’s loss was in line with consensus of analysts polled by S&P Capital IQ. Shares of Under Armour rose 10 per cent in pre-market trading to $12.60.

Earlier this week, the company said in a filing that it received a notice from the US Securities and Exchange Commission that the regulator intends to pursue enforcement against Under Armour related to an ongoing investigation into its accounting and sales practices.

Chevron swings to loss on weak oil prices

Derek Brower

Chevron swung to a deep $8.3bn loss in the second quarter, down from more than $4bn of earnings a year earlier, as the collapse in oil prices triggered by the coronavirus pandemic and the market’s crash in the wake of the Saudi-Russian price war ripped through the supermajor’s balance sheet.

The company reported non-cash net charges of $5.2bn as it wrote off all its Venezuelan assets and a $1.8bn impairment associated with the lower oil prices.

The adjusted loss, after accounting for the charges, came in at $3bn, or a loss of $1.59 per share.

“The past few months have presented unique challenges,” said Mike Wirth, Chevron’s chief executive. “The economic impact of the response to Covid-19 significantly reduced demand for our products and lowered commodity prices.”

Quarterly revenue dropped from about $32bn in the first quarter to $16bn, 55 per per cent lower than a year earlier. The upstream segment of the business was hit hard, with Chevron reporting a loss of $6bn compared with a $3.4bn gain last year. Chevron said it received just $19 a barrel for its oil, compared with $52 a year earlier.

The earnings loss was far above market expectations for an adjusted loss of $1.6bn, and revenue was well beneath analysts’ forecast of $22bn. Shares slipped 2 per cent in pre-market trade.

Boris Johnson delays further reopening of England’s economy

Jim Pickard

Boris Johnson has put the handbrake on further reopening of the English economy by postponing plans to reopen bowling alleys, casinos and ice rinks this weekend for at least another fortnight.

The prime minister has also delayed pilot schemes to restart gigs and sporting events before the autumn amid a rise in Covid-19 cases across Europe. Nor will wedding receptions of up to 30 people be allowed, as had been planned.

Mr Johnson said it was his responsibility to look at national measures. “With those numbers creeping up our assessment is that we should squeeze that brake pedal in order to keep that virus under control.”

However, the government will proceed with plans to pause the “shielding” programme for the most vulnerable and will still encourage some workers to return to offices from next week.

The prime minister, making the announcement at a press conference in Downing St, said that the prevalence of Covid-19 outside of hospital and care home settings was increasing, according to new figures from the Office for National Statistics.

“Some of our European friends are struggling to keep it under control,” he said. “We can’t fool ourselves that we are exempt. We have to be willing to react to the first signs of trouble….We just can’t afford to ignore this evidence.”

Mr Johnson had announced the further easing of those restrictions on July 17 as part of a wider announcement.

But ministers have always warned that any relaxation of the lockdown would be subject to the trajectory of the coronavirus epidemic. New figures published on Thursday evening showed 846 new infections, the highest figure for 32 days.

Mr Johnson’s announcement came just hours after the government imposed new restrictions on swathes of north-west England where indoor meetings in homes are now banned for more than 4m people. The Scottish government has advised against travel to those parts of northern England.

Hong Kong cites coronavirus for election delay

Nicolle Liu in Hong Kong

Hong Kong chief executive Carrie Lam has postponed the territory’s elections for a year, citing coronavirus as the main reason.

The Chinese territory, which is meant to be semi-autonomous but has come increasingly under the grip of Beijing with a sweeping national security law that punishes crimes such as subversion and secession, had been due to elect members of its legislative council in September.

In a press conference, Ms Lam said delaying the elections until next year was “difficult” but “necessary” because of the pandemic, social distancing requirements and the fact voters currently in mainland China or overseas would not be able to return in time to vote.

Ms Lam’s administration and the pro-establishment camp are unpopular. A group of pro-democracy candidates, who oppose the concept of rule by Beijing, won a landslide victory in Hong Kong’s local elections last November.

But last Thursday, Hong Kong banned 12 pro-democracy figures, including current Legco members and Joshua Wong, the then-student who became the face of 2015’s Umbrella Revolution, from running in the election.

The total number of confirmed coronavirus cases in Hong Kong topped 3,200 this week and the pandemic has left 27 dead in the city.

At least 24 countries have decided to postpone national elections and referendums, however more than 30 have held national elections amid the coronavirus crisis, according to research by IDEA.

Prevalence of Covid-19 in England ticks up ‘slightly’

Sarah Neville

There has been a “slight rise” in the prevalence of Covid-19 in England, statisticians said on Friday, with about one in 1,500 of the population now infected compared with about one in 2,000 the week before.

An estimated 35,700 people had Covid-19 during the most recent week, from July 20 to 26, according to the ONS figures, which exclude cases in hospitals, care homes or other institutional settings. This compares with 27,700 between July 13 and 19.

The statisticians said there was “evidence to suggest a slight increase in the number of people in England testing positive on a nose and throat swab in recent weeks”.

However, there was “not enough evidence to say with confidence whether Covid-19 infection rates differ by region in England, nor whether infection rates have increased in different regions over the past six weeks”. The new figures equate to about 4,200 infections a day in the so-called community.

Japan orders 120m doses of Pfizer’s potential Covid-19 vaccine

By Kana Inagaki in Tokyo

Pfizer and Germany’s BioNTech will supply Japan with 120m doses of their experimental Covid-19 vaccine by the end of June 2021.

The procurement by the Japanese government of enough doses for 60m people comes as the nation wrestles with a new spike in coronavirus cases, which hit a daily record of 1,482 on Friday.

There is not yet any proven vaccine for Covid-19, although nation states are scrambling to get their hands on the front-runners among potential immunisation programmes.

Earlier this month, the Trump administration committed to spend $1.95bn on 100m doses of Pfizer and BioNTech’s vaccine, which will be distributed free of charge to American citizens, subject to regulatory approval.

Pfizer and BioNTech did not disclose the financial terms of the agreement with Japan.

France hands local authorities power to make masks required in public

David Keohane in Paris

France has given local authorities the power to make mask-wearing mandatory in public places in the fight to halt the spread of Covid-19, as Europe faces a resurgence of the virus.

“In order to limit the circulation of Covid-19, local governments will now be able by order to extend the obligation to wear a mask to open public places,” said French health minister Olivier Véran on Twitter on Friday.

“This decision can be made locally, depending on the evolution of the epidemic in each territory.”

The northern French town of Lille, near the Belgian border, has already moved to impose such an order with masks mandatory in parks and pedestrian areas from Monday.

France, where more than 30,000 people have died of the virus, is facing a resurgence in cases of Covid-19. Health authorities warned this week that “the circulation of the virus has been maintained with the number of daily cases increasing and exceeding 1,000”, bringing the rate of infection back to levels seen at the start of May and before the lockdown in France started to be eased.

That rise in cases has coincided with an increase in tests being performed — now approaching 500,000 a week according to Mr Véran — but authorities are increasingly urging vigilance as the numbers tick back up.

Taiwan’s economy shrinks unexpectedly in second quarter

Kathrin Hille in Taipei

Taiwan’s economy reversed into contraction in the second quarter as the forced stop to citizens’ international travel dealt a blow to private consumption.

The cabinet’s statistics office estimated that gross domestic product in the three months to June 30 decreased by 0.73 per cent compared with the same period last year, missing its May forecast by 1.2 percentage points.

Measured at a seasonally adjusted annualized rate, the economy contracted 8.8 per cent.

The surprise drop calls into question the expectation that Taiwan’s success in containing the pandemic, and thus avoiding hard lockdowns, can spare it from a recession. One of the key reasons for its successful containment of the pandemic was early and decisive border closures.

Taiwan’s contraction compares with a 32.9 per cent fall in US GDP over the same period, however, as well as a 9 per cent drop in Hong Kong and South Korea’s economy shrinking by 3.3 per cent.

In the first quarter, Taiwan had been one of the few economies to continue expanding with 1.59 per cent growth. The market consensus expectation for the second quarter had been flat growth according to Citi.

But the government said the virus-led forced stop to foreign travel dealt a severe blow to private consumption.

“The main reason was the impact of the Covid-19 pandemic, created by a 99.57 per cent drop in foreign arrivals and the dramatic drop in services exports,” the Directorate-General of Budget and Statistics said.

While domestic consumption continued to grow by just more than 1 per cent in the second quarter, services exports were down 96 per cent. That drop is even more drastic than in Hong Kong, a much more tourism-dependent economy, which said on Thursday that services exports fell 46 per cent in the second quarter.

Eurozone output drops 12.1% in record contraction

Delphine Strauss and Chelsea Bruce-Lockhart

The eurozone has plunged into its deepest recession on record as a result of the coronavirus pandemic, data released on Friday showed.

The bloc’s gross domestic product fell 12.1 per cent between the first and second quarters of 2020, the biggest decline in 25 years of economic records, Eurostat said on Friday.

The plunge in output came after GDP fell 3.6 per cent in the first quarter.
Spain, which now faces a steep rise in new virus cases, has been hardest hit, with GDP down 18.5 per cent in the second quarter. But Portugal, which saw a much lower rate of infection, was almost as badly hit, with GDP down by 14.1 per cent quarter on quarter.

There was less divergence between other major economies, with second quarter GDP falling by 10.1 per cent in Germany, 13.8 per cent in France and 12.4 per cent in Italy.

Across the EU, GDP fell 11.9 per cent quarter on quarter in the three months to June after a 3.2 per cent drop in the first quarter.

Eurozone inflation increased more than anticipated in July, as many countries emerged from government-imposed lockdowns, but the rate still remains far from the European Central Bank’s main target rate of just under 2 per cent.

Consumer prices rose 0.4 per cent in July compared with a year earlier, preliminary Eurostat figures revealed.

This was higher than the 0.2 per cent expected by economists polled by Reuters and more than the 0.3 per cent rise in prices recorded in June.

Virus sends Italian economy into steepest fall for decades

Federica Cocco in London

Italy’s economy experienced its steepest quarterly contraction for at least 25 years in the three months to June, as activity plunged due to a decline in tourism and a nationwide lockdown to try to curb coronavirus.

Italy’s gross domestic product fell 12.4 per cent in the second quarter compared with the previous quarter, according to data from Istat, the national statistics office.
That was better that the 15.3 per cent drop predicted by economists polled by Reuters. But it was still the largest contraction since records began in 1996 and far steeper than the 2.8 per cent contraction in the first quarter of 2009, at the height of the financial crisis.

The eurozone’s third-largest economy is experiencing its fourth recession in just more than a decade, and had already been shrinking before the pandemic hit.
On a year-on-year basis, GDP tumbled 17.3 per cent in the second quarter, Istat said.

Istat also revised down its reading for the first quarter of the year to a drop of 5.4 per cent.

Italy’s official forecast is for a full-year GDP contraction of 8 per cent in 2020. Economy Minister Roberto Gualtieri said this could be revised lower. The Bank of Italy has estimated a contraction of 9.5 per cent, while the European Commission has predicted the economy would shrink 11.2 per cent, the sharpest fall in the European Union.

Spain’s economy contracts to 18-year low

Chelsea Bruce-Lockhart

Spain’s economy contracted sharply in the second quarter of 2020, taking the country into recession and bringing output down to levels not seen for 18 years.

Gross domestic product decreased by 18.5 per cent in the three months to June compared with the previous quarter, according to preliminary estimates published by the National Statistics Institute on Friday. It follows a contraction of 5.2 per cent in the first quarter.

Economists had expected a decline of 16.6 per cent in the second quarter, according to a poll by Reuters.

The decline in output brought Spanish GDP back to levels last seen in 2002, wiping out the seven years of growth since the country’s last recession.

The pandemic has hit Spain hard, in part because of the impact on its tourism industry, which accounts for about one-seventh of GDP.

The country now faces a resurgence in cases that threatens to hold back its recovery in the second half of this year.

The pandemic’s impact on Spain’s economy was significantly worse than in the US and Germany, which both lost about a tenth of their economic output in the second quarter. French GDP contracted by almost 14 per cent.

French consumer prices rise to five-month high

Federica Cocco

French consumer prices grew by more than expected in July, pushing the rate to a five-month high in the latest sign that its economy has begun to rebound from the economic damage caused by coronavirus.

Consumer price inflation rose to an annual rate of 0.9 per cent in July, from 0.2 per cent the previous month, the French national statistics agency INSEE reported on Friday. Economists polled by Thomson Reuters had expected annual inflation to rise to 0.3 per cent.

Consumer prices rose 9 per cent compared with the previous month. INSEE said that the rise was driven by a rebound in manufactured products as summer sales that had been postponed during lockdown began to catch up. The stabilisation of energy prices also contributed.

Separate data published by INSEE on Friday showed that household consumption expenditure on goods returned to pre-pandemic levels in June, with a rise of 2.3 per cent on February.

France suffered a historic 13.8 per cent quarter-on-quarter contraction in gross domestic product in the three months to June, figures published earlier on Friday showed.

Airline KLM to cut further 1,500 jobs to weather the pandemic

Dutch airline KLM has said it will axe an additional 1,500 jobs, as uncertainty lingers over the recovery in global air travel which has been grounded by the coronavirus pandemic.

The carrier said that it plans to cut positions relating to the ground, cabin crew, cockpit and its subsidiaries, taking total reductions since the pandemic began to 5,000 jobs — 15 per cent of its 33,000 strong workforce before March. It said that it has only recovered to operating 30 per cent of its flights compared with pre-pandemic levels.

KLM warned that further reduction in staff numbers could come if it revises down its forecast on the pace of recovery in air travel for the next financial year.

“Expectations are that the road to recovery will be long and fraught with uncertainty,” the company said in a statement. “Demand is only expected to recover by 2023 or 2024 at the earliest.”

The company added that the recent moves to tighten travel restrictions, such as the UK imposing a quarantine on visitors coming from Spain, are making consumers more cautious to travel overseas.

BA parent IAG launches €2.75bn rights issue as losses swell

Naomi Rovnick

British Airways owner IAG has launched a €2.75bn emergency fundraising, supported by its biggest shareholder Qatar Airways, to see it through the Covid-19 pandemic that has thrust the industry into a historic crisis. 

The group confirmed the rights issue, which it said last week that it was considering, as it unveiled a first-half loss of more than €4bn after its passenger business collapsed.

IAG, which also owns Iberia, Aer Lingus and Vueling, has already announced plans to cut 12,000 jobs and said it will retire its entire fleet of Boeing 747 jumbo jets because of the travel downturn. 

The half-year operating loss included more than €2bn of exceptional costs related to impairment of IAG’s aircraft fleet, as well as costs relating to its fuel-hedging programme. It had posted a profit of €1.1bn in the first half of 2019.

The group said passenger traffic fell 98 per cent in the most recent quarter because it was “only able to operate a skeleton passenger schedule”.

Chief executive Willie Walsh said that the airline industry was “facing an unprecedented crisis”, while the outlook for the sector “remains uncertain”. 

 “While we have had to make tough decisions on both people and costs, these actions are the right ones to protect as many jobs and serve as many customers as feasible and put IAG in the strongest position possible”. 

He added that he did not expect the aviation industry to recover from the pandemic “before 2023”.

NatWest more than doubles loan loss provisions on gloomy UK outlook

Nicholas Megaw

Newly renamed NatWest Group became the latest in a string of British banks to report a sharp jump in provisions to deal with an expected surge in bad debts due to the worsening outlook for the UK economy.

The company, formerly known as Royal Bank of Scotland, reported a £2.1bn impairment charge for the second quarter, more than twice the size of its first quarter provision.

Government support measures since the start of the pandemic have so far kept the rate of loan defaults among consumers and businesses relatively low, but banks are preparing for a wave of difficulties in the coming months due to pessimistic growth and unemployment forecasts.

NatWest predicted that impairments would rise further in the second half of the year, albeit at a slightly slower rate. It predicted a full-year charge of between £3.5bn and £4.5bn, compared with a total of £2.9bn in the first half.

The impairment charge pushed NatWest to a £1.3bn pre-tax loss for the three months to June, compared with a £1.7bn profit in the same period last year. Revenues dropped from £4.1bn to £2.7bn, though the previous year’s numbers benefited from a series of one-off gains.

Glencore to reduce thermal coal output as Covid-19 hits demand

Neil Hume in London

Glencore has moved to address weakness in the thermal coal market, with plans to mothball a big mine in Colombia and reduce production from Australia.

Thermal coal, used to generate electricity in power stations, has been hit hard by Covid-19 as demand from key consumers such as India plunged because of lockdowns. Benchmark prices in Asia have dropped 25 per cent to below $50 a tonne this year.

Glencore, the world’s biggest producer of seaborne thermal coal, said on Friday it had applied for its 16m-tonne-a-year Prodeco mine to remain on care and maintenance due to “ongoing weakness” in the Atlantic market and it was targeting “volume reductions” in Australia.

As a result, the Swiss-based miner and commodity trader expects cut coal production guidance to 114m tonnes from 132m previously.

Glencore also said its marketing, or trading arm, was on course to deliver earnings before interest at the top end of a $2.2bn to $3.2bn range.

A big driver of that performance was oil, where its traders snapped up cheap barrels of crude during April’s price crash to sell in the future at higher prices.

UK house prices rebound in July

Chelsea Bruce-Lockhart

UK house prices made a surprising rebound in July, suggesting consumers were feeling more positive about the future of the economy after it was hit by the coronavirus pandemic.

After adjusting for seasonality, house prices increased 1.7 per cent in July from the previous month, according to a well-regarded survey by Nationwide, the British building society. Economists were expecting house prices to dip just slightly by 0.1 per cent, a poll by Reuters showed.

Property viewings and exchanges for prospective house buyers have been allowed since mid May, after being banned during the peak of the UK’s lockdown period. But the easing of restrictions did not initially give the market the boost it needed, with prices falling again in June by 1.6 per cent, after a month-on-month drop in May. There were hopes pent-up demand would have caused the prices to rebound.

But now this pent up demand is being felt, said Robert Gardner, Nationwide’s chief economist. “Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.” Mr Gardner added:

These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.

Compared with the same period of the previous year, house prices increased by 1.5 per cent in July.

France suffers historic 13.8% economic contraction in second quarter

Federica Cocco

The French economy suffered its largest postwar contraction in the three months to June, after the country imposed strict lockdown measures to halt the spread of coronavirus.

Gross domestic product shrank 13.8 per cent from the previous three months, marking the third consecutive quarter of contraction, according to the official statistics agency INSEE. A Reuters poll of economists had expected the drop to be deeper, at 15.3 per cent.

The decline was driven by a 25.5 per cent decline in exports and a 20 per cent drop in government investment. Household spending was down 11 per cent.

Figures published on Thursday showed that both the US and German economies lost about a tenth of their economic output in the same period.

Data for the eurozone and its two other largest economies, Spain and Italy, are due to be published later on Friday.

Insee also revised its figure for France’s first-quarter contraction down by 0.6 percentage points to a contraction of 5.9 per cent.

Vietnam reports largest one-day jump in coronavirus infections

Vietnam reported 45 new coronavirus infections in the tourist city of Da Nang as of Friday morning, the country’s biggest one-day tally since the pandemic began.

The coastal city’s outbreak, which was discovered last week, broke a months-long run of no local cases after the country effectively halted the spread of the virus within its borders.

The new cases in Da Nang take the number of infections since July 25 to 93, according to government figures.

Infections have been reported in other parts of the country and nearby Hoi An, a former trading port-turned-tourist town, has reintroduced social distancing measures with residents told to limit non-essential travel.

Travel bans bring fresh misery to Spain’s Costa del Sol resorts

Ian Mount on the Costa del Sol

Manuel Villafaina, owner of the Los Manueles beachfront restaurant in the Spanish resort of Torremolinos, has hosted his share of celebrities over the years. There was also the memorable occasion, he recalled, when Diana, Princess of Wales, and her entourage booked an entire floor for dinner, only to cancel an hour before they were due to arrive.

Yet Mr Villafaina now yearns for much less rarefied patrons — the crowds of European holidaymakers who each summer descend on this stretch of Spain’s south coast, known as the Costa del Sol, and who were expected to return this August. That was until a spate of travel curbs — including an abrupt UK decision to quarantine arrivals from Spain — threw an industry already battered by the coronavirus pandemic into fresh chaos.

Read more here

Outbreaks highlight disparities in UK test and trace regimes

Andy Bounds in Carlisle and Sarah Neville in London

Prime minister Boris Johnson promised a “world-beating” test and trace programme to stop the spread of coronavirus by June. Carlisle — and the rest of England — is still waiting.

Public health officials in the northern city have been fighting a rise in cases for four weeks. But efforts to manage the outbreak have been hampered by incomplete data, overstretched local officials and a lack of testing facilities.

There have been more than 20 localised outbreaks of coronavirus in England and Wales since the UK began emerging from lockdown in June.

But the two nations have different test and trace models, and their strengths — and weaknesses — can be seen in the different responses to upsurges in Carlisle and Merthyr Tydfil, a former mining community in South Wales.

In Wales the “test, trace, protect” service is run regionally while the English “test and trace” programme is centrally controlled under its chief executive, Dido Harding.

When an outbreak is discovered, local public health teams are brought in to manage the outbreak. But the latest figures show that England’s scheme only reaches four in every five people testing positive.

Read more here

Global stocks fall after US economy shrinks

Hudson Lockett in Hong Kong

Global stocks and the dollar were under pressure on Friday after the US recorded its largest gross domestic product contraction in postwar history, reinforcing fears that an economic recovery is losing momentum.

Japan’s benchmark Topix index fell 1.8 per cent in early trading in Asia-Pacific while Australia’s S&P/ASX 200 dropped 1.7 per cent. China’s CSI 300 index rose 0.1 per cent and Hong Kong’s Hang Seng fell 0.5 per cent.

Overnight, data showed that the US economy shrank at an annualised rate of almost 33 per cent in the second quarter due to the impact of the coronavirus lockdowns, which was slightly better than economists’ forecasts.

US jobless claims rose for the second week in a row, underscoring how the recovery in the world’s biggest economy could be bumpy.

The record fall for the US economy “does not change our expectations for a strong bounce-back” in the third quarter, said Veronica Clark, an economist at Citigroup Global Markets.

The S&P 500 closed 0.4 per cent lower, even as big tech companies including Amazon, Apple and Facebook posted blowout quarterly results.

Futures markets tipped the US benchmark to climb 0.3 per cent when trading begins later on Friday while the FTSE 100 was set to gain as much.

South Korean factory production rebounds in June

Edward White in Wellington

South Korean factory data rebounded in June, signalling the export-led economy might have moved through the worst of the economic downturn from the coronavirus pandemic.

Industrial production rose 4.2 per cent month on month last month, recovering from a contraction in May and rising 0.7 per cent on June 2019, according to Statistics Korea.

Manufacturing output surged 7.2 per cent from a month earlier, its steepest increase since the global financial crisis.

Investment in facilities and retail sales also improved from May.

The rosier industrial data mark an improvement from the past six months, during which the South Korean economy fell into a recession for the first time in almost two decades.

While Asia’s fourth-biggest economy has been somewhat protected by the avoidance of a nationwide lockdown and solid demand for computer chips, officials in Seoul hope unprecedented government stimulus measures will further buoy the domestic economy and support jobs in the second half.

Lockdown tightened in northern England at short notice

Andy Bounds in Huddersfield and Laura Hughes in London

People from different households have been banned from meeting indoors across a large area of northern England after a spike in coronavirus cases.

The area affected, including Greater Manchester and Bradford, has a population of almost 5m people. The government announced the measures at 9.16pm on Thursday night, less than three hours before they took effect.

Matt Hancock, the health secretary, tweeted that people had not been observing social distancing and therefore contributed to the spread of the virus. He needed “to take immediate action to keep people safe”.

Mr Hancock said: “We’re constantly looking at the latest data on the spread of coronavirus, and unfortunately we’ve seen an increasing rate of transmission in parts of northern England.

“The spread is largely due to households meeting and not abiding by social distancing. So from midnight tonight, people from different households will not be allowed to meet each other indoors in these areas.”

The ban includes private gardens. People can still go to pubs, restaurants and other public places but only with members of their own household or support “bubble”, a government official said.

Read more here

Japan unemployment rate edges down amid Covid-19 furloughs

Robin Harding in Tokyo

Japan’s unemployment rate dropped back to 2.8 per cent from 2.9 per cent a month earlier as employers kept millions of workers on a Covid-19 furlough rather than terminate their jobs.

However, the ratio of open jobs to applicants — regarded as a more sensitive measure of what is going on in the Japanese labour market — fell 0.09 points to 1.11, the lowest since October 2014.

That suggests the unemployment rate will rise in the months ahead, with the labour market gains from eight years of economic stimulus under prime minister Shinzo Abe getting wiped out by the coronavirus epidemic.

Industrial production began to bounce back from its coronavirus shutdown, rising by 2.7 per cent in June compared with the previous month, but it remained 17.7 per cent lower than the same month last year, highlighting the ongoing economic fallout from factory shutdowns and reduced export demand.

Xinjiang Covid-19 outbreak climbs above 500

China has reported 112 new Covid-19 cases in the western region of Xinjiang, taking the total over the past two weeks to more than 500.

The number of new Covid-19 cases in Xinjiang, which is home to the Uighur minority, has climbed sharply in recent days, despite efforts to limit the spread of the virus in the capital Urumqi.

More than 2m people have been tested for the virus. Officials said Urumqi had a comparatively high number of people who tested positive for the virus but showed no symptoms. Asymptomatic cases are not included in China’s official tally.

The region’s health authority said it had found a total of 108 asymptomatic cases as of Thursday.

China reported a total of 123 local infections nationwide on Thursday, the highest number since early March.

An outbreak in Dalian, a port city in the northern province of Liaoning, grew by 11 infections to reach 69 cases over the past week.

Almost 4.1m samples from Dalian residents have been collected for coronavirus testing, state media reported early on Friday. A second round of testing will be launched in high-risk districts.

An additional four imported cases took China’s overall number of Covid-19 cases to 84,292.

Gilead hopes to meet global remdesivir demand by October

Hannah Kuchler in New York

Gilead hopes to be able to fulfil global demand for remdesivir by October, as some US hospitals struggle to get hold of enough of the Covid-19 drug.

Daniel O’Day, chief executive of the California-based biotech company, said the US has the “vast majority” of supplies that will be available until the end of September, at 500m courses. The rest has been allocated to countries with significant rates of Covid-19 infections.

He said the US government process for allocating the antiviral had improved over time yet admitted there was still not enough supply to meet demand. One-third of pharmacists said they did not have enough to treat all Covid-19 patients who could benefit from remdesivir, according to a recent survey by the American Society of Health System pharmacists.

Johanna Mercier, Gilead’s chief commercial officer, said while the company was confident it would be able to ramp up manufacturing by the fourth quarter, the progress of the pandemic and the number of patients remained the big unknown.

Read more here

News you might have missed…

The World Health Organization should have given more help to developed countries coping with the Covid-19 pandemic, after they have underinvested in their public health systems, according to a senior leader at the global body.

Facebook shares rose almost 8 per cent after its second-quarter revenue beat analyst expectations, though the social media group warned that the coronavirus pandemic, as well as a boycott of its advertising services, would hamper growth in the current quarter.

Google has suffered its first recorded revenue decline, as the coronavirus crisis caused an 8 per cent slide in advertising income in the latest quarter and depressed parent company Alphabet’s revenues by 2 per cent from the year before.

A single dose of Johnson & Johnson’s experimental coronavirus vaccine elicited “robust” protection against Covid-19 when tested on animals, with clinical human trials now under way in the US and Belgium.

Former Republican presidential candidate and pizza chain executive Hermain Cain has died more than a month after being hospitalised with coronavirus. He was 74.

International passengers travelling to Kenya will be required to undergo mandatory Covid-19 testing as the country lifts the suspension of overseas flights effective on Saturday, in a bid to open its tourism sector.

Asia-Pacific stocks dip following gloomy US GDP

Stocks in Asia Pacific slipped on Friday following falls on Wall Street after the US economy suffered its largest post-war contraction.

Japan’s Topix fell 0.8 per cent, the Kospi in Seoul was flat and Australia’s S&P/ASX 200 shed 0.6 per cent. S&P 500 futures point to a 0.5 per cent gain when US markets open on Friday.

Figures released on Thursday showed the US economy contracted by an annualised rate of 32.9 per cent following unprecedented shutdowns designed to halt the spread of coronavirus.

The S&P 500 ended the day down 0.4 per cent, while Germany’s Dax was Europe’s worst performer after the country’s economy contracted by a sharper than forecast 10.1 per cent in the second quarter.

Gold, which hit record highs this week amid concerns over the effects of the pandemic on the US economy was down 0.2 per cent at $1,956 an ounce. The dollar was hovering at a two-year low.

US Covid-19 deaths top 1,000 for fourth day

Peter Wells in New York

Daily deaths from Covid-19 in the US topped 1,000 for the fourth day in a row as several sunbelt states once again reported historic jumps in fatalities.

A further 1,291 people in the US died from coronavirus, according to Covid Tracking Project data, from 1,418 on Thursday.

The national death toll has increased by more than 1,000 fatalities a day nine times in the past 10 days, taking the overall tally to more than 144,000.

Florida (252) and Arizona (172), among the hard-hit sunbelt states, reported record daily jumps in fatalities. California (194) was just short of Wednesday’s record of 197.

The death toll in Texas rose by 84 from a day earlier to 6,274 as of Thursday, according to Financial Times analysis of Covid Tracking Project data.

The Lone Star state’s health department announced a series of changes this week to the way it counts deaths. Officials said today that as they shifted to using death certificate data, “an automation error caused approximately 225 fatalities to be included that did not have COVID-19 listed as a direct cause of death” and that they had to correct the cumulative fatalities for July 27, 28 and 29.

A further 69,917 people in the US tested positive for coronavirus over the past 24 hours, from 66,211 on Wednesday, according to Covid Tracking Project data.

California (10,197) reported more than 9,000 cases for the first time in five days, while Florida (9,956) and Texas (8,800) also had large increases
States that had record daily jumps in cases included: Missouri (1,781), Ohio (1,733), New Mexico (597) and Hawaii (108).

Coronavirus latest: Earnings deluge underscores pandemic’s impact on corporate America


Florida reports record jump in deaths

Florida reported its biggest one-day jump in deaths on record, but reported fewer than 10,000 new cases for the third day in a row.

A further 191 people died, the state’s health department reported on Tuesday, from a two-week low of 77 yesterday. The latest tally topped the previous daily record from July 23 by 18.

Florida health officials revealed a further 9,230 people tested positive for Covid-19 over the past 24 hours. That was up slightly from Monday’s 8,892, which was the smallest one-day increase in nearly three weeks.

Figures on Monday tend to be lower due to weekend delays in reporting, but typically tick up on Tuesday.

On average, about 10,300 coronavirus cases a day have been reported over the past week, but this is down from a peak rate of almost 11,900 in mid-July. That may be a sign infections in Florida, which has become one of the new hotspots for the disease in the US, could be reaching a plateau.

More than 90,200 tests were conducted in Florida. For the fourth day in a row, the number of tests coming back positive remained below 12 per cent. The per cent positivity rate was 11.7 per cent on Tuesday, officials said.

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Fed extends emergency lending programmes until year end

James Politi in Washington

The Federal Reserve is extending the emergency lending facilities it set up to shore up financial markets during the pandemic until the end of the year, in the latest sign of its concern that the coronavirus crisis will continue to weigh on the US economy.

The board of the US central bank announced the decision on Tuesday, as its monetary policymakers began a two-day meeting of the FOMC. The lending facilities, which were designed to support short-term funding markets, corporate debt markets, and offer loans to struggling midsized businesses, were due to expire at the end of September.

“The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the Covid-19 pandemic,” the Fed said.

“The board’s lending facilities have provided a critical backstop, stabilising and substantially improving market functioning and enhancing the flow of credit to households, businesses, and state and local governments,” it added. Fed officials had signalled the lending facilities would be in place as long as they were needed and would not be allowed to lapse prematurely.

Harley reports first loss since 2010

Harley-Davidson swung to its first loss in more than a decade in the second quarter as global motorcycle sales were weighed down by the coronavirus pandemic.

The Milwaukee-based company swung to a loss of $92m or 60 cents a share, compared with a profit of $196m or $1.23 a share. That marked the first loss since the fourth quarter of 2010 and compared with analysts’ expectations for earnings of 4 cents a share.

The American motorcycle manufacturer said revenues fell to $669m in the second quarter, down from $1.4bn in the same period a year ago.

“Global retail motorcycle sales in the second quarter of 2020 were significantly impacted by Covid-19,” the company said. Harley reported 52,700 motorcycle sales, down from 71,800 in the year ago quarter.

Earlier this month the company announced about 700 job cuts globally as new chief executive Jochen Zeitz began an overhaul of the business’ operating model, including focusing on 50 markets in America, Europe and Asia Pacific, while considering withdrawing from international markets where “volumes and profitability do not support continued investment”.

Harley, like other businesses, had its operations interrupted by the coronavirus pandemic lockdowns and said most of its non-production workers will continue to work from home until the end of 2020. Ninety-three per cent of its global dealers were open following pandemic interruptions.

Air traffic won’t return to pre-pandemic levels until 2024, industry body warns

Tanya Powley in London

The global airline industry downgraded its recovery forecast on Tuesday, warning it will take until 2024 for passenger traffic to return to pre-Covid 19 levels — a year later than the sector had previously expected.

The cut comes as the aviation sector is facing further uncertainty following new curbs on travel imposed by countries amid a string of local upsurges in coronavirus infections, dealing a blow to hopes of a revival in the global tourism industry.

The International Air Transport Association, the global airline trade body, said it now expected passenger traffic to be down 63 per cent in 2020, compared to a year ago. While demand will improve in 2021, traffic will still be about 36 per cent lower than 2019 levels.

Its figures show that global passenger traffic remained weak in June, down 86.5 per cent, only improving slightly from the low of 94.1 per cent in April.

France finds more than 1,000 cases of fraud in furlough scheme

David Keohane in Paris

France has uncovered 1,400 suspected cases of fraud in its furlough scheme which was put in place to try and stave off the risk of bankruptcies and mass lay-offs due to the pandemic.

As Covid-19 shut down economies, countries across Europe rolled out or enhanced partial unemployment schemes under which the state pays subsidies to companies to fund the salaries of those prevented from working.

However, the massive and rapid expansion of the schemes — which involve tens of millions of people — have led to fears of “furlough fraud”, which will take time to uncover.

Elisabeth Borne, the country’s labour minister, told French radio station RTL on Tuesday that of the 25,000 checks done so far, half had been flagged as “suspicious”, meaning there were indications of fraudulent use or scams to take advantage of the system. In the former case, companies might have made erroneous or fraudulent declarations while the latter could involve identity theft or the setting up of fake companies.

“The counterpart to the simplicity of the scheme is that there will be people who defraud it,” said the minister. The French justice system earlier this month said it had launched an investigation into “massive fraud” in the system.

“We do a lot of checks: we have already done 25,000, we will do 50,000 by the end of the summer”, said Ms Borne adding that “in France, when economic activity stopped, the state has taken charge of all or part of the salary of 9 million French people.”

Cigarette maker Altria boosts dividend and reinstates guidance

Patricia Nilsson in London

Marlboro-maker Altria has raised its dividend and reinstated full-year guidance after “outstanding financial performance” in its tobacco business.

The US group on Tuesday announced a quarterly dividend of $0.86 per share, representing a new annualised dividend of $3.44 a share, up 2.4 per cent from the previous rate. It also reinstated its guidance for 2020 due to a “better understanding of Covid-19 impacts on adult tobacco consumer purchasing behavior”, expecting adjusted diluted earnings per share to grow by up to four per cent and fall in between $4.21 and $4.38.

Billy Gifford, Altria’s chief executive, said the company had shown resilience “despite the challenges of the Covid-19 pandemic in the US”. Although revenues and profits dropped slightly in the three months ending June, cigarette stockpiling earlier this year helped pre-tax profits grow by 12 per cent to $4.7bn in the first half of the year. Net revenues in the first six months of the year were up by 4 per cent to $12.7bn.

The company had in March borrowed $3bn under its revolving credit agreement “due to the uncertainty” of the pandemic. It said on Tuesday the sum had now been repaid in full.

Mr Gifford, who has a long background at Altria, took over the reins earlier this year after his predecessor stepped aside following a troublesome investment in e-cigarette maker Juul Labs.

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Pfizer lifts 2020 forecast as cancer drug sales rise

Hannah Kuchler in New York

Pfizer lifted its full year guidance as sales of key cancer and cardiac drugs rose, despite the pandemic hitting in-person sales representative visits and routine healthcare appointments.

The US pharmaceutical company said it now expects revenue of between $48.6bn and $50.6bn, $100m more than previously forecast, and adjusted diluted earnings per share of between $2.85 and $2.95, three cents more than prior guidance. But the forecast is dependent on patient and sales rep visits increasing in the third quarter.

The guidance does not include revenues from a potential Covid-19 vaccine, which Pfizer is developing in conjunction with German company BioNTech. The companies dosed the first patients in a phase two/three trial on Monday. Last week, it signed a $2bn pre-order with the US government, on the condition that the vaccine is approved.

The drugmaker beat expectations in the second quarter, despite taking a $500m hit to revenue because of disruption due to Covid-19. Sales fell 11 per cent to $11.8bn, higher than the consensus forecast of $11.6bn. Excluding the impact of the now-divested consumer healthcare division, operational revenue declined 3 per cent, primarily due to the loss of US exclusivity for Lyrica, a drug for treating nerve pain.

Non-gaap earnings per share were 78 cents, higher than the average analyst estimate of 66 cents. Net income fell 32 per cent to $3.4bn. Shares in Pfizer rose 3 per cent in pre-market trading in New York.

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McDonald’s reports lowest quarterly profit in 13 years

Alistair Gray

Quarterly profits at McDonald’s sunk to their lowest level in 13 years as the pandemic forced the closure of thousands of its restaurants, but the fast food group said business was picking up with revenues in the US approaching normal levels.

Results published on Tuesday showed net income in the three months to June dropped 68 per cent from the same period a year ago to $484m. Net income was the weakest since 2007, when a one-time charge triggered a quarterly loss, according to S&P Capital IQ data.

Across the group, revenues in the quarter fell 30 per cent to $3.76bn. Diluted earnings per share were 65 cents compared with $1.97 for the same period last year.

Along with the sales slump after McDonald’s outlets in many countries were forced to close for several weeks, the pandemic has pushed up the company’s costs.

However, monthly figures showed the trends were improving. Like-for-like sales at the US business were down 2.3 per cent year on year in June, compared with a 19.2 per cent drop in April.

Performance overseas was weaker. Sales at the company’s “international operated” division — which includes the UK, France and Italy — were down 18 per cent last month, yet this too was an improvement from a 67 per cent slump in April.

The vast majority of McDonald’s restaurants are now open, although most are confined to drive-through, delivery and takeaway. Seating is available in only about 2,000 US outlets, roughly 15 per cent of the total.

McDonald’s said at the start of this month that it would postpone sit-in reopenings in the US by three weeks and last week it extended this for another 30 days. From this weekend it will also require customers to wear face masks in its US outlets, even where authorities do not mandate them.

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3M results miss view, but sees sales improvements in July

Industrial group 3M reported quarterly sales and earnings below analysts’ estimates as the coronavirus pandemic hurt demand for its products, although it said sales were improving so far in July.

The company behind everything from 3M Post-it notes to face masks said it is “seeing broad-based sales improvements across businesses and geographies to start the third quarter”.

3M, which previously said it would eschew earnings forecasts for monthly updates, said that with about a week to go this month, overall sales are up “low-single digits year-on-year” at present.

The Minnesota-based company’s more optimistic tone came alongside second quarter results that showed sales fell 12.2 per cent from a year ago to $7.2bn, just below analysts’ expectations for $7.3bn, according to a Refinitiv survey. Shares in the company fell nearly 3 per cent in pre-market trade.

While end demand was strong in certain segments such as personal safety, home improvement and general cleaning, others like healthcare elective procedures, automotive and general industrial segments experienced “significant weakness”. The company also reported sales declines across all major geographical regions led by a 16.4 per cent drop in Europe, Middle East and Africa and a 12.7 per cent decline in the Americas.

3M reduced costs by about $400m year-on-year. “While our results were significantly impacted by the global economic slowdown, we executed well, managed our costs and delivered another quarter of robust cash flow,” said Mike Roman, 3M chief executive.

Net income rose to $1.3bn or $2.22 a share, up from $1.1bn or $1.92 a share in the same period a year ago. Adjusting for one-time items the company reported earnings of $1.78 a share, shy of analysts’ expectations for $1.80 a share.

Pandemic crisis: Global economic recovery tracker

The FT is tracking alternative indicators to give an early picture of whether the global economy is returning to pre-crisis levels.

Where lockdowns have eased and the virus is under control, economic activity is starting to recover — but because there is a lag of weeks to months between when official economic data is produced and the period of time it covers, it is out of date before it is published.

Among the detailed information available, jobs posting data offers a snapshot into a labour market recovery has barely started.

Read more on the economic indicators here.

Selfridges plans ‘fundamental’ changes as it cuts 450 jobs

Upmarket UK department store chain Selfridges is to cut 450 jobs as part of “fundamental changes” to its business in response to the rapid reshaping of the retail industry caused by the coronavirus pandemic.

The group warned that this year will be the “toughest” in its recent history and expects sales to fall significantly. It said it was leaving “no stone unturned” in planning for changes to consumer behaviour that have been accelerated by the Covid-19 crisis as shoppers abandon the high street and turn online in increasing numbers.

“How we work, shop and socialise is changing,” managing director Anne Pitcher said in a message to staff on Tuesday.

Selfridges is known for its flagship store on Oxford Street in central London, but Ms Pitcher said the business will invest in its online platform and customer experiences as footfall and tourist numbers in major city centres have collapsed.

German authorities ‘very concerned’ over spike in cases

Guy Chazan in Berlin

The head of Germany’s main public health authority has said he is “very concerned” about a spike in new coronavirus cases in the country, which had up until now been largely successful at keeping a lid on new infections.

Lothar Wieler, head of the Robert Koch Institute, said there had been 3,611 new cases registered in the past seven days. “For a few days now we have been seeing a marked increase in new cases,” he said, adding that he was “very concerned” by the development. He urged Germans to stick to the rules of social distancing and continue to wear a mask in shops and on public transport.

In mid-July, Germany was recording around 500 new cases of Covid-19 infection a day. But this number rose to 815 last Friday, 781 on Saturday, 305 on Sunday, 340 on Monday and 633 today.

Previously, Germany had experienced a few localised flare-ups of the virus, usually in meat-processing factories and abattoirs where migrant workers live cheek by jowl in cramped hostels.

But that is changing. Dr Ute Rexroth of the RKI said the new cases being registered in the past few weeks were spread across Germany and were “diffuse”. “It’s family get-togethers, weddings, meetings with friends, outbreaks in workplaces, in hostels, community centres, care homes, old-people’s homes and hospitals,” she said.

She said many of the new cases were people returning from holidays abroad, although most of them had become infected in Germany.

Gold touches record high as dollar weakens

Hudson Lockett in Hong Kong and Naomi Rovnick in London

Gold rose to within striking distance of $2,000 for the first time as investors braced themselves for a period of low returns from other assets such as bonds and the US dollar sank to multiyear lows.

The price of the precious metal for immediate delivery increased as much as 2 per cent to hit a new all-time high of $1,980.57 per troy ounce on Tuesday morning in Asia, before shedding much of that gain by morning in London to $1,918.

Gold has risen more than 30 per cent in the year to date, making it one of the best-performing mainstream assets of 2020.

Silver also rose as much as 6.4 per cent to $26.19 per ounce during the Asian session, before easing back to trade 0.7 per cent higher.

The dollar index, which tracks the US currency against a basket of peers, edged 0.3 per cent higher but continued to trade near its lowest levels since mid-2018. The index has fallen 6 per cent since early May.

Investors said gold’s upward momentum reflected growing expectations that the Federal Reserve could signal new policy measures when its rate-setting committee meets on Wednesday.

In London, the FTSE 100 opened 0.7 per cent higher, propelled upwards by energy stocks that investors hope will benefit from more US stimulus to battle the coronavirus pandemic. The Europe Stoxx 600 index rose 0.2 per cent, Germany’s Dax gained 0.4 per cent and France’s CAC lost 0.2 per cent.

Spanish unemployment hits two-year high

Federica Cocco

Spanish unemployment ticked up to a two-year high in the second quarter, even as millions of workers are still being shielded from the impact of the pandemic the state-subsidised furlough scheme.

The unemployment rate rose to 15.3 per cent up from 14.4 per cent in the first quarter, slightly better than the 16.2 rate expected by economists polled by Reuters.

Still, the statistics body added that more than 1m who lose their jobs had been classified as inactive during the period, rather than unemployed, suggesting the true picture of employment is significantly worse than the headline data.

According to forecasts from the OECD, Spain is likely to suffer from worse unemployment than any other member state. The think-tank predicts Spanish joblessness will jump to almost 22 per cent by the end of the year — or 25.5 per cent if there is a second wave of infections.

Greggs says trading to be depressed while social distancing in place

Alice Hancock

Greggs, the bakery-cum-café chain, said that it had to write down £9m worth of stock due to lockdown and has warned that it will not return to previous trading levels while social distancing is required.

The Newcastle-based company said on Tuesday that trading had reached 72 per cent of 2019 levels in the week to the end of July 25, but that in the busiest 20 per cent of its shops, particularly smaller sites and those in travel locations, it could not employ full teams.

Takeaway food businesses were allowed to stay open during lockdown but Greggs said that it found its efforts to remain open initially “inconsistent with the ‘stay at home’ phase of lockdown”.

The company reopened stores on a trial basis in early May, after fears that an over enthusiastic reaction to its opening on Twitter would cause a stampede at stores.

Inflows rise at St James’s Place

UK wealth manager St James’s Place reported a rise in new investment in the first half of the year, as customers weathered a period of historic market volatility.

Net inflows of funds rose to £4.5bn in the six months to the end of June, up slightly from £4.4bn the previous year. Group funds under management ticked up to £115.7bn.

“We have witnessed the most extraordinary period for markets,” said chief executive Andrew Croft, pointing to the stock market’s sharp fall and subsequent recovery as the pandemic rippled through financial markets in the first half of the year.

SJP, known for its full service offering and high fees, said it “registered negative returns” over the first half, although its performance improved as markets recovered through the second quarter.

Pre-tax profits more than trebled to £222m, but this was largely down to a temporary effect linked to life insurance tax.

Virgin Money prepares for mortgage defaults as employment fears grow

Nicholas Megaw, Retail Banking Correspondent

Virgin Money has reported a sharp increase in provisions for defaults on mortgage loans, as fears grow about the impact the coronavirus pandemic will have on UK unemployment levels.

The UK’s sixth-largest bank said it had yet to see many specific credit losses across its loanbook due to forbearance measures such as loan holidays and free overdrafts, but topped up its provisions for potential future losses by £42m to reflect a weaker economic outlook.

The majority of the increase in provisions was focused on home loans, an area which largely avoided provisions earlier in the year. Virgin said the 62 per cent increase reflected “more cautious assumptions in relation to the outlook for unemployment” and house prices.

David Duffy, Virgin chief executive, said he was “pleased with the way the group has performed during the pandemic … we know that things may yet get more difficult for many of our customers, but we are determined to continue to support their needs where we can and to fulfill our role in the economic recovery”.

Reckitt Benckiser sales soar on booming disinfectant demand

Judith Evans

Soaring demand for cleaning products and disinfectants during the pandemic sent sales at consumer goods group Reckitt Benckiser sailing higher in the first half of 2020.

The maker of Dettol and Lysol disinfectants, Cillit Bang cleaning products and Nurofen painkillers said like-for-like net revenue growth, a key metric for the sector, was 11.9 per cent, up from 1 per cent a year earlier and above the 10.6 per cent that analysts had expected.

“The world has changed beyond recognition in 2020. Covid-19 is likely to be with us for the foreseeable future and, as a society, we are embedding new hygiene practices to protect our way of life,” said Laxman Narasimhan, chief executive. “Our supply chain has withstood the challenge of unprecedented demand,” he added.

Hygiene products led the rise in sales, with 16.1 per cent like-for-like net revenue growth. The company said it had also created a new professional service business “from a standing start”, signing deals with Hilton Hotels, Delta Air Lines and Avis Budget Group to provide products such as disinfectant.

Reckitt said its full-year expectations had improved because of opportunities related to the pandemic, with net revenue growth now set to come in the “high single digits” for the full year.

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ECB tells eurozone banks not to pay dividends until January 2021

Owen Walker

The European Central Bank has called on lenders to continue to freeze dividend payments until at least January 2021, in a move that further undermines the investment case for the sector.

The central bank has also written to lenders, asking them to be “extremely moderate” when setting bonuses in order to help absorb losses and support lending throughout the coronavirus crisis.

European bank stocks have been hit hard this year after lenders were pressured by regulators to suspend capital returns to shareholders at the height of the Covid-19 crisis. The Stoxx Europe 600 Banks index is down more than a third in 2020, compared to a fall of just over 10 per cent for the broader Stoxx Europe 600 index.

Delivery Hero raises guidance as pandemic drives food delivery orders

Tim Bradshaw in London

Delivery Hero, the online food delivery group, has raised its full-year guidance by around €200m after revenues and order volumes both nearly doubled during the pandemic.

The Berlin-based internet group behind the Foodora, Foodpanda and Talabat apps said that it now expects 2020 revenues to hit €2.6-2.8bn, compared with €2.4-2.6bn previously, as it also announced plans to launch in Japan.

“Even in these unprecedented times, we have seen record growth across Delivery Hero’s markets, putting us in a strong place to build out our global leadership position,” said Emmanuel Thomassin, Delivery Hero’s finance chief.

“Japan is the greatest underpenetrated delivery market outside of China, and we see great potential to win market shares in this early stage environment.”

The company is competing with the likes of Just Eat Takeaway, Uber and China-focused Meituan Dianping for global dominance of the food delivery market, which has seen an up-step in deal-making over the past year.

After sales initially took a hit in March and April as restaurants were forced to close and consumers stockpiled groceries, food delivery apps have seen demand for takeaway meals and other items explode in recent months, as lockdowns lingered.

Southwest shows edge over rivals in US airline turmoil

Claire Bushey in Chicago

For the past six months, investors in US airlines have focused on how carriers will survive the pandemic-related travel restrictions ravaging the industry.

An announcement from one of the country’s largest airlines has raised a new question in recent days: will the turmoil shake up the pack in terms of market share?

Southwest Airlines declared it will not furlough any employees on October 1, when US government bailout restrictions expire, potentially giving it an edge over competitors when demand for air travel returns.

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Australia offers ‘pandemic leave’ to aged-care workers

Jamie Smyth in Sydney

Australia is introducing “paid pandemic leave” for casual staff working in aged-care homes due to concerns a lack of basic employee entitlements is accelerating the spread of Covid-19, with some workers failing to self-isolate when they develop symptoms.

From Wednesday, casual employees at residential care homes will become eligible for up to two weeks of paid leave if they need to self-isolate due to having symptoms of the virus or coming into contact with a confirmed case, Australia’s workplace regulator ruled on Monday.

“There is a real risk that employees who do not have access to leave entitlements might not report Covid-19 symptoms which might require them to self-isolate, but rather seek to attend for work out of financial need,” said the Fair Work Commission, which had previously resisted a push by trade unions for paid pandemic leave.

The provisions are in place until October 29 unless extended.

The regulator’s U-turn follows a surge in coronavirus cases this month in Victoria, Australia’s second-most populous state, where about one in six of the 4,775 active cases are in residential aged-care homes.

Sara Charlesworth, professor of work, gender and regulation at RMIT University in Melbourne, said Covid-19 had exposed systemic faults in Australia’s aged-care system, including underemployment and low pay.

“It’s not as though aged-care workers are not acutely aware of risks to clients and residents — they are,” she said. “But you’ve also got an imperative to be able to make a living.”

Pandemic puts pressure on foreign workers in the Gulf

Jamie Etheridge in Kuwait City and Simeon Kerr in Dubai

The coronavirus outbreak has shone a spotlight on the treatment of millions of foreign workers across the oil-rich Gulf. Many have lost their jobs as businesses have closed and thousands have left.

In Kuwait, where expatriate workers make up 70 per cent of the population, resentment against foreigners is on the rise. Animosity towards Egyptians, many of whom compete with Kuwaitis for government jobs, is particularly virulent.

Parliament approved several draft laws aimed at cutting the number of foreign workers. “It is discrimination,” said Ashraf, an Egyptian working in Kuwait. “The government is working to get expats out.”

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US bank loan provisions forecast higher than Europe rivals’

Laura Noonan in New York

US banks’ profits will be hit twice as hard by provisions for loan losses as a result of the pandemic than their European peers, consultants at Accenture forecast, in a study that upends the traditional wisdom of European banks’ relative weakness.

The $427bn of loan loss charges predicted for 58 US banks over the three-year period equates to about 10.2 per cent of their estimated average 2020 loan books, Accenture’s data show.

The 50 European banks in the study are expected to take loan loss charges of $455bn over the same period which, by contrast, are equal to roughly 4.6 per cent of their 2020 loan balances.

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Will coronavirus hasten demise of Poland’s coal mines?

James Shotter and Agata Majos in Katowice, Poland

In June, nearly two months after the coronavirus began sweeping through Silesia’s coal mines, Poland’s government ordered a production halt at 12 pits. Yet rather than applauding an effort to protect workers, union leaders demanded the decision be reversed.

Officials have denied that they intend to use the pandemic as an excuse to cut jobs in the struggling industry which employs 80,000 people, and all 12 mines reopened this month.

But the spat was a harbinger of the battle over the future of the sector that will have profound implications both for Poland’s economy and for the EU’s ambitious climate goals.

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Surge in US Covid-19 cases to dominate Fed meeting

James Politi in Washington and Colby Smith in New York

The surge in US coronavirus cases is pushing the Federal Reserve closer to a delicate decision on the best way to deliver more monetary support to the US economy.

Policymakers will gather for a meeting of the Federal Open Market Committee on Tuesday and Wednesday.

Proceedings are expected to be dominated by the threat to recovery posed by the spread of Covid-19, including in such economically vital states as California, Texas and Florida.

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Gold climbs to near $2,000 ahead of Fed meeting

Hudson Lockett in Hong Kong

Gold rose to within striking distance of $2,000 for the first time as demand surged ahead of an interest rate decision by the US central bank.

The price of the precious metal for immediate delivery hit a new all-time high of $1,980.57 per troy ounce on Tuesday morning in Asia.

Gold has risen by more than 30 per cent year to date, making it one of the best-performing mainstream assets in 2020.

Viewed by investors as a haven during times of uncertainty, gold has jumped by about 9 per cent in the past six trading sessions as concerns have grown over the economic impact of US coronavirus outbreaks.

The recent gains have come at the expense of the dollar as investors have bet that the worsening Covid-19 situation in the US will prompt more economic stimulus measures.

A weaker dollar is typically viewed as bullish for gold partly because it makes the metal cheaper for international buyers.

The dollar index, which tracks the US currency against a basket of peers, is trading near its lowest levels since mid-2018.

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Indonesia extends loans to restart infrastructure projects

The Indonesian government has approved more than $850m in loans to the capital, Jakarta, to restart infrastructure projects halted by the coronavirus pandemic, official media reported on Monday.

The finance minister, Sri Mulyani Indrawati, said regional governments are facing the tough job of reviving economic activities without risking more Covid-19 transmission. “That will be a remarkably difficult task,” she was quoted as saying by the Antara news agency.

On Monday, Ms Indrawati attended the signing of agreements between Jakarta and West Java provinces with Sarana Multi Infrastruktur, a government agency that finances major projects.

Proposed Jakarta projects under the Rp12.5tn ($860m) funding scheme include drinking water supplies, a flood control system, waste processing sites, transport developments and tourism and sport facilities.

Neighbouring West Java province received Rp4tn in loans to construct hospitals, clinics and other medical facilities as well as build and upgrade roads, bridges, housing and tourist areas.

Kyrgyzstan sets July 30 as day of Covid-19 mourning

The Central Asian nation of Kyrgyzstan will hold a day of national mourning on July 30 for coronavirus victims, official media reported on Monday.

The state-run Kagar news agency said Kyrgyzstan recorded 483 new Covid-19 cases on Monday, bringing the total number of infections in the country to 33,296.

Of those, 1,301 have died, giving Kyrgyzstan the highest fatality rate in Central Asia.

Kyrgyz president Sooronbay Jeenbekov said on Monday that the country was grateful to Russian doctors, who had provided training in modern methods of intensive care.

Australian state of Victoria reports 384 new cases

Australia’s state of Victoria reported 384 new coronavirus cases on Tuesday as its government pledged support to residential care homes experiencing a large number of infections.

Daniel Andrews, Victoria’s premier, said six more people had died from the virus, taking the state’s tally to 83.

Four of the new fatalities were people linked to private-sector aged care, which has been badly hit by the outbreak.

Mr Andrews said 769 of the state’s almost 5,000 active cases are in people in homes for the elderly.

“I cannot stand here and tell you that I have confidence that staff and management across a number of private-sector aged care facilities are able to provide the care that is appropriate to keep their residents safe,” he said.

“We don’t run this sector, but the residents in these homes are all Victorians,” said Mr Andrews, pictured, adding that the government would provide assistance to the sector.

He said the measures would not mean all residents of private care facilities would be moved “en masse” and decisions would be made on clinical need.

Residents would be moved in cases where there is no confidence in infection control, Mr Andrews said.

Nurses have also been sent into some homes to provide care to residents, which will have a knock-on effect on hospital staffing.

Palestinians to ease lockdown for Muslim holiday

Palestinian authorities said the coronavirus-related restrictions imposed on the territories it governs would be eased ahead of an important Muslim holiday, but full lockdown would return on Friday.

The official WAFA news agency quoted government spokesman Ibrahim Milhem as saying the public could celebrate Eid al-Adha in public spaces provided that they comply with restrictions.

That includes wearing face masks, maintaining physical distancing, bringing individual prayer rugs and restricting the festival sermon to 15 minutes.

Businesses would be allowed to open on Tuesday, Wednesday and Thursday until midnight, while restaurants would be allowed only to accept take-out and delivery orders.

A general lockdown would be reinstated from Friday morning to Sunday morning, WAFA reported. Only pharmacies and bakeries would be allowed to open.

A ban remains on all social gatherings, including weddings and funerals. Working in Israel is also prohibited.

Vietnam suspends flights to Da Nang over virus outbreak

Vietnam has suspended domestic flights to Da Nang from Tuesday following a coronavirus outbreak in the popular tourist destination.

After months of no new Covid-19 cases, Vietnam has reported 16 new infections in the country’s third-largest city, forcing officials to reimpose social distancing rules.

The country’s government said flights to and from Da Nang would be suspended for 15 days.

Road transport to the city has also been suspended, apart from deliveries of food and for essential travel.

The government had earlier permitted domestic airlines to schedule extra flights to allow 80,000 tourists to return home.

Lebanon to impose tight lockdown after surge

Lebanon will shut down most economic and social activity from July 30 until August 10, official media reported on Monday, as coronavirus cases surged in the Middle East nation.

“The country will be completely closed including institutions, private companies and the banking sector,” the state-run National News Agency quoted interior and municipalities minister Mohammad Fahmi as saying.

Mr Fahmi said hospitals, military and national security, industrial, agricultural and media institutions would be exempted. Sea and land borders, Beirut’s airport, municipalities and public facilities, he added, would operate a restricted schedule.

Earlier, health minister Hamad Hassan said the lockdown was essential due to a “lack of community discipline and disregard” for preventive measures.

Lebanon recorded 135 confirmed cases on Monday, fewer than the 175 announced on Saturday, which was the highest daily total since February.

Defence minister Zeina Aker announced on Sunday that her daughter had tested positive.

Despite the lockdown, newly married Lebanese couples, pictured, have been posing in the ruins of the Temple of Bacchus at the historic site of Baalbek.

NZ investigates traveller testing positive in S Korea

New Zealand said it would assist South Korea in identifying the circumstances of a coronavirus-positive traveller who flew from Auckland to Incheon on July 21-22.

The traveller has no symptoms but returned a positive test on arrival, the New Zealand health ministry said on Tuesday.

South Korean authorities suspect the traveller was infected during a transit stop at Singapore’s Changi airport.

“However other causes, including infection in New Zealand, can’t be ruled out at this stage,” the ministry said.

New Zealand authorities said a spate of mild weather this week is contributing to unusually low levels of people with flu-like symptoms and respiratory issues.

But they encouraged people who suspect they have symptoms to undergo a test. “Testing remains an important part of our overall strategy to detect any community cases of Covid-19 as quickly as possible,” said a ministry statement.

Xinjiang Covid-19 outbreak climbs above 200 cases

Xinjiang, a region in western China, reported 57 new Covid-19 cases to the end of the Monday, its highest one-day tally since an outbreak was reported there two weeks ago.

The new cases, which were all found in the capital Urumqi, take the total number of Covid-19 cases in the region to 235 since July 16.

A further 18 people tested positive for the virus but showed no symptoms, meaning they are not counted in the official tally.

A separate outbreak in the north-east province of Liaoning also grew with a further 6 cases of Covid-19, taking its total over the past week to 45

Almost 1.7m people in the port city of Dalian have been tested for coronavirus, according to state media after officials announced a plan to test all of the city’s 6m residents.

Beijing reported one new case of Covid-19, which it said was linked to the Dalian outbreak.

The Chinese capital had recorded 21 days of no new local Covid-19 cases on Monday following an outbreak at a wholesale food market in early June.

An additional four imported cases take China’s overall total for Covid-19 to 83,959.

Gold prices march to new record high as Asia stocks gain

Stocks in Asia-Pacific opened broadly higher on Tuesday after concerns over the US economic recovery from the pandemic sent the dollar to a two-year low and gold hit a record high.

The Kospi in South Korea added 1.3 per cent, Australia’s S&P/ASX 200 rose 0.8 per cent, while the Topix in Japan dipped 0.1 per cent. S&P 500 futures gained 0.2 per cent.

Outbreaks of coronavirus and resulting shutdowns in the US have prompted concerns over the country’s recovery from the pandemic, while Washington-Beijing tensions have also dented sentiment.

Senate Republicans have unveiled a White House-backed $1tn stimulus package which cuts emergency unemployment benefits by two-thirds.

Gold prices continued to march higher, rising 1.1 per cent to a record high of $1,961 per troy ounce. The dollar index, a measure of the greenback against a basket of currencies was hovering at its lowest since June 2018.

Overnight on Wall Street, the S&P 500 closed up 0.7 per cent and the Nasdaq composite added 1.8 per cent ahead of earnings from Apple, Facebook and Google parent Alphabet.

US sunbelt states show signs of slowing infections

Peter Wells in New York

The recent surge in coronavirus across the US sunbelt is showing tentative signs of slowing, even as the spread remains at sustained levels compared with a few months ago.

Florida on Monday had its smallest increase in cases — fewer than 9,000 — for the first time in nearly three weeks and California and Arizona both reported the fewest number of new infections in about a week.

These smaller increases may be the nascent sign of a more encouraging trend in US coronavirus data, even though last week the national total of cases since the pandemic began topped 4m and overall infections in California and Florida separately overtook New York’s caseload.

Seven-day averages for new cases in a number of hard-hit states such as Florida, Texas and Arizona are now below longer-term measures of infection: a potential sign record daily increases are behind them.

In the north-east, the seven-day average of new cases in the US, of 66,158 a day, on Sunday fell below the 14-day average of new cases for the first time since June 13, according to Financial Times analysis of the most recent data from Covid Tracking Project.

In mid-June, the seven-day average was just over 21,000. Florida reported 8,892 new cases on Monday, the fewest since July 7, which brought its seven-day average to a two-week low of 10,336 a day and back from a record 11,870 on July 17.

Texas has seen its seven-day average remain below its 14-day average for three straight days as of Sunday. The state on Monday confirmed a further 1,813 coronavirus cases, the fewest in a week.

NYC seeks to restart courts for gun crime trials

New York City hopes to reopen its courthouses from August 10, as residents have been unnerved by an apparent surge in violent crime after the pandemic froze the city’s justice system.

“A striking reality [is] that there’s a huge backlog when it comes to cases involving violent crime,” mayor Bill de Blasio said on Monday. “Only 50 per cent of firearms charges have even gotten to the point of indictment.”

He said he had written to the city’s five district attorneys and chief judge, asking to restart the judicial system.

He expected grand juries to reconvene from August 10. “Our courts not only need to reopen, they need to reopen fully as quickly as possible,” the mayor said.

New York City experienced 15 shootings on July 26, including seven murders. There were 47 gun-related violent incidents recorded in the past week, compared with 17 a year earlier.

Republicans $1tn stimulus plan cuts jobless benefits

James Politi in Washington

Senate Republicans set the stage on Monday for a clash with congressional Democrats by unveiling a White House-backed plan for $1tn in new stimulus that would cut emergency unemployment benefits by two-thirds.

The move on the coronavirus relief package came after weeks of hesitation by party conservatives wary of more government spending. It reflects rising concern among Donald Trump’s allies about the deterioration in US economic prospects fewer than 100 days before the November election.

Democrats in the House of Representatives, who approved $3tn in additional government aid for the economy two months ago, said the Republican proposal fell short of what is needed as the recovery faces new setbacks due to surging Covid-19 cases in many states.

Republicans have argued that the Democratic bill discourages work by maintaining emergency jobless benefits at $600 a week. Under the Senate plan, enhanced unemployment insurance would be continued — but at just $200 a week in September. From October, workers would receive 70 per cent of previous wages.

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South Africa secures $4.3bn emergency IMF loan

Joseph Cotterill in Johannesburg

South Africa was on Monday granted a $4.3bn loan from the IMF, the single biggest allocation of emergency financing from the fund yet for a pandemic-hit country.

The most industrialised country on the continent has reported about 450,000 of the continent’s 850,000 cases to date.

It has Africa’s biggest testing regime but the health system has come under severe strain from surges in the biggest cities, particularly Johannesburg.

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Covid-19 impact on GDP to last for years, says Fitch

The impact of the 2020 coronavirus recession on gross domestic product will continue to be felt for years to come, with GDP levels in the largest advanced economies expected to remain 3-4 per cent below their pre-virus trend path by the middle of this decade, according to the Fitch Ratings agency.

“There will be lasting damage to supply-side productive potential from the coronavirus shock as long-term unemployment rises, working hours fall and investment and capital accumulation slow,” Maxime Darmet, a director of Fitch’s economics team said at the report’s release on Monday.

“Repeated waves of new infections and renewed nationwide lockdowns could see a very sluggish recovery, while medical breakthroughs could result in a rapid normalisation of economic activity,” the report notes.

Fitch revised its outlook for 10 advanced countries for 2020 to 2025 with US productive potential growth now 1.4 per cent instead of 1.9 per cent. UK growth is now estimated at 0.9 per cent (formerly 1.6 per cent) and the eurozone 0.7 per cent, down from 1.2 per cent.

“The level of supply-side productive capacity by 2025 will be around 3-4 percentage points below that implied by our pre-virus projections of potential GDP,” said Fitch chief economist Brian Coulton.

US FDA adds 87 hand sanitisers to banned list

The US Food and Drug Administration on Monday added 87 more brands of hand sanitiser to its list of banned products, due to levels of methanol which can be toxic when absorbed through the skin.

The agency said it was working with manufacturers to recall products and encouraging retailers to remove products from store shelves and online marketplaces.

The FDA said it had sent a warning letter to a Mexican producer, Guadalajara-based Eskbiochem, stating that some of its ClearCare range of sanitisers did not meet US standards. “These products are adulterated” with methanol, it said.

Methanol, the agency said, “is not an acceptable ingredient for hand sanitisers and should not be used due to its toxic effects”.

Skin exposure can cause dermatitis, nausea, vomiting, headache, blurred vision, permanent blindness, seizures, coma, permanent damage to the nervous system, or death.

Methanol is a poisoning risk for children as well as adults who drink it as an alcoholic ethanol substitute, the FDA noted.

Moderna begins third-phase trial for potential vaccine

Hannah Kuchler in New York

Moderna has kicked off its largest clinical trial for its potential Covid-19 vaccine, dosing the first of 30,000 participants.

Shares in the Boston-based biotech rose 8 per cent in pre-market trading after it said it had begun the phase three trial, which is usually the last before a vaccine is submitted for regulatory approval.

The trial is being conducted in conjunction with the US National Institutes of Health at sites across the US.

Francis Collins, the NIH director, said having a vaccine by the end of 2020 was a “stretch goal” but the “right goal for the American people”.

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Robert O’Brien, US president Donald Trump’s national security adviser, has tested positive for coronavirus, making him the highest ranking official in the White House to contract the disease. “He has mild symptoms and has been self-isolating and working from a secure location off-site. There is no risk of exposure to the president or the vice president,” the White House said in a statement.

Belgium has announced new limits on social contact as the country reports a surge in new Covid-19 cases. Prime minister Sophie Wilmès announced a restriction in the “social bubble” of contact to five people per household from Wednesday for the next four weeks. This is a reduction of 15 new people a week that has been in place since late June as the country had gradually lifted its confinement measures.

Kenya has extended a nationwide dusk-to-dawn curfew for another 30 days as coronavirus cases have rocketed. President Uhuru Kenyatta said on Monday that police will continue to enforce anti-coronavirus orders as he further decried the aggressive surge of infections among Kenya’s young population. His remarks come amid complaints of police brutality in enforcing coronavirus restrictions.

Greece is poised to ban traditional August festivals around the country because of fears that overcrowding in village streets and squares could cause a rapid upsurge in coronavirus cases. New coronavirus cases have edged up this month with more infections recorded in Athens as well as in Thessaloniki, where protests have been held against Turkey converting the Hagia Sophia museum into a mosque, pictured.

Wall Street advanced on Monday driven by tech stocks and expectations for further stimulus. The S&P 500 rose 0.7 per cent led by technology and materials sectors. The Nasdaq Composite rose 1.7 per cent. Gold climbed more than 2 per cent in intraday trading on Monday to a record high of $1,945.16 a troy ounce before slightly trimming gains as the US dollar dropped.

A coronavirus outbreak among one of its teams forced US Major League Baseball to postpone two games on Monday, leaving the future of the sport’s season in the balance less than a week after beginning play. MLB said it is postponing games between the Baltimore Orioles and Miami Marlins, and between the New York Yankees and Philadelphia Phillies, amid reports of an outbreak in the Florida team.

Google has told its workers around the world that most will not need to come back to the office until at least next July. The biggest US tech companies were the first to send workers home when the pandemic struck and among the first to delay their return-to-work dates until next year. Facebook chief Mark Zuckerberg has said he expects half of his company’s employees to work remotely a decade from now.

LVMH, the world’s biggest luxury group, slashed spending on store leases, hiring, and advertising to cope with the Covid-19 pandemic yet saw operating profit dive by 68 per cent in the first half of the year. The group, controlled by billionaire Bernard Arnault, delivered a weaker-than-expected operating profit of €1.67bn and an operating margin of 9 per cent as stores closed and travel curbs bit into business.

Trump attempts shift in tone on gloomy election polls


With just over three months to go until November’s presidential election, Donald Trump is trying a new tactic: humility.

With more and more national opinion polls giving Joe Biden, the presumptive Democratic presidential nominee, a widening lead over Mr Trump, the president returned to the White House podium last week for his first coronavirus press briefing in nearly three months with a markedly different tone.

Mr Trump, who has repeatedly downplayed the severity of Covid-19, said on Tuesday that the outbreak, which has already killed more than 140,000 Americans, would “get worse before it gets better”, and encouraged people to wear face masks if they were unable to socially distance.

Two days later, the president said Republicans had scrapped plans for a big convention in Jacksonville, Florida, saying the timing was “just not right . . . There is nothing more important in our country than keeping our people safe.”

Mr Trump continued to strike a more reflective note in the days that followed, even saying in one interview that he “too often” regrets his outbursts on Twitter.

Political analysts say the shift is a direct response to the president’s faltering standing in the opinion polls, both nationwide and in key battleground states such as Florida, which has been hit particularly hard by Covid-19.

“A great many people in the White House know what is expected of a president during the most serious pandemic in the last century,” said Whit Ayres, a Republican pollster. “They would dearly love for the president to provide the kind of leadership that a number of governors of both parties around the nation have provided.”

Ford O’Connell, a Republican strategist who is close to the Trump campaign, said the White House “wants to make the case that [the president] is leading the charge to combat the coronavirus and save American lives”.

“It is all about being front and centre on the coronavirus,” Mr O’Connell said. “If President Trump continues to make coronavirus briefings as he did this week, where he is succinct, realistic and informative . . . not only will the key voters he needs come home to him . . . but many other voters will be far more receptive to his messages concerning Biden.”

Mr Biden, the former vice-president, leads Mr Trump nationally by a nearly nine-point margin, according to the Real Clear Politics average. A Quinnipiac poll published on Thursday showed Mr Biden up in Florida, a crucial swing state won by 13 of the last 14 presidential election victors, by a sizeable 13 points.

Line chart showing how Trump and Biden are doing in the US national polls

“Right now, this election is Joe Biden’s to lose. Period,” said Doug Heye, a Republican strategist. “As the news has become worse and worse, it is much harder for this administration to combat that.”

But top Trump advisers insist the president has a clear path to victory in November. Bill Stepien, an experienced political operative who took the reins of Mr Trump’s re-election campaign earlier this month, told reporters on Friday that polls and “experts” could not be trusted.

“Six months ago, the experts, pundits, people on cable TV, they all thought that Donald J Trump was on a glide path to re-election,” said Mr Stepien, a former senior aide to ex-New Jersey governor Chris Christie. “Today, the same people are saying the same thing about Joe Biden.”

“Neither was, or is, true,” Mr Stepien said. “This will be a knockdown, drag-out fight to the very end.”

The president has struggled in the polls for months, and trailed Mr Biden in a head-to-head matchup since before it became clear that the former vice-president would be his party’s nominee. But Mr Trump’s standing has fallen further in recent weeks, with more Americans objecting to his handling of the public health crisis and economic fallout, as well as the civil unrest following the killing of George Floyd.

Mr Trump promoted Mr Stepien less than two weeks ago, after demoting Brad Parscale following a June re-election rally in Tulsa, Oklahoma, that had been intended to revitalise his already flagging campaign. Some 6,200 supporters attended, even after Mr Parscale had boasted that more than 1m people had been interested in tickets. Mr Trump won Oklahoma in 2016 by an overwhelming 36 points over Hillary Clinton.

Mr Stepien said on Friday that the Trump campaign had a “quiet confidence” that the president would build on his success in 2016, retaining the states of Pennsylvania, Wisconsin and Michigan and gaining states like Minnesota, Maine, New Hampshire and Nevada, which Mrs Clinton won by a small margin.

He said national polls over-represented large, Democratic-leaning states that would not change the Electoral College outcome, such as New York and California, and undercounted registered Republicans.

He also dismissed suggestions that the president could lose in states such as Texas and Arizona, which have long been Republican strongholds but are now widely seen as within striking distance for Democrats.

“We already know where the votes are. We have already identified the voters, we have already turned them out, we have already talked to them,” Mr Stepien said. “We have just got do it again, and that is a whole lot easier than doing it for the first time.”

But many in Washington remain sceptical that Mr Trump will be able to maintain his new demeanour — and say the president still faces a significant uphill battle if he is going to defeat Mr Biden in November.

Mr Trump has not completely abandoned his unorthodox approach. He told a reporter on Tuesday that he wished Ghislaine Maxwell “well”. The British socialite is currently in federal prison awaiting trial on charges that she helped Jeffrey Epstein sexually abuse underage girls. And he has doubled down on his “law and order” message by sending federal troops into Portland, Oregon, and threatening to do the same in other cities.

“We have spent four years saying that Trump can’t pivot, and in fact, it looks like he can,” said Republican strategist Mr Heye. “We’ll see for how long.”

Coronavirus latest: US oil recovery stalls amid weaker fuel demand


Christine Lagarde says women leaders outperformed in pandemic

Martin Arnold in Frankfurt

Women leaders have outperformed in the pandemic, European Central Bank president Christine Lagarde said, citing the better communication and decision-making by female heads of state in Germany, Taiwan, Belgium and New Zealand.

“Women tend to do a better job,” said Ms Lagarde. “It’s quite fascinating actually, when you look at those countries that were led by women and the path they took and the policies they adopted and the communication style that was in play was quite stunning.”

Speaking on a video interview with the Washington Post on Wednesday, Ms Lagarde praised the way that German chancellor Angela Merkel had handled the pandemic, breaking with the tradition that the ECB president avoids singling out particular countries or leaders.

“When I look at what Chancellor Merkel has done here, she very, very transparently shared data, numbers, casualties and rate of contaminations and so on,” said the ECB president, after saying she was speaking in a personal capacity rather than as a central banker.

Ms Lagarde — whose appointment to the ECB last year was instigated in a deal struck by the German chancellor — said women leaders were better at expressing the “caring dimension” and “that was something that was considered by viewers and votes as well as authentic”.

“I was also thinking of those other leaders around the world — you look at the leader in Taiwan, in Belgium in New Zealand — many of those leaders, prime ministers or presidents have also communicated well and carried the water of bad news as well as the water of clear explanation and strong recommendations.”

Asked whether she feared the eurozone could suffer a double-dip recession in a “W-style” recovery, Ms Lagarde said this was unlikely unless there was a major second wave of coronavirus infections that forced national lockdowns to be reimposed. She added that the recovery would be “uneven” and that data seen so far indicated that the ECB’s baseline projection for an 8.7 per cent decline in the eurozone economy was “probably in the right place”.

Catalonia reports 721 new cases as region contends with outbreak

Ian Mount in Madrid

Catalonia reported an additional 721 cases of Covid-19 Wednesday, as the region in northeastern Spain fought to contain the country’s two largest outbreaks. Almost three-quarters of the new cases were in the Barcelona metropolitan area.

The number of new cases are in line with those of recent days.

The Generalitat — Catalonia’s regional government — has been fighting growing outbreaks both around Barcelona and in Segrià, an agricultural region of 200,000 people that includes the provincial capital of Lleida, where a limited outbreak in slaughterhouse and fruit-picking workers has expanded in the broader population.

Last week, the Generalitat last week decreed new restrictions in Segrià, including prohibitions on non-essential travel between some towns, meetings of more than 10 people, and restaurant table service. Similar restrictions on meetings were put in place in the Barcelona metropolitan area.

National health minister Salvador Illa said on Wednesday that Spain had 224 active outbreaks — that is, a group of three or more linked cases — encompassing 2,622 cases overall. “The majority are linked to the fruit harvest, family activities or nightlife,” he told Spanish parliament.

On Tuesday, the Generalitat’s new secretary of public health, Josep Maria Argimon announced that the regional health service would hire 500 new case trackers and could triple daily coronavirus testing rates — the region runs an average of 8,000 tests daily but has a capacity of 24,000 — as it increases testing of close contacts of known cases.

US oil recovery stalls amid weaker fuel demand

Derek Brower in London

US crude stockpiles rose unexpectedly last week and fuel demand dropped sharply, as mounting coronavirus cases and renewed shutdowns in some states stalled a recovery in the country’s oil market.

Commercial stocks of crude oil rose to almost 540m barrels, up less than 1 per cent but bucking the trend of falling inventories in recent weeks, according to data released on Wednesday by the federal Energy Information Administration.

Products supplied to the market — the EIA’s measurement of domestic fuel demand — dropped by more than 800,000 barrels a day compared with a week earlier, to 17.7m b/d. The four-week average of demand shows it down by 15 per cent compared with last year. Petrol demand fell by almost 100,000 b/d last week, to 8.6m b/d.

Crude imports rose by almost 400,000 b/d to 5.9m b/d, reflecting the fall in US supply triggered by the oil-price crash. Shipments from Saudi Arabia, which had hit a high of almost 1.6m b/d in May as an armada of oil tankers sent during the country’s springtime price war arrived in the US, fell sharply. At less than 500,000 b/d last week, Saudi imports are now back within longer-term historical range, marking the end of the kingdom’s export surge to the US.

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US existing home sales jump by most on record in June

Sales of previously owned homes rebounded by the most on record in June following three consecutive months of declines as coronavirus lockdowns weighed on housing activity during the key spring selling season.

US existing home sales climbed 20.7 per cent to an annualised pace of 4.72m last month, the National Association of Realtors said. That was shy of economists’ expectations for a 24.5 per cent rise to 4.78m units. However, sales remained down 11.3 per cent from a year ago.

Each of the four major regions saw sales grow on a month-over-month basis, led by the west.

“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” said Lawrence Yun, chief economist at NAR. “This revitalisation looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”

Record low mortgage rates have helped fuel the recovery in the US housing market, with the average interest rate on a 30-year fixed-rate mortgage falling below 3 per cent for the first time ever, mortgage finance company Freddie Mac said last week.

Moreover, economists have noted the coroanvirus crisis has largely affected younger renters as opposed to would-be homebuyers.

Indeed, Mr Yun said home prices climbed during the coronavirus lockdowns “and could rise even further due to heavy buyer competition and a significant shortage of supply.”

US stocks buck European trend as S&P 500 and Nasdaq rise

US stocks bucked moves from their counterparts elsewhere after a busy European morning when an escalation in the diplomatic row between China and the US prompted the renminbi to strengthen against the dollar.

The S&P 500 gained 0.3 per cent soon after Wall Street opened. The technology-heavy Nasdaq followed suit as its buoyant mood helped it skirt round a record close struck this week, putting its advance for the year at almost 20 per cent.

Meanwhile, in Europe the region-wide benchmark index shed about 1 per cent. That places the Stoxx Europe 600 on course to break a three-session winning streak.

President Donald Trump added to Covid-19 gloom when he said on Tuesday that the tally of coronavirus cases in the US would “get worse before it gets better”, a comment taken as an acceptance on his part of the severity of the pandemic that he previously said would “just disappear”.

The dollar pushed above 7 against the Chinese currency after the US asked Beijing to shut its consulate in Houston and local media reports showed what appeared to be consulate staff burning documents. The renminbi later trimmed those gains to break back below 7 to a dollar.

Beijing immediately condemned President Trump’s move and warned it would retaliate unless the US rethought its decision.

“This is an escalation of degree rather than of kind,” said Tom Holland from Gavekal in Hong Kong. “Senior US administration officials have been getting increasingly more open and active in their criticisms of China.”

This week’s visit to London by Mike Pompeo, the US secretary of state, was among a number of factors that appeared to be aimed at marshalling support for the US stance against Beijing, Mr Holland added.

Baker Hughes prepares for continued ructions in oil and gas sector

Myles McCormick in London

US oilfield services group Baker Hughes said it was battening down the hatches in anticipation of a fresh surge in coronavirus cases that could prompt renewed lockdowns and leave activity in the sector depressed for the rest of the year.

The group — whose revenues slid by a fifth in the second quarter — said that while the worst of the economic blow from Covid-19 had likely passed it was continuing to slash costs as it prepared for the volatility in the oil and gas industry to last through to the end of the year.

“Although the majority of lockdowns have been easing globally and economic activity likely troughed during the second quarter, visibility on the economic outlook remains extremely limited,” said chief executive Lorenzo Simonelli. He added:

More specifically, the risk of a second wave of virus cases, the reinstitution of select lockdowns, and the risk of lingering high unemployment creates an uncertain economic environment that likely persists through the rest of 2020.

Mr Simonelli’s comments came as the group reported revenues of $4.7bn for the three months to June, down 20 per cent on last year. It recorded a net loss of $201m compared with a loss of $9m in the same period in 2019.

The figures were broadly in line with the expectations of analysts. Shares were unmoved in pre-market trading.

Free cashflow and adjusted operating income — non-GAAP measures closely watched by the sector — were down 82 per cent and 71 per cent respectively, compared with last year, underlining the extent of the slump in services activity.

Oilfield services groups, which do everything from drilling wells to installing pipes for producers, have been the worst hit by the crash in the oil market, accounting for the majority of the layoffs in the sector.

US oil prices plunged into negative territory in April causing activity in the sector to seize up. They have since bounced back, but at about $40 a barrel they remain too low for most companies to return to drilling.

US strikes $2bn deal to secure vaccine supply

Joe Miller in Frankfurt and Clive Cookson in London

The Trump administration has committed to spend $1.95bn on 100m doses of a potential Covid-19 vaccine being developed by Germany’s BioNTech and US pharma group Pfizer, which will be distributed free of charge to American citizens.

The first large-scale supply agreement signed by the White House also includes the option for the US government to purchase a further 500m doses.

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Melrose shares tumble 20% as pandemic wreaks havoc on business

Michael Pooler

Melrose Industries’ share price sank by one-fifth after the FTSE 100 buyout specialist revealed the extent of the damage wrought on its automotive and aerospace components businesses by the Covid-19 pandemic. 

The London-headquartered company, which acquired car and aircraft parts maker GKN in a £8bn hostile takeover more than two years ago, said it was seeking further cost savings involving job cuts following a 27 per cent slump in revenues during the first six months of 2020. 

After falling into losses in the second quarter of the year, Melrose said in a trading update on Wednesday that it had rebounded to breakeven on an adjusted operating profit basis in June as the recovery began to take hold.

Analysts welcomed the company’s free cash flow, which was about £200m before restructuring costs and an acquisition. This reduced net debt, which stood at £3.28bn at the end of 2019, by about £90m.

However, investor worries about the size of the blow from coronavirus became evident as the stock dropped 20 per cent to 95.6p, giving a market capitalisation of £4.86bn. 

“It is clear that our, and consensus, expectations on the impact of Covid-19 were too optimistic,” wrote house broker JPMorgan, which slashed its annual earnings forecast for Melrose by almost two-fifths.

Gold advances to nine-year peak as dollar and yields weaken

Harry Dempsey in London

Gold pushed higher to hold fast a nine-year high as the dollar slides and real yields from bond investments hit rock bottom.

The price of the precious metal rose 0.7 per cent to $1,854 a troy ounce on Tuesday, its highest level since September 2011 and accelerating gains since mid-March to 26 per cent.

The US currency has fallen about 5 per cent against a basket of currencies since mid-May as concerns grow about the economic recovery. The coronavirus pandemic has escalated its spread through the world’s largest economy while investors flocked to the euro as EU leaders agreed on a stimulus package.

Rising precious metal prices come as the real yield on 10-year Treasury bond fell to a low of -0.87 per cent at market close on Tuesday, analysts at MUFG said. Bond yields move inversely to the price.

Investors are looking for real assets that store value, said Nadège Dufossé, head of cross-asset strategy at Candriam, as governments expand budget deficits helped by central banks lowering interest rates and purchasing bonds.

“The bond part is no longer a good hedge for the equity part. Everything is very expensive, cash is not bringing any return,” she said. “Investors have to reconsider traditional allocations so adding gold can be a good idea.”

Bernard Dahdah, senior commodities analyst at Natixis, said that the prospect of another economic contraction in Europe as furlough schemes are removed and the disparity between production and consumption in China added to the bullish mood.

Some strategists said that gold would need a further tranche of support to break through its all-time high of $1,920 a troy ounce.

Any decision by China to peg its currency to the metal and reduce reliance on the dollar could fuel demand for gold.

“Having secured control over Hong Kong, I believe that China will fairly soon move to offer a gold-renminbi exchange standard,” said Charles Gave, founding partner at Gavekal Research. “A tactical question for China is whether it holds fire on this plan until the effect of western economies monetizing huge deficits plays out.”

Silver prices extended its gains to sustain a six-year high. They added 1.5 per cent at $21.64 an ounce, as hopes of a recovery from the pandemic and loose monetary policy lift demand.

Global stocks slide as US and China clash over diplomacy

Sarah Provan in London and Hudson Lockett in Hong Kong

Global stocks stumbled and the renminbi retreated after diplomatic tension escalated between the US and China.

The renminbi retreated 0.4 per cent to above 7.0107 a dollar in trading within mainland China, and by almost 0.6 per cent on foreign trading hubs where it is allowed to fluctuate more freely. It earlier had hovered around a four-month high. The onshore and offshore rates climbed back above 7 a dollar.

The US requested China to close its consulate in Houston, heightening the dispute between the world’s biggest economies. Beijing “strongly condemned” the request on Wednesday, with the foreign ministry urging Washington to rethink its decision. Neither Beijing nor Washington offered an explanation for the closure of the consulate.

Ken Cheung, chief Asian foreign exchange strategist at Mizuho Bank, said the swerve past the Rmb7-per-dollar threshold reflected a sudden spike in investor concerns over US-China relations in the wake of a “quite strong” response from China’s foreign ministry to the Houston consulate eviction.

“This kind of [development] involves a lot of uncertainty”, he added, noting that markets appeared to be pulling back from harsher bets against the Chinese currency as they await more details on the situation.

Other global assets took some heat from the row between the superpowers. Europe’s Stoxx 600 fell 1 per cent by mid-morning on Wednesday, easing off a four-month high. US stock futures mirrored the decline to an extent as S&P 500 futures fell 0.5 per cent away. In London, the FTSE 100 took a 0.7 per cent hit, while Frankfurt’s Dax index retreated from wiping out its losses for the year with a 0.5 per cent drop.

Mainland China’s CSI 300 of Shanghai and Shenzhen-listed shares was the one exception among Asian stocks as it earlier closed 0.5 per cent higher. The index has risen 15 per cent this year.

DMGT delays major oil and gas event for a year

Media and conferences group DMGT has postponed its major oil and gas event ADIPEC, due to be held in Abu Dhabi, for a year.

ADIPEC, which DMGT calls the world’s largest oil and gas event, was scheduled to be held in November but will now not go ahead until November 2021, the group said.

“This is despite strong bookings for the event and is in compliance with a directive from Abu Dhabi’s Department of Culture and Tourism that extends a ban on all events in the emirate,” DMGT announced on Wednesday.

Conference businesses have been trying, during the pandemic, to move their events online to retain delegates, speakers and brand recognition. But DMGT said this would be mostly impossible for ADIPEC because of its large size.

It is in the best interests of all parties that DMG events runs well-attended shows. The ADIPEC exhibition usually hosts thousands of exhibitors from around the world, featuring over 40,000 products and services, and is of a scale that makes it impossible to successfully virtualise.

DMGT will however move some events associated with ADIPEC, such as awards and conference programmes, online in November this year.

“They are not expected to generate significant revenues” DMGT cautioned.

The group said its insurance policies would mostly cover losses that amount from postponing ADIPEC, although about £3m of costs would still be incurred.

Iran warns outbreak to worsen in coming months

Monavar Khalaj

Iran’s President Hassan Rouhani warned the coronavirus pandemic will worsen in the coming months as the country’s fatality count has continued rising.

“Our scientific predictions estimate more hospitalisations in the coming months compared to the previous months,” said Mr Rouhani on Wednesday in the weekly cabinet session. “We must get medically ready as our estimates show the burden of this illness will get heavier.”

He urged Iranians to change their lifestyle and hold off on mourning or wedding ceremonies for now should they want to overcome the Covid-19 pandemic in the country.

Kianush Jahanpur, a senior official at Iran’s health ministry, on Wednesday urged people to take preventive measures notably a fresh campaign to wear face masks more seriously.

“If this campaign fails to form a broad public participation, the figures of casualties could multiply within the next two months and the country would face a human crisis regarding the coronavirus” in November, he said.

The death toll reached 14,853 in total on Wednesday out of 281,413 individuals who tested positive, making Iran the worst-hit country in the Middle East in terms of fatalities.

German drug group Evotec wins $18m contract from US government

Anna Gross in London

German drug discovery company Evotec Biologics has been awarded an $18.2m contract by the US government to supply lab-produced antibodies to treat Covid-19, the company announced on Tuesday.

The US Department of Defense has asked the company’s Seattle subsidiary to provide monoclonal antibodies – antibodies that are made by identical immune cells cloned from a parent cell – which will be used to develop treatments for Covid-19.

Evotec said it will design a highly efficient process to manufacture monoclonal antibodies that target the Sars-Cov-2 virus.

The company’s share price rose almost 5 per cent towards a one-month high in early trading on Wednesday.

“It is an honour to be working with the Department of Defense on this important and time-critical programme,” said James Thomas, executive vice president at Evotec Biologics. “The response to Covid-19 requires the application of rapid, flexible, scalable and robust development and manufacturing technologies.”

European corporate news round-up

Kingfisher, the owner of B&Q, reported a 21.6 per cent rise in like-for-like sales in its second quarter to date, as consumers bought goods to help them spruce up their homes during the lockdowns. The outlook for the remainder of the year was upbeat due to the “strong demand for home improvement”, it said.

Swiss engineering group ABB reported earnings slipping by a fifth to $651m, ahead of expectations thanks in part to improved margins in its motors, drives and transmissions business unit.

Soft drinks producer Britvic reported a 16.3 per cent decline in revenues to £328.9m in its fiscal third quarter, as out-of-home consumption of drinks sank with coronavirus restrictions in place. It kept guidance for a £12-18m hit to adjusted earnings before interest and tax per month, as the outlook remained uncertain despite restaurants, bars and pubs reopening.

Antofagasta, the south American copper miner, said that production would come in at the lower end of its guidance to output 725-755,000 tonnes of the industrial metal, even as only two-thirds of its workforce are working on site.

Bus operator Stagecoach said that it expects a “lasting effect” of Covid-19 on travel patterns, as its revenues fell by a quarter to £1.41bn and earnings dropped to 13.5p per share from 19.3p in its financial year to May.

European stock futures decline as Covid-19 sentiment darkens

Stock futures in Europe fell while global equities stalled, as persistent fears over the worsening coronavirus caseload in the US and the effects on the economy darkened sentiment while any initial exuberance from Europe’s coronavirus recovery plans waned.

Futures shadowing Europe’s Stoxx 600 dropped 0.4 per cent while those for the FTSE 100 shed 0.2 per cent. The European index closed at the four-month high of 376.7 points on Tuesday. It was last at this height in early March just as the continent was imposing lockdown restrictions to stem the spread of Covid-19.

US and European stocks were initially boosted by EU agreement on a €750bn recovery fund and the pledge that the Republican leader in the US Senate would back more direct payments to American families, raising hopes of further fiscal stimulus.

President Donald Trump’s warned the US coronavirus outbreak is likely to worsen. Mr Trump said late on Tuesday that the surge in Covid-19 cases in the US would “get worse before it gets better”, in what investors interpreted as a change in the president’s view on the severity of the outbreak. Infections in California surpassed 400,000 while caseloads in other sunbelt states have spiked in recent weeks.

In London, meanwhile, the UK government has given up any hopes of tying up a US-UK trade deal before the US presidential election in November. Prime minister Boris Johnson had pinned his hopes on a fast-track agreement by late summer.

South Korea pulls back on stock market capital gains tax plan

Song Jung-a in Seoul

South Korea has scaled back its plan to impose capital gains taxes on stock investments after President Moon Jae-in stressed the need to prop up the stock market battered by the coronavirus pandemic.

The finance ministry on Wednesday proposed taxes of up to 25 per cent on annual capital gains of more than Won50m ($42,000) a year for retail investors from 2023. The government planned in June to impose the taxes on capital gains exceeding Won20m.

The revised tax code is aimed at “overcoming the economic crisis quickly,” finance minister Hong Nam-ki said on Wednesday, as the worsening pandemic pummels growth in Asia’s fourth-largest economy.

Under the latest proposal, the government plans to cut stock transaction taxes gradually from 0.25 per cent to 0.15 per cent by 2023.

The government is keen to channel abundant liquidity into the stock market from the red-hot property market amid record-low interest rates.

Local retail investors have poured a record Won30tn into the local stock market in the first half of this year to boost the benchmark Kospi composite index up more than 50 per cent from a trough in March.

The revised capital gains tax proposal will affect 150,000 investors, or the top 2.5 per cent of all stock investors, according to the ministry.

EU pandemic package stokes rule-of-law dispute

Michael Peel in Brussels, Valerie Hopkins in Budapest, Guy Chazan in Berlin and James Shotter in Warsaw

Hungary’s prime minister, Viktor Orban, hailed a big win after EU leaders emerged from four days of gruelling talks with a deal for a €750bn coronavirus recovery package.

Mr Orban insisted he had won a “huge victory” by stopping an effort to make cash handouts dependent on good governance, thwarting those who view him as an authoritarian menace.

While his take is disputed by others in the EU, the compromise struck in the early hours of Tuesday has left open the question of whether the 27-country bloc has the appetite or tools to take on those member states accused of sliding into autocracy.

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Oil industry scales back exploration worldwide

Anjli Raval in London

Oil exploration is an expensive and risky business that can take years and billions of dollars of investment. As cost pressures mount and demands on companies to act on climate change grow, this segment of the industry is coming under intense scrutiny.

Once the most glamorous aspect of the oil business, exploration is now one of its most controversial. Environmentalists and some activist investors — especially in Europe — are pushing oil companies to shrink their legacy fossil fuel businesses, stop their search for new acreage and focus instead on lower-carbon technologies and alternative sources of energy.

That was the case before coronavirus sent the global economy into its worst crisis since the Depression, with the industry now wondering what the pandemic’s longer-term impact on oil demand — which stood at close to 100m barrels a day last year — will be.

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Global stocks fall after Trump warns on US virus outbreak

Daniel Shane in Hong Kong

Global stocks stalled with sentiment darkened by US President Donald Trump’s warning that the country’s coronavirus outbreak is likely to worsen.

Japan’s Topix index slipped 0.4 per cent in early Asia-Pacific trading on Wednesday, while Australia’s S&P/ASX 200 fell 1.2 per cent. Hong Kong’s Hang Seng was off 0.2 per cent.

Mr Trump said late on Tuesday that the surge in Covid-19 cases in the US would “get worse before it gets better”, in what investors interpreted as a change in the president’s view on the severity of the outbreak.

California confirmed that infections in the state had surpassed 400,000 while caseloads in other sunbelt states have spiked in recent weeks.

US and European stocks were initially boosted by news that EU leaders had agreed a €750bn recovery fund and that the Republican leader in the US Senate would back a new round of direct payments to American families, raising hopes of further fiscal stimulus.

Wall Street’s S&P 500 closed up 0.2 per cent, notching its third day in a row of gains, led by energy and financial companies. Europe’s Stoxx 600 added 0.3 per cent.

Futures trading tipped the S&P 500 to gain 0.3 per cent when US trading begins later on Wednesday, while London’s FTSE 100 was set to fall 0.1 per cent.

The one exception in Asia was mainland China’s CSI 300 of Shanghai- and Shenzhen-listed shares, which gained 1.4 per cent. The onshore-traded renminbi strengthened as much as 0.2 per cent to 6.9657 per dollar, or about a four-month high.

Traders said Chinese shares had been boosted by an anticipated announcement later on Wednesday regarding the rebalancing of the benchmark Shanghai Composite, which is expected to make the index more technology-focused.

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Russia races for vaccine as Covid-19 nonchalance spreads

Henry Foy in Moscow

At a trendy wine and tapas bar in central Moscow, the official rules mean that customers are supposed to be kept 1.5 metres apart.

But each day, officials from the local city administration headquarters around the corner squeeze into tightly packed tables, and sit shoulder-to-shoulder for lunch.

“If they don’t follow the rules, then I guess nobody needs to,” says Anton, the head waiter, as he gestures to a veranda busy with people sipping white wine as dusk settles. He shrugs. He is the only person on the premises wearing a face mask.

Ever since the mayor of Russia’s capital hastily lifted coronavirus quarantine rules six weeks ago in order to allow President Vladimir Putin to conduct a national vote on a new constitution on July 1, Muscovites have taken that proclamation to heart.

Bars buzz with drinkers and rush hour metro trains are packed despite Moscow recording about 600 new Covid-19 infections daily out of about 6,000 nationwide.

The Kremlin is now pinning its hopes on a fast-tracked coronavirus vaccine as a means to stop the virus from continuing to spread through its population and inflicting further damage on its struggling economy.

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AIIB to lend Pakistan $250m to boost post-Covid-19 economy

The Asian Infrastructure Investment Bank has approved a $250m loan to Pakistan to “strengthen its response to the social and economic fallout” from the Covid-19 pandemic

The loan, financed jointly with the World Bank, will be used to “stimulate investment in human capital, expand social safety nets, improve the country’s emergency health infrastructure and foster economic growth”, the Beijing-based lender said in a statement.

“The pandemic has rapidly evolved in Pakistan and now threatens to undo many of the hard-won gains made in reducing poverty over the past two decades,” said Konstantin Limitovskiy, AIIB’s vice president of investment operations.

AIIB said it has approved $750m in loans and grants to Pakistan since the pandemic began.

Chicago’s sports teams in push to wear face masks

Chicago’s eight major-league sporting teams have joined forces to urge the wearing of masks, as the third-largest metropolis in the US fights a surge of new coronavirus infections.

The NFL’s Bears, NHL’s Blackhawks, NBA’s Bulls, the Cubs and White Sox baseball teams, Chicago Fire FC, and two women’s teams — the Red Stars in soccer and basketball’s Sky — launched a campaign on Tuesday aimed at promoting the wearing of masks among the city’s youth.

“We encourage Bears fans everywhere to continue wearing masks to best protect the health and safety of everyone,” said team president and chief executive Ted Phillips. “Together, we can fight this pandemic.”

Chicago has experienced a rise in cases to more than 200 a day over the past week. Mayor Lori Lightfoot on Monday tightened access and capacity restrictions on restaurants, bars and gyms, reversing earlier relaxations.

Since June 15, almost 30 per cent of new cases in Chicago have emerged in people aged 18 to 29.

Australia struggles to rein in latest Covid-19 surge

Jamie Smyth in Sydney

Australia is struggling to control a second wave of Covid-19 with the state of Victoria reporting a record 484 cases on Wednesday and infections spreading to more than 40 aged care homes.

The surge in cases in Melbourne — the nation’s second most populous city — has led to the re-imposition of strict social distancing rules and mandating the wearing of face masks in large parts of Victoria.

Several prisons were placed in strict lockdowns this week after a corrections officer tested positive for the virus and new restrictions placed on care home workers in a bid to halt the spread of Covid-19 in vulnerable settings.

Daniel Andrews, Victoria’s state premier, pictured, said the rapid spread of the virus was being enabled by the failure of people to follow rules and isolate immediately when they felt sick.

“Nearly 9 in 10 — or 3,400 cases — did not isolate between when they first felt sick and when they went to get a test,” he said. “People have felt sick, they’ve got symptoms, and they’ve kept going shopping. They’ve kept going to work.”

The total number of Covid-19 cases in Victoria is 6,738, which is more than half the nation’s number of infections. Australia successfully suppressed the spread of Covid-19 by rapidly implementing border closures and social distancing restrictions when the virus first began spreading in late February.

But earlier this month breaches in hotel quarantine for returning residents in Melbourne were identified as the main cause of a surge in new cases and the start of community transmission of the virus in the state.

The borders between Victoria and other Australian states have been shut to stop the spread of the Covid-19. But several outbreaks in New South Wales have been linked to travellers from Victoria, raising concerns among health officials that community transmission could spiral out of control. NSW reported 16 new cases on Wednesday.

“The next few weeks are the most critical in NSW since the lockdown earlier in March and April,” said Gladys Berejiklian, the NSW premier.

“If we can get on top of the community transmission at this stage, we have a much better chance of continuing the move forward in a positive way, but the next few weeks are critical,” she said. “We are not out of the woods by any stretch, quite the opposite.”

San Francisco plans post-virus homeless shelter expansion

San Francisco’s mayor said on Tuesday the city would create 6,000 additional shelter places in the next two years, to ensure homeless people moved indoors during the Covid-19 pandemic are not returned to the streets.

The city would have to acquire or lease new space for 1,500 homeless people to live, mayor London Breed said in statement.

Ms Breed said the programme would be the largest expansion of shelter for the homeless in 20 years.

At least 48 homeless people, including several who tested positive for Covid-19, died between March and May in San Francisco, more than three times the 14 deaths recorded during the same period last year.

Quarantine exemptions blamed for surge in Hong Kong cases

Primrose Riordan and Nicolle Liu in Hong Kong

A convoluted system of quarantine exemptions, including allowing executives of listed companies to freely enter Hong Kong, has been blamed for a third wave of coronavirus cases sweeping the Asian financial hub.

The surge in cases, which doctors said was the city’s worst outbreak since the beginning of the pandemic, has also been attributed to the relaxation of social distancing restrictions and low testing rates.

After initially winning praise for controlling the virus without a lockdown, the number of cases in Hong Kong has soared by about 40 per cent since July 5 to almost 2,000 cases as of Tuesday. The territory has until now avoided the worst effects of the virus through the swift adoption of face masks, working from home and border controls.

But virologists said pressure from the business community to prevent the city’s economy from shutting down led the government to grant exceptions to quarantine for certain groups and the relaxation of social distancing measures. The result, the virologists said, was a new outbreak that is “out of control”.

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South Korea quarantines 1,000 troops following outbreak

Edward White in Wellington

The South Korean military has ordered almost 1,000 troops into self-isolation amid concerns some have come into contact with a group of frontline soldiers infected with coronavirus, sparking fears over a new outbreak in barracks.

At least eight soldiers who were part of a frontline unit tested positive for coronavirus this week, a military spokesperson confirmed.

The unit was based at Pocheon, which is north-east of Seoul and near the country’s heavily fortified border with North Korea.

General Robert Abrams, who leads the 28,500 US troops stationed in South Korea to assist with defence against North Korea, on Monday credited the “remarkable record” of the United States Forces Korea in stopping the spread of the virus on its massive bases.

The USFK has seen a total of 98 confirmed cases since the outbreak began, but 74 of those have been people arriving from overseas and 24 infected locally, Gen Abrams said. The USFK’s last case of local infection was reported on April 13.

Separately, the Korea Centers for Disease Control reported 63 new coronavirus cases on Wednesday, taking the country’s total to 13,879.

South Korean health officials continue to urge caution over the potential for new clusters emerging, despite the country’s relative success in suppressing the virus without a nationwide lockdown.

New York City distributes 100m meals during pandemic

New York City’s “Covid-19 food tsar”, Kathryn Garcia, said on Tuesday that more than 100m free meals had been distributed to needy families during the coronavirus lockdown.

The free food was supplied under the city’s Emergency Home Food Delivery Program, which was launched in March. The programme employed licensed taxi and limousine drivers to bring food to New Yorkers who could not leave home or afford private delivery options.

“I hope the federal government will support us in continuing this effort as long as need among seniors and the most vulnerable New Yorkers persists, whether through reimbursements for food distributed or through new benefits,” said Ms Garcia, who is head of the city’s sanitation department in addition to her pandemic responsibilities.

China reports 9 further coronavirus cases in Xinjiang

Health authorities in China reported nine more Covid-19 cases in Xinjiang, taking the total in the region to 64.

The new cases in the western region that’s home to the Uighur minority group take the number of people there diagnosed with Covid-19 over the past week to 64.

Strict measures have been put in place to limit the spread of the virus, including locking down some residential compounds.

Five imported cases were also reported for Tuesday. China on Tuesday demanded all air travellers produce a negative coronavirus test before boarding flights to the country.

The new cases take the country’s official Covid-19 tally to 83,707.

Airline chiefs urge Covid-19 testing on transatlantic flights

Bethan Staton in London

US and European airlines wrote to the White House and EU on Tuesday, urging co-ordinated coronavirus testing to restore transatlantic flights.

The chief executives of United Airlines, Lufthansa Group, American Airlines and IAG, which owns British Airways, called on US vice-president Mike Pence and EU commissioner for home affairs Ylva Johansson to act as the industry struggles to recover from the effects of the pandemic.

The airlines said they wanted US and European governments to adopt a co-ordinated Covid-19 testing programme for transatlantic flights, in order to “enhance safety and build confidence in critical transatlantic passenger air services”.

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Asia-Pacific equities dip after Trump warning on US outbreaks

Stock markets in Asia-Pacific retreated on Wednesday after US president Donald Trump warned that the coronavirus pandemic in the US would “get worse before it gets better”.

Japan’s Topix was down 0.2 per cent, the Kospi in South Korea edged up 0.1 per cent and Australia’s S&P/ASX 200 shed 0.7 per cent. Futures tip the Hang Seng in Hong Kong to dip 0.3 per cent.

Mr Trump’s comments came as California’s coronavirus tally rose above 400,000 as parts of the US suffer a resurgence in infection.

His assessment overshadowed optimism seen in European markets on Tuesday following a deal reached by EU leaders on a €750bn rescue package. The continent-wide Stoxx 600 ended 0.3 per cent higher and Germany’s Dax added 1 per cent.

In the US overnight, the S&P 500 rose 0.2 per cent, while a retreat for technology shares sent the Nasdaq Composite 0.8 per cent lower.

Investors are watching for details of further US stimulus, especially whether this will include another round of direct payments to American families. Mitch McConnell, the Republican leader in the Senate on Tuesday backed another round of payments.

S&P 500 futures pointed to a 0.3 per cent gain when Wall Street reopens.

NFL tells players it has cancelled its preseason games

The US National Football League told its players on Tuesday that there would be no preseason games ahead of the 2020 season.

In a notice on the NFL website, the NFL Players Association told its members of the cancellation during a conference call one day after the league proposed a one-game preseason slate.

Previous preseason schedules have consisted of four games for each team.

US new coronavirus deaths top 1,000 for first time since May

Peter Wells in New York

The US reported more than 1,000 new coronavirus deaths for the first time since May, while the number of new cases ticked back above 60,000.

A further 1,029 people died from the disease over the past 24 hours, according to data from Covid Tracking Project, up from 362 on Monday.

That is the biggest increase in deaths since May 29 when excluding a one-time revision of almost 1,900 to New Jersey’s death toll on June 25, according to Financial Times analysis of Covid Tracking Project data. Florida (136), Arizona (134) and Texas (131) reported the biggest single-day jumps in fatalities.

Florida reported its second-biggest one-day increase in coronavirus deaths on Tuesday, but the number of new cases eased below 10,000 for the first time in a week.

Florida teachers are resisting returning to school, fearing a spread of the virus, and some held protests on Tuesday, pictured.

Meanwhile California has become the second US state — after New York — to have confirmed 400,000 coronavirus cases since the pandemic began after passing the milestone for the first time.

Nevada (28) and Arkansas (17) had record increases. A further 62,749 people in the US tested positive for coronavirus over the past day, according to Covid Tracking Project, up from almost 57,000 yesterday. Florida (9,440), Texas (9,305) and California (9,231) had the biggest increases. California’s increase was enough to push to state’s total above 400,000.

The state is set to surpass New York as the US state with the most confirmed coronavirus cases as soon as Wednesday. Wisconsin (1,161) and Missouri (1,138) were the only states to have reported record increases in cases, according to Financial Times analysis of Covid Tracking Project data.

In case you missed it …

Donald Trump has said the Covid-19 pandemic will “probably unfortunately get worse before it gets better”, in his first White House coronavirus task force press briefing in almost three months.

United Airlines reported a loss of $1.6bn in the second quarter as the airline industry struggled with the fallout from the coronavirus pandemic. The Chicago company reported an 87 per cent year-on-year drop in operating revenue to $1.48bn from a year earlier.

Vaccine makers tried to reassure Congress that the US would not be forced to rely on foreign manufacturing for any potential Covid-19 vaccine, while staying committed to aiming to deliver a safe and effective inoculation by next year.

This year’s edition of the Indian Premier League, the world’s top cricket tournament, is on track to take place in the United Arab Emirates as coronavirus rages in its home country. The two-month tournament, due to start in March, was postponed indefinitely due to coronavirus and India’s nationwide lockdown.

Snap said that its revenues this month were running close to one third higher than in July last year, signalling a rebound in spending by pandemic-hit advertisers even as it warned of headwinds in the rest of the quarter.

Most of the US is still not reporting essential coronavirus data, making it harder for officials to fight the pandemic, a former director of the country’s top disease fighting agency has warned.

US Covid-19 surge could trigger a double-dip recession


The writer is chairman of Fulcrum Asset Management

The relentless rise in the number of new US Covid-19 infections, which is being followed by increased hospitalisation rates and fatalities in the worst affected states, suggests that Anthony Fauci of the White House coronavirus task force was justified when he recently described the deteriorating situation as a “perfect storm”.

So far, the US policy response has been muted, certainly compared to nationwide lockdowns in other countries in March. And markets remain surprisingly relaxed, reportedly because investors are optimistic that an effective vaccine from the Oxford university or Moderna trials may be “within sight”. Those trials are highly encouraging. But even the most favourable outcome in vaccine development would come too late to save the US economy from the spread of the virus over the next three months.

Unless public policy can control the rate of infections across the American sunbelt, there could be adverse consequences for any US economic recovery over the rest of this year. Consensus economic forecasts have not yet given much weight to this increasing risk, although the US Federal Reserve is increasingly worried.

Fulcrum economists have developed a new model which tracks the epidemic on a state-by-state basis, based on the now-familiar SIRD model used by the Imperial College Covid-19 response team and other researchers.

It suggests that the virus’s effective reproduction number, known as R, is now above the critical level of 1 in all but five of the US’s 50 states. Weighted by gross domestic product, this means that 95 per cent of the US economy is affected by a viral reproduction rate high enough to cause an exponential rise in the number of cases — unless something intervenes to prevent this. Other researchers have found similar results.

This spread of R levels above 1 is the broadest it has been since the epidemic started. In March, absolute levels of R were higher in the north east, when the reproduction rate exceeded 3 for several weeks and infection numbers doubled every few days.

In the current wave, the generally lower levels of R have slowed down the spread of the disease. Furthermore, the age distribution of the infected group is younger, and the case fatality rate within intensive care units has fallen as treatment has improved.

As a result, there has been political resistance to full lockdowns in the most severely affected states. Unfortunately, international experience suggests that delayed lockdowns result in worse outcomes for cases and fatalities, at least in the short term.

The key economic question now is how much damage to activity will be incurred as policy lockdowns and voluntary social distancing bring the epidemic under control. So far, the answer is very little.

According to Harvard University economist Raj Chetty’s website, which tracks the recovery and is based on big data, US consumer expenditure has flattened since late June but not fallen substantially — even in the most affected states. Trackers based on Google searches and other big data paint a similar picture.

Most forecasters therefore assume that there will be nothing worse than a brief period of stable activity. This would result in strongly positive growth between the second and third quarters. For example, Goldman Sachs believes the virus may be controlled by measures focused on ending indoor gatherings and promoting the wearing of face masks. Both of these have been effective in some states.

Such measures would fall short of full stay-at-home lockdowns, permitting the economy to resume recovery. Arizona is one example of a state that has made encouraging progress. However, the downside risks are obvious.

Fulcrum economists have modelled an alternative scenario where full lockdowns are eventually needed in states where the R is currently above 1.5, with partial lockdowns in states where R lies between 1.25 and 1.5, and no lockdowns elsewhere.

This would lead to a large drop in activity — in effect, a double dip — of about 7 percentage points through the whole economy while the lockdowns last. If the situation persisted for three months, it would knock almost 2 percentage points from this year’s growth rate, compared to the latest consensus forecasts.

This double dip may not be the most likely outcome, right now. But is a highly plausible worst-case scenario if the national spread of the virus is not brought under control soon.

 

Coronavirus latest: US consumer spending climbs as workers and retailers return


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Florida reports record increase in deaths

Florida reported its biggest one-day increase in coronavirus deaths on Thursday and almost 14,000 new cases.

A further 156 people died from Covid-19 since Wednesday, the state health department revealed this morning, edging past the previous record from July 14 of 133. A total of 4,782 people there have died since the pandemic began.

The number of confirmed cases jumped by 13,965 compared with 10,181 on Wednesday. It is Florida’s second-biggest one-day jump, trailing the 15,300 on July 12 that is also a record for any US state.

Almost 316,000 people in Florida have tested positive for Covid-19 since the pandemic began; New York and California are the only US states with more cases. Florida’s tally crossed 300,000 for the first time on Wednesday.

More to follow

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US homebuilder confidence back at pre-pandemic levels

US homebuilder confidence jumped in July, taking it back to levels seen before the pandemic rattled the US economy as the 30-year mortgage slipped to a record low, data on Thursday showed.

The National Association of Home Builders’ Housing Market Index jumped to 72 in July from 58 the previous month. That exceeded economists’ forecasts for a reading of 60, according to a Reuters survey, and matched its reading in March.

The rise in homebuilder confidence comes as mortgage rates on 30-year loans fell to a fresh low of 2.98 per cent, the lowest level on records dating back to 1971, according to Freddie Mac.

“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke. “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”

Economists have pointed out that one of the reasons the housing market has recovered quickly is because pandemic-driven job losses have disproportionately affected younger renters as opposed to would-be homebuyers. Moreover, lower mortgage rates have made home purchases more attractive for those who have held on to their jobs.

Republican party convention to go ahead in Florida at smaller scale

Lauren Fedor in Washington

The Republican party has decided to hold a scaled-back convention in Jacksonville, Florida, next month, as the coronavirus outbreak in the Sunshine State continues to spread.

The GOP had originally intended to hold its convention, held once every four years, in Charlotte, North Carolina, but said it would move most of the event’s activities to Jacksonville.

The decision came after Roy Cooper, North Carolina’s Democratic governor, said he would impose social distancing and other requirements on attendees. Florida’s Republican governor, Ron DeSantis, is a close ally of Donald Trump.

But Ronna McDaniel, chairwoman of the Republican National Committee, said on Thursday that “adjustments must be made to comply with state and local health guidelines”.

Florida is one of the hardest-hit states in America’s widening Covid-19 outbreak. On Wednesday, the state reported a further 10,181 infections, bringing the total number of cases there to more than 300,000 since the start of the crisis.

In a letter to RNC members, obtained by the Financial Times, Ms McDaniel said only delegates would be allowed to attend the first three days of the convention, from August 24 through August 26. Mr Trump is still expected to give a speech formally accepting the party’s nomination on August 27, with a slightly wider group of attendees.

Ms McDaniel said the party would “implement a variety of health protocols”, including “on-site temperature checks” and “available PPE”.

Mr Trump had been reluctant to scale back the convention, which will be held just over two months before Election Day. The Democratic party has already announced plans for its own condensed convention in Milwaukee, Wisconsin, which will be held the week before the GOP gathering.

US retail sales jump again in June

US consumer spending jumped for a second month in a row in June as more Americans returned to work and retailers continued to gradually reopen.

The US Census Bureau said on Thursday that retail sales were up 7.5 per cent last month, compared with economists’ estimate of 5 per cent growth and a May rise of 18.2 per cent, which was revised higher.

The monthly rise in consumer spending was driven in part by petrol stations, where sales jumped 15.3 per cent, and food services, which registered 20 per cent growth as restaurants across the country gradually reopen. Sales in cars and related parts jumped 8.2 per cent. For clothing stores, sales more than doubled. Spending on electronics, appliances and home furniture also gained.

Non-store retailers, a category that includes ecommerce shopping, posted a 2.4 per cent decline in sales with more brick-and-mortar outlets emerging from shutdowns. Food and beverage stores were down 1.2 per cent.

The gains come amid worries over the impact of Covid-19 outbreaks in the US south and west, where some states have rolled back their reopening plans in an effort to slow the spread of coronavirus.

US unemployment claims ease amid gradual rehiring

The number of Americans collecting unemployment cheques eased for the sixth week running to 17.3m, reflecting how businesses have rehired workers even as lay-offs continue four months into the pandemic.

Continuing claims for the week ending on July 4 dropped from a revised 17.8m, according to the latest figures from the US labour department. It marked the lowest level since early April and compared with economists’ estimates of 17.6m.

Slightly fewer workers applied for new jobless benefits last week. There were 1.3m first-time claims, against 1.31m the week before. Economists had forecast claims of 1.25m. The pace of new claims has gradually slowed in each of the last 15 weeks since hitting a high of 6.9m in March.

New claims in the federal Pandemic Unemployment Assistance programme, which extended aid to the self-employed or other individuals who would not qualify for regular unemployment compensation, fell to 928,488 from about 1m on an unadjusted basis.

European assets take ECB in their stride as focus turns to recovery fund

European stocks and the euro were little moved by the European Central Bank’s decision not to tinker with its level of stimulus as it gauges the region’s fragile recovery from the coronavirus pandemic.

Analysts said the move to keep monetary policy and bond purchases unchanged was not a major surprise and said investors are instead focused on Friday’s meeting of EU leaders, where they are expected to finalise details of a €750bn recovery fund.

“We would expect to see progress and positive noises even if this isn’t the final sign off,” said Hetal Mehta, senior European economist at Legal & General Investment Management.

ECB pauses stimulus policy as it gauges pace of nascent recovery

Martin Arnold in Frankfurt

The European Central Bank has left its monetary policy on hold and committed to keep buying trillions of euros in bonds until it judges the economic crisis caused by the coronavirus pandemic to be over.

The decision by the ECB governing council on Thursday means that the central bank has hit pause after four months of ramping up its monetary stimulus, taking time to assess the eurozone’s nascent recovery before launching any new measures.

At its previous monetary policy meeting in early June, the ECB expanded the amount of bonds and other assets it plans to buy under its Pandemic Emergency Purchase Programme from €750bn to €1.35tn and extended its timespan until at least the end of 2022. 

Since then, the outlook for the eurozone economy has tentatively brightened. Consumers went on a spending spree after shops reopened in May, helping retail sales to rebound from record falls in March and April, while industrial output also recovered, albeit at a slower rate.

On Thursday the ECB kept its main deposit rate unchanged at minus 0.5 per cent and said its bond purchases would continue “as long as necessary to reinforce the accommodative impact of its policy rates”.

J&J sales of medical devices slide as pandemic delays operations

Hannah Kuchler in New York

Johnson & Johnson’s net earnings fell by more than a third as the Covid-19 pandemic delayed elective procedures and hit sales of medical devices, while the consumer division suffered from declines in demand for beauty products.

But the world’s largest healthcare company inched up its revenue and earnings guidance for the year as pharmaceutical sales remained strong, led by treatments for cancer and inflammatory conditions. Shares were flat in pre-market trading.

Alex Gorsky, chief executive, said the results showed the “enduring strength” of its pharmaceutical business and remained confident about the prospects for its Covid-19 vaccine.

J&J expects full-year revenue of between $81bn and $82.5bn, higher than the previous range of $79bn to $82.2bn.

In the second quarter, J&J sales slid 11 per cent year on year to a higher than expected $18.3bn. They dropped by a third in the medical devices division.

UK business faces twin blow of higher Covid-19 costs and lower sales

Valentina Romei in London

UK businesses face steeper costs as they implement Covid-19 safety measures that include protective equipment and social distancing, yet turnover remains depressed.

Of the companies that put in place coronavirus restrictions, 73 per cent reported rising operating costs, a national survey on the pandemic’s impact on business revealed.

Ninety-one per cent of the 5,500 businesses surveyed from June 15 to 28 introduced social distancing while 80 per cent use personal protective equipment and 85 per cent updated hygiene measures. Only 3 per cent of businesses in the Office for National Statistics study did not implement any of the measures.

About 90 per cent of businesses in the accommodation and food services industry reported rising operating costs, with about two in five businesses reporting “substantial” increases.

Operating costs rise as 58 per cent of active businesses reported that their turnover decreased outside the normal range over the same period.

The burden was greater in the leisure and food services sector, which employs 1.8m and accounts for the largest share of furloughed workers. The industry had 86 per cent of businesses reporting depressed turnover. Almost half suffered turnover shrinking more than 50 per cent.

The combination of lower sales and rising costs is a threat to jobs that are being supported by the government scheme, but will lose support from August when the scheme will stop being free of costs.

Hong Kong authorities nervous about rise in untraceable cases

Primrose Riordan in Hong Kong

Hong Kong health authorities reported 67 new coronavirus infections on Thursday, triggering fears of an outbreak in the territory that has until now been a global success story in controlling the virus.

Authorities warned of an increase in untraceable cases as they said 63 of the cases were local and not imported.

Health authorities advised senior citizens not to leave their homes and further tightened social distancing regulations for restaurants.

Unicef to help poor countries secure medical supplies

Andrew Jack in London

Unicef has received support from a UK social finance business to help low and middle-income countries secure costly health supplies for their battles against Covid-19.

MedAccess, a social finance venture owned by the government’s development finance arm, will provide a $50m guarantee to the international children’s charity, boosting its bargaining power on behalf of nations in Africa and south Asia.

The guarantee will enable Unicef to buy high volumes of diagnostic and medical supplies from manufacturers, obtaining better terms than individual countries would manage on their own.

MedAccess has in recent months structured several deals directly with manufacturers of health products on behalf of lower income countries to lower prices in exchange for bulk purchases. Its latest agreement is the first with Unicef and will be offered without any fees.

Michael Anderson, MedAccess chief executive, said: “We’ve seen some pretty terrible profit seeking and local pricing that we want to help eliminate. This guarantee will reduce price volatility, pool procurement and increase the leverage of small low-income countries without the diplomatic or financial clout to get access directly.”

France orders mask-wearing in public indoor spaces from next week

Victor Mallet in Paris

France will insist that masks be worn in indoor public spaces nationwide from next week after signs of an uptick in coronavirus infections in Paris and some other regions, the government announced on Thursday.

A decree ordering the wearing of protective face masks was to have been enforced from August 1, but has been brought forward.

“I realised that the target date seemed too late,” prime minister Jean Castex told the Senate, “so the decree will come into force next week.”

Earlier, health minister Olivier Véran warned of Covid-19 clusters in the Mayenne department in north-west France and said infections in Paris merited attention.

“We are noticing in some Paris hospitals slight signs of an uptick in the epidemic, which is why I am asking the French to remain particularly vigilant in taking action against the virus,” he told France Inter radio.

We have to get used to the virus circulating. Some countries around us have been obliged to put towns, provinces and regions back into lockdown.

More than 30,000 people have died from coronavirus in France since the start of the year. The country started easing a strict, two-month lockdown in mid-May, and the national Covid-19 reproduction or R number has recently crept back above 1 to reach 1.05, while in Mayenne it is at 1.42.

The overseas territory of Guyane — French Guyana in South America — also has a high rate of new infections and is the only part of France currently classified as a “red zone” on high alert.

Coronavirus and the UK jobs market

The FT reported earlier on how the pandemic has blighted the UK labour force, with 650,000 paid employees having lost their jobs since March.

But according to investment manager Hargreaves Lansdown, which has looked at Office for National Statistics data and unofficial employment measures, the situation is even more miserable than this.

Sarah Coles, personal finance analyst at Hargraves, reports that while 650,000 formal jobs have been lost since March, another 178,000 self-employed people have given up work. This is the largest decline on record, according to her analysis.

Since March, the number of people claiming unemployment benefits has also more than doubled to 1.4m.

And in bad news for those looking for new jobs, vacancies fell to a record low of 330,000, a 58 per cent decline on the previous three-month period.
Ms Coles says:

We’ve seen 650,000 jobs lost, 178,000 self-employed people throwing in the towel, the claimant count more than doubling, and so few jobs being advertised that people have given up looking for work.

And this is just the start. The [Office for Budget Responsibility] has predicted unemployment will hit 3 million this year, [rising to] as much as 4 million in 2021.

UK boosts plans for government bond sales to record £385bn

Tommy Stubbington

The UK government now plans to raise £385bn from bond sales in the first eight months of the current fiscal year, in the latest increase to its record-breaking gilt issuance programme.

The Debt Management Office (DMO) announced the new figure, covering the period from April to November, following the latest package of measures to support the economy through the coronavirus crisis announced by chancellor Rishi Sunak last week. At its previous update in late June, the DMO had pencilled in gilt sales of £275bn from April to August.

UK borrowing costs have dropped to record lows in recent days despite the flood of new bonds, thanks largely to the Bank of England’s £300bn bond purchase programme. Gilt yields are negative, meaning investors are in effect prepared to pay the government to take their money, up to maturities of seven years.

The new issuance schedule, which includes 38 bond auctions from September to November, means the pace of gilt sales is set to drop to £36bn a month, from £60bn at the start of the fiscal year, according to analysts at TD Securities.

The slowing of issuance “should be considered relatively positively for markets”, said TD strategist Pooja Kumra. However, the outlook for gilts will depend on the ongoing pace of BoE purchases, which will be updated at the central bank’s August meeting, she added.

Online gaming boom helps GVC cope with retail closures

Ladbrokes Coral owner GVC reported that revenues fell sharply in the second quarter but the blow was softened by a stronger than expected performance for online gaming.

The damage from coronavirus was revealed on Thursday as the group reported that net gaming revenues fell 22 per cent in the second quarter, as the business was hit by cancellations and postponements of sports fixtures and closed high street bookies during the lockdowns.

However, a more than 20 per cent rise in revenues from its online business due to a boom in gaming from home helped to mitigate the sharp fall-off in other businesses.
It said that earnings before interest, tax, depreciation and amortisation in the first half of the year were expected to be £340m-£350m, higher than analyst forecasts.

The trading update came as the group announced that chief executive Kenneth Alexander would step down at the end of the week, making way for chief operating officer Shay Segev to take charge.

The leadership change comes as gambling groups vie to win customers in the prized US market, which has gradually begun to legalise sports betting state by state.

Chinese stocks fall further after disappointing sales data

Global stocks pulled back on Thursday after disappointing data on China’s economy sent the country’s stock market tumbling almost 5 per cent.

The slide in Chinese markets dragged down European equities in early trading with the continent’s Stoxx 600 index slipping 0.6 per cent, pulling back from gains of 1.8 per cent on Wednesday when positive news from early Covid-19 vaccine trials lifted global markets.

The UK benchmark FTSE 100 dropped 0.4 per cent as traders reviewed employment figures, which showed the country shed 650,000 jobs during the coronavirus lockdown.

Retail sales in the world’s second-largest economy defied expectations of a return to growth to fall 1.8 per cent in June compared with last year in their fifth month of decline. The signal of a slow and uneven recovery from the pandemic sent stocks into reverse after a rally on Wednesday.

China’s CSI 300 index of Shanghai and Shenzhen-listed companies suffered its worst day since February, falling 4.8 per cent. Hong Kong’s Hang Seng slid 1.7 per cent and China’s currency, the renminbi, weakened.

The drop came despite better than expected figures on China’s gross domestic product, which grew 3.2 per cent in the three months to the end of June compared with the same period last year — above the 2.5 per cent forecast by economists in a Reuters poll.

China’s mainland stocks have risen 12 per cent this year, despite Thursday’s fall, leading some investors to worry that the country’s equities have become a bubble.

California’s biggest oil and gas producer files for bankruptcy

Myles McCormick in London

California Resources Corp, the golden state’s biggest oil and gas producer, filed for bankruptcy overnight, becoming the latest US energy group to hit the wall since the coronavirus pandemic sent crude prices tumbling.

Recent market ructions proved to be the final straw for a company that had struggled under the weight of its debt load since it was spun off from Occidental Petroleum six years ago.

“Today’s unprecedented market conditions, including oversupply and reduced demand due to Covid-19, require that we further reduce our debt through a Chapter 11 process,” said Todd Stevens, CRC chief executive.

The Santa Clarita-based company is the fourth big name in the US energy sector — and the biggest conventional producer — to file for bankruptcy since the outbreak of coronavirus combined with a price war between Russia and Saudi Arabia sent oil prices plunging.

It was spun out of Occidental in 2014, inheriting a net debt of over $6bn, just as oil prices were beginning to slide ahead of the last downturn. When the deal was conceived, oil traded above $100 a barrel, but even as it closed, prices had slipped to about $70. They fell to $30 by the end of 2015 and have never since returned to triple digit levels.

Heineken set for first-half loss as it takes €550m impairment charges

Judith Evans in London

Heineken expects to swing to a loss for the first half, it said on Thursday, after slashing the value of its assets by €550m because of the pandemic.

The world’s second-largest brewer said it expected to make a net loss of about €300m in the second quarter, down from a net profit of €1bn a year earlier, thanks to the impairment charges. Net revenues declined by 16.4 per cent on an organic basis in the first half, it said.

Shares in the beermaker fell 5 per cent in early Amsterdam trading.

“As expected, the impact of the COVID-19 crisis deepened in the second quarter of 2020,” said the Dutch group, which also makes brands including Amstel, Tiger and Moretti. “After a low point in April, volume started to gradually recover into June as lockdowns were lifted around the world and customers restored depleted inventories.”

It said beer volumes had been worst affected in Americas, Africa, the Middle East and Eastern Europe, above all Mexico and South Africa, both of which banned the sale of alcohol during lockdowns.

The brewer has taken “significant cost mitigation actions” which will continue, it said as it issued preliminary figures ahead of a full release on August 3.

UK loses 650,000 jobs despite attempts to shore economy up

Valentina Romei in London

The UK has shed more than half a million jobs during the coronavirus lockdown while employees worked fewer hours and earned less despite the government rolling out numerous measures to support the economy.

The number of UK payroll employees fell by 650,000 in June compared with March, a 2.2 per cent fall, figures from the Office for National Statistics based on tax data show. The statistics body said, however, that the rate of decline in employment had slowed in June compared with May.

“There are now almost two-thirds of a million fewer employees on the payroll than before the lockdown,” said Jonathan Athow, ONS deputy national statistician for economic data.

June’s ONS labour market statistics pointed to a deterioration across various measures despite a government programme that supports 9.4m jobs and 2.7m self-employed people. The jobs scheme is due to be phased out in October, prompting concern that Britain could face a further surge in unemployment in coming months.

Banks in Hong Kong tell staff to work from home amid local outbreak

Primrose Riordan in Hong Kong

Banks in Hong Kong have reinstated measures to allow employees to work from home after a resurgence in local coronavirus cases led authorities to introduce new social distancing measures.

HSBC employees were encouraged to work from home from Wednesday, while others who needed to work from the office were told to stagger their arrival.

“To support flexible working employees who must work from HSBC premises should discuss working arrangements, including staggered arrival and lunch times, with their line manager,” a memo from the bank said.

Standard Chartered bankers who can work from home were told to go back to this arrangement, the bank said, and those who work from the office have to follow a split team system.

Customers must wear masks inside branches and partitions have been installed, Standard Chartered said.

Anglo’s working capital builds up as diamond demand fades

Neil Hume in London

Global miner Anglo American has reported an 18 per cent drop in second-quarter output because of coronavirus-related disruptions and flagged a $1.3bn increase in working capital because of plunging demand for diamonds.

The London-listed company, which has extensive operations in South Africa, said it is operating at 90 per cent production capacity, up from 60 per cent in April, as lockdowns have eased.

“Continued strong performances from our Minas-Rio iron ore operation in Brazil and the Collahuasi copper operation in Chile helped mitigate our overall decrease in production to 18 per cent, as we also addressed operational issues at our metallurgical coal and platinum group operations,” said chief executive Mark Cutifani.

Anglo revealed a $1.3bn build-up in working capital as demand for diamonds produced by its De Beers division plunged due to Covid-19 and repairs at a key processing plant in South Africa hit refining activity in platinum and palladium.

Analysts had expected a weak quarter due to the tough lockdown measures implemented in South Africa and two incidents at its met coal business in Australia.

European futures tip stocks to fall

Europe’s markets are set to retreat when trading begins on Thursday after disappointing Chinese retail data unsettled Asian equities.

Retail sales in the world’s second-largest economy contracted 1.8 per cent in June compared with last year, missing expectations of a modest return to growth, in a sign of weak consumer confidence. The data sent Asia’s markets down despite 3.2 per cent year on year growth in China’s gross domestic product.

Futures in the European Stoxx 600 composite traded down 0.8 per cent ahead of the market open, pulling back from gains of 1.8 per cent on Wednesday when global markets rallied on positive news on an early Covid-19 vaccine trial.

The UK’s FTSE 100 futures pointed to a 0.5 per cent drop as investors digested data on job losses during the coronavirus lockdown.

European traders will be looking ahead to Thursday’s scheduled announcement from the European Central Bank, which is expected to hold interest rates steady.

S&P 500 futures also dropped, by about 0.5 per cent, after the index rallied 0.9 per cent on Wednesday.

Australia cannot eliminate Covid-19, says top medical official

Australia cannot eliminate coronavirus, according to one of its top medical officials, who called such a strategy “unrealistic”­ and “dangerous”.

Nick Coatsworth, a deputy chief medical officer, said the recent surge of hundreds of new cases in the state of Victoria has prompted calls for an “elimination” strategy.

“This is surprising,” Dr Coatsworth said in a statement posted on the health department website on Thursday. “It’s unrealistic ­– and it’s dangerous.”

He said it was not true that if Victoria had eliminated community transmission of Covid-19, this second outbreak would not have occurred.

He said the new surge has stemmed from breaches in quarantine by Australian citizens returning from overseas. “Such breaches would have seeded this outbreak even if community transmission had been eliminated for several weeks,” Dr Coatsworth said.

He said “true elimination” can be achieved only by a vaccine. “Measles is a good example. It is eliminated in Australia and we received that distinction from the World Health Organization in 2014.”

But, he noted, Australia does see occasional outbreaks, “which are quickly brought under control by our public health teams and because we have an excellent immunisation programme”.

Local elimination is wonderful when it occurs, and allows significant relaxation of distancing measures, Dr Coatsworth noted.

But, he added, “we are not in a position in Australia to achieve elimination where global transmission is increasing”.

He said returning travellers, ships and crew would continue to come from countries with widespread transmission.

Chipmaker TSMC reports 81% jump in quarterly profit

Kathrin Hille in Taichung, Taiwan

Taiwan Semiconductor Manufacturing Company reported an 81 per cent jump in net profit for the second quarter compared with the same period last year, as the world’s largest contract chipmaker continues to grow despite the downturn caused by the coronavirus pandemic.

Net income in the three months to June 30 totalled NT$120.8bn (US$4.1bn), TSMC said. The company said its revenue reached NT$310.7bn, up 28.9 per cent from the same period in 2019, and in the top range of the forecast the company gave three months ago.

Compared with the first quarter, net earnings increased by 3.3 per cent and revenue was flat. In the first three months of this year, TSMC’s net income had almost doubled over the same period a year earlier, and revenue had grown by 42 per cent.

The results reflect strong demand for computers and other gadgets needed for working from home which use the chips TSMC manufactures for global customers, including Apple and Huawei.

Although US sanctions on Huawei announced in May are set to force TSMC to discontinue shipments to the Chinese technology group later this year, other customers are expected to take up the production capacity, TSMC said earlier this year.

Formula One strikes hospitality deal with Zoom

Samuel Agini in London

Formula One is set to unveil a tie-up with Zoom, the video meeting platform, as the world’s biggest motor racing series creates a virtual substitute for the corporate hospitality business it has been forced to suspend during the coronavirus pandemic.

While Zoom has struck partnerships with individual sports teams in the past, including English Premier League sides Arsenal and Manchester City, the F1 deal is its first move into re-creating corporate hospitality as a virtual experience.

F1, which has been controlled by billionaire John Malone’s Liberty Media since an $8bn deal in 2016, is trying to emulate the experience of the Paddock Club, its luxurious corporate hospitality arm.

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Survey indicates mid-sized Asia companies hit hard by virus

More than half of mid-sized Asia-Pacific companies reported a reduction of up to 50 per cent of normal revenues during the coronavirus pandemic, according to a regional survey.

More than 60 per cent of the respondents indicated a 20 to 50 per cent reduction in monthly revenues, with more than half of them foreseeing that it will take at least six to 12 months to recover from the disruptive impact and stabilise operations.

“Due to limitations around financing support as well as uncertainties about the end-consumer demand, mid-sized corporates are often more vulnerable to disruptions compared to their larger counterparts,” said Jiten Arora, global head of commercial banking at Standard Chartered, which commissioned the survey.

“Despite these challenges, there is an opportunity for new profitable growth if these businesses can … be nimbler in innovating and transforming their ways of working to become more resilient,” Mr Arora said.

The bank’s survey polled 205 mid-sized companies – defined by the bank as having annual revenues of $100-500m – in China, Hong Kong, India, Malaysia and Singapore during the last two weeks of June.

Scientists question lasting immunity from virus vaccine

Hannah Kuchler in New York and Anna Gross in London

Scientists are questioning whether waning immunity to Covid-19 could affect how useful a vaccine will be in tackling the pandemic, even as investors welcomed new positive early trial data.

A study from King’s College London, which has yet to be peer-reviewed, showed recovered patients’ antibodies declined significantly within months of infection, raising the critical issue of how long a vaccine could prevent people catching the disease.

The concerns come as shares in Moderna rose 6 per cent on Wednesday after the US biotech company shared positive data showing all 45 participants had produced antibodies after taking its vaccine candidate.

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Indonesia to impose fines over masks, says governor

Indonesia’s president, Joko Widodo, will approve a decree imposing fines for the first time on people who violate Covid-19 health protocols, official media reported on Thursday.

The president is working out the details of a presidential instruction, the Antara news agency quoted West Java governor Ridwan Kamil as saying after a meeting with provincial leaders.

“The president has applauded our initiative to impose the fines,” Mr Kamil said.

The governor said the minimum fine for not wearing a mask in public would be set at Rp100,000 ($7).

West Java, home to 48m of Indonesia’s 267m people, would start fining violators from July 27, Mr Kamil told the agency.

The governor said the spread of Covid-19 had been brought under control in West Java.

“It has been under control, but some locations, including boarding education institutions, need to be monitored cautiously,” Antara quoted him as saying.

Airbnb executive to depart amid virus downturn

Dave Lee in San Francisco

A senior executive is set to depart Airbnb as part of a leadership shakeup, as the accommodation-rental company insists it has not ruled out going public despite coronavirus leaving much of its business in tatters.

Greg Greeley, president of homes and a former Amazon executive, is stepping down two years after being brought in to stabilise and grow Airbnb’s core rental business.

“When the market is ready, we will be ready,” Brian Chesky, chief executive, sad of the proposed listing in an email to employees on Wednesday. “We were down, but we’re not out.”

India records more rural cases as total approaches 1m

Amy Kazmin in New Delhi

India detected a record 32,682 new coronavirus infections on Wednesday, bringing it ever closer to the grim milestone of 1m confirmed infections.

The country also recorded an additional 614 coronavirus deaths, bringing the total number of fatalities from the pandemic in India to 24,900.

India now has more than 970,000 confirmed coronavirus infections, the world’s third-heaviest confirmed burden after the US and Brazil.

Despite this, the government has touted its battle against the pandemic as a great success, pointing to the relatively low number of deaths in a nation of 1.3bn people.

Until now, India’s coronavirus hotspots have mainly been metropolises such as Mumbai, the preeminent financial city, and Delhi, the capital district.

But the virus is now spreading into more rural areas, such as Bihar, where medical infrastructure is far weaker.

The failure to control the virus has led to renewed disruptive lockdowns in many parts of the country, including the tech hubs of Pune, Bangalore, pictured, and the state of Bihar.

In the southern state of Karnataka, of which Bangalore is the capital, B. Sriramulu, the state’s health minister and chair of its Covid-19 task force, declared on Wednesday that “only God” could save the state from the ravages of the pandemic.

Public health experts say India’s total confirmed case count, and its official death toll, are likely to be severely understating the true magnitude of the epidemic, as India has one of the lowest rates of testing of any major nation in the world.

In these regions, many ailing coronavirus patients may never be tested, or diagnosed, or treated, simply becoming silent, unacknowledged casualties of the pandemic.

Opec and Russia primed to unwind historic supply cuts

Anjli Raval, David Sheppard and Derek Brower in London

Opec and Russia are primed to start unwinding the record oil supply cuts agreed earlier this year, as they aim to raise production without undermining a recovery in crude prices.

The oil cartel and its allies are set to scale back the cuts of 9.7m barrels a day that took effect in May to 7.7m b/d from August, Opec delegates said on Wednesday.

It would be the first test of their ability to start returning to the market the equivalent of almost 10 per cent of global crude output, which was removed this spring after Covid-19 lockdowns and travel bans crushed oil demand.

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Coronavirus cases emerge in Hong Kong’s judicial system

Hong Kong’s Judiciary announced on Thursday that Covid-19 positive cases had been discovered in its Labour Tribunal and in a magistrates’ court.

The Centre for Health Protection said a contract cleaner at the tribunal, located in Kowloon, had tested positive for coronavirus and hearings had been adjourned until further notice.

Another person who had visited Tuen Mun Magistrates’ Courts in the northwest of the territory also tested positive. Officials said the court would be disinfected.

Hong Kong’s judicial system had been adjourned on January 29 due to the pandemic, but hearings had begun to resume in stages from May 6.

India reports 1st trade surplus in 18 years as imports collapse

Amy Kazmin in New Delhi

India reported its first trade surplus in more than 18 years in June, as exports remained far below last year’s levels but imports collapsed even more dramatically, as the coronavirus pandemic weighs on the country’s economy and trade.

India recorded a slight $800m surplus in June, the first time since January 2002 that its merchandise exports had exceeded imports.

However, the backdrop was a sharp decline in India’s overall trade activity, highlighting disruption from the virus and efforts to control it.

India’s merchandise exports contracted 12.4 percent in June from June 2019, though the magnitude of the contraction has moderated significantly from the 36 per cent year-on-year contraction in exports in May, and the 60 per cent contraction in April, when virtually all economic activity was brought to a halt.

The export numbers were buoyed by growth in overseas pharmaceutical sales, which grew about 10 per cent year on year in June, while other items, including textiles, electronic goods and engineering items, remained depressed.

Imports remain severely depressed, down 47.6 per cent year on year, reflecting weak domestic demand.

Economists have projected that India’s economy will contract significantly this year, with some saying the fall could be as much as 7 per cent, a more significant decline than the global average.

Ukraine to extend quarantine measures for another month

Ukraine health officials will extend quarantine regulations in the country by another month to August 31, state media reported on Wednesday.

“We cannot abandon the restrictive measures due to the current epidemic situation,” the Ukrinform news agency quoted health minister Maksym Stepanov as saying.

Quarantine measures were introduced in Ukraine on March 12 with June 30 set as a deadline. On June 20 the measures were extended until July 31.

The government regulations require Ukrainians to wear face masks and keep social distance minimums.

In Kyiv, the capital, where the infection rate is highest, indoor restaurants, swimming pools, cinemas, theatres, museums and entertainment areas in shopping malls remain closed.

Mr Stepanov said the restrictive measures might be gradually eased by regional administrations.

As of July 15, Ukraine reported 55,607 confirmed Covid-19 cases, including 1,427 deaths and 28,131 recoveries.

Officials told Ukrinform that 836 new cases were recorded on Wednesday.

Weak China retail sales data drag down Asia-Pacific stocks

Asia-Pacific stocks retreated on Thursday after retail sales in China remained weak, offsetting better-than-expected overall economic growth figures for the second quarter.

China’s economy grew 3.2 per cent year on year in the three months to the end of June after coronavirus lockdown measures were eased, and coming in above a Reuters poll of economists that forecast 2.5 per cent growth.

However, Chinese retail sales fell 1.8 per cent year on year in June, notching a fifth month of falls and bucking expectations from a Reuters poll of 0.3 per cent growth. Retail sales fell 20.5 per cent in February as the country was locked down to halt the spread of coronavirus.

Fixed asset investment was down 3.1 per cent, in line with forecasts and industrial production rose 4.8 per cent.

The CSI 300 index of Shanghai- and Shenzhen-listed stocks fell 1.1 per cent and Hong Kong’s Hang Seng dipped by the same amount. In Japan, the Topix declined 0.3 per cent and Australia’s S&P/ASX 200 edged down 0.4, while the Kospi in South Korea shed 0.7 per cent.

S&P 500 futures were down 0.6 per cent.

Marcella Chow, JPMorgan Asset Management global market strategist, noted the lag for retail sales, but expects this sector will become a growth driver alongside government infrastructure investment.

“Since domestic households have accumulated a huge amount of bank deposits for precautionary savings during the economic slowdown and pandemic, fast recovery might be seen in consumption when their confidence improves,” she said.

The onshore renminbi, which is permitted to move 2 per cent either side of a daily midpoint set by China’s central bank, was 0.1 per cent weaker at Rmb6.9957 to the dollar. The offshore renminbi was 0.2 per cent weaker at Rmb6.9956.

Positive news from two vaccine trials supported global stocks overnight with the S&P 500 ending 0.9 per cent higher in the US and the FTSE 100 adding 1.8 per cent.

Chinese GDP grows 3.2% in second quarter

Thomas Hale in Hong Kong and Xinning Liu in Beijing

China’s economy returned to growth in the second quarter, in one of the world’s earliest signs of recovery from the fallout of the coronavirus pandemic.

Gross domestic product grew 3.2 per cent in the three months to the end of June, compared with the same period last year, exceeding forecasts.

The figures follow the first annual decline in decades in the previous quarter, when China’s GDP fell by 6.8 per cent as the country struggled to deal with the impact of the coronavirus pandemic.

The return to growth coincided with a period when new reported cases of the virus had fallen sharply, and against a backdrop of state support for the country’s industrial sector even as consumption remains weak.

Liu Aihua, spokeswoman for the country’s National Statistics Bureau, said the figures “demonstrated a momentum of restorative growth and gradual recovery”. “We are confident on the economic recovery in the second half of this year,” she added.

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S Korea central bank warns of deeper contraction

Song Jung-a in Seoul

The Bank of Korea on Thursday forecast the economy to shrink more than expected this year as exports and domestic consumption were hit hard by the coronavirus pandemic.

The central bank now expects Asia’s fourth-largest economy to contract more than 0.2 per cent in 2020, after it shrank 1.3 per cent in the first three months of this year, the sharpest decline since the global financial crisis.

“Looking forward, facilities and construction investment are expected to grow at a moderate pace; however, the pace of recovery in consumption and exports will be slower than previously forecast,” the bank said in a statement.

In May, it forecast the export-driven economy to shrink by 0.2 per cent this year while the IMF forecast a 2.1 per cent contraction for the Korean economy.

However, the BoK left interest rates unchanged at a record low of 0.5 per cent on Thursday, concerned about a property bubble in the housing market in the greater Seoul area.

The base rate was slashed by 75 basis points since March to shore up the economy battered by the pandemic.

The country’s exports dropped 10.9 per cent in June, falling for the fourth consecutive month, while its job market was hammered by the pandemic. The country lost about 352,000 jobs in June, marking the fourth straight monthly decline.

South Korea continued to grapple with rising coronavirus infections brought in from abroad, reporting 61 new cases on Thursday, including 47 imported cases, the highest since end-March.

About 20 of the imported cases were among those who worked at a construction field in Iraq, according to the Korea Centers for Disease Control and Prevention.

Infections coming in from overseas reported double-digit numbers for the past three weeks.

Peru president reshuffles cabinet as Covid-19 cases soar

Gideon Long in Bogotá

Peruvian president Martin Vizcarra has reshuffled his cabinet, ditching his health minister in the wake of some of the highest coronavirus numbers in the world.

He replaced Victor Zamora with surgeon Pilar Mazzetti, who has held the position before.

Despite imposing a strict lockdown at the start of the pandemic, Peru, with a population of 32m, has recorded nearly 340,000 cases of Covid-19.

That is the fifth-highest caseload in the world, and the country has recorded more than 12,400 deaths, the 10th-highest global death toll.

Mr Vizcarra’s popularity has fallen as the pandemic has unfolded.

The president kept his economy minister, María Antonieta Alva, and named economist Rafael Belaunde as his new mining minister.

Gross domestic product crashed by over 40 per cent year-on-year in April and by 33 per cent in May. Mining is the bedrock of the economy.

Despite the grim numbers, Peru has shown signs that the worst of the pandemic might be over. The number of new cases has dropped significantly in recent days.

Big US retail chains to require masks for all shoppers

Mamta Badkar and Peter Wells in New York and James Politi in Washington

Three of the biggest US retail chains will require all customers to wear masks, imposing the restrictions nationwide in the face of a patchwork of measures from government authorities in response to the new coronavirus outbreak.

Walmart, Kroger and Kohl’s announced the face covering policies, which go into effect next week, amid signs the spike of cases in the US south and west was continuing unabated.

About 65 per cent of Walmart’s 5,000 stores and Sam’s Club locations were in regions where face coverings were already mandatory, the company said. Kohl’s said about 70 per cent of its stores are affected by government mandates.

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Victoria faces ‘cunning enemy’ as 317 new cases reported

Australia’s state of Victoria reported 317 new coronavirus cases on Thursday morning as its premier described the virus as a “cunning enemy” and that it would take about two weeks to see the results of new lockdown measures.

Daniel Andrews, Victoria’s premier, said the new cases took the overall total to 4,750 with 29 deaths. The two fatalities from Covid-19 were men in their 80s, Mr Andrews said.

Metropolitan Melbourne was placed under lockdown last week in a bid to stall the spread of coronavirus infections.

Mr Andrews, pictured, called on residents of Victoria to follow the rules put in place to limit the spread of the virus and to avoid a harsher lockdown.

“It’s very very challenging for us to be across every single case and for every single person to do everything they can to limit the likelihood of infecting someone else,” he said.

“That’s why it’s so so important that these rules are followed.”

North Macedonians vote as coronavirus cases surge

Valerie Hopkins in Sarajevo

North Macedonia’s pro-Western Social Democrats are leading their nationalist rivals in a parliamentary vote by a knife edge, according to a partial vote count.

The vote, which had been postponed from April, took place as the country attempted to cope with a surge in Coronavirus cases, with 94 per 100,000 inhabitants, according to the European Center for Disease Prevention and Control.

The country of 2m people has registered more than 8,500 cases and almost 400 deaths.

More troops head to Melbourne as Covid-19 cases surge

The Australian and Victorian state governments announced on Wednesday that 1,000 more military personnel would be sent to Melbourne in the next few days, as a surge in coronavirus cases continues.

One of the country’s deputy chief medical officers, Michael Kidd, said the new additions were “highly-trained Australian Defence Force personnel” who join 400 other military supporting testing and checkpoint control.

“The additional ADF support will be … doing planning, logistics and intelligence reporting, people supporting the public health response focusing on contact tracing, data management and analysis and on information flow,” Prof Kidd said.

Victoria reported 270 more positive cases on Wednesday, out of 284 diagnosed nationally. “Nationwide, there are 90 people with Covid-19 in hospital, and 85 of those people are in hospital in Victoria,” he said.

In the past seven days, only 4 per cent of cases in Australia have been acquired overseas, according to health department data.

Dubai arrivals to New Zealand test positive

New Zealand has seen three cases of imported Covid-19 infection in the past two days, health officials said on Thursday.

Two people tested positive for Covid-19 after arriving in New Zealand on flights via the United Arab Emirates.

A man in his 60s arrived from Pakistan via Dubai on July 10 and a woman in her 50s who arrived from Dublin via Dubai. Both were put in isolation after travelling to the city of Rotorua.

On Thursday, a child who arrived from Italy on July 4 tested positive. The family is in quarantine in Christchurch.

The health ministry said the most recent case of Covid-19 acquired locally from an unknown source was 75 days ago.

Twitter hack shuts off Covid-19 information flow

Bitcoin scammers who on Wednesday hacked the Twitter accounts of dozens of public figures, including US presidential candidate Joe Biden, Microsoft founder Bill Gates and Tesla chief Elon Musk, have shut off a flow of Covid-19 information from prominent public health experts.

Twitter reacted to the hack by appearing to temporarily stop tweets from users with verified accounts. “You may be unable to Tweet or reset your password while we review and address this incident,” the Twitter Support account tweeted.

https://twitter.com/TwitterSupport/status/1283518038445223936

The accounts temporarily silenced include those of World Health Organization director-general Tedros Adhanom Ghebreyesus, US Centers for Disease Control and Prevention director Robert Redfield and former UK government scientific adviser Neil Ferguson.

A pause on all verified accounts would mean many national, state and provincial, and local public health officials and organisations are temporarily frozen.

“Apparently all verified (blue check) accounts are unable to tweet at the moment as Twitter tries to get a handle on this breach,” MIT professor Vipin Narang wrote on his unverified Twitter account. “I don’t want a blue check anyway.”

Asia-Pacific stocks cautious ahead of China GDP

Asia-Pacific stocks struggled for direction at the open on Thursday ahead of Chinese economic growth figures and after optimism over a potential coronavirus vaccine lifted global markets.

Japan’s Topix dipped 0.1 per cent, while the Kospi in South Korea was flat and Australia’s S&P/ASX 200 added 0.2 per cent. Futures tip the Hang Seng to open 0.3 per cent higher.

China will release its second quarter gross domestic product figures at 10am Hong Kong time on Thursday (3am Thursday in London, 10pm Wednesday in New York), giving investors insight into the effects of the pandemic on the world’s second-largest economy.

Economists polled by Reuters predict year -on-year growth of 2.5 per cent, up from the 6.8 per cent contraction in the first three months of the year as lockdowns to curb the spread of coronavirus stalled activity.

Global stocks climbed on Wednesday following positive signals on vaccine trials for coronavirus, with the S&P 500 ending the day up 0.9 per cent and the UK benchmark FTSE adding 1.8 per cent.

India urges schools to limit computer screen time

Amy Kazmin in New Delhi

The Indian government has unveiled a plan to help its citizens deal with the fallout from the coronavirus outbreak: limit screen time for the country’s 240m school-age children.

Authorities have urged schools to restrict online classes to two hours a day for children younger than 13 and three hours a day for older students in a bid to ensure children “do not get overly stretched or stressed or get affected negatively owing to its prolonged use”.

Critics say the pandemic will widen India’s educational divide, highlighting disparities between families with and without access to digital devices

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Carnival cruises taps another $1.3bn to stay afloat

Joe Rennison and Robert Smith in London

Carnival Corporation raised a further $1.3bn secured against its fleet of ships on Wednesday, as the cruise operator seeks to steady itself while burning through more than half a billion dollars per month.

The world’s largest cruise operator has suffered after the outbreak of coronavirus caused sickness and death on several of its vessels and forced the cancellation of voyages.

In April, the Miami-headquartered company offered an interest rate of 11.5 per cent on $4bn of secured bonds backed by the company’s assets, including 83 of its ships.

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US records 2nd-biggest single-day jump in new cases

Peter Wells in New York

The US reported its second-biggest one-day jump in coronavirus cases on Wednesday, boosted by near-record increases in infections in California and Florida.

A further 65,106 people tested positive for the disease over the past 24 hours, according to Covid Tracking Project data, up from 62,879 yesterday, and about 1,500 short of the July 10 record.

Florida becomes the third US state to top 300,000 coronavirus cases since the pandemic began after reporting another daily increase of more than 10,000 new cases.

A further 10,181 people were confirmed over the past 24 hours to have tested positive for Covid-19, Florida’s health department said on Wednesday morning, up from an almost week-low of 9,194 yesterday.

California reported among its biggest one-day increases in both new cases and deaths. A further 11,126 people tested positive for Covid-19 over the past 24 hours, the state’s health department revealed, up from an almost one-week low of 7,346.

https://twitter.com/MayorOfLA/status/1282848617439485952

“Please stay home when you can, avoid gatherings, and only visit businesses when you have to,” Los Angeles mayor Eric Garcetti wrote on Twitter.

Oklahoma governor Kevin Stitt has become the first US state leader to test positive for coronavirus. Mr Stitt, who said he was self-isolating at home, made the announcement during a teleconference. Oklahoma has not ordered a statewide pause or reversal of its reopening plans or issued a mask-wearing mandate.

Alabama joined a growing number of southern US states and ordered residents to wear a face covering as it confronts a more than 50 per cent increase in coronavirus cases over the past two weeks. Governor Kay Ivey issued the statewide mask requirement on Wednesday.

A further 855 people died from coronavirus since Tuesday, up from 736, and to the highest level in nearly a week. California (140) and Florida (112) had near-record increases, while Texas (110) reported its biggest one-day jump.

San Francisco delays business reopenings

Businesses in San Francisco that involve close interaction with customers will not reopen this week as planned, city officials announced on Wednesday, extending a pause on a return to normal.

Personal services, such as hairdressers and nail salons, would stay shut until further notice, the city’s top health official said.

“The key indicators of Covid-19 activity … show that a surge of cases and hospitalisations is under way, and it must be brought under control before reopening can continue,” said health director Grant Colfax.

Massage parlours, tattoo and body piercing salons would also be prohibited from opening.

Other activities and businesses that were previously scheduled to reopen either June 29 or July 13 remain on pause, including indoor dining, outdoor bars without food, indoor museums and aquariums, outdoor swimming pools and real estate open houses.

Mayor London Breed said the city would review the restrictions again on Friday.

New York City wavers over easing Covid-19 restrictions

New York City, the biggest US metropolis, will decide this week if Covid-19 movement restrictions will be eased as planned, or the city will have to extend a partial lockdown as cases surge in the country.

While New York expected to move into a “Phase Four” of restrictions that would see many locations and businesses reopened, mayor Bill de Blasio said on Wednesday that there is “a substantial amount of activity that needs to be adjudicated”.

He said under Phase Four, sports teams could start up without audiences, but a number of colleges and universities have already announced that they’re not going to do in person classes or activities.

The mayor said indoor dining would remain “on hold until a point that we feel it’s acceptable”.

Governors Island, a popular 11ha park between Manhattan and Brooklyn boroughs, reopened to the public on Wednesday, while Liberty and Ellis Islands plan to partially reopen on Monday. The Statue of Liberty’s interior will remain closed.

Asia companies fail on cyber-attack prevention during Covid-19

Most small and medium-sized Asia-Pacific businesses have failed to deploy basic cybersecurity measures during the pandemic, when employees are in less secure working-from-home environments, according to PwC, the consultancy.

PwC said it surveyed more than 1,000 such companies in 11 countries and territories during March 2020, as Covid-19 had reached pandemic status.

While most respondents expressed confidence in their cybersecurity measures, only 53 per cent had installed antivirus programs, regarded as an indicator of basic countermeasures.

“The survey reveals a discrepancy between their confidence in their cybersecurity capabilities and their actual cyber-readiness,” said Kenneth Wong, regional cybersecurity and privacy leader at PwC in Hong Kong.

The survey showed only 27 per cent of the companies had a dedicated
cybersecurity team. Mr Wong said 76 per cent of smaller businesses in the region had sustained more than one cyberattack over the past two years, while 57 per cent of those surveyed had been attacked.

“[Small and medium-sized businesses] are viewed as easy targets by attackers, as they do not have the substantial cybersecurity resources dedicated to protecting larger enterprises,” Mr Wong said.

PwC said the surveyed companies identified viruses and malware, web-based attacks and phishing as the top three cybercrimes.

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US stocks closed higher with the S&P 500 up 0.9 per cent, its second straight day of gains, led by shares in the industrial sector. The tech-heavy Nasdaq Composite rose 0.6 per cent, and the Dow Jones Industrial Average climbed 0.9 per cent.

US airline stocks rose as investors savoured good news about a potential vaccine and the prospect of additional government funding. American Airlines jumped 16 per cent to $13.44, followed by a near 15 per cent increase at United Airlines to $36.37. Prices also rose for Delta and Southwest as well as Boeing.

Moderna, the US biotech group, announced late on Tuesday that its experimental vaccine had produced an immune response in all 45 individuals participating in an early-stage trial. A rumour of positive developments for the vaccine candidate being developed by the University of Oxford in the UK also buoyed stocks.

Burberry, the UK luxury fashion group that relies heavily on wealthy tourists visiting its European stores, said it saw no immediate end to coronavirus disruption. European sales were down 75 per cent on a year ago. In contrast, online retailer Asos reported a jump in sales thanks to growth in “lockdown products” such as loungewear.

The Bank of Canada will keep its rates at rock-bottom levels until inflation reaches 2 per cent, as the central bank said it would continue its bond-buying programme. The bank said it will hold its benchmark rate at the “effective lower bound” of 0.25 per cent. In its first policy update under new governor Tiff Macklem, the bank also signalled a willingness to keep supporting an expansion in government debt not seen since the second world war.

Ireland has deferred reopening bars and nightclubs by three weeks until August 10 as a rise in Covid-19 infections spurs fear of a second coronavirus wave. Some 3,500 pubs that don’t serve food had been preparing to reopen next Monday but they have now been directed to stay closed. The sector closed in March, with the loss of 50,000 jobs.

About €40bn of France’s new €100bn coronavirus recovery plan will go towards protecting and modernising industry and reducing dependence on foreign countries, according to Jean Castex, the new French prime minister. Mr Castex was giving details in the National Assembly of President Emmanuel Macron’s promise on Tuesday to allocate more money to the national economic recovery from the Covid-19 pandemic.

Rishi Sunak, the UK chancellor of the exchequer, said British companies should not expect the government to help relieve their growing debt burden and that it is not sensible for the government to take equity stakes in companies. His remarks contrasted with those made by Andrew Bailey, Bank of England governor, who has said the high level of corporate debt might undermine the recovery and the public sector should ensure a response to “the need for equity capital”.

Coronavirus latest: Gilead’s remdesivir trial shows improvement in Covid-19 recovery


Australia faces little cross-border risk, says top medic

One of Australia’s top doctors said on Thursday there was little chance of the Victoria coronavirus outbreak crossing the border into New South Wales in large numbers, despite the issuance of 125,000 interstate travel permits in recent days.

“With those [new infection] numbers being low and our ability to test, trace and isolate, that is exactly what will stop … spreading within the community,” said Nick Coatsworth, one of the country’s deputy chief medical officers.

The focus is on Albury-Wodonga, sprawling border towns on the Murray River, which separates Victoria from NSW, where three people tested positive yesterday, one of whom had travelled from Melbourne.

Four cases have emerged in the Australian Capital Territory, 300km north of Albury, and another on the NSW coast.

“We have had isolated cases of Covid-19 already, related to the epidemic in Melbourne,” said Dr Coatsworth. “The residents of those border towns are encouraged not to move further north into NSW.”

Gladys Berejiklian, the NSW premier, ordered the border between Australia’s two most populous states shut at midnight on Wednesday evening after hundreds of new cases were reported in Victoria in the past week, mostly in Melbourne’s largely lower-income northern suburbs. There were 165 new cases recorded on Thursday in Victoria.

Queensland and South Australia also closed their state borders to Victorian residents. However, the NSW government said it had issued 125,000 permits to Victorian travellers requesting entry.

Australia’s Critical Health Resource Information System, which keeps track of intensive care units, reported that ICUs in Victorian hospitals were at 85 per cent capacity on Thursday, with 380 out of 446 beds occupied.

Overall, Australia has recorded 9,059 cases of coronavirus, with 182 new cases confirmed in the 24 hours to noon on Thursday. There have been 106 fatalities.

Australia’s second-largest city and home to more than 5m people, Melbourne is now under a six-week lockdown. Normally busy areas of the city, such as the Southern Cross railway station, pictured, were almost deserted on Friday.

Coronavirus latest: Italian retail sales surge 24% after lockdown eased


Percentage testing positive in US hits highest since May 8

Peter Wells in New York

The US reported more than 47,000 new cases of coronavirus on Monday, as the percentage of people testing positive for coronavirus hit its highest in two months and hospitalisations continued to rise.

Although the national increase was below recent record jumps of more than 50,000 a day, California, the most populous US state, reported a record increase of more than 11,000 cases.

Based on the nearly 518,400 tests conducted over the past day, the positivity rate for the US jumped to 9.1 per cent, the highest since May 8, from 6.5 per cent yesterday, according to Financial Times calculations using Covid Tracking Project data. On a seven-day rolling average, the per cent positive rate is 7.9 per cent, the highest since mid-May.

A total of 47,375 people in the US tested positive over the past 24 hours, according to data from Covid Tracking Project, and up slightly from 42,578. In the first four days of this month, the US case tally increased by more than 50,000 each day, including a record of more than 57,500 on July 4.

California represented most of the increase, with a record 11,529 new cases. That is a record for the state and is eclipsed only by New York’s biggest jump of 11,571 on April 15.

Florida reported a further 6,336 new cases. Last week the state become the first since New York to report a daily increase of more than 10,000.

Texas reported 5,318 new cases, down from a record jump of more than 8,200 on Saturday. However, more patients are hospitalised with coronavirus here — almost 8,700 — than in any other US state at present, which is heaping pressure on its public health system.

Dallas county reported its largest one-day increase (1,214) in hospitalisations on Monday, said Clay Jenkins, the county’s chief elected official. Last week, Houston’s main hospital said the number of patients in its intensive care unit wards in the area surpassed normal capacity of 1,330 as it had to deal with a jump in Covid-19 patients.

Earlier today, New Jersey governor Phil Murphy said the state’s rate of coronavirus transmission reached its highest in more than two months. The figure, often referred to as Rt or the R number, has been at 1.03 for the past two days, he said, pointing out that a number above one meant, on average, each coronavirus case leads to at least one more new case. “This is an early warning sign that, quite frankly, we need to do more,” he said.

US sends aircraft carriers into South China Sea


The US Navy has sent two aircraft carrier groups into the South China Sea for the first time since 2014 as China conducts exercises the contested waters. 

The USS Nimitz and the USS Ronald Reagan were conducting dual carrier operations and exercises in the South China Sea to support a free and open Indo-Pacific, the US Navy said on Saturday.

China’s People’s Liberation Army is conducting a five-day drill around the Paracel Islands, a disputed archipelago. Vietnam and the Philippines have protested against the exercise, which Washington has criticised as counterproductive to easing regional tension.

Beijing’s actions would “further destabilise the situation in the South China Sea,” the Pentagon said on Thursday, adding that the exercises violated Chinese commitments under an agreement with fellow claimants.

The simultaneous drills by Chinese and US armed forces in the strategic waters are the most high profile yet of a series of operations held in close quarters, as the two powers vie for dominance in the Asia-Pacific theatre.

The US repeatedly sent warships into the South China Sea in April following Chinese harassment of fishing and oil prospecting vessels from Vietnam and Malaysia.

The carriers involved in the current South China Sea exercises have been operating together in the Philippine Sea since June 28. Chinese and US military aircraft and ships have frequently followed each other in the South China Sea, the Bashi Channel which connects it to the Pacific, and the Philippine Sea.

On June 24, a Chinese warplane suddenly approached a US military tanker and naval surveillance aircraft south-east of Taiwan, according to Taiwanese military sources and experts. Military analysts said the surveillance aircraft was refuelling between flights to observe a Chinese submarine near Pratas, a South China Sea atoll held by Taiwan.

“This is a very risky manoeuvre,” said Captain Chang Ching, a research fellow at the Strategic Studies Society ROC and former commander in Taiwan’s navy. “They were sending the US a message: We know where you are!”

Since the start of the Chinese exercise in the Paracels on Wednesday, US surveillance ships and aircraft have been observing, according to data from ship and aircraft tracking websites shared by the South China Sea Probing Initiative, an outfit set up by Peking University.

The US and China have a number of agreements aimed at avoiding incidents in the air and at sea. Under an agreement for the notification of major military activities, the US was obliged to keep out of the area of the Paracels exercise which China had announced in advance, Capt Chang said.

Lt Joe Keiley, spokesman of the Seventh Fleet said the operation supported “enduring US commitments to stand up for the right of all nations to fly, sail, and operate wherever international law allows.”

“This opportunity for two carrier strike groups to train and operate together in the region provides combatant commanders with significant operational flexibility and capabilities that only the US Navy can command.”

Capt Chang said the US was aiming to demonstrate its superior naval capabilities to China. “The Chinese public has been enthusing how their nation has entered a ‘dual carrier’ era after their second carrier started service last year,” he said. “Now, the US Navy is aiming to shake that confidence by showing them that only it can stage such operations.”

Recent incidents in the South China Sea