Coronavirus latest: Earnings deluge underscores pandemic’s impact on corporate America
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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.
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.
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.
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.
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.
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.
Read more here
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.”
Read more here
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.
Read more here
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.
Read more here
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.
Read more here
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.
Read more here
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.
Read more here
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.
Read more here
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.