China export restrictions pose new risk for TikTok sale in US


China’s inclusion of new technologies on an export restrictions list could hamper TikTok’s sale in the US, according to state media reports, in the latest ratcheting up of trade tensions between the two countries.

China’s Ministry of Commerce revealed late on Friday the government had added items including those related to computing and artificial intelligence to a list of technologies subject to export controls.

In an interview with the state-run Xinhua news agency, Cui Fan, a government adviser, suggested that the new measures could impact the sale of TikTok by ByteDance, its Chinese owner, because they cover some of its underlying technologies.

He added that the company, which has attracted interest from Microsoft, Oracle and Walmart for its operations in the US, Canada, Australia and New Zealand, should “seriously and cautiously” decide whether to suspend its negotiations as a result.

The trade restrictions are the latest development in a feud between China and the US over TikTok, a popular video app that President Donald Trump has vowed to shut down unless its business in the country is sold to an American firm.

China has not adjusted its list of technology export restrictions since 2008, the Ministry of Commerce said in a statement. The changes were needed because of the “rapid development” of science and technology in the country.

The updated list of controlled exports added restrictions for “personalized information recommendation services based on data analysis”. Tiktok’s app is built on algorithms that analyse user behaviour to push personalised content.

The commerce ministry said it approves or denies applications for export within 30 business days of receiving an application.

Erich Andersen, ByteDance general counsel, said: “We are studying the new regulations that were released Friday. As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the US and China.”

Prof Cui, who is also a professor at Beijing’s University of International Business and Economics, told the FT the changes had been under discussion since 2018. But China was introducing them now in part because of the “current international situation”.

Inclusion on the list means companies must obtain additional government approvals for the export of certain technologies. Prof Cui told Xinhua that ByteDance should go through the “licensing procedures” if it is exporting related technology. 

The scrutiny of TikTok follows a wider deterioration in relations between China and the US, with longstanding tensions over trade escalating this year following the coronavirus outbreak and the introduction of a new security law in Hong Kong that prompted US sanctions on individuals.

Recent US pressure has focused on the technology sector. Mr Trump, who has hardened his stance towards China ahead of US elections in November, has said there is “credible evidence” that actions taken by ByteDance might harm US security.

Earlier in August, Mr Trump said he was giving US companies 45 days to stop dealing with WeChat, a Chinese messaging app owned by Tencent. The US president has signalled he might take a similar approach towards other Chinese companies, including ecommerce group Alibaba. 

In China, ByteDance has faced a backlash over the perception that it was bowing to US pressure.

Last week, Kevin Mayer, the chief executive of TikTok, quit his role, pointing to a “sharply changed” political environment. Earlier in the week, the company sued the Trump administration.

Coronavirus latest: France to extend mask wearing to all of Paris as Covid-19 spreads


The US justice department has requested Covid-19 data from four states as it considers civil rights investigations into the deaths of nursing home residents. The department said it was requesting the data from New York, New Jersey, Pennsylvania and Michigan, citing orders in those states that required nursing homes to admit coronavirus-infected patients.

Italy on Wednesday reported its biggest one-day increase in coronavirus cases in more than three months as Europe contends with a sharp uptick in infections. The country reported 1,367 new cases up from 878 the previous day, taking the total caseload to 262,540. The country’s death toll has climbed to 35,458. Italy is one of several countries in Europe with a rise in infections as holidaymakers return home.

Coronavirus will sap more than £20bn from Britain’s travel industry while the UK quarantine policy leaves London at risk of surrendering its position as a global hub for tourism and business, an industry group has warned. Spending by international travellers is expected to plummet 78 per cent, or £22bn, this year, the World Travel & Tourism Council said.

Inflation surged in Lebanon during July, with its consumer price index rocketing 112 per cent compared with 2019. The cost of consumer goods is being driven up by the devaluation of the Lebanese pound, whose two-decade peg to the dollar at L£1,500 has effectively been broken. Black market rates are currently hovering at L£7,000-7,500.

Dick’s Sporting Goods registered its highest-ever quarterly sales and earnings, as consumers showed growing interest in fitness and socially distant outdoor activities. The Pittsburgh-based retailer said net sales jumped 20.1 per cent year-on-year to $2.71bn for the three months to August 1. Consolidated same-store sales advanced 20.7 per cent.

London Gatwick is to cut up to a quarter of its workforce as part of a major restructuring following a collapse in passenger numbers at the UK’s second-busiest airport. Gatwick is entering into consultations with about 600 staff, and said it was in talks with the government over sector-specific support to help the aviation industry through the crisis.

Salesforce shares were poised to extend their gains a day after the cloud-based software group surpassed $5bn in quarterly sales and raised its forecast for next year. Shares in the San Francisco-based company rose 13 per cent in pre-market trading on Wednesday. They have risen more than 10 per cent this month, and 33 per cent for the year.

Russian gold miner Polymetal doubled its dividend after metal prices rallied in the first half of the year. Polymetal said it would pay a first-half dividend of 40 cents a share. The group has benefited from a 27 per cent rise in gold prices this year and lower costs due to a fall in the Russian rouble and Kazakh tenge. Gold hit a record $2,072 an ounce on August 6.

Compiled by George Russell in Hong Kong

Oil rises ahead of two dangerous storms hitting Gulf Coast


Oil prices rose on Monday, led higher by a jump in US gasoline futures as two dangerous storms careered towards the fuel refining hub on the US Gulf Coast.

Tropical storm Laura, which was expected to hit between Louisiana and Texas later this week, was now approaching hurricane strength and was gaining in intensity, warned the National Hurricane Center in Florida.

“Laura is forecast to strengthen over the Gulf of Mexico and there is an increasing risk of dangerous storm surge, wind, and rainfall impacts along portions of the US Gulf Coast by the middle of the week,” the NHC said on Monday.

RBOB gasoline futures, the benchmark for wholesale petrol prices in the US, rose almost 5 per cent to $1.3485 a gallon, as traders worried about a disruption to fuel supplies.

US crude benchmark West Texas Intermediate and international benchmark Brent also gained around 1 per cent to $42.70 a barrel and $44.80 a barrel, respectively, as oil producers temporarily shut around half of the production in the offshore Gulf of Mexico as a precaution.

Marco, the other tropical storm, was scheduled to approach the Louisiana coast later on Monday, weakening from hurricane strength overnight and dissipating further.

A key focus for traders was on the possible impact of the storms on refineries that dot the southern US coast. The US refining hub on the Gulf Coast processes roughly 10m barrels of crude a day, or more than half of all US demand, with pipelines carrying fuel supplies to population centres on the East Coast.

Robert Yawger at Mizuho Securities USA said damage to refineries could lead to the gap in price performance between fuels and crude widening further.

“If refineries shut in, there is no need for the crude oil that runs through them,” Mr Yawger said. “Gasoline and product will likely be bid, but crude oil prices could slide.”

Inventories of both crude oil and refined fuels are at elevated levels, however, which may dampen any price hit as long as pipelines and other industry infrastructure are not too badly affected, analysts said.

Oil consumption remains depressed by the pandemic, while stockpiles of fuel grew rapidly in March and April as lockdowns slashed demand in North America and Europe.

“Gains will be limited by the threat of a second prolonged Covid wave,” said Stephen Brennock at PVM oil brokerage in London.

The US has had an overly active hurricane season with 13 named storms so far, leading possibly to the busiest season on record, according to the National Oceanic and Atmospheric Administration. 

Historically, only two named storms form on average by early August, and the ninth named storm typically does not arrive until around October 4.

Meteorological agencies in the US and Australia have recently raised the chances of a La Niña weather phenomenon, which could enhance an already busy hurricane season. The phenomenon, caused by the cooling of the tropical Pacific Ocean, increases the number of hurricanes that develop and allows stronger hurricanes to form, according to NOAA.

Follow on Twitter: @oilsheppard

Socialising pushes Spain’s Covid-19 rate far above rest of Europe | Free to read


Coronavirus is spreading far faster in Spain than in the rest of Europe, confronting the country with a race against time to bring the outbreak under control before the return to school and work next month following the holiday season.

Figures published by the European Centre for Disease Prevention and Control, an EU agency, on Friday indicated that in the previous 14 days Spain had reported about 145 new Covid-19 cases per 100,000 of population.

Apart from Malta, no other European country had a ratio above 100, and the Spanish figures compare with ratios of 51 in France and 21 in the UK.

In three districts of Madrid, the Spanish region with most cases, the equivalent ratio is above 400 and in one it is almost 600. On Friday, the regional government of Madrid urged people in the worst-affected areas to stay at home.

“No one should be confused: things are not going well,” Fernando Simón, the doctor leading the country’s effort against the pandemic, said on Thursday evening, as he acknowledged that in some areas of the country the spread of the virus was out of control.

National and regional officials largely blame the speed of the virus’s resurgence on uncontrolled groups of youths drinking and socialising — as well as gatherings of family members — and are beginning to warn that despite months of planning, pupils may not be able to return to classes in full.

Dr Simón pleaded for social media influencers to use their clout with young people to persuade them of the dangers of the virus. “We can’t allow this to go on,” he said. “I understand that people want to party, but there are lots of ways to party.”

Critics say that Madrid and Spain as a whole need to step up their effort to track and trace the virus spread. In Madrid, where more than 2,800 new cases were reported on Friday, there are about 550 trackers.

“Unless citizens take responsibility, in terms of staying at home if they have been in contact [with someone infected], we could have the best tracking in the world and it won’t be enough,” Enrique Ruiz Escudero, the Madrid region’s top health official, told the Financial Times. “Most of the outbreaks we have detected have been family or social gatherings, when people relax and think they can’t be infected.”

With the disease resurgent in a city that has been largely deserted for the beach, the challenge is to avoid a disastrous further surge when people return to schools and work in around two weeks time, as well as during the autumn flu season.

As is the case in countries such as France and Germany, the number of daily cases recorded in Spain has already returned to levels not seen since spring. On Friday, the health ministry reported more than 8,000 new cases and said that 125 people had died in the previous week. This compares with a death toll of 22 in the week up to August 6.

Mr Ruiz Escudero emphasised that current hospitalisations and intensive care cases are a fraction of the levels reached during the pandemic’s peak in March and April, and that those affected are on the whole much younger than before. About half of all Spain’s new cases are asymptomatic. 

He added that the high totals in Madrid were partly the result of large-scale random testing in the most affected areas, rejecting criticism that the region’s centre-right government was too quick to relax controls when Spain’s nationwide lockdown ended on June 21.

Madrid, together with the rest of the country, is now reimposing some controls, this week decreeing the closure of nightclubs and discos — although on Friday a judge was reported to have overturned the order.

Mr Ruiz Escudero said the region was looking at “all possible scenarios” for the return to school, including part-time attendance, and called for nationwide agreement on protocols for how schools should respond to Covid-19 cases.

“The phase-out of the lockdown accelerated too much in June,” said Miguel Otero, an analyst at the Elcano institute, a think-tank, who served on a government committee on the transition to a new normality. “People had the impression the virus was coming under control and there was huge pressure on the economy to reopen, particularly the tourism and entertainment sectors.”

Mr Otero also suggested that part of the reason why Covid-19 was now more prevalent in Spain than elsewhere was the country’s love of bar-hopping and of family gatherings.

‘No evidence’ Hizbollah leaders were behind murder of Rafiq Hariri


A decade-long international investigation into the assassination of former Lebanese prime minister Rafiq Hariri has found no evidence that the leaders of Iran-backed paramilitary group Hizbollah were responsible for his killing, nor any “direct evidence” implicating the Syrian regime.

The February 14 2005 suicide bombing that killed Hariri and 21 other people was a defining moment in the Middle East’s modern history, ultimately catalysing the end of almost three decades of Syrian military occupation of Lebanon.

Although the assassination was “undoubtedly a political act” and “Syria and Hizbollah may have had motives to eliminate” Hariri, David Re, presiding judge of the Special Tribunal for Lebanon, said: “There is no evidence that the Hizbollah leadership had any involvement in Mr Hariri’s murder and there is no direct evidence of Syrian involvement.”

The UN-backed tribunal heard charges against four Hizbollah members in absentia, including conspiracy to murder and commit terrorist acts. The judges ruled unanimously that one of the defendants, Salim Ayyash, was guilty on all counts. But it cleared his three co-defendants, saying there was not sufficient evidence to pin the allegations on them.

“For many people this is going to be justice delayed, justice denied,” said Maha Yahya, director of the Beirut-based Carnegie Middle East Center think-tank. “Bottom line, no one is going to be held accountable for a crime that, in the words of the judges, was meant to destabilise Lebanon.”

Almost two tonnes of explosives were detonated in the 2005 attack, shaking Beirut and leaving a 1.9m deep crater. The investigation could not identify the suicide bomber, but found “92 human parts” belonging to an unknown man who was “most likely” the bomber, said Judge Janet Nosworthy.

The prosecution’s case had largely rested on patterns of mobile communications, which they alleged showed that the defendants planned and carried out the assassination.

The UN-convened trial has been 15 years in the making, after a series of political assassinations prompted Lebanon’s government in late 2005 to ask the UN for an international tribunal to investigate. The Special Tribunal for Lebanon did not open until March 2009.

As Lebanon’s first post-civil war prime minister, Hariri was a pivotal figure and one of the Middle East’s most recognisable leaders. Fondly remembered by many Lebanese as having presided over a period of relative prosperity, the tycoon is widely credited with rebuilding downtown Beirut and jolting the country’s economy back into life by attracting large investments from the Gulf, where he had strong business ties.

A supporter of the former prime minister outside the tribunal in The Hague on Tuesday © Getty Images

Reading of the judgment at The Hague was postponed after the August 4 explosion at Beirut’s port, which killed about 180 people, injured thousands and wrecked swaths of the capital. The government has stepped down, while Lebanon faces its worst economic crisis since the civil war ended in 1990.

The verdict could weaken calls for international investigation into the blast at the port, argued Randa Slim, conflict resolution director at the Washington-based Middle East Institute. It “strengthens the argument offered by opponents, including [Lebanese president Michel] Aoun that an investigation is not warranted”, she said.

The financial breakdown of the past year has, for some, dented Hariri’s reputation, as he and his political allies were founders of the now collapsed economic system and a form of governance seen as kleptocratic. His son, Saad Hariri, resigned as prime minister in the face of mass anti-corruption protests that erupted in October last year.

“We are still living today with the [political] ripple effect of the 2005 assassination of Rafiq Hariri,” said Ms Yahya. Mass protests and international pressure that followed “got the Syrians out” but ultimately opened space for Hizbollah to become integrated into Lebanon’s government, she said.

Syria has long been suspected as being behind the assassination because Hariri appeared to threaten the neighbouring regime’s control of Lebanon. Although he had stepped down as prime minister in October 2004, he was planning to run again on an anti-Syrian ticket and was co-ordinating efforts with other Lebanese political leaders to mount an opposition to its neighbours’ influence.

Lebanon’s Hizbollah, a Shia Islamist paramilitary and political party, is allied to Syrian president Bashar al-Assad. The four men accused of conspiracy to carry out the attack, who stood trial in absentia, were all supporters of Hizbollah. A fifth alleged conspirator, Mustafa Badreddine, was killed fighting in Syria in 2016, according to Hizbollah, which has vowed not to hand over the four remaining defendants. It is unclear where they are.

The trial said it had heard evidence that Hariri and Hizbollah’s leader Hassan Nasrallah had “good” relations. Yet it also said the murdered leader was making regular payments of “millions” of dollars to Syria’s military intelligence chief for Lebanon, “seen as a form of blackmail in order to maintain the relationship”. The court did not clarify why the money was being paid.

Lukashenko tells Putin Belarus protests pose a threat to Russia


Alexander Lukashenko has held telephone talks with Russia’s president Vladimir Putin after warning that the protests sweeping his country were “not just a threat to Belarus”.

“Defending Belarus today is nothing less than defending all of our space,” he said, according to state news agency Belta. “If Belarusians don’t hold out, this wave will roll over there.”

The Kremlin warned against “destructive forces that want to damage the two countries’ mutually beneficial co-operation,” and said the two men had expressed “certainty that all the problems that have arisen will soon be resolved.”

Tens of thousands of people across Belarus have protested against Mr Lukashenko’s disputed win in last Sunday’s presidential election.

Opposition candidate Svetlana Tikhanovskaya, who fled to Lithuania this week under pressure from Belarus security services, said she would form a “co-ordination council” from exile to work towards a “transfer of power”.

A violent police crackdown during which nearly 7,000 people were arrested — and many tortured — initially suppressed the rallies before galvanising them on Thursday.

Factory workers from heavily subsidised Belarus state enterprises, the core of Mr Lukashenko’s political base, went on strike to call for new elections and an end to the police violence.

Mr Lukashenko’s comments were a clear appeal to Mr Putin to defend himself against the unrest, an unprecedented phenomenon in the collective farm boss’s 26-year rule and an unthinkable event just a few days ago.

He said protesters were using “colour revolution playbooks” honed in pro-western uprisings in Ukraine and Georgia in the 2000s and said “elements of foreign interference” were directing them.

This is a turnround from the run-up to the election, when Mr Lukashenko repeatedly accused “puppetmasters” in Russia of funding a leading opposition candidate, who Belarus later jailed, and sending 33 mercenaries to “destabilise the situation”.

Speaking to Belarus’ armed forces on Saturday, Mr Lukashenko said he would not give up power voluntarily and rejected offers to mediate the crisis with foreign powers. “We won’t give up the country to anyone. We’ll get the situation under control,” Mr Lukashenko said, according to Belta. “Our soldiers have enough resources to defend themselves and their families and ensure the security of the state.”

EU foreign ministers agreed on Friday to start work on sanctions against those responsible for “violence and falsification” around Sunday’s poll.

On Friday, Belarus released 32 Russian mercenaries who it had charged two weeks ago with planning terrorist attacks in cahoots with the local opposition.

Russia said the mercenaries were taking advantage of Belarus’s lax border policy and lack of restrictions on international flights to transit to private security jobs in South America.

Mr Putin congratulated Mr Lukashenko on his disputed win, which the EU said on Friday it would not recognise.

Since the protests began, some Kremlin proxies — including the Russian nationalist firebrand Vladimir Zhirinovsky — have floated the idea of dumping Mr Lukashenko.

Russia’s foreign ministry said on Thursday that it was “concerned by the incidents of violations of public order on the streets of several Belarusian cities” but condemned “clearly discernible attempts to interfere in the affairs of a sovereign state with the goal of splitting society and destabilising the situation,” which it blames on western governments.

Coronavirus latest: US consumer prices grow for second consecutive month


Florida daily deaths top 200 for second consecutive day

Florida reported more than 200 coronavirus deaths for the second day running and an elevated number of new infections, casting a cloud over recent improvements in daily case trends.

A further 213 people in Florida died, the state health department revealed on Wednesday, down from yesterday’s record increase of 277. Over the past week, Florida has averaged about 164 deaths a day, down from a record rate of 185 earlier this month.

Florida reported 8,109 people had tested positive for Covid-19 over the past 24 hours, up from 5,831 on Tuesday and above the seven-day average of 6,880, which is at its highest in almost a week.

A total of 550,901 coronavirus cases have been confirmed in Florida since the pandemic began.

The state conducted nearly 81,200 tests over the past day, up from almost 67,000 reported on Tuesday. Of these tests, 11.89 per cent came back positive for the virus, the highest proportion since July 29 and from a multi-week low of below 9 per cent reported over the weekend.

US crude stockpiles fall more than expected on rising consumption

Derek Brower and Myles McCormick in London

US commercial stocks of crude oil dropped sharply again last week, as falling imports combined with rising consumption sparked a draw from storage that was far greater than the market expected.

Total commercial stocks for the week ended August 7 amounted to 514m barrels, compared with 519m barrels the week before. They remain 17 per cent above the same level last year.

The drawdown in stocks will raise hopes in the US oil industry that consumers are beginning to drag the market out of a historic period of oversupply.

Brent crude, the international marker, traded up 1.8 per cent on the day following the data release. WTI, the US marker, was up 2.1 per cent.

US petrol demand was higher, bucking the consumption plateau of recent weeks. Total finished motor gasoline supplied — the EIA’s method of measuring demand — rose 3 per cent compared with the week before, to 8.6m barrels a day. However, demand remains 10 per cent below the same period last year.

Gasoline stocks fell, pointing to further hopes for a recovery in US mobility following months of depressed activity in the wake of the virus lockdowns. Jet fuel product supplies remained down 46 per cent compared with the same four-week period last year.

Crude oil import data confirmed that the surge in supplies from Saudi Arabia — an outcome of the price war earlier this year — is over, with shipments from the kingdom amounting to slightly less than 300,000 b/d, compared with a peak of almost 1.6m b/d in May.

Tui bags additional €1bn loan from Berlin

Alice Hancock in London

Tui, Europe’s largest tour operator, has secured an extra €1.05bn loan from the German government to fund it through its low winter season after the near total shutdown in international travel wiped out its revenues earlier in the year.

The loan, from the state-backed bank KfW, comes on top of an existing loan from the same bank for €1.8bn that Tui secured in April. It leaves Tui with total cash and liquidity of €2.4bn as it goes into the typically quieter winter months.

The new loan, announced on Wednesday, is dependent upon the issuing of a convertible bond of €150m to Germany’s Economic Stabilization Fund, which was established to cushion the impact of coronavirus on German companies, and a waiver by Tui’s bondholders on its senior notes due in October 2021.

The company said that the partial restart of its summer holiday programme after European countries began to lift travel restrictions had “an immediate positive effect on working capital”. It added:

Holidays remain a high priority to our customers and we continue to work through different demand scenarios as we move through the current and upcoming seasons.

Tui, which typically uses customers’ prepayments for holidays to fund its day-to-day operations, has been hit particularly hard by the virus as holidaymakers cancelled bookings and claimed refunds. It has also had to cut flights to the popular holiday resorts of Spain from its main UK and German markets in recent weeks following an uptick in the virus there.

The Hanover-based travel operator is due to report financial results on Thursday.

US stocks advance towards record while bonds extend decline

US equities climbed towards an all-time high on Wednesday while global bond markets extended a recent sell-off as investors shifted into riskier assets.

The S&P 500 reversed the previous session’s losses to gain 1 per cent as the index edged towards a record struck in February. In Europe, UK equities outshone their peers.

Ten-year US Treasury yields pulled back from their highest level in more than a month, recently up 0.013 percentage point to hit 0.67 per cent, reflecting a fall in prices. A week ago the yields were around 0.5 per cent. UK and eurozone sovereign debt yields followed suit.

US consumer price gains kept pace into a second month as demand signalled a rebound from a pandemic-related decline. That meant the index matched June’s advance when it rose for the first time since February, before the US shut down to stem the spread of Covid-19.

Analysts pointed to huge sales of new debt as a short-term catalyst for the sell-off. The US Treasury is set to auction a record $38bn of 10-year bonds on Wednesday.

In Europe, UK stocks swept past their continental peers as investors homed in on upbeat earnings reports and a nascent economic rebound at the end of a bleak second quarter.

London’s FTSE 100 blue-chip index sailed 1.5 per cent higher by early afternoon, a rosier move than its less exuberant eurozone peers. Frankfurt’s Dax shook itself from an earlier reverie to rise 0.3 per cent while the CAC 40 in Paris accelerated to a 0.7 per cent gain. The regional Stoxx 600 index added 0.6 per cent.

US consumer prices grow for second consecutive month

US consumer price gains kept pace into a second month as demand showed signs of a rebound from the depths of the pandemic-fuelled slump.

The US Bureau of Labor Statistics said the consumer price index jumped a seasonally adjusted 0.6 per cent in July against the previous month, higher than economists’ forecast for 0.3 per cent growth. The figure also matched gains recorded in June, when consumer prices climbed for the first time since February, before coronavirus-related shutdowns in the US. In April, the CPI sank 0.8 per cent, the biggest drop since December 2008.

On an unadjusted basis, the CPI was up 1 per cent year on year versus 0.6 per cent in June.

The CPI’s gain in July “mainly reflects a recovery in the prices of goods and services that were most affected during the early stages of the pandemic”, said Paul Ashworth, chief US economist at Capital Economics.

Petrol accounted for about a quarter of the monthly increase in July, with more Americans returning to the road and oil prices recovering from historic lows. The energy index rose 2.5 per cent. That offset declines in food prices, which fell 0.4 per cent.

The so-called core CPI, which excludes volatile food and energy prices, was up 0.6 per cent, compared with the consensus view of 0.2 per cent growth.

Prices for used cars and trucks were 2.3 per cent higher, following a 1.2 per cent decline in June. Housing, transportation services, medical care and apparel also recorded price gains.

Data on Tuesday showed producer prices also increased more than expected last month, rising 0.6 per cent in another sign of improved demand.

Train derails in Scotland, with one death and serious injuries reported

Mure Dickie in Edinburgh and Philip Georgiadis in London

At least one person is reported to have died and an unknown number of passengers are seriously injured after a train derailed in north-east Scotland on Wednesday following heavy rain and floods in the area.

A major incident was declared at the scene of the derailment near Stonehaven in Aberdeenshire, Scottish first minister Nicola Sturgeon said.

“Although details are still emerging, I am afraid to say there are early reports of serious injuries,” she told the Scottish parliament.

Significantly fewer passengers are travelling on the UK’s rail network owing to the coronavirus pandemic. The summer months, however, have seen an increase in rail travellers as restrictions have been eased.

The Press Association reported that at least one person was believed to have died in the derailment, which police said occurred about 9.40am. Network Rail had earlier warned of landslides in the area where the derailment happened and said services had been unable to operate.

The train involved was the 06.48am ScotRail service travelling between Aberdeen and Glasgow Queen Street, a long-distance service running through the spine of Scotland. 

Wall Street set to open higher as bonds extend decline

US equities were poised to follow their European counterparts higher while global bond markets extended a recent sell-off as investors shifted into riskier assets.

Stock futures for the S&P 500 picked up speed during European trading, tipping the index to recoup much of its 0.8 per cent overnight decline. Ten-year US Treasury yields climbed to their highest in more than a month at 0.67 per cent, reflecting a fall in prices, having sunk to just above 0.5 per cent a week ago. Yields on bonds in the UK and eurozone also climbed.

Analysts pointed to huge sales of new debt as a short-term catalyst for the sell-off. The US Treasury is set to auction a record $38bn of 10-year bonds on Wednesday.

Meanwhile, gold, traditionally a haven asset, revived a rally one day after its biggest sell-off in seven years, pushing the metal’s price back below $2,000 a troy ounce. It was recently up 1.2 per cent to trade at $1,933 a troy ounce.

“The world has looked precarious,” said Georgina Taylor, multi-asset fund manager at Invesco. “There is a demand element for gold. It is an asset to park your cash.”

In Europe, UK stocks pipped their continental peers to a steeper climb as investors homed in on upbeat earnings reports and a nascent economic rebound at the end of a bleak second quarter.

London’s FTSE 100 blue-chip index sailed 1.3 per cent higher by early afternoon, a rosier move than its less exuberant eurozone peers. Frankfurt’s Dax barely budged while the CAC 40 in Paris gained 0.4 per cent, reflecting the move in the regional Stoxx 600 index.

Across the Atlantic, Wall Street was set to gain when it opens. The S&P 500 closed lower on Tuesday after Mitch McConnell, the Republican leader in the US Senate, said there have been no talks on a new economic stimulus package since Friday.

Investors have emphasised the importance of reaching an agreement on another round of support measures.

FC Barcelona player infected with coronavirus

A player at FC Barcelona has tested positive for coronavirus, a day before squad members from the world’s richest football club head off to Lisbon for the final stages of the Champions League.

The player, among nine due to begin pre-season training on Wednesday, is self-isolating after testing positive, the Spanish club said.

“The player has not been in contact with any of the senior team players who are scheduled to travel to Lisbon this Thursday to compete in the Champions League,” FC Barcelona said.

Uefa has warned that the staging of future international fixtures will be at risk if players fail to follow a 31-page rulebook in Lisbon during the 12-day knock-out stage for the quarter finalists. Portugal is one of the countries not exempt from requirements for returning travellers to the UK to self-isolate for 14 days.

Clubs on the continent are beginning to be punished if their players flout restrictions to stop the spread of coronavirus. Scotland’s first minister Nicola Sturgeon demanded on Tuesday that Celtic call off its next two games, after its defender Boli Bolingoli was found to have travelled to Spain to later play in a match without quarantining.

Two players from Atlético Madrid, one of the teams in the Champions League quarter-finals, have been forced to self-isolate after testing positive for coronavirus at the weekend.

Eurozone industrial production jumps 9% in June

Martin Arnold in Frankfurt

Eurozone industrial production rose 9.1 per cent in June, as the region’s manufacturers ramped up their activity after the heavy blow from the coronavirus pandemic.

However, the rise in the bloc’s industrial output in June was below the 10 per cent consensus forecasts of economists surveyed by Reuters, raising questions about the speed of the recovery in the region’s pandemic-stricken economy.

Following a record 12.4 per cent increase in May, industrial production remains down more than 12.3 per cent from a year ago, underlining how factories are still struggling to recover fully from the pandemic.

“The factory orders are still way off where we were before the crisis, so we need quite a lot more just to catch up,” said Anatoli Annenkov, economist at Société Générale.

Overall production of consumer goods rebounded the fastest in June, rising just over 20 per cent, while capital goods production rose 14.2 per cent – helped by the restarting of the region’s car production.

Intermediate goods production rose 6.7 per cent, while non-durable consumer goods rose 4.8 per cent and energy production 2.6 per cent.

The coronavirus pandemic dragged the eurozone economy into a historic recession in the second quarter, when gross domestic product fell by a record 12.1 per cent from the first quarter.

But several signs show a sharp bounce back since May. Purchasing managers’ indices pointed to a strong rebound in activity for manufacturers across the eurozone in July, fuelling confidence about the region’s industrial output for the third quarter.

A further boost came from the record 27.9 per cent jump in orders at Germany’s factories in June from a month earlier, as well as the 15 per cent rebound in German exports in the same month, boosted by increased trade with China.

UK’s emphasis on services means pandemic has hit economy harder

The pandemic crisis has hit the UK economy harder than other developed economies, with the slide in gross domestic product since the end of last year being double that in the US and second only to Spain among its European neighbours.

“The driver of economic growth is critical with how quickly economies can recover from the pandemic,” said Georgina Taylor, multi-asset fund manager at Invesco.
“Nowhere is doing well but, as manufacturing comes back on line, those economies where it is a bigger driver of economic growth can come back quicker than a services-based economy such as the UK.”

“This is why we are at the bottom of the pile at the moment; we are a services economy,” she said. “We are not all equal in this crisis.”

The services industry in the UK accounts for 80 per cent of the economy. The UK particularly felt the heat as restaurants, bars and shops closed for weeks during lockdown measures that were imposed on March 23 as the government tried to impede the spread of the virus. Social-distancing measures added to the angst even when pubs began to open at the beginning of the summer.

Output increased 8.7 per cent month-on-month in June as a revival picked up momentum, official figures showed on Wednesday.

Energy groups’ earnings hit by fall in power prices

Leslie Hook

Danish energy company Orsted said that low power prices in the UK had knocked its earnings during the second quarter, and warned that low power prices could persist due to the economic impact of coronavirus.

The company, which is the world’s largest developer of offshore wind farms, left its full-year guidance unchanged for earnings before interest, tax, depreciation and amortisation.

However it reported a DKr150m ($23.6m) impact from low power prices during the second quarter, as a result of low demand for electricity during lockdown.

“As long as we are in a recessionary state of the economy we will see an impact on lower power prices,” said chief executive Henrik Poulsen. “We would expect that to continue.”

He pointed out that the impact of power prices was “a fairly small blip relative to our total earnings”, which were DKr3bn before interest, tax, depreciation and amortisation during the second quarter.

German energy group Eon was hit by low electricity demand during lockdown in the first half of 2020, and cut its full-year earnings guidance as a result, it said on Wednesday.

Germany’s health minister sceptical about Russian vaccine

Guy Chazan in Berlin

Jens Spahn, the German health minister, has expressed scepticism about Russia’s Covid-19 vaccine, saying it had not been adequately tested.

In an interview with Deutschlandfunk radio, Mr Spahn said: “It’s not about being first, it’s about having a tried, tested and safe vaccine which will be given — and that’s the important part — to hundreds of millions, maybe even billions of people.”

He said for people to be able to trust such a vaccine, it was important to do all the relevant tests and make them public before it was licensed.

“The problem is that we know very little because the Russian authorities are not being very transparent,” he said. He said there had clearly been no phase 3 clinical trials or tests on thousands of people.

“And it can be dangerous to start vaccinating millions, if not billions of people too early, because that would likely kill off the [public] acceptance of vaccination if it goes wrong,” he said. “And so I’m very sceptical about what’s happening in Russia.”

President Vladimir Putin announced on Tuesday that Russia had become the first country to grant regulatory approval to a Covid-19 vaccine, after less than two months of human testing.

Moscow said the vaccine would be administered to medical personnel and then to teachers on a voluntary basis at the end of this month or in early September, with a mass roll-out in Russia expected to start in October.

Mr Spahn said he would be “very pleased if we have a first, good vaccine, but from everything we know — and that’s the main problem, that the Russians are telling us very little — it has not been sufficiently tested”.

Pandemic hits value of Covent Garden

George Hammond in London

Coronavirus has blown a £430m hole in the value of London’s Covent Garden, according to Capital & Counties, the estate’s owner.

Covent Garden has shed 17 per cent of its value, from £2.6bn to £2.2bn, since the start of the year, with coronavirus having emptied out the popular tourist destination for much of that time.

Capital & Counties, or Capco, said it had reopened the majority of the estate, in its results for the six months to June 30 on Wednesday, and added it was pedestrianising more streets in order to facilitate that.

Net rental income in that period, which encompasses the UK’s lockdown from March to May, fell 41 per cent from the same period a year earlier.

Ian Hawksworth, Capco’s chief executive said the “majority of our retail and hospitality customers have reopened with encouraging early indicators.”

Capco is not paying a dividend for the period.

Asos raises forecasts as customers return fewer clothes

Shares in Asos jumped after the ecommerce fashion retailer said that sales and profits were to come in “significantly ahead” of market expectations for the year, as customers shifted to online shopping during lockdown.

The group expects revenue growth to be between 17 and 19 per cent compared with the year before and profit before tax to come in the range of £130m to £150m, supported by “strong underlying demand” and customers sending fewer unwanted goods back to the retailer.

Consensus among analysts polled by Reuters was for revenue to increase by 13 per cent and profit before tax to be about £53m. Shares in Asos rose 10 per cent in early London trading.

The company said in a trading update that the lower level of returns was due to shoppers buying “lockdown” products, such as activewear and cosmetic products, and engaging in more deliberate purchasing.

Asos said it was unclear how long the change in shopping behaviour that has benefited its business would persist.

UK chancellor: ‘Hard times are here’

Rishi Sunak, the UK chancellor, said “hard times are here” after the country officially fell into its deepest recession on record.

“Today’s figures confirm that hard times are here … But while there are difficult choices to be made ahead, we will get through this,” he said.

The figures led to renewed calls from business groups for the government to extend wage support through the furlough scheme and step up other forms of support for the economy.

Overnight the FT reported Mr Sunak is considering shelving his autumn Budget if the UK is hit by a second wave of coronavirus.

Asset manager M&G reports 57% fall in profits

Siobhan Riding in London

M&G suffered a 57 per cent fall in profits in the first half of the year after spooked investors pulled money from its retail funds during the coronavirus-related market sell-off.

The asset manager and insurer reported adjusted pre-tax profit of £309m, well below the £714m posted for the same period last year, after heavy net client outflows from its savings and investment business caused its fee revenues to drop by nearly 9 per cent.

Outflows totalled £4.1bn, as the market volatility and economic uncertainty unleashed by the coronavirus pandemic crisis sent investors fleeing from M&G’s retail funds. Total assets under management and administration declined from £352bn to £339bn over the period.

The results cap a turbulent time for M&G as it approaches its first anniversary as an independent, listed company. It was originally part of Prudential, but was spun off last year as part of a demerger of the group’s UK insurance and investment business.

“Obviously, this is not the backdrop we would have wished as a newly independent company,” said chief executive John Foley. Despite this, he said M&G would pay an interim dividend of 6.00p in light of its “continued financial strength and resilient performance”.

European stocks poised for mixed opening

European stocks are set for a mixed opening after the UK fell into the deepest recession on record, while investors weighed up dimming hopes for imminent new measures to support the US economy’s recovery from the coronavirus pandemic.

Stock futures for the Euro Stoxx 600 were flat, implying that equities will open little changed. London’s FTSE 100 futures were marginally higher, up 0.3 per cent, while the S&P 500 was tipped to gain 0.5 per cent.

The UK’s gross domestic product fell 20.4 per cent quarter-on-quarter, official figures showed, with widespread contractions across all sectors. Productivity dropped by the most since the three-day week in the 1970s.

Equities in the Asia-Pacific region slipped. China’s CSI 300 index of Shanghai and Shenzhen-listed stocks shed 0.9 per cent on Wednesday while Hong Kong’s Hang Seng rose 0.8 per cent. Australia’s S&P/ASX 200 dropped 0.2 per cent.

The declines came after Mitch McConnell, the Republican leader in the US Senate, said on Tuesday that there had been no talks on a new economic stimulus package since Friday. His comments prompted a late downswing on Wall Street, where the S&P 500 finished the day down 0.8 per cent.

UK government urged to take ‘bold action’ as economy enters recession

The British Chambers of Commerce has called for “bold action” to inject confidence back into the UK economy after figures revealed the UK fell into the worst recession on record in the second quarter.

The business lobby group said the likelihood of swift recovery “remains remote”, particularly as government support measures wind down.

BCC head of economics Suren Thiru said:

Against this backdrop, bold action is needed to immediately inject confidence back into the UK economy. This should include supporting businesses to retain staff through a cut in employer national insurance contributions and targeted support to help businesses placed under local lockdowns.

The Resolution Foundation, a think tank, said the UK faced a more challenging recovery than most other developed countries given it suffered a larger economic hit.

The longer-term impact of the crisis on living standards will depend on the scale of the rise in unemployment and how long it lasts. So the government’s priority should be providing support to those parts of the economy hardest hit by the crisis, supporting jobs while also helping those unlucky enough become unemployed.

Admiral profits rise by nearly a third on fewer road accidents

Oliver Ralph in London

Profits at car insurer Admiral jumped by almost a third in the first half of the year as the number of road accidents fell sharply during the lockdown, pushing down insurance claims.

The company passed some of the benefit of lower claims on to customers in the form of a £25 per vehicle premium rebate. Admiral was the only UK insurer to offer an automatic rebate to all customers.

Pre-tax profits for the first half jumped 30 per cent to £287m. In addition to the impact of the lockdown measures that were imposed in an effort to contain the spread of coronavirus, claims from previous years turned out to be cheaper than it had first expected, the company said.

EmoticonUK enters historic recession

Delphine Strauss in London

The UK economy shrank by a fifth in the second quarter of 2020, falling into the deepest recession on record and suffering a bigger slump than any other major European economy over that period.

Official data released on Wednesday showed that gross domestic product fell by 20.4 per cent quarter-on-quarter, with widespread contractions across all sectors. Productivity saw its biggest fall since the three-day week in the 1970s.

A recovery from the depths of the lockdown gained momentum in June, with output growing by 8.7 per cent month-on-month – faster than most economists had expected, although broadly in line with the Bank of England’s latest predictions. This means GDP has now grown 11.3 per cent since its April low, but still remains 17.2 per cent beneath its level in February, before the coronavirus crisis hit.

Hare Krishna temple sealed after 22 people test positive

Amy Kazmin in New Delhi

Indian authorities have sealed a Hindu temple of the International Society of Krishna Consciousness — also known as the Hare Krishna — in the holy city of Vrindaban, after 22 people there, including two priests, tested positive for coronavirus.

More than 165 people were residing at the Iskcon temple complex, where Lord Krishna is believed to have lived. The head of the Iskcon movement died in Florida from Covid-19 in July.

The cluster at the temple highlights the way temples and shrines have emerged as highly risky locations for visiting, after authorities in many parts of the country permitted the reopening of Hindu temples and other religious places as part of its efforts to revive the economy.

In South India, nearly 750 employees and personnel of the massive Lord Venkateswara Temple, in the southern town of Tirupati, have been infected with coronavirus since the temple reopened to the public on June 11 after the nationwide lockdown.

Of those infected, at least three, including the former head priest, are known to have died. No one knows how many of the hundreds and thousands of visitors who come to the shrine may have contracted the virus from their visit.

But authorities have resisted calls to close the powerful institution to the public.

India has more than 2.3m confirmed coronavirus cases and has now detected more new cases in a day than either the US or Brazil, which have had the two highest caseloads in the world.

Colombia reports record number of new Covid-19 cases

Gideon Long in Bogotá

Colombia has recorded its highest daily number of new coronavirus cases so far and, having avoided the worst of the pandemic in the early stages, has become one of the hardest hit countries in Latin America in recent weeks.

The government said on Tuesday it recorded 12,830 new cases in a single 24-period, eclipsing the previous record of 11,996.

Over the past week, Colombia, with a population of 50m, has averaged well over 10,000 new cases a day – one of the highest per capita rates of infection anywhere in the world.

Since the start of the pandemic it has recorded over 410,000 cases and more than 13,000 deaths.

Parts of the country remain under relatively strict lockdown while some areas have opened up.

Indian health workers charged for protesting over pay

Amy Kazmin in New Delhi

New Delhi police have filed criminal charges against 100 public health workers for demonstrating against their poor pay and working conditions, even as they have become frontline troops in the country’s battle against coronavirus.

The 100 women charged are among 600,000 accredited social health activists who have been on strike in recent days, protesting against their meagre salaries — in some cases as low as Rs2,000 ($26.74) per month — and lack of protective equipment as they play a critical role in the battle against the pathogen.

India’s army of Asha workers — who are normally involved in government public health campaigns such as tuberculosis treatment, vaccinations, prenatal health and encouraging women to go to the hospital for childbirth — are now on the front line of India’s coronavirus campaign, involved in such activities as contact tracing and public outreach.

But they face harassment and suspicion from citizens who fear being hauled off to squalid government quarantine facilities or public hospitals.

Many Asha workers gathered in New Delhi on Sunday to protest against their poor conditions, and those charged were accused of holding the demonstration without permission.

China suspends 3 air routes into Shanghai over coronavirus cases

China’s aviation regulator has said it would suspend three routes into Shanghai, including one operated by SriLankan Airlines, for up to four weeks after arrivals tested positive for coronavirus.

The Civil Aviation Administration of China said the SriLankan route between Colombo and Shanghai would be suspended for four weeks starting from Monday after 23 passengers tested positive for Covid-19.

The CAAC introduced penalties for airlines carrying more than five coronavirus-positive passengers into the country on one flight, in a bid to slow the number of imported cases. Passengers must produce a negative coronavirus test before travelling.

Etihad route EY862 between Abu Dhabi and Shanghai will also be suspended for one week from Monday after six passengers arriving in the country tested positive for coronavirus.

China Eastern Airlines’ route between Manila and Shanghai will be suspended for one week after another six passengers tested positive for the virus.

China Southern Airlines was the first airline to have its route suspended in mid-June over flights between Dhaka and Guangzhou.

NZ expands quantitative easing in wake of new outbreak

Jamie Smyth in Sydney

New Zealand’s central bank is expanding its quantitative easing programme to NZ$100bn (US$65.6bn) following a fresh outbreak of Covid-19, which has forced the lockdown of Auckland and threatens to dent a nascent economic recovery.

Adrian Orr, Reserve Bank of New Zealand governor, said the banks’ asset purchase scheme would expand from NZ$60bn to NZ$100bn due to the “highly uncertain” global and domestic economic outlook, which had been underlined by the return of social-distancing restrictions in New Zealand.

In addition, the RBNZ is actively preparing additional policy tools — including negative interest rates, funding commercial bank lending and buying foreign assets — in case of a need for further stimulus, he said following a monetary policy meeting at which official interest rates were left on hold at 0.25 per cent.

“The severe global economic disruption caused by the pandemic is persisting,” said Mr Orr. “Any significant change in the global and domestic economic outlook remains dependent on the containment of the virus, which is highly uncertain as evidenced today by the return to social restrictions in New Zealand.”

The surprise move to expand quantitative easing caused the Kiwi to fall 0.7 per cent to US$0.6525.

New Zealand’s economy has performed better than anticipated over recent months following the nation’s successful run of 102 days without any new Covid-19 cases acquired outside of quarantine facilities.

This enabled life to return to normal in most parts of the country, apart from continuing restrictions on international borders. But this record was smashed on Tuesday when four new coronavirus cases were identified in Auckland with no known source — a discovery that prompted the government to order a strict lockdown of the city for at least three days.

Less severe social-distancing restrictions were imposed across the rest of the nation from midday on Wednesday — a move which local media reported prompted a swath of panic buying from shoppers.

Analysts said that if the social restrictions last longer than the anticipated three days it would significantly restrict domestic activity, which is already being affected by the border closure. Ben Udy, economist at Capital Economics, said he expected the RBNZ would still wait until next year before bringing in negative interest rates.

Netherlands and Belgium split over tackling virus hotspots

Mehreen Khan and Michael Peel in Brussels

The Netherlands and Belgium are battling some of Europe’s sharpest increases in new Covid-19 cases, despite taking sharply different strategies that highlight the difficulties governments still face in quelling the virus.

The latest figures show a near doubling of new Covid-19 cases in the Netherlands at the start of August while Belgium has reported its fifth consecutive week of rising infections.
Experts warn summer weather has led to governments and residents dropping their guard just as the travels of richer European holidaymakers around the continent increase the risk of outbreaks spreading.

Read more here

Indian industrial production slide eases in June

Amy Kazmin in New Delhi

India’s index of industrial production contracted 16.6 per cent year-on-year in June, a month that saw the economy rebound after one of the world’s strictest coronavirus lockdowns.

Industrial production had shrunk a record 57.6 per cent in April, when virtually all sectors were brought to a complete halt. The slide moderated somewhat in May, with an IIP contraction of 33.8 per cent.

The June figures suggested that Indian industries had continued their effort to gradually restart, and the latest data reflected pent-up demand, but also highlighted that economic activity still remains far below last year’s levels.

Electricity generation was down 10 per cent in June from last year, mining output fell 19.8 per cent, and manufacturing output contracted 17.8 per cent from last June.

Prime Minister Narendra Modi’s government has been struggling to revive economic activity, as the spread of the virus continues to accelerate.

India detected more than 61,000 new coronavirus cases in the past 24 hours — more than any other country in the world — bringing the total confirmed caseload to 2.3m.

So far, more than 46,000 Indians have died from coronavirus.

Many senior leaders of India’s ruling Bharatiya Janata party are among those that have been admitted to hospital with the infection.

Cathay Pacific reports record $1.3bn loss in pandemic standstill

Thomas Hale in Hong Kong

Cathay Pacific reported record losses in the first half of the year, with more than three-quarters of its passenger traffic disappearing compared with 2019 because of lockdowns and travel restrictions.

The company made a loss of HK$9.9bn ($1.3bn) in the six months to the end of June, confirming figures released as part of a profit warning in mid-July. That compares with a profit of HK$1.3bn over the same period last year.

“The first six months of 2020 were the most challenging that the Cathay Pacific Group has faced in its more than 70-year history,” the company said in a statement, pointing to the impact of the coronavirus pandemic on travel.

It carried 4.4m passengers in the first half of the year, down by 76 per cent compared with last year.

The losses are net of just over HK$1bn of Covid-related government grants globally. They come two months after a restructuring plan was unveiled in June, which saw the Hong Kong government take a stake as part of a $5bn rescue plan.

Cathay Pacific shares were up 9.3 per cent ahead of the earnings announcement, on track for the largest one-day gain in a decade.

Top US colleges postpone football seasons

Sara Germano in New York

The $8bn US college sports industry suffered a major setback on Tuesday as some of the biggest universities in the country postponed their lucrative American football seasons amid the coronavirus pandemic.

The decisions to forgo the programmes were announced by the Big Ten and Pac-12 conferences, which include 26 high-profile universities such as the University of Michigan, Ohio State, pictured in 2019, and Stanford.

“Unlike professional sports, college sports cannot operate in a bubble,” said Pac-12 commissioner Larry Scott in announcing the postponement, which affects all sports through the end of 2020.

Read more here

Awards for pandemic heroes as China reports 25 new cases

China recorded 25 new Covid-19 infections on Wednesday, 16 of which were imported, a day after President Xi Jinping made the first awards to researchers involved in combating the pandemic.

The nine local cases were all in the western region of Xinjiang, which has been put under a heavy testing regime.

Of the 16 imported cases, six were detected in Guangdong province, four in Shanghai municipality and one each in Inner Mongolia, Zhejiang, Fujian, Shandong, Sichuan and Shaanxi provinces.

China has officially recorded 84,737 confirmed cases, of whom 4,634 died. Another 4,181 cases have been detected in Hong Kong since the pandemic began, along with 46 in Macau.

Beijing hailed the heroes of its coronavirus battle for the first time this week with one of the country’s highest awards, the Medal of the Republic, going to Zhong Nanshan, a pulmonary disease researcher.

On Tuesday, the official Xinhua news agency announced Mr Xi had also honoured Zhang Boli, a traditional Chinese medicine practitioner; Zhang Dingyu, head of Wuhan’s designated coronavirus hospital; and Chen Wei, a military medical scientist.

Hybrid internships provide a blueprint for the future

Amy O’Brien in London

The summer internship is a rite of passage for many students and graduates. But the pandemic and its global lockdowns have created an unusual set-up, as many start their placements from their bedrooms.

Adam Warburton-Brown, a 23-year-old graduate from King’s College London, started his fundraising internship at a non-profit environmental organisation in May after moving back to the family home. “They sent me out a laptop — the only problem was I had no desk, so I was working with it propped on a wardrobe shelf for a few weeks.”

A survey by Prospects, a UK graduate jobs website, found 26 per cent of graduates had their internships cancelled this year. Demand for the virtual internships still going ahead is even higher than usual, according to recruiters.

Read more here

Gold and equities retreat as US stimulus hopes fade

Hudson Lockett in Hong Kong

Global stocks and the price of gold fell as hopes dimmed for imminent new measures to support the US economy’s recovery from the coronavirus pandemic.

China’s CSI 300 index of Shanghai and Shenzhen-listed stocks dropped 1.6 per cent in early trading on Wednesday while Hong Kong’s Hang Seng slipped 0.4 per cent. Australia’s S&P/ASX 200 shed 0.5 per cent.

The declines for equities came after Mitch McConnell, the Republican leader in the US Senate, said on Tuesday there had been no talks on a new economic stimulus package since Friday. His comments prompted a late swing lower on Wall Street, where the S&P 500 finished the day down 0.8 per cent.

Gold dropped 0.9 per cent to $1,892.86 per troy ounce on Wednesday morning in Asia, adding to a 5.7 per cent fall on Tuesday that took the price back below $2,000, its worst one-day decline since 2013.

The precious metal has rallied to all-time highs in recent weeks as expectations of central bank stimulus spurred a flight to havens potentially less affected by higher inflation. But with Washington demurring on further economic measures, investors may be reassessing their inflation outlook.

Read more here

Opinion: Europe risks post-Covid false dawn

Ten years ago, European leaders judged that the economic recovery from the global financial crisis was secured, and shifted from stimulus to fiscal and monetary tightening, Martin Sandbu writes:

The result was a second downturn and, in the eurozone, a near-existential sovereign debt crisis. We should keep this vivid memory in mind today so as not to become complacent as the Covid-19 pandemic recovery picks up.

The risks are great that this could become another false dawn. Whether it does, depends on how policymakers act in the months ahead. It is natural to hope for the best, but they must also prepare for the worst.

Read more here

Singapore says worker dormitories free of coronavirus

Singapore announced on Tuesday that it had cleared all foreign worker dormitories of coronavirus infections.

However, 17 blocks across the city-state would continue to serve as quarantine facilities for 22,500 workers in isolation, the labour ministry said in a statement.

Singapore is a temporary home to about 300,000 foreign labourers, mostly men working in the construction and maritime sectors. About two-thirds of the workers are from China, according to census data.

The ministry said most of the workers have been allowed to resume work this week, once they have been tested negative for coronavirus.

England’s A-level students can use mock grades as result

Bethan Staton in London

The government has made a last-minute attempt to prevent a scandal over A-level results, by allowing pupils in England who have had exams cancelled this year to use mock test grades as a final result.

Gavin Williamson, education secretary, announced late on Tuesday night that pupils could reject the moderated official grades, which will be released for A-level students on Thursday, in favour of higher scores from mock exams taken earlier in the year.

The snap concession came amid growing outrage over the fairness of calculated A-level results, and after the Scottish government scrapped 125,000 secondary school grades. It acknowledged that they were calculated according to a flawed system of standardisation.

Read more here

Victoria reports 410 new coronavirus cases and 21 deaths

Australia’s state of Victoria reported a further 410 coronavirus cases and 21 new deaths as the premier of neighbouring New South Wales called on residents to wear masks in public.

Daniel Andrews, Victoria’s premier, said the new cases took the state’s total tally to 15,646 cases with 267 deaths. Sixteen of the new deaths were linked to care facilities for the elderly, which have struggled to contain infections.

Mr Andrews said there had been a concerning increase in cases in regional Victoria, including the cities of Geelong, Ballarat and Bendigo, and recommended that people avoid unnecessary trips into metropolitan Melbourne.

He said the “Covid normal” was “still some time away” and said people must continue to follow measures designed to limit the spread of the virus.

Gladys Berejiklian, premier of New South Wales, said the state had recorded 18 new cases to 8pm on Tuesday — one of which was from overseas, while two were linked to Victoria.

She said NSW remained in a “state of high alert” and called for people to wear masks in shops, public transport and places of worship. Wearing a mask is not currently mandatory.

“Whilst numbers have remained stable in New South Wales for the past month, we can’t be assured of that moving forward,” Ms Berejiklian said.

The premier called on residents in west and south-west Sydney, where there had been high levels of community transmission, to come forward for testing.

McCain steps in to support UK’s potato industry

Judith Evans in London

The UK’s £1bn potato-growing sector has been hit so hard by extreme weather and coronavirus that its largest customer is stepping in with £25m of support to secure its supply chain.

Canadian company McCain, which makes frozen chips and other potato products for UK retailers, restaurants and chip shops, will invest £10m this year and another £15m over the next four years to help growers overcome hits to supply and demand, and risks linked to Brexit.

The move follows droughts in 2018 followed by flooding in 2019, which hurt yields. The pain was compounded by lockdown and the closure of restaurants and fast food outlets, which left a potato surplus of almost 200,000 tonnes in March, putting pressure on prices.

Read more here

South Korea jobless data show fifth straight month of gloom

Edward White and Kang Buseong in Seoul

South Korean employment statistics deteriorated for the fifth straight month in July as the fallout from the coronavirus pandemic continues to hit young and temporary workers despite some recent positive indicators of economic recovery.

Official data on Wednesday showed 277,000 jobs were lost in July year-on-year, marking the worst extended period of job losses since the wake of the global financial crisis, and pushing the jobless rate to 4 per cent.

Jobs held by temporary workers slumped by 395,000 as the total number of unemployed in the country of 51m rose to 1.13m, the worst figure since 1999 following the Asian financial crisis. The youth unemployment rate remained near 10 per cent.

South Korea reported 54 new coronavirus cases on Wednesday as authorities continue to test residents in Seoul, pictured, where 13 of the new cases emerged.

While the government of President Moon Jae-in remains under acute pressure to support jobs, the country has seen several indicators of an economic recovery under way, including a slowing decline in exports over recent months and improved consumer spending.

Hong Ki-nam, the finance minister, noted that the pace of job losses has now slowed since May.

The OECD on Tuesday lifted its forecast for annual GDP in South Korea to a contraction of 0.8 per cent, from an earlier estimate of minus 1.2 per cent, marking the highest growth estimate among 37 OECD member countries ahead of the OECD average of a 7.5 per cent contraction.

Mr Moon’s administration has rolled out unprecedented stimulus packages worth Won277tn ($233bn) in response to the virus.

ESG screens ‘provided no protection’ in virus sell-off

Billy Nauman in London

Strong environmental, social and governance credentials provided no special protection to risky companies during the Covid-19 related drop in markets earlier this year, according to research that challenges the idea that such attributes can make a portfolio more durable.

A new study from Marty Fridson, chief investment officer of Lehmann Livian Fridson Advisors, found that indices of high-yield bonds that skew towards companies with high ESG scores did better than the broader market during the sharp sell-off in March — but this had little if anything to do with ESG.

Instead, Mr Fridson found that ESG-focused investments did relatively well because issuers had higher average credit ratings and funds had less exposure to the energy sector, which was hit by a historic crash in the price of crude.

Read more here

New Zealand PM defers dissolution of parliament

Jacinda Ardern, New Zealand’s prime minister, has deferred the dissolution of parliament after the country reported its first community coronavirus cases in more than 100 days.

Ms Ardern said the government had decided to defer the dissolution of parliament by “at least a few days” to deal with the cases in Auckland. Parliament was set to be dissolved on Wednesday at 11am ahead of a September 19 general election.

Auckland was placed under a Level 3 lockdown from Wednesday until Friday after four members of the same family tested positive for the virus.

She said options were also being examined for the general election date.

Ms Ardern said the government was taking “a rapid response to break the chain of transmission” through contact tracing and testing programmes.

New Zealand and Ms Ardern, pictured, have received praise for introducing a strict lockdown early in the country’s outbreak to stem the spread of coronavirus. New Zealand adopted a policy designed to eliminate the virus from its shores.

A testing centre has been opened in the North Island city of Rotorua after one of the coronavirus patients travelled to the popular tourist spot over the weekend, said Ashley Bloomfield, director-general for health.

The health department is conducting genome sequencing on the family’s samples in a bid to trace the source of the virus.

Ms Ardern said elderly care homes had closed their doors to visitors and non-essential deliveries to protect vulnerable residents.

The prime minister called on residents of Auckland to wear a face covering if they leave their homes, and said that 5m masks had been released from the government’s reserve.

Asia-Pacific equities shrug off Wall Street fall

Asia-Pacific stocks gained on Wednesday despite the Republican leader in the Senate announcing that there had been no new talks on the US economic stimulus package.

In Japan, the Topix rose 0.6 per cent, while South Korea’s Kospi added 0.2 per cent and the S&P/ASX 200 in Australia ticked up 0.2 per cent.

The NZX 50 declined 2 per cent after New Zealand reported its first cases of Covid-19 outside quarantine facilities in more than 100 days, forcing the government to reimpose lockdown restrictions on Auckland.

The S&P 500 closed down 0.8 per cent on Wall Street after Senate Republican leader Mitch McConnell said there had been no talks on a new economic stimulus package since Friday. Investors had expected talks would continue.

British Airways hails ‘significant progress’ with unions

Philip Georgiadis in London

British Airways has hailed “significant progress” in negotiations with unions over its contentious plan to restructure its business as the airline battles to survive the crisis engulfing the aviation industry.

In a letter to staff on Tuesday, chief executive Alex Cruz said the carrier had signed an agreement in principle with unions over the future of parts of its workforce, following the sharp drop in flights this year because of the coronavirus pandemic and resulting restrictions on international travel.

The deal does not apply to cabin crew but covers engineers and staff at Heathrow who work in roles such as check-in and ticketing, and extends to staffing levels and changes to working practices such as the introduction of more flexible shift patterns.

Read more here

Australia’s Commonwealth Bank reports 11.3% profit dip

Jamie Smyth in Sydney

Commonwealth Bank of Australia reported an 11.3 per cent fall in underlying full-year profits of A$7.3bn (US$5.2bn) on Wednesday, due mainly to a spike in loan impairments linked to the ongoing recession induced by the Covid-19 pandemic.

Australia’s largest bank by assets said it would take a A$2.5bn charge linked to bad loans in the year to end June, up from A$1.2bn in the previous 12 months, as it revealed customers had deferred A$62bn in business and home loans.

Total impairment provisions climbed to A$6.3bn in the year to end June, up from A$4.7bn.

CBA’s statutory net profit, which includes the proceeds from the recent sale of several businesses, including its life insurance arm, jumped 12.4 per cent to A$9.6bn.

The bank said it would pay a second half dividend of 98 cents, which is almost 50 per cent of its second-half earnings and at the top end of recent guidance made by Australia’s prudential regulator.

Matt Comyn, CBA chief executive, said the economic outlook still looked highly uncertain and anticipated lower credit growth and low interest rates would continue to put pressure on bank revenues.

“The bank’s results reflect the impact of the coronavirus pandemic on our customers and the economy. But business fundamentals remain strong with good performance and volume growth in core businesses,” he said.

Nathan Zaia, analyst at Morningstar, said it was a decent result which would be difficult for CBA’s competitors in the market to match. But he said future earnings would be driven by how fast the economy could recover from Covid-19.

“While CBA is the most well-provisioned of its peers, the number of households and businesses still on deferred loan repayments makes it likely we haven’t seen the end of large loan losses and provisions across the banks,” said Mr Zaia.

Moderna signs vaccine production deal with US

Kiran Stacey in Washington

Pharmaceutical company Moderna will manufacture and deliver 100m doses of its Covid-19 vaccine candidate for the US government, officials said on Tuesday.

“Moderna will manufacture the vaccine doses while clinical trials are under way,” the US Health and Human Services Department said in a statement.

The deal is worth $1.5bn.

Moderna is undertaking the third phase of clinical trials of its experimental drug, after a first-phase trial earlier this year showed the vaccine prompted an antibody response in all 45 participants.

Volunteers for the trial, which began in late July, included Melissa Harting of Harpursville, New York, pictured, who received an injection in nearby Binghamton.

If the Food and Drug Administration authorises its use, the vaccine doses would be distributed and used as part of a Covid-19 vaccination campaign, officials added.

The health department and the Department of Defense have signed an agreement with Moderna for the vaccine candidate. The deal comes after the US struck a similar agreement with Pfizer to purchase 100m doses of its vaccine candidate for a price of nearly $2bn.

The deals are “increasing the likelihood that the US will have at least one safe, effective vaccine by 2021”, said health secretary Alex Azar.

New US cases and deaths rise by most in 4 days

Peter Wells in New York

New coronavirus cases and deaths in the US both had their biggest daily jumps in four days as a number of sunbelt states worked their way through backlogs in data.

A further 55,594 people in the US tested positive for coronavirus over the past 24 hours, according to Covid Tracking Project data on Tuesday, up from a seven-week low of 41,807 yesterday.

Deaths rose by 1,326, more than triple Monday’s increase of 426.

The biggest share of new daily cases came from California (12,500) as the state worked through a backlog of infections stemming from a data glitch last week.

The issue with the state’s data system, which had led to the under-counting of new infections, was fixed on Friday, but these new cases from the backlog “will be reported over the next few days”, officials said.

Texas became the third US state, after California and Florida, to have confirmed more than 500,000 coronavirus cases. The Lone Star state had a further 9,803 infections, according to Financial Times analysis of Covid Tracking Project data, but this included cases for Nueces county that were left out of Monday’s count as public health officials there dealt with a “large backlog” of positive tests.

Florida (5,831) and Georgia (3,563) were the other states with large daily increases, although both these remain well back from peak levels last month.

The rise in deaths at the national level was spurred by a record single-day rise in Florida (277) and a large jump for Texas (220). Georgia (122) and California (109) also had sizable increases.

Texas becomes third US state to pass 500,000 cases

Peter Wells in New York

Texas has become the third US state to confirm more than 500,000 coronavirus cases since the pandemic began after reporting nearly 9,000 infections on Tuesday.

A further 8,913 people tested positive, the state’s health officials revealed on Tuesday, about double the 4,455 reported on Monday.

This was the biggest daily increase in a week. That took the total number of confirmed cases in the state since the pandemic began to 500,620.

That puts it behind California (574,411) and Florida (542,792), which each surpassed the 500,000 level within the past two weeks.

The milestone was reached as many children in the state returned to school this week, pictured.

The latest figures include data for Nueces county, around Corpus Christi, that were left out of Monday’s count due to a large backlog of positive lab reports.

A further 220 people in Texas died, a jump from the 31 reported on Monday. That takes the total number of fatalities to 8,710, the fifth-highest among US states.

News you might have missed …

Russia has become the first country to grant regulatory approval to a Covid-19 vaccine and will begin mass production and immunisation of key workers in the next few weeks. The move comes after just two months of human trials and underscores Moscow’s desire to beat western pharmaceutical companies. Vaccinations could begin as soon as this month.

The UK has shed almost 750,000 jobs since the start of the coronavirus lockdown, and more than a quarter of the workforce was still temporarily away from work as the economy began to reopen in June, official data showed. The Office for National Statistics said the drop in payroll employment in May, June and July was largely due to a lack of hiring.

The governor of the US state of New Hampshire issued an emergency order requiring face coverings to be worn at gatherings of more than 100 people. Chris Sununu said his decision was prompted by a motorcycle meet-up in South Dakota, where attendees were not wearing masks. New Hampshire is due to hold its own motorbike festival in less than a fortnight.

The British government has tightened its grip on preparations for the 2022 Commonwealth Games in Birmingham after organisers said they would not be able to get the £500m athletes’ village ready in time. Construction delays exacerbated by the coronavirus pandemic were blamed for the decision to scrap plans to build housing for up to 6,500 athletes.

Greece has banned bars, restaurants and clubs in tourist resorts from staying open past midnight following an upsurge of new coronavirus cases. The midnight to 7am curfew, which took effect on Tuesday, was imposed after a committee of infectious disease experts advising the government said Greece was facing a “second wave” of Covid-19 infections.

Almost 75,000 Scottish secondary school pupils will have their results upgraded to teachers’ estimates of how they would have performed if they had sat exams cancelled because of the coronavirus crisis, following a public outcry. The change of mind puts pressure on other UK education ministers to follow suit.

UK chancellor of the exchequer Rishi Sunak is weighing options to shelve his autumn Budget if Britain is hit by a big second wave of coronavirus. While the chancellor expects to deliver his Budget as planned, it is a sign of government anxiety over a possible autumn Covid-19 spike that he is ready to delay big public spending decisions until after the crisis.

New Zealand reported its first coronavirus cases outside quarantine facilities in more than 100 days, prompting the government to order the lockdown of Auckland, the most populous city, for at least three days. Four members of a family tested positive and the source of the infection remained unknown, Jacinda Ardern, prime minister, said on Tuesday.

Fed cuts emergency rates for states and municipalities

Colby Smith in New York

The US Federal Reserve has lowered the pricing for its municipal liquidity facility, the emergency lending programme aimed at aiding state and local governments, as economic damage from coronavirus worsens.

On Tuesday, the central bank announced that it would reduce by 0.05 percentage points the interest-rate spread on tax-exempt notes across all credit rating categories, among other adjustments.

“Today’s changes will ensure the MLF continues to provide an effective backstop to assist US states and local governments as they weather the pandemic,” the Fed said in a statement.

The facility, which involves the Fed buying up to $500bn of short-term debt directly from select states and cities, is one of 11 emergency measures unveiled by the Fed since March that operates under powers that allow the central bank to make asset purchases in “unusual and exigent circumstances”.

Since the facility was announced in April, only one state has tapped it so far. In June, cash-strapped Illinois said it would borrow $1.2bn from the US central bank to bridge a financing gap that had widened as a result of the pandemic.

Corporate news you might have missed …

Losses at UK fintech Revolut tripled in 2019 as rising staff costs more than offset revenue growth, but the company said it was on track to break even this year despite the impact of coronavirus. Revolut reported a pre-tax loss of £107m, more than triple the £33m loss in 2018, driven largely by a massive hiring spree. Staff numbers increased from 633 to 2,261.

For the April to June quarter, SoftBank reported a net profit of ¥1.25tn ($12bn) compared with a net loss of ¥1.4tn in the previous quarter. That was above analysts’ forecasts for a net profit of ¥750bn, according to S&P Global Market Intelligence. Founder Masayoshi Son has pledged that SoftBank will remain in “crisis mode” despite the quarterly profit.

InterContinental Hotels Group, the owner of the Holiday Inn brand, said that it had signed deals for an average of one new hotel a day in 2020 despite falling to a loss due to coronavirus. Revenues in the six months to the end of June were $1.25bn, down 45 per cent from the same period last year, while the group slumped to a pre-tax loss of $275m.

US grocery group Kroger is to double the number of products available to consumers through online delivery, firing another shot in the battle for e-commerce supremacy. The Ohio company said it had accelerated plans for the expansion of the service to 100,000 products from the autumn, as the company plans to open the platform to third-party vendors.

Petrofac, the oilfield services company, has fallen to a half-year loss as it was “materially impacted” by the Covid-19 pandemic, which pushed its oil and gas clients to cut back on spending. The group posted a half-year pre-tax loss of $48m from a profit of $193m at the same point in 2019, as revenues also fell by a quarter to $2.1bn.

Saga, the UK over-50s travel specialists, said it would extend its insurance policies to include some cover for cancellation due to Covid-19. Customers taking out a new policy from Wednesday would be able to claim up to £10,000 per person if they need to cancel a holiday because of a positive Covid-19 test in the 14 days before they leave.

Publisher Time Out has issued its first magazine following a pandemic freeze, but warned its free printed listings on local urban life are likely to disappear from many of the 40 cities it used to serve. The 52-year-old magazine plans to resume print distribution only in London, where the title appeared on Tuesday for the first time in six months, Madrid and Barcelona.

Uniper said it might write off a loan to the controversial Nord Stream 2 gas pipeline, citing risk the project could be delayed or collapse under US sanctions. Despite such concerns and the economic crisis caused by coronavirus, the German energy company said operating profit in the first half of 2020 rose to €691m from €308m in the same period last year.

San Francisco sets aside $446m for fight against Covid-19

San Francisco is setting aside $446.1m this fiscal year to deal with the continuing Covid-19 crisis, the city announced on Tuesday.

The California city is attempting to balance an expected $1.5bn deficit this year with preserving jobs and services.

San Francisco expects to contribute $93m through its general fund, with the remainder coming from federal funding and state grants.

“The spending I have proposed for the city’s Covid-19 response is an investment in San Francisco’s public health,” said mayor London Breed.

“We know this virus is going to be with us for months to come, and we need to continue to build on the progress we have made with these investments,” she added.

The $446.1m figure applies only to expenditures this year, Ms Breed said.

“If there is a significant surge in cases or the pandemic requires the current level of response after July 2021, additional funding will be required,” she said.

UK meal deal used 10.5m times in first week

Laura Hughes and Alice Hancock in London

Rishi Sunak’s coronavirus meal deal offer was taken up more than 10.5m times in its first week, according to the latest UK government figures.

Businesses that signed up for the chancellor’s Eat Out to Help Out scheme, which is running throughout August, can claim up to £10 per person from the Treasury as part of an offer of half price eat-in food and non-alcoholic drinks from Monday to Wednesday.

The initiative is designed to give a financial boost to the hospitality sector. HM Revenue & Customs had received 10,540,394 claims under the scheme to August 9. The average claim made by diners was £5, taking the total cost of the initiative so far to £50m.

Read more here

London office market bracing for Covid-19 ‘true impact’

George Hammond in London

The real impact of coronavirus on London’s office market has not yet been felt, with job losses and business failures likely to increase vacancies and drag down rents, according to one of the capital’s leading landlords.

Derwent London, which owns the Brunel building in Paddington and the White Collar Factory on Old Street, said the “true impact of the lockdown” was yet to be reflected in the market, and predicted sweeping changes for workplaces because of coronavirus.

Vacancies across London’s offices will “undoubtedly” rise, according to Paul Williams, Derwent’s chief executive.

Read more here

The astonishingly good but predictably bad AI program


When the chief executive of a San Francisco artificial intelligence company tries to damp down the hype surrounding his own technology then you know that some people have become rather excitable.

But that is exactly what Sam Altman attempted to do last month in response to the ecstatic reaction to OpenAI’s latest GPT-3 program. “The GPT-3 hype is way too much,” Mr Altman tweeted. “It’s impressive (thanks for the nice compliments!) but it still has serious weaknesses and sometimes makes very silly mistakes.”

GPT-3, which stands for generative pre-trained transformer version three, is, in essence, a super-sophisticated auto-complete function, which sounds less than exciting. But what makes GPT-3 remarkable is its scale and flexibility and the possibilities for future development. 

Drawing on hundreds of billions of words ingested from the internet and using neural network technology similar to that used by Google DeepMind’s AlphaGo, GPT-3 was trained to spot and then replicate sophisticated patterns. GPT-3 contains 175bn language parameters, more than 10 times the next biggest equivalent model.

Developers, who have been given access to GPT-3 in a private beta test, have used it to write poems, articles, comic sketches and computer code, compose guitar riffs, offer medical advice, and reimagine video games, sometimes with stunning effect. “Playing with GPT-3 feels like seeing the future,” tweeted Arram Sabeti, a tech entrepreneur who used the software to write a Raymond Chandler-style screenplay about Harry Potter. “It’s shockingly good.”

It is easy to imagine how GPT-3 could be used to empower digital assistants, making it almost impossible to know if you are dealing with a machine or a human. Deployed at scale in a whole range of activities, the software could significantly enhance human productivity and creativity.

But the dark uses of such technology are just as easy to imagine, empowering disinformation campaigns and doctored videos, or deepfakes. Computer scientists have also questioned OpenAI’s indiscriminate use of training data sets, meaning that GPT-3 reflects human stereotypes, biases and prejudices to an alarming degree. In that sense, GPT-3 may be an accurate reflection of human nature, but should we not aspire to design AI systems to be better than we are?

The technology also raises a host of ethical issues, debated by nine experts rapidly assembled by Daily Nous, the online philosophy site. 

The philosophers considered that GPT-3 was “unnervingly coherent and laughably mindless”. It was more than a machine, but less than a mind, not knowing what it knew or did not know and on occasion spewing out nonsense.

Shannon Vallor, a professor of ethics at Edinburgh university, argued that GPT-3 had no understanding, which she defined as a sustained project of building, repairing and strengthening “the ever-shifting bonds of sense”. “Like the bullshitter who gets past their first interview by regurgitating impressive-sounding phrases from the memoir of the CEO, GPT-3 spins some pretty good bullshit,” she wrote.

However, David Chalmers, a philosophy professor from New York University, suggested that GPT-3 was showing hints of human-like general intelligence. “I am open to the idea that a worm with 302 neurons is conscious, so I am open to the idea that GPT-3 with 175bn parameters is conscious too.”

Intriguingly, GPT-3 was then fed these comments and prompted to reply: “To be clear, I am not a person. I am not self-aware. I am not conscious. I can’t feel pain. I don’t enjoy anything. I am a cold, calculating machine designed to simulate human response and to predict the probability of certain outcomes. The only reason I am responding is to defend my honour.”

Pretty convincing, no? The idea that a computer might have “honour” shows just how good GPT-3 has become at mimicking our tendency to anthropomorphise technology. Unless of course . . . 

[email protected]