Coronavirus latest: US factory recovery continues as orders grow


Florida reports fewer than 5,000 new cases after storm closed test sites

Florida reported its smallest increase in new coronavirus cases and deaths over the weekend after state testing facilities were closed due to the approach of tropical storm Isaias.

A further 4,752 people tested positive for Covid-19 over the past 24 hours, the state’s health department revealed on Monday, the fewest since June 23 and down from 7,104 on Sunday.

The death toll rose by 73, from the 62 reported on Sunday, which was the state’s lowest daily death toll in about three weeks.

Monday data tend to be lower than other days of the week owing to weekend delays in reporting. But Florida’s numbers are probably also lower after officials decided late last week to close state testing sites ahead of the approach of tropical storm Isaias, which at the time had been upgraded to hurricane status.

State-run testing sites are set to reopen today.

Almost 61,000 coronavirus tests were conducted in Florida over the past 24 hours, with 9.09 per cent of those coming back positive. Those are the lowest levels for both data in at least two weeks.

For the month of July, Florida confirmed just over 321,000 Covid-19 infections, representing two-thirds of its total caseload since the pandemic began. A further 3,494 deaths were reported over the same period, nearly half of all the fatalities it has recorded since the start of the outbreak.

US factory recovery continues as orders grow

The US manufacturing sector grew at a faster pace in July, as factory activity in the world’s largest economy continued to recover from the depths of the coronavirus crisis.

The Institute for Supply Management said its manufacturing index rose to 54.2 from a June reading of 52.6, marking two consecutive months of expansion despite economists’ concerns that a rise in Covid-19 cases could slow the US economic rebound. The index first dipped below 50 in March, falling below the threshold that separates expansion from contraction. It dropped as low as 41.5 in April.

The result in July was the highest mark since March 2019 and surpassed the consensus estimate of 53.6, according to a Reuters poll of economists.

“Demand and consumption continued to drive expansion growth, with inputs remaining at parity with supply and demand,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee.

A sub-index tracking new orders jumped to 61.5 in July, up from 56.4 a month earlier. Measures of production, employment and order backlogs also improved.

The gain in the headline PMI indicated that the overall US economy grew for a third month in a row, according to the ISM. The group said a PMI above 42.8 generally indicated expansion.

Wall Street begins August on the front foot

US stocks climbed higher on Monday amid an earnings season that has surprised analysts to the upside with the impact of coronavirus not being as bad as feared.

The S&P 500 rose 0.5 per cent at market open, while the tech-heavy Nasdaq climbed 1 per cent, as the majority of companies performed better in the second quarter than analysts had been anticipating.

“Nearly 80 per cent of companies are beating expectations, with the median company beating by 16 per cent,” compared with the usual average of 3 per cent, said Mark Haefele, chief investment officer at UBS Global Wealth Management.

However, the situation still remains severe: earnings per share of companies listed on the S&P 500 are expected to be down by 35 per cent in the second quarter compared with the same period in 2019. Forecasts from the end of June expected them to be down 44 per cent, according to FactSet data.

The push higher by US stocks followed suit of counterparts in Europe and Asia, while the US dollar climbed from its lowest level in two years, adding 0.6 per cent on Monday.

Refiner Marathon sinks to loss as US fuel demand dries up

Derek Brower and Myles McCormick

Marathon Petroleum Corp, the US’s biggest independent refiner, reported an adjusted loss of $868m in the first quarter, down from a $1.2bn profit a year ago, as demand for fuel in the world’s largest market remained depressed due to the coronavirus pandemic.

The company, which on Sunday announced its plan to sell its Speedway retail unit to Seven & i in a $21bn all-cash deal, also reiterated its intention to “indefinitely idle” its Gallup and Martinez refineries and potentially convert one of them to renewable diesel.

“Our second-quarter results reflect a full three months of the challenges Covid has created for our business,” said Michael Hennigan, Marathon’s chief executive. “We began April with demand at historic lows. Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed.”

Before adjustments, second-quarter income came in at $9m, including a net pre-tax benefit of $1.4bn, Marathon said. It added that it was on track to meet a target to reduce capital spending this year by $1.4bn and cut operating costs by $950m.

Total revenues of about $15bn were down by more than half compared with the same period last year and slightly below analysts’ forecasts.

The Speedway deal with Seven & i came four months after an earlier proposed sale fell through, and followed pressure from activist investors to raise money and reduce leverage. Marathon’s long-term debt stood at $29bn at the end of the first quarter, against assets of $86bn.

Lockdown restrictions for Manila to tighten on Tuesday

The Philippine capital is set to reimpose quarantine restrictions to stop the spread of coronavirus on Tuesday, following warnings that the health system is at the point of being overwhelmed by a rise in cases.

President Rodrigo Duterte approved late on Sunday the tightening of restrictions on movement in Manila and nearby provinces for two weeks as part of a so-called modified enhanced community quarantine, according to local media reports.

The new restrictions include the suspension of public transport and the use of quarantine passes to leave the house to shop for essential goods or travel to work. Barber shops, salons and gyms will be shut, while retailers and manufacturing sites can operate below 50 per cent capacity.

The south-east Asian country had eased restrictions at the start of June but case numbers have steadily risen to almost 3,250 new daily cases on average in the past seven days based on calculations by the Financial Times, as the total case number pushed above 103,000 on Sunday.

On Saturday, medical association leaders wrote to the government urging it to reimpose lockdown restrictions since the healthcare system was fighting a losing battle and risked being overwhelmed by the virus.

The Philippine Stock Exchange Composite Index slumped 3.6 per cent on Monday.

Fitness group DW Sports falls into administration

Patricia Nilsson

Fitness retailer and gym group DW Sports has fallen into administration, putting 1,700 jobs at risk, after the coronavirus lockdown disrupted its business.

The company, which is owned by former footballer Dave Whelan, on Monday said it was hoping to save “as many gyms as possible” but that its 75 stores would now enter into closing down sales if they had not already closed.

Chief executive Martin Long said the government-mandated closing of its stores and gym chain for a long period had left it with “a high fixed-cost base and zero income”.

“Having exhausted all other available options for the business, we firmly believe that this process can be a platform to restructure the business and preserve many of our gyms for our members, and also protect the maximum number of jobs possible for our team members,” he said.

DW Sports, which runs 73 gyms, said its sister brand Fitness First would not be affected by the administration.

Dollar starts August on a high note after worst month since 2010

The US dollar ticked up from its lowest level in two years and global stocks edged higher after upbeat economic reports and signs corporate earnings season was not as bleak as forecast bolstered market sentiment.

The dollar index, which measures the currency against six peers, rose 0.4 per cent on Monday, after falling 4 per cent in July in the worst fall since 2010.

Lee Hardman, currency analyst at MUFG, said factors that pressured the dollar in July were still at play, but that the intensity of the recent moves meant investors would need to reassess whether it was now fairly priced against its major peers such as the euro, sterling and Japanese yen.

“The ongoing fall in US real yields and rising US political uncertainty have played a role in helping to weaken the US dollar,” he said. “While those fundamental developments remain negative for the US dollar, we have to take into account that it has already moved a long way in short period of time.”

Europe’s Stoxx 600 climbed 0.8 per cent on Monday, after slipping 1.1 per cent in July to snap three consecutive months of gains. Frankfurt’s Xetra Dax rose 1.5 per cent, while London’s FTSE 100 was up 0.2 per cent. Futures tied to the US S&P 500 edged 0.1 per cent higher.

Italy’s manufacturing sector activity grows for first time in two years

Chelsea Bruce-Lockhart

Business managers in Italy’s manufacturing sector reported an expansion in activity for the first time in almost two years in July, as the economy begins its recovery from lockdown.

Italy’s IHS Markit purchasing managers’ index rose to 51.9 in July, from 47.5 the previous month. This moved it above the 50 threshold which indicates that the majority of business managers believe business activity has improved since the previous month. A figure below 50 indicates that business leaders feel there was a deterioration in activity compared with the previous month.

The PMI figure for Italy’s manufacturing sector was higher than the 51.2 reading economists had expected, according to a poll by Reuters, and was the first reading above 50 since August 2018. A rise in domestic demand was considered the main reason for the sector’s expansion. But foreign demand remained weak and there was much evidence to suggest factories were not yet operating at full capacity.

“Overall, July data appear to suggest the sector is on its way to recovery, with output expectations also remaining positive,” said Lewis Cooper, an economist at IHS Markit. “But, after such an extreme blow, there is masses of ground to make up. It is essential that demand conditions continue to improve.”

Mr Cooper added: “Any reintroduction of lockdown measures due to a ‘second wave’ of the pandemic has the potential to derail the recovery.”

Italy’s economy was already shrinking before the pandemic hit. But the shock of the virus has since pushed the country into its fourth recession in just over a decade.

Preliminary data released on Friday showed output had fallen by 12.4 per in the three months to June, from the levels recorded over the previous quarter. This was the steepest contraction of output in nearly four decades.

Italy’s manufacturing PMI was broadly in line with the equivalent measure reported in other major European countries such as France and the UK, which reported readings of 52.4 and 53.3 respectively.

Carmaker Hyundai reveals 13% drop in July sales

Song Jung-a in Seoul

Hyundai Motor reported a 13 per cent drop in July sales as the coronavirus pandemic continued to pummel demand for new cars, but the rate of decline slowed from the previous month, helped by strong domestic sales.

Overseas sales fell 20.8 per cent from a year earlier to 235,716 units last month even as domestic sales jumped 28.4 per cent to 77,381 units as South Korea was able to largely contain the virus outbreak and extended auto tax cuts. The performance was better than a 22.7 per cent decline in June sales.

Hyundai, which is the world’s fifth-largest automaker together with affiliate Kia Motors, has forecast a modest recovery in auto demand in the second half but said auto sales would likely match 2019 levels only around 2023.

Hyundai reported a 62 per cent drop in second-quarter net profit as sales fell 19 per cent in the April-June period. Shares of Hyundai shares gained 0.4 per cent to Won127,000 on Monday while the benchmark Kospi index was little changed.

Spain’s manufacturing sector activity picks up in July

Chelsea Bruce-Lockhart

Activity in Spain’s manufacturing sector improved more than expected in July, providing some welcome respite for one of the continent’s economies hardest hit by the pandemic.

The IHS Markit purchasing managers’ index rose to 53.5 in July, from 49.0 one month earlier. This brought the figure above the 50 point threshold, beyond which indicates the majority of business managers reported an improvement in business activity compared with the previous month.

July’s manufacturing PMI was higher than the 52.0 reading expected by economists, according to a group polled by Reuters. An improvement in both domestic and international demand were thought to drive the change.

However, further manufacturing job losses were also reported, while optimism about the future remained subdued.

“There remains some way to go until we see a return to levels of activity recorded before the Covid-19 pandemic intensified” said Paul Smith, Economics Director at IHS Markit, adding: “Manufacturers are generally cautious in their view of how the rest of the year and the first half of 2021 will work out.”

The rise in Spain’s manufacturing PMIs was welcome news after a series of data releases on Friday indicated that it has been one of the economies worst affected by coronavirus.

Preliminary data released late last week showed Spain’s economy had fallen into recession in the first half of the year, with output contracting by 22 per cent. The drop in output wiped out all the gains made in the seven years since its last recession and was more severe than the fall in gross domestic product seen elsewhere in Europe. More than a million people lost their jobs in the process.

Spain has since seen a fresh wave of coronavirus cases, which threatens to hold back its recovery. The country is currently reporting an average of 2,300 new cases a day.

UK estate agents report brisk business from stamp duty holiday

UK estate agent M Winkworth has reported its busiest July for five years after chancellor Rishi Sunak temporarily removed stamp duty land tax for homes worth £500,000 or less.

“Since 8 July 2020, when the chancellor announced an easing of the stamp duty threshold from £125,000 to £500,000 until 31 March 2021, the Winkworth network has seen a significant recovery,” the group said.

The stamp duty holiday, which was part of a package of measures announced by Mr Sunak in an attempt to stimulate economic activity during a recession prompted by Covid-19 lockdowns and distancing restrictions, saves buyers of £500,000 homes £15,000 in moving costs.

“This has now been our busiest July in at least the past five years,” Winkworth chief executive Dominic Agace said. “The changes in stamp duty have turbo-charged the market.”

Online estate agent Purplebricks gave a similar update on Monday, telling shareholders in a statement alongside its annual results that July had been its busiest ever month in the UK, with 7,000 homes newly listed on its platform.

The estate agency industry was hit hard by Covid-19 restrictions on people’s movements in March to May, however. Both Winkworth and Purplebricks said they remained uncertain about how their businesses would do for the rest of the year.

Shopping centre owner Hammerson to raise capital as tenants withhold rents

George Hammond

Hammerson is looking to investors to help it through the next few months, as the shopping centre owner scrambles to plug a hole left by tenants withholding rent. 

The company, which owns the Bullring in Birmingham, Brent Cross in London and Victoria Gate in Leeds, confirmed on Monday that it was considering raising new equity via a rights issue.

Hammerson is also aiming to bolster its balance sheet with the sale of its 50 per cent stake in its European shopping outlet business, VIA Outlets, to its partner in the venture, the Dutch pension fund asset manager APG.

The company’s announcement confirmed a report from Sky News on Saturday.  

The mall-owner is looking to get cash into the business after rents from tenants dried up. The closure of non-essential retail between March and May, and the slow pace with which shoppers have returned, has meant Hammerson collected just 16 per cent of the rent it was due on June 24, the date at which tenants are meant to pay for the following three months. 

That has since increased to more than 30 per cent, according to the company. 

Hammerson’s share price has fallen almost 80 per cent this year, from £3.10 at the start of January to 64 pence on Monday morning. 

Stocks edge higher on signs of economic recovery

Global stock markets were mostly higher following earnings reports and economic data that pointed to signs of an economic recovery from the coronavirus pandemic.

Futures for Europe’s Stoxx 600 climbed 0.4 per cent, suggesting that the continent-wide stock index will open higher when trading begins. The FTSE 100 was set to add 0.1 per cent.

Japan’s benchmark Topix index was up 1.8 per cent on Monday late afternoon while China’s CSI 300 of Shanghai and Shenzhen-listed stocks added 1.1 per cent.

The gains for equities came as the Caixin purchasing managers’ index, a private gauge of operating conditions in China’s manufacturing sector, showed the biggest improvement in almost a decade, while corporate earnings season in Europe has not been as bad as feared.

Ross MacDonald, an analyst at Morgan Stanley, said that more than two-thirds of European companies had beaten expectations in second-quarter earnings, despite being the worst quarter for profits on record.

“With second-quarter results still on track to deliver an upside surprise, there has been a clear troughing out in expectations for the hit to 2020 profits,” he said.

Greater Manchester declares major incident as Covid-19 cases rise

Authorities in Greater Manchester have declared a “major incident” following a rise in coronavirus cases in the northern English region.

The move to prepare multiple local agencies to work together to improve their response to the virus comes after the government announced new lockdown measures for Manchester and nearby areas last week.

On its website, Manchester City council said citizens should not be alarmed by a major incident being declared.

“This is standard practice for complex situations which require a co-ordinated multi-agency response,” Richard Leese, leader of the council said.
“Although the Council and partner organisations have been working closely to tackle the impacts of the pandemic since early this year, declaring a major incident means we can ramp this up further.”

The Greater Manchester region became subject to new lockdown measures last week, which ban members of different households from meeting inside homes or in pubs. The new rules, which cover an area of almost 5m people. also apply to East Lancashire and parts of West Yorkshire.

Insurer Hiscox lifts estimate for Covid-19 claims to $232m

Oliver Ralph

Insurer Hiscox has increased its estimate of Covid-19 claims from $150m to $232m.
The insurer said that claims have come in on a variety of policies, including property, event cancellation and travel.

Hiscox has also been caught up in the controversy about whether customers can claim on business interruption policies. It was one of eight insurers involved in a High Court case against the Financial Conduct Authority last month.

The claims pushed Hiscox to a $139m loss for the first half of the year, against a $168m profit in the same period last year.

In May, Hiscox raised £375m in an equity issue designed to allow it to take advantage of rising prices for commercial insurance. The company said on Monday that prices for commercial insurance sold in London had risen by 13 per cent so far this year.

Dividend boost to UK investors as £1bn restored

Daniel Thomas and Attracta Mooney in London

UK companies have restored more than £1bn of dividends in recent weeks, underlining that some have fared better during the pandemic than first feared and providing a boost to beleaguered investors.

BAE Systems last week became the latest FTSE 100 company to announce that it would start paying a dividend again, worth about £300m, following packaging group Smurfit Kappa and property company Land Securities.

Other companies in the FTSE 250 and Aim markets — including Nichols, which makes soft drinks such as Vimto — have followed suit.

Read more here

UK managers forced to take pandemic pay cuts

Daniel Thomas in London

Just under one-fifth of senior UK managers took pay cuts during the coronavirus pandemic and almost half said business had suffered as companies were forced to put operations on hold.

A poll of almost 2,000 members of the Chartered Management Institute on behalf of the Financial Times showed companies were gradually beginning to restart operations as lockdown restrictions were eased.

However, many warned they were far from restoring normal operations, including a widespread return to offices or international travel, and Brexit was again on the radar for companies as they set out plans for the rest of the year.

Read more here

HSBC profits plunge as loan-loss provisions jump

Primrose Riordan in Hong Kong and Stephen Morris in London

HSBC unveiled a jump in reserves set aside for bad loans and a steep drop in profits in the second quarter due to coronavirus, as the bank warned of the impact of tension between the US and China on its business.

Europe’s biggest lender said on Monday that quarterly provisions for potential loan losses surged to $3.8bn from $555m a year ago, surpassing the $2.7bn predicted via analyst estimates compiled by the company.

Group pre-tax profit for the quarter plunged 82 per cent to $1.1bn year on year, missing the $2.5bn estimated by analysts.

Read more here

Officials eyeing need for stiffer rules in New South Wales

Officials say they are carefully eyeing the emergence of new Covid-19 cases in Australia’s most populous state, New South Wales, to ensure it doesn’t follow the massive outbreak in neighbouring Victoria.

NSW recorded 13 new cases of coronavirus on Monday, including a new infection from Victoria. Three cases were travellers from overseas.

Gladys Berejiklian, NSW premier, said more testing teams had been deployed to Sydney’s main airport to screen arrivals from Melbourne, which has been put into a harsh lockdown since Sunday after thousands of new cases emerged in recent weeks.

Officials are considering tighter restrictions on the state’s border with Victoria but added that NSW would continue to allow its residents there to return. “It is very difficult to tell someone you can’t come back home.”

Health officials said a sustained increase in cases would see a review of NSW’s rules, which currently recommend but not mandate face masks in public.

“Well clearly, we’re following what’s happening in NSW very, very closely,” one of Australia’s deputy chief medical officers, Michael Kidd, said in an interview on Monday.

“We’ve had … between 10 and 20 cases each day of community transmission, and [seen] a magnificent job in picking up the contacts of all those people,” Prof Kidd said.

Virus drives shift away from coal except in China

Christian Shepherd in Beijing and Stephanie Findlay in New Delhi

The coronavirus pandemic has accelerated a global shift away from coal with the exception of China, which has expanded plans to build power stations using the fuel, data show.

The first half of 2020 marked the first ever six-month decline in global coal power capacity, said Global Energy Monitor, a San Francisco-based non-governmental organisation.

Authorities around the world commissioned 18.3 gigawatts of capacity and retired 21.2GW, led by the closure of plants in Europe. South and south-east Asian nations have also curtailed plans to build plants.

Read more here

ADB urges green restart for regional public transport

The Asian Development Bank said on Monday it would urge governments around the region to rebuild coronavirus-hit public transport infrastructure using more green technology.

A report released by the Manila-based lender said the pandemic had a “profound impact” on transport, as lockdowns had forced millions to work and learn from home and consumers had shunned physical shops to order food and other supplies online.

Public transit has not bounced back in Asia as lockdowns ease, due to perceptions that it is relatively unhygienic compared with private vehicles or walking, ADB noted.

“The two key challenges ahead are addressing capacity on public transport to maintain safe distancing requirements, and how best to regain public confidence to return to public transport,” said Bambang Susantono, the bank’s vice-president for knowledge management and sustainable development.

The report said that there is a short window of opportunity for cities to promote the adoption of low-carbon alternatives to lock in air-quality gains from the lockdowns.

China factory activity grows at fastest rate since 2011

China’s manufacturing sector showed further signs of improvement in July, with output and new orders growing at the fastest pace in almost a decade, as the domestic economy recovered from the pandemic.

The Caixin manufacturing purchasing managers’ index rose to 52.8 in July, its highest level in more than nine years and up from 51.2 a month earlier. Readings above 50 mark expansion.

Companies surveyed reported output and new orders expanded at the fastest rate since January 2011 as the Covid-19 outbreak was largely under control within China’s borders.

International demand, however, contracted for a seventh consecutive month as the pandemic continued to hit overseas demand.

“Overall, flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy, which continued to recover as more epidemic control measures were lifted,” said Wang Zhe, senior economist at Caixin Insight Group. “However, we still need to pay attention to the weakness in both employment and overseas demand.”

Companies reported cutting staffing levels in July amid efficiency drives or by not replacing employees who had left.

India’s home minister joins list of BJP figures with Covid-19

Amy Kazmin in New Delhi

One of India’s most senior leaders has been admitted to hospital with the potentially deadly coronavirus, one among a series of top Bharatiya Janata party stalwarts to be afflicted.

Amit Shah, the powerful home minister, tweeted that he had been tested after showing “initial symptoms.”

BS Yeddyurappa, chief minister of the BJP-ruled southern state of Karnataka, also confirmed that he had been infected with the deadly pathogen on Sunday night, and was in hospital.

He is the second state chief minister to be afflicted with the virus, after the BJP’s Shivraj Singh Chouhan of Madhya Pradesh tested positive last week.

Mr Shah appealed to all those who had come in contact with him in recent days to isolate themselves and get tested.

He is last known to have met prime minister Narendra Modi at a Cabinet meeting on Wednesday, though Indian officials said on Sunday that the prime minister was following social distancing protocols.

Mr Shah has also appeared at some public functions. He has been at the forefront of efforts to persuade Indians that their country has fared far better than more advanced, wealthier nations.

The home minister, pictured at right with Mr Modi at a 2017 rally, recently declared that India was fighting one of the world’s “most successful” battles against coronavirus.

Yet India has been hard hit by coronavirus, with more than 52,700 people testing positive for the virus in the past 24 hours, exceeding the number of new cases in the US.

In total, India has so far confirmed 1.8m infections, of whom 38,171 have died, including more than 750 on Sunday.

Among those who died this weekend was Kamal Rani, a member of the cabinet of the BJP state government in Uttar Pradesh.

Another UP state cabinet minister, Mahendra Singh, the minister of water, and the Swatantra Dev Singh, the chief of the BJP in the state, also tested positive for the virus on Sunday.

BJP veteran Banwarilal Purohit, 80, now serving as governor of the southern state of Tamil Nadu, also tested positive for coronavirus on Sunday and was admitted to hospital.

High-speed Covid-19 tests to be rolled out across UK

Sarah Neville in London

Millions of high-speed coronavirus tests able to return results in 90 minutes are being rolled out across NHS hospitals, care homes and labs from next week as the UK government seeks to contain a feared winter surge in infections.

The announcement follows the government’s promise to expand testing capacity to 500,000 a day by October in an attempt to keep a lid on the disease and avoid a return to tougher lockdown measures.

Sage, the government’s scientific advisory committee, has said that 80 per cent of infected people’s contacts must be tracked down within 48 hours to slow the spread of the disease — a goal that depends on rapid testing.

Read more here

China reports 36 new cases as infections appear to slow

Health authorities in China reported 36 new local Covid-19 cases to the end of Sunday as new infections in Xinjiang appeared to slow.

The western region reported 28 new cases, a sharp drop from the almost 112 cases reported for Thursday.

The new cases bring the total for an outbreak that was first reported in the region’s capital, Urumqi, in mid-July to 590, according to official figures.

Liaoning, a province in China’s north-east, also reported eight new cases following an outbreak in the port city of Dalian, taking its total to almost 90.

An additional seven imported Covid-19 cases brought China’s overall tally to 84,428.

S Korea shows signs of recovery as export decline slows

Edward White in Wellington

The decline in South Korean exports slowed further in July, reflecting early signs of recovery in an economy that is seen as a bellwether for trade in the region.

Official data showed a 7 per cent fall in exports last month compared with the year earlier.

That was ahead of a 9.7 per cent drop forecast by Refinitiv and 10.9 per cent year-on-year decline in June.

It also shows the improvement from declines of more than 20 per cent in April and May at the height of the coronavirus pandemic.

The data from Korea Customs Service marked the fifth consecutive month of declines, however the export-dependent economy has been partly buffered by some electronics exports, particularly computer chips, which have seen solid demand and prices amid a surge in online activity.

South Korean industry has also been supported by the government’s response to the public health crisis, which saw the country avoid a nationwide lockdown and widespread disruption to factories.

The IHS Markit manufacturing purchasing managers’ index rose to 46.9 in July from 43.4 in June, suggesting improved conditions for the country’s manufacturers.

While the index remained below the 50-point mark separating contraction from expansion, the result was the best since February and reflected the change since a reading of 41.3 in May – the lowest since the financial crisis.

Joe Hayes, an economist at IHS commented:

July data provides early signs of a turnround across the South Korean manufacturing sector… The output, new orders and employment components have all lifted from the lows seen in the second quarter of 2020, helped by reopening international supply chains and a gradual recovery in demand in key areas such as automotive production.

While the IMF has forecast South Korean gross domestic product to contract 2.1 per cent this year, officials in Seoul have remained optimistic that the result can be avoided.

The government is deploying unprecedented stimulus measures of about $230bn as well as a further $130bn five-year spending plan announced last week aimed at creating 1.9m jobs by 2025.

Marathon sells petrol station division to Seven & i

Kana Inagaki in Tokyo

Marathon Petroleum has agreed to sell its Speedway petrol stations business to Seven & i Holdings in a $21bn all-cash deal, five months after the Japanese owner of the 7-Eleven convenience store chain walked away due to the coronavirus crisis.

Despite earlier failing to agree on pricing, the Japanese retail giant decided to forge ahead with its largest-ever acquisition to cement its top position in the US convenience store market, extending its expansion push beyond its shrinking home market.

Marathon had been in exclusive talks with Seven & i to sell the business for about $22bn.

Read more here

Lord & Taylor chain files for bankruptcy protection

Alistair Gray in New York

The retail implosion in the US has claimed its most venerable victim, with the 194-year-old Lord & Taylor chain the latest to file for bankruptcy protection.

The upmarket group, already hit by online retailing, was forced to close all its outlets during the coronavirus shutdown.

The New York-founded chain sought Chapter 11 protection on Sunday in Virginia, putting the future of its 38 stores into doubt.

It is the latest addition to a long list of recent retail failures. Among department store chains alone, Neiman Marcus and JCPenney, two of the sector’s biggest operators, filed earlier in the pandemic.

Lord & Taylor’s bankruptcy comes a year after Hudson’s Bay Company, owner of Saks Fifth Avenue, sold the stores’ operations to Le Tote, a fashion rental subscription service.

Le Tote, based in San Francisco, agreed to pay $100m for the brand, digital channels and inventory as well as the store operations. It hoped to revive Lord & Taylor’s fortunes by combining bricks-and-mortar retail with its own subscription business.

But Le Tote also filed for chapter 11 on Sunday. The company had debt obligations of $138m at the time of the filing.

Lord & Taylor was established in 1826 by two Englishmen, Samuel Lord and George Washington Taylor, who opened the first outlet in Manhattan.

The chain’s flagship Fifth Avenue store closed in January 2019, pictured.

Japan’s manufacturing sector shows signs of improvement

Japan’s manufacturing sector showed signs of improvement in July, after the country’s state of emergency was lifted and as overseas lockdowns eased, according to the results of a private survey.

The au Jibun Bank Japan manufacturing purchasing managers’ index rose to 45.2 in July, up from 40.1 in June as output and new work fell at a slower rate. Readings below 50 mark a contraction, while those above 50 indicate expansion.

Manufacturing production volumes fell at the slowest rate in five months with respondents pointing to the lifting of the state of emergency and as factories overseas restarted production.

“Japan’s manufacturing sector remained severely impacted by the Covid-19 pandemic and subsequent downturn in worldwide economic conditions,” said Tim Moore, director at IHS Markit, which compiles the survey.

“Manufacturers that reported a turnround in production schedules typically cited a boost from easing emergency measures at home, alongside signs of recovery across the automotive supply chain and the restart of economic activity in key export destinations,” he said.

Indian Oil forecasts recovery by year’s end

Stephanie Findlay in New Delhi

The chairman of Indian Oil Corporation, the country’s biggest refiner, forecast that demand would begin to rebound only by year-end as the coronavirus pandemic hits one of the world’s largest energy markets.

Shrikant Madhav Vaidya said new lockdowns in India had knocked capacity utilisation down from 93 per cent in early July to 75 per cent by the end of the month but forecast it would stabilise in the coming months.

“There is demand destruction but then the country is recovering,” Mr Vaidya told the Financial Times after reporting a sharp fall in year-on-year net profit in the quarter ended June 30. “By the end of the year, I expect that things will be nearly back to pre-Covid times.”

Read more here

Asia-Pacific stocks diverge amid rising US-China tensions

Asia-Pacific stocks diverged on Monday and gold rose amid rising US-China tensions and ahead of the results of surveys on the state of the region’s manufacturing sector.

Japan’s Topix was up 1 per cent, the Kospi in South Korea shed 0.3 per cent and the S&P/ASX 200 fell 0.6. The Hang Seng index in Hong Kong is set to fall 0.7 per cent when it opens later in the morning. Futures point to a 0.1 per cent gain for the S&P 500 when US markets reopen.

Mike Pompeo, US secretary of state, said on Sunday that President Donald Trump would take action in coming days against Chinese technology companies, including TikTok and WeChat, that the US claims are “feeding data directly to the Chinese Communist party, their national security apparatus”.

Gold, which neared a record high of $2,000 an ounce last week amid concerns over the US economic recovery, was 0.3 per cent higher at $1,980 an ounce.

The dollar index was hovering near a two-year low after recording its worst month since 2010 in July as investors weighed the prospects for the US recovery.

On Friday, the US benchmark S&P 500 closed 0.8 per cent higher while the technology-heavy Nasdaq Composite added 1.5 per cent after strong quarterly results for Apple, Facebook, Amazon and Google parent Alphabet.

US reports smallest jump in new cases and deaths in weeks

The US reported its smallest increases in new coronavirus cases and deaths on Sunday in weeks, with a number of hotspot states continuing to exhibit signs of a possible plateau in new infections.

A further 48,694 people in the US tested positive for the disease over the past 24 hours, according to Covid Tracking Project, from 60,264 on Saturday. This was the smallest one-day increase since July 6.

The nation’s death toll rose by 515, the smallest increase in two weeks.

Figures from weekends and Mondays have tended to be lower than other days of the week owing to weekend delays in reporting, but the latest data were also kept low by a lack of reporting from Texas.

Texas’s data dashboard for Covid-19 underwent a scheduled upgrade on Sunday “to a system that processes electronic lab reports,” state health officials said. Last week, officials overhauled how the state would report deaths. Sunday’s figures will be posted on Monday.

California and Florida both reported the most new cases and fatalities among US states. New infections continued to show signs of remaining comfortably down from peaks last month, while deaths showed some reprieve having surged to record levels last week.

California, which this weekend became the first US state with more than 500,000 confirmed coronavirus cases, reported a further 9,032 infections on Sunday and 132 fatalities.

Florida reported 7,104 new cases and 62 deaths. Late last week, some state testing facilities were closed owing to the approach of Hurricane Isaias. Some Florida residents braved the wind and rain during the storm, pictured.

The state conducted nearly 88,000 tests over the past 24 hours, the fewest in 10 days, but the number that came back positive was 9.28 per cent, the lowest level in at least two weeks.

Deborah Birx, one of the top members in the White House’s coronavirus task force, told CNN on Sunday “we are beginning to see an impact from the mitigation procedures that many of the state and local officials have put into place”.

She warned, though, the latest phase of the pandemic in the US was “very different from March and April” in that the virus is “extraordinarily widespread” and is in both rural and urban areas.

Australian purchasing managers show optimism

The recovery in the Australian manufacturing sector gathered pace in July, according to the Commonwealth Bank purchasing managers’ index, as companies expect the economy returning to post-Covid-19 normality in the coming months.

The headline index from the seasonally adjusted survey rose from 51.2 in June to 54.0 in July, its highest reading since December 2018.

Readings below 50 signal a deterioration in business conditions on the previous month while readings above 50 show improvement.

“Producers of investment goods reported a particularly strong increase in output,” wrote economist Bernard Aw.

Total new orders rose for the first time in 10 months during July, with the rate of increase the strongest since February 2019, the data showed.

“Policy stimulus and increased infrastructure work were also factors behind the optimism,” Mr Aw wrote.

US economy in peril as jobless payments expire

James Politi and Aime Williams in Washington

US lawmakers are facing increasingly shrill warnings over the dangers to the economy as Congress and the White House struggle to reach a deal on a new fiscal stimulus package, leaving millions of Americans without vital safety net payments.

White House chief of staff Mark Meadows on Sunday said the two sides were still far apart, despite progress over the weekend following the expiry of emergency unemployment benefits.

The impasse on Capitol Hill has echoes of other US budgetary stand-offs in the past — which were also marked by moments of political brinkmanship — but with much higher stakes given the recession triggered by the coronavirus pandemic.

Read more here

The battle to save Britain’s farmhouse cheeses

The impact of Covid-19 is being felt by speciality cheesemakers across the UK, Polly Russell, a food historian and curator at the British Library, writes in the FT Magazine.

Given the relatively small size of the sector and the fact that larger industries are facing catastrophe too, concern about artisan cheese might seem a niche problem.

After all, according to figures from the Speciality Cheese Association, the sector is worth an estimated £100m a year, while standard, industrial cheese is worth in excess of £3bn.

Read more here

Singapore waives levies on foreign workers

Singapore has set aside S$320m (US$233m) to waive levies on employers who hire foreign workers in the construction, marine shipyard and process sectors, the government announced at the weekend.

The government said the move was in addition to S$1.36bn in support to the construction industry announced since the coronavirus pandemic began.

About 15,000 companies in the sectors “continue to face financial difficulties as they are unable to resume work due to Covid-19 measures”, the manpower ministry said in a statement.

Problems are likely to persist until the foreign worker dormitories, where tens of thousands of imported labourers have tested positive, are cleared of the virus, the ministry added.

Blackstone and TPG renegotiate debt after Covid-19

Joe Rennison in London and Mark Vandevelde in New York

Blackstone and TPG have agreed to make hundreds of millions of dollars of unscheduled repayments on loans funding their real estate investment trusts, in exchange for promises that their lenders will not take punitive action as the property market sours.

The private equity firms moved to renegotiate terms with their banks and other lenders as they brace for a fall in property prices in the upheaval caused by the coronavirus pandemic.

The Reits — which are managed by the private equity firms and listed on the stock market — make money by borrowing from banks and lending the cash at higher interest rates to hotel operators, apartment block developers and other owners of commercial property.

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Britons worry lockdown easing too quickly, poll finds

Just 30 per cent of British adults approve of their government’s handling of the coronavirus pandemic, a poll released on Sunday showed.

Almost half — 48 per cent — disapprove, the Opinium Research survey found, with more than half expressing concern that the government is trying to return to normal too rapidly.

The number of people who believe the UK is easing the lockdown too quickly rose 3 percentage points to 51 per cent, while those who think the lockdown is relaxing too cautiously also rose 3 points to 11 per cent.

People appear more ready to go to pubs and restaurants. The number of respondents who have gone to or who plan to go to restaurants rose to 33 per cent, up from 27 per cent two weeks ago.

The poll found 63 per cent of Britons who booked a foreign holiday this summer said it was cancelled while a further 20 per cent responded that it was postponed.

Only 13 per cent have booked a holiday outside the UK scheduled for the next three months, and 18 per cent have booked a domestic vacation.

Three-quarters of respondents think a second wave of Covid-19 is likely this year.

Opinium carried out an online survey of 2,002 UK adults on July 30-31.

Hong Kong official calls for China-Macau ‘travel bubble’

A senior Hong Kong official has suggested a “travel bubble” could be set up with China and Macau to allow travel across the boundaries that separate the regions from the mainland.

Paul Chan, financial secretary, said on Sunday that if Hong Kong gains control of its current surge, residents who take tests that prove negative could be allowed to travel to the mainland and Macau for business and leisure.

“Through the same arrangement, business people and tourists from the mainland and Macau could come to Hong Kong,” Mr Chan wrote in his weekend blog. “We would be able to resume business activities as quickly as possible, and help tourism, retail, catering and other industries.”

Ferry and hydrofoil services on the heavily travelled Macau-Hong Kong route have been suspended since February 4.

He said similar arrangements could also be gradually extended to other places where the pandemic is under control in the Asia-Pacific region.

Referring to the Hong Kong government’s decision on Friday to postpone legislative elections, Mr Chan said the virus “will not be wiped out by political disputes”.

He said only public health measures could bring Covid-19 under control. “I hope everyone will put aside their differences for the time being and work together to control the epidemic.”

Covid-19 outbreak strikes Arctic cruise liner

Richard Milne in Oslo

A large-scale Covid-19 outbreak has hit a Norwegian cruise liner operated by the first company to start up international operations since the start of the coronavirus pandemic.

Hurtigruten said over the weekend that 36 staff from its MS Roald Amundsen had tested positive for coronavirus, as had one passenger from the first of two affected cruises.

Almost 400 passengers from two cruises in July to the Arctic archipelago of Svalbard have had to go into quarantine, affecting 69 municipalities, according to Norwegian health authorities.

Read more here

Victoria declares state of disaster as infections surge

Australia’s second-largest city is locked down tighter this week after the state of Victoria declared a state of disaster, under which police are granted sweeping powers and some acts of parliament are temporarily suspended.

On Sunday, Victorian premier Daniel Andrews announced 671 more coronavirus cases, making a total of 11,557 infections in the state of about 6.5m people.

Of those, 598 are under investigation with no known transmission cause.

Mr Andrews said there were 760 “mystery cases” in the state. “We cannot trace back the source of the person’s infection, who they got it from, where or how,” he said in a Sunday press conference. “This mystery is our biggest challenge and a reason to move to a different set of rules.”

He said an 8pm to 5am curfew would be imposed on Melbourne and an adjoining municipality from Sunday evening.

Police would be out in force, he said. “This is all about limiting movement.”

On Sunday, police and defence force personnel began foot patrols of the city, including the popular Docklands area, pictured.

“With that many [mystery] cases you must assume you have even more. We must err on the side of caution and go further and go harder.”

From 6pm on Sunday, Victoria introduced a new series of stage 4 restrictions — the most stringent. “The stay at home conditions are enhanced with additional limits,” Mr Andrews said. “It is no longer available to go beyond 5km from home.”

Only one person could exercise at a time, he said. “So no three sets of tennis, no rounds of golf.”

Mr Andrews said there could be no groups bigger than two people, with “commonsense exceptions for children who need to be looked after”.

The state death toll rose to 123, with seven more fatalities, all people aged in their 70s to 90s, and all but one in care homes.

Victoria, with about 25 per cent of the country’s population, has nearly two-thirds of its Covid-19 cases.

On Saturday, Victoria reported another 397 new Covid-19 cases and three more deaths. The national death toll reached 200 over the weekend, with Victoria accounting for about 60 per cent of those.

China corn prices a fertile ground for speculators

Sun Yu in Beijing

Coronavirus has prompted a surge in corn, or maize, prices in China, even as the pandemic has hammered global demand for the crop, resulting in a speculative frenzy and a problem for policymakers.

Corn futures traded in Dalian have risen about 20 per cent since Covid-19 began spreading in China in February. Over the same period, prices for US corn futures have fallen 12 per cent.

The jump has pushed food inflation in China into double-digits, and piled pressure on the country, the world’s second-largest corn consumer, to boost imports.

Read more here

‘No local infection’ in NZ traveller to Korea

New Zealand officials said they have no evidence that a resident who tested positive for coronavirus in South Korea last month acquired the infection locally.

“There continues to be no evidence of any transmission in New Zealand involving the traveller who tested positive for Covid-19 on arrival in South Korea,” according to a health ministry statement issued over the weekend.

The ministry said that although “the public health risk from this case continues to be low”, there would be further contact tracing around their travel within New Zealand.

“All domestic contacts of this case tested to date have returned negative results,” the ministry added.

The traveller visited Queenstown and Auckland before flying from Christchurch to Incheon via Singapore.

New Zealand reported three new cases on Sunday, all related to incoming travel. One case is the child of a previously reported case who arrived on July 14 from Pakistan via Dubai.

The others are a woman in her 30s who arrived in New Zealand on July 28 from Los Angeles and a woman in her 40s who arrived on August 1 from Manila via Hong Kong.

Kerala’s star status imperiled by Gulf migrants’ return

Benjamin Parkin and Jyotsna Singh in New Delhi

Kerala, a coastal Indian state of about 35m people, has been lauded internationally for its strong public health response to the coronavirus, which helped quash early outbreaks even as the virus accelerated around much of the country.

But the mass return of migrants from the Gulf nations exposes weaknesses in the star state’s economy.

Kerala is powered by remittances from abroad, which are estimated to account for as much as a third of the state economy and are now under threat as Gulf countries rethink the role of foreign workers.

Read more here

Pandemic drives small Asia businesses towards tech

The coronavirus pandemic is driving Asian small businesses to embrace technology, according to a recent survey.

A study commissioned by Cisco Systems of companies in China, Japan and ASEAN member states found that 94 per cent say they have become more reliant on technology to ensure business continuity.

Nearly 70 per cent responded that they were accelerating the digitalisation of their businesses as a result of the Covid-19 pandemic.

The study, undertaken by IDC, defined digitalisation as the transformation of business operations using cloud, mobility, social, augmented and virtual reality, Internet of Things, data analytics and artificial intelligence to engage customers, suppliers and workers.

Cisco estimated that efficiencies caused by increased use of such technology could add $2.6-31tn to Asia-Pacific gross domestic product by 2024.

Small businesses face obstacles in harnessing tech, however. “The top technology hurdles [are] a shortage of digital skills and necessary technologies to enable digital transformation,” said Bidhan Roy, Cisco’s head of Asian small business..

Singapore, Japan and New Zealand small businesses were the most likely to digitalise successfully, the survey of 1,400 small businesses found.

‘Sustainable’ funds pull ahead in 2nd quarter

Funds identified as “sustainable investment” outranked peers in the pandemic-affected second quarter of 2020, according to research by Morningstar.

Among equity strategies, 56% per cent of 212 funds identified as sustainable outranked their non-sustainable peers.

The research firm found that 18 of 26 global sustainable index tracker funds outperformed their comparable equivalents in the second quarter, and all outperformed peers in the year to date.

“Sustainable themes continue to provide favourable return potential,” said Amantia Muhedini, sustainable investment director at UBS, a bank.

“We expect this to be supported by the post-Covid-19 green recovery that increasingly looks to be supported by policymakers in many parts of the world,” she added.

Australian state looks into electronic monitoring

The Australian state of Victoria is considering introducing electronic monitoring of coronavirus-positive people who breach isolation rules, according to health officials, as a surge in cases in Melbourne continues.

“We have seen … a number of people that have breached the isolation orders,” Michael Kidd, one of the country’s deputy chief medical officers said of Melbourne, the state capital, which has seen thousands of new cases emerge in the past two weeks.

“We have received disturbing reports that some people with Covid-19 who have been told to isolate in their homes have not been at home when health personnel have called around to see how they are doing,” he added.

Prof Kidd said Victoria’s government would make any decision on electronic monitoring.

“Whether we need to move to additional measures and we have seen additional measures used in other countries to monitor people who have been diagnosed with Covid-19 is something that we will need to consider in the days ahead.”

News you might have missed

An increase in Covid-19 cases across the US south and west led to July being the nation’s worst month for infections since the pandemic began, hindering efforts to reopen the world’s largest economy. The US confirmed almost 1.86m cases since the end of June, representing 41 per cent of total infections since the start of the outbreak, according to Covid Tracking Project data.

An Australian study exploring treatments for Covid-19 has started convalescent plasma therapy. The first patient was recruited last week to the Australasian Covid-19 Trial and Randomised, Embedded, Multi-factorial, Adaptive Platform Trial for Community-Acquired Pneumonia. People recovering from Covid-19 develop antibodies in blood plasma, which is transfused into newly infected patients.

Three-quarters of frequent airport lounge customers plan to restart their travel as quickly as is safe, according to a study of 22,000 members of Priority Pass, a global independent lounge group. About seven in 10 travellers are willing to pay for lounge access where social distancing is maintained. The members’ biggest worry is abrupt changes in quarantine and border controls.

UK ministers have been warned that hundreds of thousands of jobs are at risk after the furlough scheme that helped pay the wages of more than 9m workers during the coronavirus lockdown begins to wind down. Since Saturday, UK employers have been encouraged to bring more staff back to their offices to boost hard-hit sectors such as high street retailing and dining.

Britons desperate to take a holiday after months of lockdown have been rushing to book what is left of the country’s holiday accommodation, especially since the government’s advice to avoid Spain. About 14m adults in Britain intend to take a holiday in the country before the end of September, in a potential shot in the arm for destinations such as Padstow in Cornwall, pictured.

Papua New Guinea is seeing a sharp surge in Covid-19 cases two months after ending a state of emergency on June 2. As of Sunday, total confirmed cases have increased to 91, with two deaths. “There is still a large number of people who are not adhering or are unable to adhere to the preventative measures and this is extremely worrying,” said Anand Das, Oxfam director in the Pacific nation of nearly 9m people.

Indonesian commercial property sales are expected to fall 40 per cent year-on-year in the second quarter, according to Fitch, the rating agency. The plunge in presales among 12 large developers follows a 19 per cent year-on-year drop in the first quarter. “We expect demand for industrial land to remain weak as investor sentiment is likely to remain soft,” analysts Bernard Kie and Hasira De Silva wrote.

With borders still closed to millions of frustrated would-be travellers, New Zealand’s tourism officials plan to launch a gamified virtual visit of the South Pacific nation. PlayNZ is billed the world’s first walkthrough of a real-world location, where users can experience New Zealand as a video game. Teenage Kiwi actor Julian Dennison of Deadpool 2 and Shopping narrates the experience.

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