Coronavirus latest: Brussels calls for coordinated response to lockdown exit strategies
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US stocks rise as earnings season kicks off
Wall Street advanced on Tuesday tracking European and Asian bourses higher on the back of better-than-expected Chinese data and the kickoff to US earnings season.
The S&P 500 climbed 1.7 per cent, while the Nasdaq Composite rose 1.8 per cent.
That followed gains in Europe, with the Stoxx 600 up 0.7 per cent, and Asia overnight, after data showed Chinese exports fell in March by much less than analysts had anticipated.
JPMorgan and Wells Fargo unofficially kicked off earnings season on Tuesday with both lenders reporting a sharp drop in profits and increases in loan loss reserves. Shares in both banks climbed at the open.
Investors are also watching to see when the American economy might reopen after Donald Trump claimed he had “total” authority as US president to lift coronavirus restrictions despite the nation’s constitution leaving such rights to state governors.
Elsewhere in markets, the yield on the US 10-year Treasury was little changed at 0.744 per cent. While the dollar index, a gauge of the buck against a weighted basket of peers, slid 0.3 per cent to 99.10.
Protests erupt in Mumbai as workers demand transport to rural homes
Amy Kazmin in New Delhi
Migrant workers trapped in India’s financial capital Mumbai have gathered at the Bandra Railway station to protest against the extension of the ongoing lockdown, and to demand their right to return home to villages across the country.
Thousands of rural migrants have been stuck in Mumbai – mostly without work – since March 22, when India suspended all its bus and train services for what was initially billed as a ‘one day’ symbolic people’s curfew. Neither public transport nor normal work has ever resumed.
On Tuesday morning, Prime Minister Narendra Modi announced that India’s curfew – which is completing three weeks – would be further extended until May 3, as the country’s confirmed coronavirus caseload continues to rise.
Mr Modi said that the government would relax the rules of the lockdown somewhat to allow some limited resumption of economic activity. Details are due to be announced on Wednesday.
But for many migrant workers stuck in Mumbai, who were unable to join the earlier mass exodus out of the city before the train services were suspended, patience has run out. Thousands stormed the Bandra station on Tuesday afternoon, demanding to be allowed to go home to their villages. Police armed with lathis dispersed the crowd.
Afterwards, Aditya Thackeray, son of the chief minister of Maharashtra state, tweeted that the violent protests were a result of Mr Modi’s government “not being able to take a call on arranging a way back home for migrant labour”. “They don’t want food. They don’t want shelter, they want to go back home,” Mr Thackeray tweeted.
On Friday, migrant workers – mainly from the eastern state of Orissa – trapped in the diamond-polishing centre of Surat, also rioted in the streets, demanding that they be paid the wages owed to them and provided with transport to return home.
117m children’s lives at risk from delayed measles vaccinations, says WHO
More than 117m children from 37 countries are at risk of missing out on life-saving measles vaccinations, the World Health Organization warned on Tuesday, as attempts to limit the spread of coronavirus put on hold immunisations around the world.
Two dozen countries have already postponed measles vaccination campaigns to avert further spread of Covid-19, and another 13 are expected to do so by the end of the year, said the WHO.
“We urge leaders to intensify efforts to track unvaccinated children, so that the most vulnerable populations can be provided with measles vaccines as soon as it becomes possible to do so,” the WHO said in a statement on Tuesday. “Urgent efforts must be taken now at local, national, regional and global levels to prepare to close the immunity gaps that the measles virus will exploit.”
Despite having a safe and effective vaccine for more than 50 years, measles cases have surged in recent years and caused more than 140,000 preventable deaths in 2018, mostly of children and babies, according to the WHO.
Hardship ahead in the UK due to coronavirus, chancellor says
Rishi Sunak, the chancellor of the exchequer, has warned that there is “hardship ahead”, after the Office for Budget Responsibility estimated the UK economy could shrink by more than a third in the second quarter if a lockdown to stop the spread of coronavirus is in place for three months.
“This will have a very significant impact on our economy,” he said. “It’s important that we are honest about that. People should know that there is hardship ahead – we can’t protect every person and business.”
The fiscal watchdog outlined a scenario in which a deep recession in the UK economy looks likely to leave a £220bn hole in public finances. Mr Sunak noted that “this is just one potential scenario” of many.
FT analysis suggests that £60bn will be added to UK public spending, which could push the deficit as high as £200bn in the coming year, as part of measures to support the country’s response to the Covid-19 outbreak including a £350bn rescue package for businesses.
“The report makes clear that the actions we have taken – unprecedented actions – will help to mitigate the impact of the virus on our economy,” he added.
England’s Covid-19 fatality count rises back above 700
The number of new Covid-19 fatalities in England ticked up considerably on Monday after lower figures were recorded over the Easter weekend.
A further 744 people who had been diagnosed with the disease caused by coronavirus died in hospital in the 24 hours to 5pm on Monday, according to NHS England. That was 77 more than the previous day, but still below Thursday’s high of 866.
The figures from England are published before the nationwide UK counts, but typically account for the bulk of overall deaths. The patients who died in England were between 34 to 102 years old, and all but 58 had other underlying health conditions. In total, 11,005 people in England have died in hospital from the virus.
Johnson advised against ‘immediately’ returning to work
Laura Hughes in London
Boris Johnson has been advised by his doctors not to “immediately” return to work and is recovering from coronavirus at his official country residence, Downing Street have said.
“He is continuing his recovery at Chequers,” No 10 said. “The priority is for the PM to rest and recover and his medical team have advised him not to immediately return to work.”
Meanwhile they confirmed that the prime minister’s chief aide Dominic Cummings has returned to work in No 10 after recovering from symptoms of the virus.
Wells Fargo quarterly profit tumbles as loan loss reserves jump
Robert Armstrong in New York
Wells Fargo’s net income fell almost 90 per cent in the first quarter as the economic impact of the coronavirus drove “unprecedented” increases in loan loss reserves as well as write-downs in the bank’s securities portfolio.
The $653m result followed an increase in loss reserves by $3.1bn and write-down of securities by $950m. Earnings per share of 1 cent missed the 33 cents expected by Wall Street analysts. The hit from the reserve increases and security write-downs was 73 cents a share.
Chief financial officer John Shewsbury said that, despite effects of the pandemic, the bank continued to see significant customer activity. “Commercial loans grew by $52bn, deposits increased by $54bn, we originated $48bn of residential mortgage loans, and we raised $47bn of debt capital for our clients,” he said.
The bank noted that in the month of March alone commercial customers had drawn $80bn from their lines of credit.
Wells Fargo shares have fallen 13 per cent since late February, when coronavirus fears first began to roil markets. They rose almost 3 per cent in pre-market trading on Tuesday alongside gains in US stock futures.
TAP faces possible nationalisation, Portugal’s prime minister says
Peter Wise in Lisbon
TAP-Air Portugal might have to be nationalised because of the impact of the coronavirus pandemic on the loss-making airline, the prime minister has said.
“We cannot exclude the possibility of nationalising TAP or any other company that is absolutely fundamental to our country,” António Costa said on Tuesday. “We cannot run the risk of losing them during this crisis.”
Portugal’s flag carrier has temporarily laid off 90 per cent of its 10,000 workers after drastically cutting its flights because of the pandemic. The company was partly privatised in 2015, leaving the state with 50 per cent. Atlantic Gateway, a private consortium headed by David Neeleman, a US-Brazilian airline entrepreneur, owns 45 per cent and employees 5 per cent.
Some TAP shareholders had expressed an interest in selling their stakes, Mr Costa said on local radio. Another company had expressed an interest in investing in the airline, but that possibility had been “suspended” because of the pandemic, he said.
This appeared to be a reference to unconfirmed reports that appeared in the German media in February saying that Lufthansa and United Airlines were considering a joint takeover of TAP.
Portugal on Tuesday reported an accumulated total of 17,448 confirmed coronavirus cases, an increase of 514 cases, or 3 per cent, over the previous 24 hours. The number of deaths linked to Covid-19 increased by 32 over the same period to a total of 567.
EasyJet founder intensifies rift with management
Nikou Asgari in London
EasyJet founder Stelios Haji-Ioannou has sent a complaint to the Financial Conduct Authority (FCA) about the airline’s Airbus order, ratcheting up tensions between the carrier’s largest shareholder and its board.
The UK-listed airline and its founder have been battling for weeks over a £4.5bn Airbus order for 107 new aircraft, which Sir Stelios argues should be cancelled in order to preserve cash in the face of the coronavirus crisis. Last week, easyJet compromised by saying it would defer the purchase of 24 aircraft.
In the letter to the FCA, Sir Stelios, whose family owns 34 per cent of the company, argues that the airline has breached the UK’s Market Abuse Regulations and Listing Rules as it did not obtain shareholder approval before deferring the Airbus order.
In a separate statement, Sir Stelios said: “If the FCA does not force them to call a shareholder vote, my company, easyGroup, will not hesitate to take the regulator to judicial review as the law provides.”
Deep UK recession may poke £220bn hole in public finances
Delphine Strauss in London
The UK’s lockdown has plunged the economy into a deep recession that looks likely to leave a £220bn hole in the public finances, according to the Office for Budget Responsibility.
The fiscal watchdog said on Tuesday that if the lockdown measures intended to slow the spread of coronavirus stayed in place for three months, national output could fall by around 35 per cent in the second quarter of 2020 – a contraction on a similar scale to statisticians’ predictions for France.
This would lead to an increase of £218bn in public sector net borrowing in 2021, relative to the OBR’s March forecast – largely due to a collapse in tax revenues, as well as government measures such as business rate holidays, and spending to support household and business finances.
The OBR said the figures should be taken as a “reference scenario”, not a forecast of what was most likely to happen, since it could not predict how long restrictions on economic activity would last.
It has assumed that the three-month lockdown would be followed by a further three months of partial restrictions, after which the economy would recover quickly with no lasting damage.
Even on these relatively benign assumptions, the deficit would explode, climbing to almost 14 per cent of GDP in 2020-21 – more than double its peak in the aftermath of the 2008 financial crisis, and the highest level since the second world war. In March, the OBR had forecast it would reach just 2.4 per cent of GDP in this fiscal year.
IMF writes off an estimated $214m of debt for poorest countries
Jonathan Wheatley in London
The IMF has granted an estimated $214m in debt relief to 25 of the world’s poorest countries by cancelling repayments owed to the fund for the next six months, allowing them to use the money to fight coronavirus instead.
Most of the countries covered by the grant are in sub-Saharan Africa, with others in Asia and the Caribbean.
The announcement comes ahead of a much larger debt suspension plan covering an estimated $18bn in repayments of official bilateral debt which the G20 group of the world’s richest advanced and developing countries is expected to announce at the IMF and World Bank spring meetings later this week, although there is no suggestion these debts will be cancelled outright.
Read more here
J&J cuts guidance but raises quarterly dividend
Donato Paolo Mancini in London
Johnson & Johnson has cut its guidance for 2020 but increased its quarterly dividend as the coronavirus pandemic has depressed the outlook for nearly all industries.
The New Jersey-based company expects to report sales between $77.5bn and $80.5bn for the year to come, down from a previous estimate of between $85.4bn and $86.2bn. It predicts adjusted earnings per share for the year in the $7.50 to $7.90 range, down from a previous estimate of $8.95 to $9.10.
The group however has increased its dividend by 6.3 per cent to $1.01 a share, or $4.04 for the year.
For the quarter that ended on March 31, the company reported adjusted earnings-per-share of $2.17, beating expectations, and sales of $20.69bn, up from $20.02bn in the same time a year before.
J&J is developing a Covid-19 vaccine that it hopes will be available early next year. Shares rose 4.5 per cent pre-market.
JPMorgan profits tumble as lender boosts defences for loan losses
Laura Noonan
JPMorgan Chase’s profits fell by 69 per cent in the first quarter as America’s biggest bank dramatically increased provisions for potential losses on loans to customers hit by the coronavirus crisis.
The bank reported net income of $2.87bn for the three months ended in March, down from $9.18bn a year earlier. Earnings per share of $0.78 were far worse than the $1.76 predicted by analysts contributing to a Bloomberg poll.
The earnings miss was largely driven by a $6.79bn surge in provisions for loan losses, which chief executive Jamie Dimon attributed to “the likelihood of a fairly severe recession”.
Total provisions came in at $8.29bn for the first quarter of 2020. Still, Mr Dimon said his bank “performed well in what was a very tough and unique operating environment — growing deposits in every line of business and providing loans as we extended credit and served as a port in the storm for our clients and customers”.
GSK-Sanofi team up to accelerate Covid-19 vaccine development
Leila Abboud in Paris and Sarah Neville in London
GlaxoSmithKline and Sanofi, two of the world’s biggest vaccine makers, have agreed to collaborate to develop a vaccine for Covid-19 with the aim of speeding a treatment to market in the next 12 to 18 months.
Calling the partnership of erstwhile rivals “unprecedented”, Sanofi’s head of vaccines David Loew said in an interview that teaming up made sense because each company held “a piece of the puzzle”.
Sanofi’s vaccine candidate, which is an S-protein Covid-19 antigen based on recombinant DNA technology, needs what is known as an adjuvant to function.
GSK already has a “proven pandemic adjuvant technology” that it used during the H1N1 swine flu outbreak in 2009.
Exclusive: EU calls for ‘task force’ to manage lockdown exit strategies
Jim Brunsden in Brussels
Brussels wants the EU to create a “task-force like structure” to co-ordinate its exit from lockdowns, as it seeks to prevent “political friction” between member states, a document seen by the Financial Times reveals.
The commission will call for the co-ordinated effort as part of a “European roadmap towards lifting Covid-19 containment measures”, which it will publish this week.
The undated draft, seen by the FT, says that EU member states “should notify each other and the commission in due time before they lift measures and take into account their views”.
The commission warns in the leaked draft: “Action must be co-ordinated between the member states.”
A lack of co-ordination in lifting restrictive measures risks having negative effects for all member states and is likely to give rise to political friction between member states.
“Member states are invited to nominate single points of contact for the European Commission and neighbouring countries, ideally as part of an operational task force-like structure,” the document says.
A European network of such points of contact will monitor and exchange information in the weeks and months ahead.
The draft says that Brussels is working to speed up approval processes for testing kits and other crucial equipment, but says that the only way to overcome the pandemic will be the development of a vaccine.
“We will have to live with the virus until a vaccine or treatment is found,” the document says.
Fund managers build biggest cash stockpiles since 9/11
The coronavirus pandemic has prompted investors to sell down riskier assets, pushing the amount of cash they hold to the highest level since the September 11 terror attacks in 2001, according to a closely watched poll.
The latest Bank of America fund manager survey showed the average cash balance held by fund managers jumped to 5.9 per cent in April from 5.1 per cent in March and 4 per cent in February. That is well above a 10-year average of 4.6 per cent.
Analysts at the bank expect April to mark “peak pessimism” with cash balances receding next month.
The poll covered 207 managers with $597bn in assets under management. The vast majority – 93 per cent – of these believe there will be a recession in the next 12 months. This is higher than the previous peak during the financial crisis, when 86 per cent predicted a recession.
Most do not anticipate a swift path out of any recession. 52 per cent of those surveyed expect a “U-shaped” recovery, which would mean a slower return to normality, compared with 15 per cent who expect a speedy “V-shaped” recovery.
Toyota announces plan to resume car production in France on April 22
Kana Inagaki in Tokyo
Toyota has said it plans to resume production at its plant in France from April 22 following a month-long shutdown due to the coronavirus outbreak.
The world’s second largest carmaker also plans to restart operations at its plant in Poland from April 23, although production volume at both plants would be reduced initially.
Every large European and North American plant has been closed after carmakers shuttered sites from mid-March to protect workers and respond to falling demand.
As Toyota and other carmakers plan to restart production in Europe later this month, it remains unclear how fast vehicle demand will pick up as many big cities remain in lockdown.
The earliest start date for reopening plants in the UK, Turkey and the Czech Republic is May 4, the Japanese carmaker said.
Nato to focus on supply chain vulnerability
Helen Warrell in London and Michael Peel in Brussels
Nato defence ministers are to discuss whether they have become too dependent on medical supplies and protective equipment made by countries outside the alliance, in a meeting this week on the security implications of the coronavirus pandemic.
Speaking ahead of Wednesday’s summit Jens Stoltenberg, Nato secretary general, said that one of the “obvious” lessons to be learned was about building resilience in supply chains.
“We have to look into issues like supplies of medical equipment, protective suits, medicines…and also ask questions about whether we are too dependent on production coming from outside, whether we need to produce more of this equipment from our own countries,” he told reporters on Tuesday.
The supply line vulnerabilities revealed by the pandemic are already an acute concern in the EU, whose countries also form a large majority of Nato’s membership.
A mix of soaring demand, emergency national export restrictions and collapsing air cargo capacity has hampered European efforts to secure vital goods from Asia, including personal protective equipment and crucial hospital intensive care drugs.
Other topics under discussion will include how to respond to disinformation and propaganda being spread in relation to the virus.
Iran’s elite troops co-ordinate support for nearly 4m poorer families
Najmeh Bozorgmehr in Tehran
Iran’s Revolutionary Guard has set up a base to co-ordinate economic support for 3.5m families who cannot afford to make ends meet as a result of the coronavirus outbreak.
The charity works of all state organisations would be handled by the base, called Imam Hassan Mojtaba, with “packages” distributed by voluntary forces of the guard, basij, among the poorest segments of the society, Major General Hossein Salami said on Tuesday
“This will continue for some months until we go back to normal conditions,” he said.
The elite force has increased its social responsibilities in recent years, rushing to assist and feed people in times of natural disasters, in particular in poor provinces in what analysts say is part of the guard’s efforts to increase its popularity and power to influence politics. The coronavirus spread, it says, is a fresh opportunity.
The number of deaths in Iran related to the virus has risen by 98 over the past 24 hours, the first time in about a month that the country, which has been one of the most affected by Covid-19, has reported a daily toll below 100. That brings the total
to 4,683, Iran said on Tuesday, while 74,877 individuals have tested positive.
Coronavirus spread in Spain slows to lowest rate yet
Daniel Dombey in Madrid
The spread of coronavirus in Spain has fallen to its lowest rate since the beginning of the outbreak, although there has been an uptick in deaths, according to government figures released on Tuesday.
The ministry of health said there have now been 172,541 confirmed cases of the virus, just 1.8 per cent higher than Monday’s figure. The rate of increase is much below the speed with which coronavirus spread last month, when the tally regularly rose by 25-30 per cent a day.
The government figures indicate that to date 18,056 people have died after contracting coronavirus, 567 of them in the last 24 hours. This compares with 517 deaths in the previous 24 hour period, but remains far below the peak of 950 deaths a day at the start of this month. So far, 67,504 people have recovered.
Spain has sought to reduce transmission of the virus, hospitalisations and deaths through its month-long lockdown. This has been relaxed this week, with the end of a two-week-old ban on “non-essential” work.
South Africa slashes interest rates to post-apartheid low
Joseph Cotterill in Johannesburg
South Africa’s central bank slashed its benchmark rate to a post-apartheid low as Africa’s most industrialised economy braces for a longer pandemic lockdown.
The South African Reserve Bank said on Tuesday that it had cut its main repo rate by 100 basis points, to 4.25 per cent. The South African rand fell by 0.3 per cent against the US dollar after the announcement.
The bank had last cut rates by one percentage point less than a month ago as South Africa prepared to shut down its economy to help contain the spread of the virus. Last week President Cyril Ramaphosa ordered a national lockdown to be extended until the end of April.
Economists have estimated that South Africa’s GDP could fall by up to 10 per cent this year due to the lockdown.
The central bank has also launched purchases of government bonds to unblock strained local money markets.
Small brokerage closures on the rise in Hong Kong
Primrose Riordan in Hong Kong
Hong Kong is seeing an uptick in the closure of smaller brokerages and the chairman of the Hong Kong Securities Association Gordon Tsui estimated at least 100 of its 1,000 plus members were under severe financial stress.
“Most of the small-sized securities firms [have been] seriously, seriously affected,” Dr Tsui told the Financial Times, adding that he was aware of eight securities firms that had shut.
Many smaller firms in the city had out of date technology, which left them exposed as their clients increasingly did not want to meet in person, and made it difficult for their staff to operate from home, Dr Tsui said.
Smaller wealth managers in the territory that are dependent on transaction volume to make profits, rather than fees, are also under pressure, said Kenny Wen, wealth-management analyst at Everbright Sun Hung Kai.
At least 15 stock market participants such as brokerages, asset managers, or stockbrokers in Hong Kong have ceased trading since the start of the year, according to online records, while 22 ceased trading in the whole of last year.
Mr Wen said many wealth management clients were still losing money, even if the local stock market had calmed down over the past week. “It’s difficult to convince them to add more investments,” he said.
Record deaths in England and Wales in week to April 3, says ONS
Chris Giles in London
More deaths were registered in England and Wales in the week ending on April 3 than in any week since comparable estimates started 15 years ago, the Office for National Statistics said on Tuesday.
The statistical office said that 16,387 deaths were registered in that week, 6,000 more than the five-year average for that week in previous years.
Almost half of all deaths in London in that week, some 46.6 per cent, were registered with coronavirus mentioned on the death certificate, the ONS said, with the figure at 21.2 per cent across the whole country.
Most deaths were registered in hospitals, with nine in 10 deaths occurring there rather than in the community or in care homes. Anecdotal evidence suggests that the spread of the disease to care homes occurred later in the outbreak.
The Big Read: How coronavirus stalled climate change momentum
Leslie Hook and Aleksandra Wisniewska in London
At the birthplace of modern climate science near the top of the Mauna Loa volcano in Hawaii, scientists are looking for a change in atmospheric carbon dioxide concentrations, due to the global economic slowdown caused by coronavirus.
Ralph Keeling, a professor at the Scripps Institute who leads the atmospheric analysis programme, said a 10 per cent drop in fossil fuel emissions over one year would show up in atmospheric CO2 concentrations and be measurable at Mauna Loa.
All over the world, pollution levels are dropping fast. The lockdowns triggered by the pandemic, with about 2.6bn living under restrictions, are starting to have an impact not only on the virus but also on the planet.
Yet despite the potential short-term dip in emissions, there is a risk that the pandemic will overshadow environmental concerns. Climate talks have been delayed and new policy initiatives postponed.
Read The Big Read: How coronavirus stalled climate change momentum
Global Covid-19 cases pass 1.9m
Steve Bernard in London
Global cases of Covid-19 rose by 71,572 yesterday, the fourth consecutive day that the number of newly infected has fallen. This brings the global total to more than 1.9m.
The death toll on Monday held steady at 5,421, leaving the daily rate of growth in fatalities at 5 per cent.
Analysts have warned against assuming a peak has been passed, however, as many countries in Africa and South America remain in the early acceleration phase. The long Easter weekend could also have affected the timing of the reported numbers.
In the US, Monday’s death toll closely matched that on Sunday, with 1,535 people losing their lives. The total number of fatalities in the country now stands at 23,640, with more than 586,000 people confirmed to have contracted the virus.
Many of the hardest-hit European countries are seeing the number of new cases and deaths fall each day. Italy, Spain and France have all extended their lockdowns but have signalled they are planning to reopen their economies if the situation continues to improve.
The UK was the hardest-hit country outside of the US on Monday, with the death toll rising by 717 to 11,329. Meanwhile, Turkey continues to struggle to contain the virus with a further 4,093 new cases confirmed on Monday, the sixth consecutive day with 4,000 or more cases.
The number of recoveries worldwide rose by 21,312, leaving a total of 444,711 free from the virus.
Wizz Air to take hit of up to €80m on hedging losses
Central European carrier Wizz Air expects to take a hit of up to €80m in the March quarter and will lay off 1,000 employees.
The low-cost Hungarian airline, which is operating at 3 per cent capacity, said it would recognise exceptional losses of €70-80m as a result of hedging activity and make 19 per cent of its workforce redundant. Board members, pilots and cabin crew will take pay cuts of up to 22 per cent.
Many airlines lock in prices for fuel in advance to protect against volatility. However, with the price of crude oil having halved this year, many of these hedges will not have paid off. Jet fuel prices are down 64 per cent compared with this time last year, according to the International Air Transport Association.
But Wizz remained upbeat about its growth strategy and said that, as markets returned to normal, it “fully expects” to stick to plans to grow capacity by 15 per cent annually. It still intends to launch its Abu Dhabi subsidiary this autumn.
József Váradi, Wizz chief executive, said:
Wizz Air undoubtedly remains best placed for long-term value creation in the European aviation industry due to its low fare – low-cost business model and unique positioning as the market leader in the growing CEE market.
The group expected to report net profit of €270-280m for its financial year that ended in March but said it could not give any indication on outlook for the current year.
Renault pulls out of Chinese joint venture with Dongfeng
David Keohane in Paris and Peter Campbell in London
Renault has decided to stop selling petrol cars in China, pulling out of its loss-making joint venture with Dongfeng and reversing a strategy put in place with great fanfare by ex-boss Carlos Ghosn, as coronavirus hits the French carmaker hard.
Renault said on Tuesday morning that it had an agreement with Dongfeng to sell out of the 50-50 joint venture between the two partners, Dongfeng Renault Automotive Company.
The sale will also transfer full control of its plant in Wuhan, which was opened by Mr Ghosn in 2016, to Dongfeng and mean that DRAC will stop selling Renault-branded cars.
“We are opening a new chapter in China. We will concentrate on electric vehicles and light commercial vehicles, the two main drivers for future clean mobility and more efficiently leverage our relationship with Nissan,” said Francois Provost, chairman of the China business for Renault.
The Chinese market is expected to slow further this year due to the effects of coronavirus. Renault is one of the carmakers that has been hardest hit by the pandemic: it has shut plants around the world and is considering taking out bank loans guaranteed by the French state worth up to €5bn to see it through the crisis.
A late arrival to the Chinese market, Renault has struggled to make a dent compared with rival mass-market producers such as Volkswagen and General Motors.
Fellow French group PSA, which owns Peugeot and Opel, has also performed poorly in the market, as has Italy’s Fiat Chrysler.
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Q&A: We answer your questions on coronavirus and globalisation
Rana Foroohar and Edward Luce
In countries around the world, many global connections were suddenly severed — or at least put on an indefinite pause — due to the spread of coronavirus. With flights cancelled, travel bans enacted and global trade upended, will Covid-19 end globalisation as we know it?
In late February, Rana Foroohar wrote that the novel virus was speeding up decoupling of global economies. Less than two weeks later, Donald Trump closed off direct US travel to the European continent for the first time since the second world war — a decision that contradicted expert guidelines, Edward Luce said.
Rana and Ed have been following the economic fallout of coronavirus for the US and its global partners. On Tuesday, they’re here to answer your questions about how the outbreak has already, and will continue to affect, globalisation.
Ask your questions in the comments here.
Ed and Rana will be dropping in regularly to answer them over the course of the day.
Russia records 170 new deaths as infection rate gains pace
Henry Foy in Moscow
Russia recorded 2,774 new coronavirus cases on Tuesday, a third consecutive record daily increase, as the rate of infection continued to gain pace in the country.
Russia now has 21,102 cases of Covid-19, the country’s coronavirus agency said, and 170 people have died from the disease.
From small numbers a few weeks ago, Russia’s outbreak has soared over the past fortnight, with cases doubling roughly every four days.
President Vladimir Putin has warned citizens that the short-term outlook looks negative, as Moscow this week brought in a system of electronic passes that people will be required to apply for if they want to travel around the city.
Iran to float 10% of wealthy state-run company Shasta
Najmeh Bozorgmehr in Tehran
Iran is set to float 10 per cent of one of its wealthiest state-run companies on the country’s stock exchange on Wednesday, in a bid to generate income to limit the economic impact of coronavirus.
The sale of shares in Shasta — the investment arm of the Social Security Organisation of Iran — will constitute one of the biggest privatisation programmes in Iran. The multi-billion-dollar holding company runs operations in various sectors, ranging from petrochemicals and cement to finance and shipping.
Iran’s president Hassan Rouhani said on Friday that companies owned by the government, the broader public sector and armed forces should “quickly” float shares on the Tehran Stock Exchange.
His government — which was already reeling from tough US sanctions and a huge drop in its petrodollars — is facing the dark prospect of a worsening economic recession that will slash its income streams, including tax revenue.
The Islamic republic has opposed strict quarantine policies as shrinking income has left the government unable to support millions of Iranians who would be put out of work.
Mohammad Shariatmadari, Iran’s labour minister, in a post on Twitter, assured the public on Tuesday that the floating of Shasta’s shares would be a “win-win” situation for them and the national economy.
Germany’s Covid-19 case count rises at slowest pace in three weeks
Tobias Buck in Berlin
Germany reported 2,082 new coronavirus cases on Tuesday, the lowest number in more than three weeks and further evidence that the rate of increase is slowing sharply.
Germany has detected a total of 125,098 coronavirus cases since the outbreak started, according to official data from the Robert Koch Institute in Berlin. The latest daily increase was less than 2 per cent.
Another encouraging piece of data to emerge on Tuesday was that the number of Covid-19 recoveries exceeded the number of new infections. More than 68,000 patients have now recovered from the disease, or more than half the total number of cases.
There were 170 new deaths related to coronavirus, bringing the total up to 2,969. That means the German case fatality rate now stands at 2.4 per cent – higher than in the first weeks of the pandemic but still notably lower than in countries such as Spain and Italy.
GAM reviews salaries and cuts staff as investors withdraw funds
Siobhan Riding in London
Troubled investment manager GAM has been forced to review salaries and cut jobs after suffering a 26 per cent drop in assets in its core business line.
The Swiss group has been hit hard by coronavirus, with heavy investor redemptions and negative market movements pummelling its core investment management business. Assets under management in this unit fell from SFr48.4bn ($50bn) to SFr35.7bn ($37bn) in the first quarter.
In response, GAM said it would accelerate its cost-cutting programme, targeting total reductions of at least SFr65bn this year, compared with its previous objective of SFr30bn. The fund manager is pushing ahead with a previously announced round of job cuts, although it said it expected to make fewer than planned thanks to a voluntary redundancy programme it completed last month.
It also plans to review salaries across the group, particularly focusing on senior non-investment roles. The aim of this is to manage costs while minimising the impact of compulsory redundancies “during the difficult Covid-19 environment”, said GAM.
Chief executive Peter Sanderson added: “GAM has not been immune to some of the toughest market conditions the industry has seen, and we saw our assets under management decline as a result of the Covid-19 crisis.”
GAM’s fixed income business accounted for the lion’s share of its asset drop in the first quarter, suffering SFr5bn in net investor withdrawals. GAM’s total asset pool, which also includes assets in its private labelling business, fell from SFr132.7bn to SFr112.1bn in the first quarter.
France sees 9% budget deficit in recession-hit 2020
Victor Mallet in Paris
France has again downgraded its economic forecasts for the year as a result of the coronavirus pandemic, with ministers predicting the economy would shrink by 8 per cent in 2020 while the budget deficit would reach 9 per cent of gross domestic product.
The new forecasts followed President Emmanuel Macron’s announcement on Monday night that the lockdown on the population designed to stop the spread of the Covid-19 virus would remain in force until May 11.
Bruno Le Maire, finance minister, said new forecasts for revised budget legislation included minus 8 per cent growth this year.
Gérald Darmanin, budget minister, said the expected budget deficit was now 9 per cent of GDP — up from the previous 7.6 per cent estimate and last year’s 3.1 per cent and the worst since the second world war — while public debt would rise to 115 per cent of GDP from the current 100 per cent and the previous prediction of about 112 per cent.
“In three weeks we’ve twice re-done the budget with Bruno Le Maire and added €110bn to support the economy,” Mr Darmanin told Franceinfo radio.
European stocks open higher
European equity markets have tracked their Asian counterparts higher this morning after Chinese trade data fuelled investor optimism that its economy was bouncing back.
The Europe Stoxx 600 added 1.2 per cent at the open, with gains of 0.8 per cent, 1.6 per cent and 0.9 per cent respectively for London’s FTSE 100, Frankfurt’s Dax 30 and Paris’s Cac 40.
The moves came after data showed that Chinese exports fell by much less than analysts had anticipated in March, marking a modest rebound from the previous two months’ figures as the country ended lockdowns aimed at combating the coronavirus.
China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 1.8 per cent following the data, while the Hang Seng in Hong Kong ticked up 0.8 per cent.
“While the data has not always proven reliable, it suggests that the Chinese economy is starting to stabilise faster than expected,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
As markets open in London, we are bringing you a round-up of the top corporate announcements this morning.
Belgium drinks company AB InBev cut its proposed dividend in half to €0.5 per share and rescheduled its annual shareholders’ meeting from the end of April to early June.
National Express, the coach operator, said in a trading update for the first three months of the year that there had been “a significant decline in revenue as services have been withdrawn” since the outbreak of coronavirus, although revenue was still up 8.9 per cent year on year. Since its update last month, the company has secured a further £800m of additional credit facilities and the board has withdrawn its recommendation for a dividend payout. Two members of staff passed away due to coronavirus, the group said.
Passenger numbers at Heathrow fell 52 per cent in March compared with last year, with figures in April set to shrink by more than 90 per cent “with lasting and significant industry-wide effects predicted”. The airport moved to single runway operations last week and activities will be limited to Terminal 2 and 5 only over the coming weeks.
Pub group Mitchells & Butlers has furloughed 99 per cent of its workers, while basic pay for all employees including the board has been reduced by 60 to 80 per cent. It has been granted a temporary waiver until mid-May for a possible technical breach of its debt covenants.
Clothing retailer Next is reopening sales online, after it closed its ecommerce operations on March 26. It will initially only offer items customers need the most, it said.
Taiwan reports no new coronavirus cases for first time in a month
Kathrin Hille in Taipei
Taiwan reported no new confirmed coronavirus cases for the first time in more than a month on Tuesday, as the country’s health authorities become increasingly confident that they have successfully beaten back a second wave of infections.
“After 35 excruciating days where we had an average of almost 14 cases a day, we can report that there are zero confirmed cases,” said Chen Shih-chung, health minister.
Although Taiwan’s count of infections soared from 45 on March 9 to 393 this Monday, the country remains one of the world’s most successful in handling the disease.
Despite its geographical proximity to China and close economic ties, with millions usually travelling in both directions every year, Taiwan caught most imported infections early and thus avoided large-scale community transmission.
Other Asian countries that had been praised for their epidemic prevention policies, such as Singapore, have struggled as people have arrived from Europe and America, triggering a second wave of infections.
“Of course, the epidemic isn’t over yet. But this is still worth cheering a bit,” Mr Chen said. Earlier, he remarked that community transmission had already become highly unlikely in Taiwan.
European stocks set to open higher
Equity markets across Europe were on track to follow their Asian counterparts higher this morning after positive Chinese trade data fuelled investor optimism that its economy was bouncing back.
Futures trade suggested the Stoxx Europe 600 was set to open 1.2 per cent higher, with a similar gain for Paris’s Cac 40. In Frankfurt and London, the Dax 30 and FTSE 100 were on track for gains of 1.2 per cent and 1 per cent respectively.
The upbeat sentiment comes after data showed China recorded a trade surplus of $18.5bn for March, compared with a deficit of $7.1bn in January and February. That pushed Hong Kong’s Hang Seng up 0.7 per cent and mainland China’s CSI 300 up 1.5 per cent.
Investors will also be looking ahead to US earnings today and this week that should give an indication of the extent of the hit to corporate profits from the lockdowns imposed worldwide.
Asia stocks rise as Chinese trade data boost sentiment
Hudson Lockett in Hong Kong
Stocks across Asia Pacific gained ground after Chinese trade data brightened sentiment and as traders awaited a raft of US earnings for a further glimpse into the impact of the coronavirus pandemic on the global economy.
Investors have begun to hope there is light at the end of the tunnel in the virus outbreak, with signs that governments around the world may soon start easing economic lockdowns.
On Tuesday, China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 1.1 per cent after data showed that exports fell 3.5 per cent year on year in renminbi terms in March, marking a modest rebound from the previous two months’ figures.
However, Julian Evans-Pritchard, senior China economist at Capital Economics, warned that the recovery in exports was “likely to be short lived” as overseas demand would probably fall in the second quarter of the year due to the impact of the pandemic in other parts of the global economy.
Elsewhere, Japan’s Topix index added 1.7 per cent, while South Korea’s Kospi advanced 1.9 per cent. Australia’s S&P/ASX 200 rose 1.6 per cent and Hong Kong’s Hang Seng gained 0.9 per cent on their first day of trading following the Easter break.
North Korea tests short-range cruise missiles
Edward White in Wellington
North Korea on Tuesday carried out its latest military provocation as Kim Jong Un continues to test weapons despite the threat posed to his country by the global coronavirus pandemic.
The North Korean military fired “multiple anti-ship short-range cruise missiles” into the Sea of Japan, according to a statement by the South Korean military carried by Yonhap, the state news agency.
The weapons test was the latest in a series of instances over recent weeks in which Pyongyang has fired missiles into the waters off its eastern coastline. South Korea disputes the name of the sea, referring to it as the East Sea.
The short-range missile tests have been condemned by many in the international community as breaching UN sanctions. But they have not been viewed by US President Donald Trump as breaking Mr Kim’s 2018 self-imposed moratorium on testing of long-range missiles and nuclear weapons.
After reports of the coronavirus outbreak emerged from neighbouring China in January, North Korea swiftly shut its borders and state media this month reported a sharp reduction of people quarantined in the isolated country.
The FT reported last month that about 600 people had been tested for the virus inside the country and North Korean officials have secretly sought for further international assistance to increase coronavirus testing.
However, Pyongyang’s claims of zero coronavirus cases continues to draw international scepticism, including from General Robert Abrams, who leads the 28,500 US troops in South Korea and has described the claim as “impossible”.
Modi extends India’s lockdown until May 3
Amy Kazmin in New Delhi
Indian Prime Minister Narendra Modi has extended the country’s national lockdown against coronavirus until May 3, as the number of coronavirus cases has hit 10,362, despite stringent restrictions in place since the end of March.
“All countrymen have to remain under lockdown,” he said. “We need to contain coronavirus in all circumstances.”
However, he said that some relaxation would be put in place for essential services after April 20, when the battle against coronavirus would be reviewed, without giving further details.
At present, all commerce has been suspended, with only grocery shops and pharmacies allowed to operate; even India’s ecommerce companies are only permitted to deliver food, household cleaning products and medicines.
India had about 500 confirmed coronavirus cases when Mr Modi unexpectedly announced a three-week national lockdown to stop the spread of the disease on March 25, bringing most of the country’s economic activities to an abrupt halt.
Millions of migrant workers poured out of India’s big cities and undertook long treks back to their rural villages, where they felt better able to withstand the collapse of their incomes.
Industry groups have warned of economic devastation unless India’s strict lockdown is relaxed somewhat to permit some essential supply chain activities to be repaired.
Exporters have warned of the potential for millions of job losses in the coming months, as manufacturing comes under severe strain.
China approves human trials on two more vaccines
Xueqiao Wang in Shanghai
China has approved clinical trials on humans for two more experimental vaccines that are being developed to combat coronavirus, which has killed more than 100,000 people worldwide.
The first is being developed by the Wuhan Institute of Biological Products, a unit of the state-backed SinoPharm group. The second is being developed by Sinovac, a Beijing-based unit of Nasdaq-listed Sinovac Biotech, which claims to have been the first to produce a vaccine against H1N1 influenza.
Nearly 1,500 people will be recruited for the Wuhan Institute-SinoPharm trial, which will be conducted in Wuzhi county in Henan, according to the information on the China’s clinical trial registry.
Last month, China’s Academy of Military Medical Sciences in conjunction with HK-listed biotech company CanSino Bio also received approval for clinical trials on human volunteers, according to state media.
Australian business confidence drops to lowest since 1989
Jamie Smyth in Sydney
Australian business confidence has experienced its largest decline on record and sits at its weakest level since the survey was introduced in 1989 due to the coronavirus crisis, according to the latest National Australia Bank business survey.
All industry sectors also reported sharp declines in business conditions in March, although recreation and personal services saw the largest hit due to social distancing rules introduced to slow the spread of the virus.
“We expect a recession of unprecedented speed and magnitude for the Australian economy over the next three quarters. This will see a sharp increase in unemployment,” said Alan Oster, NAB chief economist.
He said most economists expect a fairly rapid bounce back in activity once the spread of coronavirus was contained and social distancing rules could be relaxed, but the most immediate worry for the business sector was the impact on cashflows.
“Without cashflow support, it is likely many businesses will be severely impacted and unable to return to operations once the economy begins to recover,” said Mr Oster.
Business confidence fell to minus 66 index points — its lowest level on record.
Business conditions fell to minus 21 index points, slightly weaker than the 2008 financial crisis, although it remained above the trough seen in the Australia recession in the early 1990s.
Australia’s treasury forecast the nation’s unemployment rate would double to 10 per cent due to the crisis, which has forced the government to unveil more than A$200m in economic stimulus measures.
Trump threatens to overrule state governors on lockdown measures
Kadhim Shubber in Washington and Peter Wells in New York
Donald Trump claimed he had “total” authority as US president and insisted he had the power to lift coronavirus restrictions despite the nation’s constitution leaving such rights to state governors.
During a White House news conference that ran for about two hours, the president also asserted that the federal government had “absolute power” as he fielded questions from reporters about when tough measures to stop the spread of Covid-19 could be loosened.
“When somebody is the president of the United States, the authority is total,” Mr Trump said at the daily White House coronavirus briefing.
Mr Trump’s comments came as several states announced they would band together in regional groupings to agree timeframes for lifting the orders that have effectively shuttered the US economy.
Read more here
Wuhan protest exposes tensions as retailers demand government support
Sun Yu in Wuhan
Police had to break up a protest in one of Wuhan’s busiest shopping districts after retailers demanded rent relief and greater government support for private businesses, exposing tensions in the city hardest hit by coronavirus.
The Communist party is desperate to portray the lifting of restrictions on Wuhan, where the deadly virus first surfaced, as a success.
According to official data, 97 per cent of the city’s large factories have reopened, boosting Beijing’s claim that the economic recovery is gathering pace.
But the same data reveal that just a third of small businesses are up and running, raising anxiety in a city that was brought to a standstill for 76 days.
China exports fall 3.5% on year, signalling potential rebound
Tom Mitchell in Singapore
China’s exports fell 3.5 per cent year on year in March, signalling a potential rebound for the country’s trade sector after much steeper falls in January and February due to the global coronavirus pandemic.
According to data released by China’s Customs administration on Tuesday, first-quarter exports were down 6.4 per cent year on year in renminbi terms, compared to a double-digit decline recorded during the January-February period.
The country also recorded a trade surplus of $18.5bn for the month, compared to a deficit of $7.1bn in January and February.
But Customs officials struck a cautious note as the pandemic has forced some of China’s biggest export markets to adopt widespread lockdowns that are still in place.
“With Covid-19 spreading worldwide, the global economy faces mounting downward pressure,” said Li Kuiwen, a Customs spokesperson. “Uncertainties are on the rise and China’s foreign trade is encountering bigger difficulties.”
Singapore reports record 386 new coronavirus cases
Stefania Palma in Singapore
Singapore has reported a new record daily jump in coronavirus cases, with 386 additional patients taking the country’s total to 2,918.
Most of the infections were linked to the latest cluster among the city state’s foreign worker dormitories, while 12 were connected to other patients and 94 had yet to show links to previously reported cases. None of the infections were imported.
Separately, the country’s education ministry has allowed teachers to gradually resume the use of Zoom after temporarily banning the videoconferencing app last week following virtual classroom breaches, for which authorities filed police reports.
New controls have been installed including a “security button” simplifying the app’s settings, a limit on Zoom’s features for virtual classes and a compliance form teachers are required to submit before using the app, the ministry said.
Singapore’s schools are closed under strict distancing measures running until May 4.
Zoom said it was pleased with the ministry’s decision. As part of the new measures, Zoom gave the education ministry control over teachers’ accounts to manage default security settings “in a more consistent manner”.
The limit on Zoom’s features will be lifted once educators – who are being briefed on the app’s latest updates – become more familiar with the platform, Zoom said.
China’s venture capital funding rallies after coronavirus lockdown
Mercedes Ruehl in Singapore and Ryan McMorrow in Beijing
Venture capital funding in China rebounded in March, new figures showed, as investors hunted for bargains among start-ups after the coronavirus outbreak.
Chinese start-ups and technology companies raised more than $2.5bn during the month, marking a record sixfold rise from just $410m in February, according to data from the Asian Venture Capital Journal.
The rise in activity suggested that funds had taken advantage of lower valuations resulting from the pandemic to invest in sectors including biotechnology and online education. Authorities began reopening the Chinese economy in March after managing largely to contain the country’s coronavirus outbreak.
However, venture capital financing still fell by more than half to $3.8bn in the first quarter compared with the same period in 2019 as the virus brought the world’s second-largest economy to a virtual standstill.
Read the full report here.
China reports 89 new cases, but new arrivals still dominate tally
China’s national health commission reported 89 new coronavirus cases to the end of Monday, coming in below the previous day’s tally of 108, but imported cases continue to dominate the total of new infections.
Of the new cases, 86 were found in people who had returned from overseas, while the remaining three were locally transmitted infections recorded in the southern province of Guangdong. The number of recorded coronavirus infections rose to 82,249.
China has put a limit on international flights and tightened checks on land borders in a bid to closely monitor arrivals in the country for the virus.
The northern province of Heilongjiang accounted for 79 of the new imported cases on Monday. The province has been hit by a wave of imported cases after Chinese citizens flew from Moscow to Vladivostok and used a now-closed border crossing in the province to enter China.
There were no new deaths linked to coronavirus on Monday, leaving the total number of recorded fatalities at 3,341.
There were 54 people who tested positive for coronavirus but showed no symptoms on Monday. Five of that group were returnees from overseas.
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The IMF will offer grants to some of the world’s poorest nations, mainly in Africa and Asia, to allow them to cover their debts to the Washington-based multilateral lender, as it ramps up the global response to the coronavirus pandemic.
Greece has banned families and groups of friends from celebrating Orthodox Easter together on April 19 after experts warned the next 10 days would be critical to keeping the country’s coronavirus outbreak in check.
The Federal Reserve is scaling back its interventions in short-term funding markets, as strains that spread across the financial system on account of the coronavirus outbreak have eased.
The governors of New York and five other mid-Atlantic states will co-ordinate on a plan to reopen businesses and schools across the region once the coronavirus outbreak is under control.
In a half-hour televised address to the nation on Monday night, a contrite President Emmanuel Macron admitted the French government had been ill prepared for the crisis. He said there were signs the pandemic was beginning to stall but extended France’s lockdown for a further month.
Wells Fargo is advising some small business clients to “apply elsewhere” in case the government’s $350bn rescue programme is fully subscribed before the bank can work through a massive backlog of applications.
A White House spokesperson on Monday insisted Donald Trump had no intention of removing Anthony Fauci, the immunologist who has become one of the most trusted faces of the US coronavirus response. Dr Fauci has become the target of partisan warfare after President Trump hinted he was considering sacking him.
Countries must exercise caution and put human health first when making decisions about lifting lockdown measures, said doctors from the World Health Organization on Monday, adding that it would be dangerous for all countries to relax rules at the same time.
Asia stocks gain ahead of China trade data
Asia stocks gained on Tuesday, despite losses overnight for US stocks ahead of the start of earnings seasons this week.
Japan’s Topix was up 0.4 per cent, the Kospi in South Korea gained 1 per cent and Australia’s S&P/ASX 200 was flat on its first day of trading after the Easter weekend.
China is set to release March trade figures on Tuesday, giving an insight into the impact of mass lockdowns on the world’s second-largest economy.
The S&P 500 closed 1 per cent lower as investors looked ahead to earnings reports from large US companies for signs of the true hit from the Covid-19 pandemic on business.
S&P 500 futures were up 0.2 per cent.
Mexican mayor places masks on statues to spread health message
Jude Webber in Mexico City
Debate rages internationally on whether the public should wear masks, but in one borough in Mexico City, mayor Santiago Taboada is taking no chances and has slapped face masks on monuments of historic figures to make his point.
Statues of 19th century President Benito Juárez as well as Mexican Revolutionary hero Pancho Villa are among the statues now adorned with face masks bearing the words: “It’s time for us all to take care of ourselves.”
An ancient giant Olmec head — a sculpture that dates back thousands of years— has also been kitted out.
Mr Taboada urged people to make their own masks and leave medical-grade equipment for health professionals.
US death toll tops 23,000, but daily tally falls for third straight day
The number of coronavirus fatalities in the US topped 23,000 on Monday, but the daily death toll fell for a third consecutive day for the first time since the outbreak began.
Over the past 24 hours, a further 1,450 people died from coronavirus, according to the latest data from Covid Tracking Project, taking the cumulative total to 23,369.
Monday marked the third day in a row the daily death toll has declined from the previous 24 hour period, and from a record 2,064 on Friday.
The increase in new Covid-19 cases, 24,948 in the past 24 hours, was the lowest daily increase since March 31, spurring hopes the outbreak in the US may have reached a peak in the days around the Easter holiday.