Coronavirus latest: Italian retail sales surge 24% after lockdown eased

Percentage testing positive in US hits highest since May 8

Peter Wells in New York

The US reported more than 47,000 new cases of coronavirus on Monday, as the percentage of people testing positive for coronavirus hit its highest in two months and hospitalisations continued to rise.

Although the national increase was below recent record jumps of more than 50,000 a day, California, the most populous US state, reported a record increase of more than 11,000 cases.

Based on the nearly 518,400 tests conducted over the past day, the positivity rate for the US jumped to 9.1 per cent, the highest since May 8, from 6.5 per cent yesterday, according to Financial Times calculations using Covid Tracking Project data. On a seven-day rolling average, the per cent positive rate is 7.9 per cent, the highest since mid-May.

A total of 47,375 people in the US tested positive over the past 24 hours, according to data from Covid Tracking Project, and up slightly from 42,578. In the first four days of this month, the US case tally increased by more than 50,000 each day, including a record of more than 57,500 on July 4.

California represented most of the increase, with a record 11,529 new cases. That is a record for the state and is eclipsed only by New York’s biggest jump of 11,571 on April 15.

Florida reported a further 6,336 new cases. Last week the state become the first since New York to report a daily increase of more than 10,000.

Texas reported 5,318 new cases, down from a record jump of more than 8,200 on Saturday. However, more patients are hospitalised with coronavirus here — almost 8,700 — than in any other US state at present, which is heaping pressure on its public health system.

Dallas county reported its largest one-day increase (1,214) in hospitalisations on Monday, said Clay Jenkins, the county’s chief elected official. Last week, Houston’s main hospital said the number of patients in its intensive care unit wards in the area surpassed normal capacity of 1,330 as it had to deal with a jump in Covid-19 patients.

Earlier today, New Jersey governor Phil Murphy said the state’s rate of coronavirus transmission reached its highest in more than two months. The figure, often referred to as Rt or the R number, has been at 1.03 for the past two days, he said, pointing out that a number above one meant, on average, each coronavirus case leads to at least one more new case. “This is an early warning sign that, quite frankly, we need to do more,” he said.

US sends aircraft carriers into South China Sea

The US Navy has sent two aircraft carrier groups into the South China Sea for the first time since 2014 as China conducts exercises the contested waters. 

The USS Nimitz and the USS Ronald Reagan were conducting dual carrier operations and exercises in the South China Sea to support a free and open Indo-Pacific, the US Navy said on Saturday.

China’s People’s Liberation Army is conducting a five-day drill around the Paracel Islands, a disputed archipelago. Vietnam and the Philippines have protested against the exercise, which Washington has criticised as counterproductive to easing regional tension.

Beijing’s actions would “further destabilise the situation in the South China Sea,” the Pentagon said on Thursday, adding that the exercises violated Chinese commitments under an agreement with fellow claimants.

The simultaneous drills by Chinese and US armed forces in the strategic waters are the most high profile yet of a series of operations held in close quarters, as the two powers vie for dominance in the Asia-Pacific theatre.

The US repeatedly sent warships into the South China Sea in April following Chinese harassment of fishing and oil prospecting vessels from Vietnam and Malaysia.

The carriers involved in the current South China Sea exercises have been operating together in the Philippine Sea since June 28. Chinese and US military aircraft and ships have frequently followed each other in the South China Sea, the Bashi Channel which connects it to the Pacific, and the Philippine Sea.

On June 24, a Chinese warplane suddenly approached a US military tanker and naval surveillance aircraft south-east of Taiwan, according to Taiwanese military sources and experts. Military analysts said the surveillance aircraft was refuelling between flights to observe a Chinese submarine near Pratas, a South China Sea atoll held by Taiwan.

“This is a very risky manoeuvre,” said Captain Chang Ching, a research fellow at the Strategic Studies Society ROC and former commander in Taiwan’s navy. “They were sending the US a message: We know where you are!”

Since the start of the Chinese exercise in the Paracels on Wednesday, US surveillance ships and aircraft have been observing, according to data from ship and aircraft tracking websites shared by the South China Sea Probing Initiative, an outfit set up by Peking University.

The US and China have a number of agreements aimed at avoiding incidents in the air and at sea. Under an agreement for the notification of major military activities, the US was obliged to keep out of the area of the Paracels exercise which China had announced in advance, Capt Chang said.

Lt Joe Keiley, spokesman of the Seventh Fleet said the operation supported “enduring US commitments to stand up for the right of all nations to fly, sail, and operate wherever international law allows.”

“This opportunity for two carrier strike groups to train and operate together in the region provides combatant commanders with significant operational flexibility and capabilities that only the US Navy can command.”

Capt Chang said the US was aiming to demonstrate its superior naval capabilities to China. “The Chinese public has been enthusing how their nation has entered a ‘dual carrier’ era after their second carrier started service last year,” he said. “Now, the US Navy is aiming to shake that confidence by showing them that only it can stage such operations.”

Recent incidents in the South China Sea

Tesla overtakes Toyota to become world’s most valuable carmaker

Tesla has overtaken Toyota to become the world’s most valuable carmaker by market value, in the week that marks the 10-year anniversary of the electric auto pioneer’s stock market entry.

The electric carmaker’s shares have climbed fivefold during the past year, from $230 around 12 months ago to $1,100 on Wednesday, taking the company’s market capitalisation to $205bn.

Toyota, the world’s second largest single carmaker measured by output with annual production of more than 10m vehicles, was worth around $200bn on Wednesday after its Japan-listed shares fell 1.5 per cent to ¥6,656.

Once debt is included, the Japanese group is still worth more, at $284bn compared with Tesla’s $207bn enterprise value, according to data from financial data provider Sentieo.

The relentless rise of Tesla’s shares has baffled some analysts, with the company’s value soaring despite producing only 500,000 vehicles this year and scarcely making a profit.

If the company breaks even in the quarter to June, it will be the first time the business has been in the black for four straight quarters.

While Toyota’s shares trade on a multiple that values the business at 16 times its earnings, Tesla’s shares trade on a multiple of almost 220 times the company’s profits, far above any other auto business and close to double the multiples seen by tech giants such as Amazon.

Tesla’s chief executive Elon Musk tweeted in May that the company’s share price of $755 was “too high”, which did little to halt the company’s surging value.

While the electric group’s shares have almost tripled so far this year, values of established carmakers have slid because of the impact of the global coronavirus pandemic.

Toyota’s shares have fallen more than 12 per cent since early February, as it was forced to close factories and showrooms across the world.

In May the Japanese carmaker warned that operating profits could slip 80 per cent this year and warned the decline in vehicle sales was likely to be “bigger than during the Lehman crisis”.

The pandemic has sapped global demand, with car sales expected to fall by 15 per cent this year, while demand for electric vehicles, driven by regulations in Europe and China, is expected to keep rising.

Although major carmakers from Volkswagen to PSA are releasing battery vehicles, Tesla is still expecting its overall sales to grow as the global market for electric vehicles accelerates.

Tesla’s detachment from the industry-wide sell-off will be taken as validation by supporters who view the company as a tech group rather than a traditional industrial carmaker.

One Tesla employee close to CEO Elon Musk compared the feat of surpassing Toyota to the moment Amazon overtook Wal-Mart by market value in 2015.

On Tuesday, when a Twitter user tweeted Tesla’s $200bn market cap to Mr Musk — with a couple of clinking champagne glass emojis — the Tesla CEO replied “Party on… ”

Yet the rise has surprised even the company’s most vocal stock market supporters. 

As recently as December, Morgan Stanley’s Adam Jonas, who has consistently valued the business higher than other auto analysts, laid out three scenarios for 2020 that forecast Tesla’s value to rise 50 per cent to $500, fall 25 per cent to $250, or collapse 97 per cent to $10.

The eventual increase was substantially higher than even Mr Jonas’ loftiest estimate.

Russia denies its atomic plants are responsible for radiation leak

Russia has denied that its nuclear power stations in the north-west of the country were responsible for a mild leak of radiation detected in Scandinavia last week.

Rosenergoatom, the power-plant subsidiary of state-owned nuclear group Rosatom, said its installations near St Petersburg and Murmansk were operating normally.

“Aggregated emissions of all specified isotopes in the above-mentioned period did not exceed the reference numbers. No incidents related to release of radionuclide outside containment structures have been reported,” Rosenergoatom said, according to Tass news agency.

The International Atomic Energy Agency, the UN nuclear watchdog, said late on Saturday it had contacted member states seeking more information “and if any event may have been associated with this atmospheric release”.

The IAEA said it had received evidence from international monitoring systems of “elevated” levels of three radioactive isotopes in the Nordic region.

The IAEA’s technical directorate was notified by the Comprehensive Nuclear-Test-Ban Treaty Organization, which maintains independent monitoring systems around the world, that radioisotopes of caesium and ruthenium had been measured well above normal levels by a facility it runs in Sweden. The isotopes do not occur naturally.

Lassina Zerbo, executive secretary of the CTBTO, wrote on Twitter on Friday that its Swedish monitoring unit had detected three isotopes normally associated with nuclear fission that were “higher than usual levels (but not harmful for human health)”. The message included a map of the possible source of the radiation, stretching from north-western Russia across the Baltic to the North Sea.

Mr Zerbo later added in a second message: “These isotopes are most likely from a civil source. We are able to indicate the likely region of the source, but it’s outside the CTBTO’s mandate to identify the exact origin.”

Russia has a history of concealing radiation leaks. Most notoriously, Soviet authorities for weeks denied the true extent of the accident at Chernobyl in 1986, the world’s worst nuclear disaster.

More recently, it took Russian authorities several weeks in 2017 to acknowledge publicly a radioactive cloud containing ruthenium that was detected by France. The highest levels of ruthenium from the leak were found in Argayash, a village close to the Mayak nuclear fuel reprocessing plant in the southern Urals. Rosatom denied the facility was responsible.

The latest incident was first reported last week by agencies in Sweden, Finland and Norway. The Swedish Radiation Safety Authority said it detected “very low levels of the radioactive substances caesium-134, caesium-137, cobalt-60 and ruthenium-103” in early June. Its Finnish counterpart identified the same substances while the Norwegian agency picked up iodine-131.

The National Institute for Public Health and the Environment (RIVM) in the Netherlands on Friday said: “The combination of radionuclides may be explained by an anomaly in the fuel elements of a nuclear power plant.”

“RIVM has performed calculations to find out the source of the radionuclides. The calculations indicate that the nuclides come from the direction of western Russia. Determining a more specific source location is not possible with the limited data available.”

Western Russia has several nuclear facilities, including the vast Leningrad nuclear facility outside St Petersburg on the southern shore of the Gulf of Finland, which features four reactors of the same Soviet-era type as those at Chernobyl. Work is under way to upgrade the facility.

Russia also has operational civilian nuclear plants near Smolensk and Tver. 
Finland and Sweden also operate active reactors in the potential zone of origin for the isotopes indicated by the CTBTO. The region is also home to Lithuania’s Ignalina facility, decommissioned in 2009 — as a condition for the country joining the EU — and reactors under construction in Belarus and Russia’s Kaliningrad enclave.

Coronavirus latest: Macy’s to cut 3,900 jobs in restructuring

UK retailers expect falling sales in July

Valentina Romei in London

UK retailers doubt that reopening non-essential shops will be sufficient to revive demand and prevent sale volumes from falling in July.

More than two in three retailers expect sales to be lower than the same month in 2019, the CBI monthly retail sector survey showed on Thursday. The share is largely unchanged since last month and is up from one in four retailers in March.

The labour market and businesses’ turnover remained depressed, separate figures from the Office for National Statistics showed, while online job adverts in catering and hospitality rose from 20 per cent from its 2019 level on June 12 to 27 per cent on June 19.

“Despite retailers working flat out to make sure they are safe and ready to open their doors, outside the grocery sector most retailers expect sales to be far below where they were this time last year,” said Rain Newton-Smith, chief economist at the employers’ organisation.

The survey, conducted between May 27 and June 12 which comes at a time when the government relaxed some of its coronavirus restrictions, revealed that the overall level of sales in July is expected to be poor.

Retailers have struggled from a lack of demand, with 62 per cent of respondents saying that’s a key challenge, plus growing piles of stocks. Expectations for low demand and sales led to fewer orders for suppliers: two in three said they were lower compared with last year, a proportion largely unchanged when looking at expectations for July.

Online sales however have performed above the long-term average and retailers expect them to increase at a faster clip in July. About two in five retailers reported level of stocks above the adequate levels, a proportion that increases marginally when asked about expectations for July.

Online sales made up less than a fifth of total retail sales before the pandemic, according to the ONS, but the proportion has since risen to 33 per cent.

This chart, from the ONS, shows how online shopping has soared in Britain during the pandemic.

Coronavirus latest: Covid-19 spread accelerates as situation deteriorates in Latin America

Mexico’s death toll on Sunday exceeds 1,000

Jude Webber in Mexico City

Mexico reported 1,044 more deaths from coronavirus on Sunday, as fears grow about the severity of the crisis affecting the country.

Sunday’s data brought Mexico’s total to 21,825 deaths and 180,545 confirmed cases, but because Mexico has one of the world’s lowest levels of testing, the true figures are widely assumed to be far higher.

The low testing rate might have contributed to another alarming statistic, highlighted by Harvard epidemiologist and health economist Eric Feigl-Ding, who tweeted: “Holy moly- I’m crying for MEXICO. The over 50% is the POSITIVITY percentage!!!”

José Luis Alomía, director general of epidemiology at the health ministry, told a news conference that “the majority of this group of 1,044 [deaths] are new notifications and … the vast majority of them … are deaths that happened in the month of May, then there is a group with happened in the first weeks of June and really, in the last few days, we have fewer deaths”.

However, he noted that the northern states of Sonora, Sinaloa and Coahuila and the Pacific states of Guerrero and Michoacán were emerging as Covid-19 hotspots.

Despite the increasing numbers, Mexico’s President Andrés Manuel López Obrador insists the country has “tamed” coronavirus. The health ministry says cases rose until late May but have stabilised at high levels and have yet to fall.

The country began reopening its economy at the beginning of June, despite the continued increase in cases and deaths, applying a traffic light system to differentiate between different risk areas.

Mexico City remains on red, meaning only essential businesses are supposed to be operating, but increasing number of street markets, boutiques and even shops selling toys and gifts are in operation.

Coronavirus latest: UK scientific task force recommends downgrading threat level

Australia is suffering state-sponsored cyber attack, says prime minister

Jamie Smyth in Sydney

A sophisticated, state-sponsored cyber attack is actively targeting Australian government, business, education and political organisations, Australian prime minister Scott Morrison, said on Friday.

He did not reveal the identity of the state actor that is responsible for the attacks, which he said had been happening for many months. But the scale and sophisticated nature of the malicious activity has led Australia’s security services to determine that a state actor is responsible, he said.

“Based on advice provided to me by our cyber experts, Australian organisations are currently being targeted by a sophisticated state-based cyber actor,” Mr Morrison told reporters.

“This act is targeting Australian organisations across a range of sectors including all levels of government, industry, political organisations, education, health, essential service providers and operators of other critical infrastructure.”

Mr Morrison said no large scale personal data breaches had been revealed so far and he had talked to Australia’s Five Eyes intelligence network partners, including Boris Johnson, about the malicious activity. When pressed on the possible identity of the state actor, he said there were not very many state-based actors which had the capabilities to undertake the type of operation under way.

Despite the lack of detail provided by the government on the timing and nature of the cyber attacks, analysts said China was the most likely suspect owing to the broad scope of the institutions targeted.

Sino-Australian relations have slumped to their lowest level in a generation following Canberra’s recent call for an inquiry into the origins of the Covid-19 outbreak in Wuhan, China.

“Of course it is China. There are a few countries that have the capability: Russia, China, US, UK, and perhaps Iran and North Korea, although they may not have the scale. Only China in this list will have the appetite for such a broad approach,” said Tom Uren, a cyber security analyst at the Australian Strategic Policy Institute, a Canberra-based think tank, in a social media post.

Coronavirus latest: McDonald’s sales improve as diners flock to drive-thrus

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Wall Street kicked off the new week with gains, as the Federal Reserve’s plans to begin buying corporate debt buoyed market sentiment. The S&P 500 closed 0.8 per cent higher on Monday, led higher by shares across the financial sector. The tech-heavy Nasdaq Composite fared best among the three main indices, rising 1.4 per cent. The Dow Jones Industrial Average added 0.6 per cent.

The US drug regulator has revoked its emergency approval for hydroxychloroquine, an anti-malarial that has been touted by the president, Donald Trump, and used to treat Covid-19 patients. The Food and Drug Administration said new data from trials showed the drug did not improve the condition of patients or have an antiviral effect — and so the benefits did not outweigh the risks.

The World Health Organization has cautioned that people should not “lose sight” of the public health threat posed by influenza, as it warned that surveillance had been sidelined in many countries in favour of efforts to tackle Covid-19. “Circulation of both [diseases] can worsen the impact on health systems which are already overwhelmed,” said WHO director-general Tedros Adhanom Ghebreyesus.

United Airlines will tap $4.5bn in loans from US taxpayers, while also signing for a $5bn term loan from Goldman Sachs, backed by the airline’s mileage programme. Airline executives expect the financing will bring the Chicago company to $17bn in liquidity by the end of the third quarter. United plans to offer unspecified slots, gates and routes as collateral for the loan, according to a Securities and Exchange Commission filing.

India’s imports halved last month, with exports dropping by more than a third, as nearly three months of lockdown measures and pandemic disruptions hit the economy. Imports in May fell 51 per cent to $22bn from the same month a year earlier while exports dropped 36 per cent to $19.9bn. The trade deficit narrowed to $3.2bn, down from $30bn in May 2019.

India’s southern state of Tamil Nadu is re-imposing a strict and total lockdown in the southern city of Chennai and four neighbouring districts from June 19 to 30 as it tries to clamp down on the spread of coronavirus. Chennai and the surrounding area – a hub of India’s car manufacturing industry – is one of the three Indian cities worst hit by Covid-19.

Pakistan will impose a two-week lockdown from Tuesday night in parts of Lahore, its second-largest city, after healthcare officials reported a surge in the number of coronavirus cases. Businesses, excluding pharmacies and stores selling essential food items, are to be shut under the new restrictions. Street vendors, pictured, have continued to ply their wares amid restrictions.

Singapore will ease distancing measures further on Friday in a move that authorities have said will essentially resume activity throughout the economy. Gan Kim Yong, health minister, said the number of infections has remained “under control” since Singapore started lifting lockdown measures two weeks ago. Dining in, retail outlets, parks, beaches, gyms and all healthcare services are among the activities that may resume operations.

Greece reopened officially for tourism on Monday, reducing testing for coronavirus for people arriving at Athens airport and allowing direct flights to Thessaloniki, a hub for visitors to northern Greek resorts. All visitors arriving from Italy, Spain and the Netherlands will be tested at the airport, health authorities said. If the result is positive, they will spend two weeks in quarantine, paid for by Greece.

Jaguar Land Rover has expanded its multibillion pound cost-cutting programme by a quarter and plans to shed more than 1,000 UK jobs, after the business fell to an annual loss on the back of a £500m coronavirus hit between January and March. Britain’s largest carmaker booked a £422m pre-tax loss in the year to March as showrooms and factories across the world closed because of the pandemic.

Ikea in talks with governments over returning furlough money

Ikea is in talks over returning money to all nine countries that gave the world’s largest furniture retailer government support through furlough schemes as it has suffered less than expected from the Covid-19 crisis.

Tolga Oncu, retail operations manager at Ingka Group, the main Ikea retailer, said the company had decided to start a dialogue with Belgium, Croatia, the Czech Republic, Ireland, Portugal, Romania, Serbia, Spain and the US.

Mr Oncu added that Ikea had thought business could fall by 70-80 per cent at the start of the crisis. But, now all but 23 of its stores had reopened, it was experiencing a large amount of “pent-up demand” for home improvements.

“Now we know more than what we did in February and March, it’s just the right thing to go back and say, ‘hey guys thanks very much you helped us through this difficult period and so now can we see about paying this back or forward’,” he told the Financial Times.

Ikea is in early discussions with the relevant national authorities. Because of differences in how the furlough or short-time working schemes are set up, the company does not yet know how it will pay the governments back.

Mr Oncu said the flat-pack retailer also did not know how much money it would cost or exactly how many workers were involved across the nine countries.

Ikea’s decision to return the money lays bare a dilemma for many companies as economies start to recover after the immediate shock following lockdowns from coronavirus across much of the world.

Some other companies have returned furlough money in individual countries, often under pressure from external scrutiny, but few large multinational companies have committed to returning all support.

Mr Oncu said Ikea’s priority at the beginning of the crisis in February and March had been to protect employees and their livelihoods as it closed down most of its 374 stores worldwide.

“When the thick fog started to fade away we saw that our ability to adapt to the new circumstances . . . made us realise that the depth of the crisis was not as deep as we had feared and would not last as long as we first thought.”

Mr Oncu said the move to repay the money had nothing to do with how Ikea is perceived but was simply “the right thing to do”.

He added: “It’s important to keep good relations with societies and communities we are close to. Connected with the fact that we work in the long term and we talk in terms of generations, it gives us the responsibility and opportunity to work with these questions.”

Ikea has also set up a €26m fund for Ikea store leaders to distribute in their local communities. This is on top of looking at improving both remote solutions for its workers and customers as it boosts its digital offering.

Ikea, which was founded in Sweden but now has a family of companies, many of which are headquartered in the Netherlands, is facing scrutiny from European regulators about its tax affairs.

Deutsche Bank warns bad loan provisions set to reach 11-year high

Deutsche Bank has warned its provisions for bad loans will surge to the highest level in more than a decade this quarter as the coronavirus crisis leaves the global economy mired in recession.

Germany’s biggest lender had earmarked a provision of just €506m for bad loans in the first three months of the year, but cautioned on Wednesday that the figure would increase this quarter.

“Our expectation would be that credit loss provisions will be in a range around €800m for this quarter,” James von Moltke, chief financial officer, told analysts on Wednesday at Goldman Sachs’ European Financials Conference.

Analysts were expecting just €630m in provisions for the second quarter, and €800m will be up fivefold from a year ago.

Mr von Moltke added that “we would expect that the second quarter will be the peak of the loan loss provisioning for this year”, and that the picture would improve in the second half of the year.

Shares in Deutsche Bank rose 2.6 per cent in early afternoon trading in Frankfurt to the highest level since late February.

The optimism reflected in Deutsche’s first-quarter provision caused some surprise among analysts given the economic damage wrought by efforts to contain Covid-19. Relative to the size of their loan book, only 10 of the 40 largest European lenders provisioned less than Deutsche, according to data by DBRS Morningstar.

Deutsche has argued that it is less exposed to credit card debt than many of its rivals and that an early lockdown in Germany, where state aid for stricken companies is more generous than in many other countries, will limit the damage to its loan book.

“There is nothing we have seen since [late April] that would change our outlook for the full year,” Mr von Moltke said on Wednesday, confirming Deutsche’s guidance that 2020 credit losses will range between 35 and 45 basis points of its loan book. That is up from 17 basis points last year.

In calculating their expected credit losses, banks have some leeway over the inputs they feed into their internal models. European regulators urged lenders at the onset of the pandemic to take a long-term view and not be too “mechanistic”.

As a result, Deutsche in the first quarter reverted to three-year average economic forecasts to model likely loan losses, compared with its previous policy of using quarterly assumptions. That meant that the implied hit to gross domestic product in Deutsche’s risk models was smaller, inflicting less damage on borrowers.