European corporate bond market reopens for business
Robert Smith reports:
Consumer goods group Unilever and French utility Engie drew strong demand for the first European corporate bond sales in a week, showing that top-tier borrowers in sectors less directly affected by the coronavirus pandemic still have access to cheap funding.
The European corporate bond market has remained uncharacteristically silent this week, as the market turmoil has put off borrowers from raising money. But the two investment-grade rated companies have bucked the trend and shown there is still appetite from rattled debt investors.
Engie is raising €2.5bn of bonds across five-, eight- and 12-year maturities, while Unilever is raising €2bn split across five- and 10-year notes. The two bond sales drew more than €20bn of investor demand between them.
The US corporate bond market reopened for business this week, with top-tier borrowers like Verizon and Exxon Mobil raising fresh funding on Tuesday.
EU delays new equities trading rules
Philip Stafford in London
European markets regulators have delayed the introduction of new rules for trading equities off-exchange amid fears it could create operational issues for banks while many employees are working remotely.
On Wednesday new EU rules were due to come into effect that tighten rules around tick sizes, the trading increments that brokers can offer and trade competitive prices.
The rules are aimed at banks and high frequency traders, who can trade clients’ big orders away from an exchange with infinitesimal price differences. Exchanges had cried foul, complaining the rules did not allow them to quote in the same sizes, so they lost out on the chance to compete for big blocks of shares. Watchdogs were planning minimum increments across all kinds of trading venues in the EU.
But late on Friday the European Securities and Markets Authority said it would delay the introduction until June 26 because it could create unintentional volatility in markets.
“ESMA acknowledges that in the current environment, market participants’ human and technological resources are stretched and have to focus on ensuring business continuity,” it said in a statement.
Esma said it would not expect other EU regulators to enforce it until June 26.
On Wednesday EU regulators said they would not expect immediate enforcement of the new securities financing transactions regulation, designed to improve reporting on stock lending to watchdogs. It was due to come into effect on April 11.
Federal Reserve announces measures to support US municipal bond market
Katie Martin in London, James Politi and Brendan Greeley in Washington and Colby Smith in New York
The Federal Reserve has stepped in to support the US municipal bond market in its latest effort this week to shield the economy and markets from the impact of the coronavirus pandemic.
Having already slashed interest rates, lined up a $700bn bond-buying programme and set up dollar swap lines with several other central banks around the world, the Fed said on Friday that it would expand a programme to support local-government financing through a lending facility for money market mutual funds.
According to a statement by the Fed’s board of governors, the central bank has “expanded its program of support for the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets.”
On Friday, the Fed said that through the facility, the Federal Reserve Bank of Boston would lend to financial institutions secured by a number of assets, including municipal debt with maturities up to a year. It said the loans would be secured by “high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds”.
As US cities and states in stricken areas have taken on the brunt of immediate spending for the public health response to the spread of the coronavirus, the $3.9tn municipal bond market has been wracked by volatility in recent days. Investors have dumped the debt in droves, pulling $12.2bn from municipal mutual funds in the week ending on Wednesday, according to data from Lipper. Borrowing costs have surged as a result, with yields on municipal debt maturing in 10 years soaring nearly a full percentage point in the past week to 2.6 per cent.
The Fed had faced calls to address the dislocations that have cropped up in this market. This week, Vikram Rai, head of municipal strategy at Citigroup, urged the central bank to buy municipal debt directly as part of its ongoing asset purchases programme.
Panic-buying fails to boost Coca-Cola’s sales
Alistair Gray in New York
Panic buying of cupboard staples is failing to boost Coca-Cola’s sales, showing how the coronavirus pandemic is hurting even those businesses that are usually regarded as bulwarks in recessions.
The drinks company, whose brands include Powerade, Minute Maid and Sprite as well as its eponymous beverages, warned on Friday that it was likely to miss previously issued targets for sales and profits.
While consumers preparing to hunker down at home are loading up on staples including fizzy drinks, this was not enough to offset the decline in dining at restaurants, the cancellation of major sporting and entertainment events and a slump in global travel.
Coke said these would have a “negative impact” on its full-year results although the Atlanta-based company was unable to quantify the hit.
It marks a reversal from four weeks ago, when Coke reiterated its full-year financial guidance despite the developing coronavirus outbreak in China.
Shares were down 1.8 per cent in early trading in New York on Friday.
Kenyan minister warns of ‘critical moments’ ahead
Donald Magomere in Nairobi reports:
Kenya’s health minister has declared the next two weeks will be critical for the east African country’s fight against the coronavirus.
Mutahi Kagwe said:
In all honesty, it is better for us to prepare for the worst. As the government is preparing for the worst, individuals must prepare for the worst too.
So far, the country has only reported seven positive cases, ahead of its neighbours Tanzania with six confirmed cases and Uganda which has reported zero.
The African Union and World Health Organization have positioned the country as the continental hub in medical research and disease control. Kenya plans to fumigate all open-air markets including Gikomba, the largest secondhand clothing market in east Africa.
Russian cases rise by about 30 per cent in three days
Henry Foy in Moscow
Russia announced 54 new cases of coronavirus on Friday, taking its total to 253 and marking a week of strong growth in infections, challenging the Kremlin’s view that the virus was “under control”.
Cases in Russia have grown by roughly 30 per cent in the past three days, and one infected person died on Thursday.
President Vladimir Putin has urged people to stay calm and sought to present an image of business as usual, while officials have denied there are any plans to enforce a lockdown on cities like Moscow.
The president’s spokesman said on Friday that Mr Putin “has no such need to take a coronavirus test because he has no symptoms. Thank God, he feels excellent and he keeps working”.
UK government set to order London pubs and restaurants to close
Jim Pickard and George Parker report:
All pubs, restaurants and leisure centres across London will be ordered to close as the government steps up its emergency measures to combat the spread of coronavirus.
Boris Johnson is expected to take the drastic measure at a meeting of officials on Friday in an attempt to prevent the NHS being overwhelmed by patients suffering from Covid-19.
Downing St has signalled for several days that London would initially face tougher measures than other parts of the UK because it has a much higher proportion of cases.
Now cafes, pubs, restaurants and leisure centres will be closed – but ministers have not yet decided whether to extend the measures to non-essential stores. The measures are likely to come into force rapidly rather than allowing a gradual transition over the weekend.
At the same time the government is poised to announce plans for a new form of income subsidy to prevent job losses and also give further support for those people who lose their jobs in the coming days. The help for workers and the new London restrictions could both come as early as the prime minister’s 5pm press conference on Friday afternoon.
The imminent closure of pubs and restaurants in London comes along with severe cuts to public transport and warnings for people to work from home where possible. However, the city is – for now – still stopping short of the total lockdowns seen in other cities such as Madrid, where most people have been confined to their homes in recent days
Central Banks announce co-ordinated action to improve dollar liquidity
Chris Giles reports:
The world’s leading central banks co-ordinated again on Friday to improve the supply of US dollars to companies and market participants outside the US.
In a joint statement, the US, eurozone, UK, Swiss, Japanese and Canadian central banks announced that dollar auctions for seven-day maturities would now take place daily rather than weekly, aiming to guarantee that dollars would be available and no one need sell assets at knock down prices to get them.
“These daily operations will commence on Monday, March 23, 2020 and will continue at least through the end of April,” the statement said.
Gold sell-off fails to dent investor enthusiasm
Henry Sanderson, mining and metals correspondent, writes:
Gold’s lacklustre performance this week appeared to diminish the metal’s “safe haven” status, as it declined for the second week in a row amid a global stock market sell-off due to coronavirus.
But investors are still flocking to the precious metal in the hope of a rebound and protection against an even worse fall in other assets, from stocks to currencies and bonds.
Gold has erased almost all its gains for the year and fell 3 per cent on the week to trade at $1,503 a troy ounce in early trading on Friday.
But on Thursday, gold-backed exchange traded funds received inflows of 2.6m ounces, equivalent to the annual gold production of a mid-tier mining company such as Australia’s Newcrest Mining. Total holdings in gold-backed exchange traded funds were at a record of over 3,000 tonnes in February, according to the World Gold Council.
Online gold exchanges, which sell physical gold directly to customers, said they had seen record buying volumes.
Trump a New Yorker ‘betraying’ the city, says Mayor de Blasio
Joshua Chaffin in New York
New York City Mayor Bill de Blasio on Friday called President Trump “a New Yorker in the White House betraying New York City,” and said “political considerations” were party to blame for his response to the crisis.
The remarks — effectively accusing the Republican president of turning his back on a Democratic-leaning city — were unusually strong even amid the current tension between Washington and state and local authorities about how to respond to the crisis.
New York City now boasts the nation’s highest number of coronavirus cases. Mr de Blasio has been clamouring for Mr Trump to mobilise the military with urgency.
US tax filing deadline extended
US taxpayers will have an extra three months to file their tax returns as a result of the coronavirus pandemic.
Steven Mnuchin, the Treasury secretary, said on Friday the filing date would be pushed back to July 15.
“All taxpayers and businesses will have this additional time to file and make payments without interest or penalties,” he said in a tweet.
The extension comes as Donald Trump and Congress scramble to prop up the US economy as it reels from the disruption caused by efforts to prevent the coronavirus outbreak from overwhelming the US healthcare system.
JPMorgan to offer some staff $1,000 payments
Stephen Morris reports:
JPMorgan Chase has pledged to give some of its staff a one-off payment of as much as $1,000 to help them meet the challenges of “childcare and transportation” during the coronavirus pandemic, according to a memo on Friday seen by the Financial Times.
The employees must be required to work on site and earn less than $60,000 or be branch-based consumer bank staff, it said. It will be paid in two equal instalments in April and May.
President of Italy’s worst-hit region asks military to enforce lockdown in Milan
Miles Johnson in Rome
The president of Lombardy, Italy’s worst-hit region during the coronavirus outbreak, has requested the Italian military are deployed on the streets of Milan to enforce the continued lockdown in the country’s financial capital.
Attilio Fontana said he had discussed the deployment in Milan directly with Italy’s president Sergio Mattarella as part of more stringent efforts to stop the spread of the coronavirus in a critical moment when the northern region’s health service is operating under immense strain.
“There are 114 soldiers, which means practically nothing,” Mr Fontana said. “You have to add at least a zero to that figure to seriously discuss the problem, but it is good that my request has been accepted”.
As the strain on Lombardy’s health system has increased the regional authorities have been forced to take additional steps to increase its capacity, including the construction of a new Covid-19 hospital at the Milan Trade Fair.
Other Italian regions have also stepped up efforts to ensure social distancing was being observed. The Rome regional authorities from this weekend will begin setting up checkpoints to inspect vehicles in the city.
“I still hear of people jogging, getting together, leaving home without good reason… This is a critical moment if we want to slow down the contagion curve,” said Federico D’Inca, minister for parliamentary relations, to Italy’s state broadcaster.
Earlier this week, military trucks began to be used to carry away dead bodies in the town of Bergamo, in Lombardy, which has one of the most severe outbreaks in the region. On Thursday, Italy became the country with the highest number of recorded deaths from coronavirus in the world, overtaking China.
Number of Spanish cases climbs to almost 20,000
Daniel Dombey in Madrid
Spain now has almost 20,000 documented cases of coronavirus and over 1,000 people have died — more than 200 of them in the past 24 hours — the government said.
In figures released on Friday, the government said that 19,980 people had contracted the virus, a rise of 16 per cent since the day before.
It also said that 1,141 were in intensive care and 1,002 had died, compared with 767 the day before. However, 1,585 people have now recovered.
In Madrid, the worst affected part of the country, 7,165 people have contracted the virus, 678 are in intensive care and 628 have died, while 1,186 have recovered.
UK regulator tells banks how to give loan relief
Matthew Vincent in London reports:
Britain’s financial regulator has told banks how they must implement the UK’s coronavirus loan relief scheme, to help struggling homeowners and business borrowers.
The Financial Conduct Authority said mortgage lenders must grant a 3-month payment holiday to any customers who need one as a result of Covid-19 affecting their ability to fund a home loan – with no fees or charges, and no “negative impact” on their credit score. They have also been told by the regulator that repossessions for non-payment should not be carried out unless “the customer has agreed it is in their best interest”.
Small business loans of up to £25,000 should also be made to sole traders and “unincorporated enterprises”, based on historic trading figures – and even if, at the time of applying, the borrower is “temporarily experiencing exceptional financial pressures.” If forecast income does not materialise, then lenders have been told to defer repayments until it does.
Portugal’s virus tally top 1,000 confirmed cases
Peter Wise in Lisbon
Confirmed coronavirus cases in Portugal climbed to 1,020 on Friday, an increase of 235 cases, or almost 30 per cent, in 24 hours. Health authorities said the virus had claimed the lives of six people.
A total of 126 people with the Covid-19 virus are being treated in hospital, including 26 who are in intensive care. The remainder are in isolation at home.
The rise in cases came as the government warned people to stay indoors under the terms of a state of emergency that came into force on Thursday. All non-essential businesses and restaurants must close for at least 15 days, but can provide takeaway and home delivery services.
Pharmacies, supermarkets, petrol stations, banks and bakeries are allowed to stay open, but must impose capacity restrictions. People over 70 or medically vulnerable have been told to leave their homes only to buy food, visit a doctor, exercise a pet or take short walks.
Other citizens are allowed to leave home only to go to work, assist their families, give their children some outdoor recreation or for other essential activities.
António Costa, the prime minister, said the government was not imposing a mandatory lockdown, which would be “disrespectful” to citizens, and did not see any reason for rationing. However, people with the virus or being monitored by the health service, must remain in compulsory quarantine.
EU opens probe into fake coronavirus products
Jim Brunsden in Brussels
The EU’s anti-fraud office announced that it has opened an investigation into “fake Covid-19 related products” including masks, sanitisers and testing kits.
The agency, known as OLAF, published photos of fake masks — including ones targeted at children — that had been seized by customs officials.
“Fraudsters are attracted by potentially huge illicit profits,” the Brussels-based watchdog said, adding that fake face masks for children had been “ruthlessly smuggled”.
“Counterfeit masks have been offered online in different EU member states at prices ranging between 5€ and 10€, approximately three times the normal price,” OLAF said.
The agency is working with national customs authorities to try to choke off the arrival of fakes in the EU, warning that they can be ineffective or even detrimental to health.
Smuggling routes include online sales to consumers and containers with fake certificates, the agency said.
Wall Street opens higher
US stocks sought their first back-to-back gains in more than a month, as a wave of central bank intervention offered some reprieve to markets that have been upended by the coronavirus pandemic.
The S&P 500 rose 1.5 per cent in the first few minutes of trading. The tech-weighted Nasdaq was 2 per cent higher, while the Dow Jones was up 1 per cent.
Central bank interventions have sought to stem the economic hit from the spread of coronavirus, which threatens a large global recession this year. The result has been relative market calm, with currencies stabilising after being hit by a surging US dollar as companies and banks hoard greenbacks.
New York orders barber shops, tattoo parlours and nail salons to close
The average length of hair sported by a New Yorker may be set to increase, with the state announcing the temporary closure of barber shops and other similar services.
Governor Andrew Cuomo said on Friday in a tweet that: “NY, CT, NJ, and PA will temporarily close all barber shops, nail & hair salons, tattoo shops, & similar services in our four states effective tomorrow at 8pm.”
Those four states — New York, Connecticut, New Jersey and Pennsylvania — banded together earlier in the week to order the closure of other services businesses including gyms, cinemas and casinos, as well as shifting restaurants and bars to close unless they offered delivery or takeaway options.
“These temporary closures are not going to be easy, but they are necessary to protect the public health,” Mr Cuomo said in a tweet.
Total to freeze hiring, halt share buybacks and cut costs
David Keohane in Paris
France’s Total is preparing to cut costs and freeze hiring and share buybacks as the energy major tries to cope with tumbling oil prices and falling demand due to coronavirus.
Total will cut its planned $18bn in investment programmes by about 20 per cent and look for additional cost savings of near $400m this year, chief executive Patrick Pouyanne said in a video to staff.
The news was first reported by Reuters and confirmed by the group’s unions. Total itself declined to comment.
According to Thierry Defresne, a member of the left-leaning CGT trade union, Mr Pouyanne said that a planned share buyback plan would be halted.
The total planned savings are to come to $5.5bn, out of a $9bn shortfall, Mr Defresne said. The rest will be borrowed.
This week, oil prices fell to their lowest level in 17 years, dropping below $25 a barrel, as demand for fuel has been hit by work and travel lockdowns introduced in some of the world’s biggest economies as part of efforts to contain the spread of the virus.
UK sets out analysis and evidence for coronavirus policy
Clive Cookson, science editor, in London
The UK government has published much of the analysis, evidence and scientific modelling that has fed into its coronavirus policy.
Altogether the Scientific Advisory Group for Emergencies (Sage), which advises ministers and officials on their Covid-19 response, considered 34 different papers and statements from its own sub-groups and academic teams, as its advice evolved over the past two months.
“The collective evidence we have published today has played a considerable role in shaping our recommendations on when, how and why the government have made the interventions it has so far,” said Sir Patrick Vallance, government chief scientist.
But the Government Office for Science cautioned: “Some of the bespoke new modelling that Sage has drawn upon to formulate its conclusions has not yet been published here. This is to allow scientists time to publish their research through the right academic channels.”
Saudi Arabia extends its coronavirus stimulus package
Ahmed Al Omran in Riyadh:
Saudi Arabia has announced additional measures to mitigate the impact of coronavirus on the economy. The $32bn stimulus package includes $13bn to support banks and SMEs, unveiled by the kingdom’s central bank earlier in the week.
The new measures, announced by finance minister Mohammed al-Jadaan on Friday, include exemption from an expat levy on foreign workers by extending their residency permits by three months without charge, and allowing businesses to postpone tax payments over the same period.
The authorities will postpone the collection of customs duties for a period of 30 days and the collection of some governmental and municipal fees to relieve pressure on business owners.
“The government’s focus is to make every effort to address the pandemic’s threats on health and community,” Mr al-Jadaan said. “The government will also continue to improve the efficiency of fiscal and economic performance to better confront the impacts of the virus spread.”
The measures come as the kingdom grapples with a period of low oil prices triggered by the virus’s impact and the collapse of a Saudi-Russian pact to cut production.
Applause breaks out for Switzerland’s frontline staff
Sam Jones in Zurich reports:
Residents across the city of Zürich broke into continuous applause on Friday lunchtime, leaning out from windows and standing on balconies to thank frontline medical staff and other essential workers on the fourth day of Switzerland’s lockdown.
The campaign of clapping, dubbed “Applause for Heroes”, rippled out from the centre of the city at 12.30pm, reaching almost every neighbourhood, as videos and photographs were shared on social media, tagged #dieSchweizsagtDANKE — Switzerland says thank you.
Similar rounds of applause broke out in other large Swiss cities, according to regional media reports. Switzerland’s Federal Office of Public Health said that as of noon on Friday, the country had confirmed 4,840 cases of the novel coronavirus, with 43 deaths.
Exclusive: ECB set to ease strict accounting rules temporarily for banks
Martin Arnold in Frankfurt
The European Central Bank is preparing to give more relief to the region’s strained banking system by allowing them leeway on new accounting rules that the sector has warned could magnify the financial impact of the coronavirus pandemic.
The expected move, which is likely to mitigate or delay the impact of tough new accounting rules known as IFRS 9, follows a similar shift by the Bank of England on Friday.
It shows supervisors are responding to a lobbying campaign by banks, which had raised concerns that new accounting rules could result in a huge rise in losses on their loan books as companies and consumers were expected to be unable to repay their debts.
UK and European banks have been calling for supervisors to delay the introduction of IFRS 9, which forces banks to set aside money to cover loans to distressed borrowers before they start to default.
In a statement on Friday, the BoE said it was inclined to “look through” a temporary rise in their losses on loans.
The Financial Times this week reported that executives had argued that faster and more punitive recognition of bad loans could absorb much of the capital relief announced by central banks, leaving little left over to be lent on to companies seeking new emergency credit lines.
Brazil closes borders to passengers from Europe and Asia
Andres Schipani reports:
Brazil is the latest country to place restrictions on its borders in an effort to stem the coronavirus pandemic.
The government announced on Friday that it will be banning the entry of air travel passengers from the EU, Great Britain, Northern Ireland, Iceland, Norway, Switzerland, China, Japan, Malaysia, South Korea and Australia from Monday. The ban does not apply to citizens of those countries who legally reside in Brazil.
Latin America’s largest country had already shut its borders with neighbouring nations, and has now reported more than 600 confirmed cases of the disease, including seven fatalities.
On Tuesday, Wednesday and Thursday evening, hundreds of thousands of Brazilians banged pots and pans from their windows — a Latin American tradition — to protest against the perceived inaction of the rightwing President Jair Bolsonaro.
Mr Bolsonaro is supposed to be in quarantine after 22 members of his delegation have reportedly tested positive for Covid-19 after returning from a trip to Florida to meet US president Donald Trump.
Lidl plans to boost workforce in UK stores to meet demand
Lidl is seeking hundreds of temporary workers for its UK stores as it tries to cope with surging demand for its goods.
The German discount supermarket chain plans to create up to 2,500 jobs, including stock assistants on a four-week fixed-term contract, for its 800 stores. The recruits can start immediately and will receive pay matching the living wage, Lidl said.
“Our store colleagues are doing an incredible job at keeping our shelves stocked, and serving communities during an extremely challenging period,” said Christian Härtnagel, chief executive at Lidl GB.
Temporarily expanding our teams is one way we can help support our colleagues and customers, whilst providing work to those that have had their employment affected by the current situation.
Asda has also set out plans to hire more than 5,000 temporary employees who have lost their jobs as a result of coronavirus. Employees from 20 national companies in industries like food and travel will be offered shifts and temporary secondments to Asda, the company said in a statement on Friday.
Emerging market currencies tumble to weakest level since late 1990s
Steve Johnson reports:
Emerging market currencies, excluding China, have fallen to their weakest level since the Russian and Long-Term Capital Management crises of the late 1990s.
The sell-off has been led by the Russian rouble and Mexican peso, which have both lost about a quarter of their value against the dollar in recent weeks as risk assets have been dumped amid the deepening coronavirus crisis and oil price crash. The South African rand has also fallen about 18 per cent.
On a real effective exchange rate basis, a GDP-weighted basket of 25 emerging market currencies has slumped 10 per cent since December to its lowest level since 1999, according to calculations by Renaissance Capital. EM FX did bounce on Friday, with the 0.7 per cent rise in the MSCI index — the biggest one-day gain for around a year — amid broad-based appetite for risk assets from equities to oil, but few would bet on this being the start of a lasting rally amid increasingly volatile, whipsaw markets.
Free-floating Latin American currencies such as those of Argentina, Mexico and Brazil are among the most undervalued in real, inflation-adjusted terms, with the rand, rouble and Turkish lira also now very cheap by historical standards. Some Asian currencies, as well as the dollar-pegged currencies of the Gulf, are still holding up, however.
China to send 10m testing kits to Ukraine
Roman Olearchyk in Kyiv reports:
Ukraine is to receive 10m test kits for the coronavirus from China in the coming days, President Volodymyr Zelensky said in an attempt to quell fears that the country faces a full-blown crisis because of low levels of testing and limited supply of ventilators.
Noting that domestic production of kits had begun, Mr Zelensky said other supplies coming from China included 10 artificial breathing ventilators, 1m medical masks for the population, 100,000 masks for medical personnel, 400,000 express tests and 10,000 litres of disinfectant.
Out of 308 suspected cases, Ukraine’s health ministry on Friday said testing had detected 26 confirmed cases of infection by the novel coronavirus, three of which were fatal.
It was not immediately clear how many rapid and full tests have been conducted in the country, where some private clinics conducting tests have not reported results to the authorities. Earlier this week, Mr Zelensky called the country’s oligarchs in for a discussion asking them to help purchase additional ventilators and other crucial medical supplies.
Economic data suggest some UK service sectors in free fall
Valentina Romei, economics reporter, writes:
High-frequency indicators show the UK economy is taking a large hit from the coronavirus crisis, with collapsing demand for restaurants, cinemas and shops.
The full extent of economic damage from the crisis will not be known for months but early signs show some sectors are in free fall.
On Wednesday, UK restaurant bookings dropped 88 per cent compared with the same day the previous year, according to OpenTable, a San Francisco-based online restaurant-reservation service. The fall reflects the government request to avoid pubs, restaurants and other entertainment services.
In the week ending March 19, UK cinema box office revenues were down nearly 60 per cent compared with the same week last year, according to Box Office Mojo. Retail footfall was down 24 per cent compared with the previous week, according to data from Springboard, a retail research company.
“The unprecedented shutdown in service sector activity is why we expect the fall in output in this recession to be particularly large,” said Andrew Wishart, UK economist at Capital economics. “After pencilling in large falls in activity in sectors where activity could almost cease entirely, we arrived at a fall in GDP of 15 per cent in Q2 compared to the previous quarter.”
Bavaria first federal German state to impose lockdown
Tobias Buck in Berlin
Bavaria has become the first federal state in Germany to impose a public lockdown in response to the coronavirus outbreak, with residents only allowed to leave their homes for special reasons.
Markus Söder, the prime minister of Bavaria, said the lockdown would come into effect at midnight on Friday. “We will close down public life almost completely,” he said.
Residents will be able to leave their homes to go to work, to visit the doctor or the pharmacy and to shop for food and other necessities. There will be a limited exemption for people to engage in sporting and outdoor activities, although only alone or together with housemates.
Bavaria has been hit especially hard by the coronavirus, and signs indicate the outbreak is gathering momentum. Mr Söder said on Friday the state had seen infections rise 35 per cent between Thursday and Friday, while deaths from Covid-19 rose from 10 to 15.
Isle of Man arrests person for not self-isolating
Andy Bounds in Manchester reports:
A man has been arrested on the Isle of Man for refusing to self-isolate after arriving in the country.
The incident highlights the more draconian approach of the island compared with the UK. It is a self-governing Crown Dependency and enacted emergency powers this week to allow the police to detain people with symptoms of coronavirus or who refuse to quarantine themselves.
The island, in the Irish Sea, has just one confirmed case of the disease – a recent returnee from Spain – among its 80,000 population after testing 52 people. Anyone arriving has to self-isolate for two weeks whether they have symptoms or not.
Police said the 26-year-old man detained was in a “specially cleaned” area at Isle of Man Constabulary’s headquarters in Douglas.
Lobby group recommends IT exemptions to help homeworkers
Javier Espinoza in Brussels
Tech lobbying group DigitalEurope has come up with some recommendations to help remote working, including treating IT goods as “essentials”.
Other recommendations, which are designed to “boost the potential of digital technologies to fight coronavirus and mitigate its effects on the wider economy”, include:
— Add remote working devices such as printers, laptops and monitors to the list of essential goods exempt from border controls;
— Keep electronics stores open during lockdowns to allow access to essential remote working tools;
— Exempt information and communication technology workers essential for the maintenance of remote working equipment from travel bans.
UK universities call for academic paywalls to come down
Andrew Jack, global education editor, reports:
British universities and library networks on Friday called on academic publishers to drop access restrictions on journals to ensure students and faculties can continue their studies during the coronavirus pandemic.
A consortium of institutions requested that publishers producing content for learners and researchers should remove paywalls, allow remote access and ease licensing and payment terms over the coming weeks, as concern rises over how students can maintain work off campus.
Many leading medical journals have made their findings on coronavirus free to access, and educational publishers including Pearson have eased broader rules for online textbooks.
The call came from half a dozen bodies including Universities UK, representing British universities, the Association of Colleges on behalf of further education, and the Society of College, National and University Libraries.
Liam Earney, executive director of digital resources at Jisc, which provides the digital backbone for education and research institutions across the UK, said: “We want to have as much content made available as possible.”
Belgium seeks to add capacity in hospitals as demand to rise
Jim Brunsden, FT reporter in Brussels:
Belgium is seeking to increase capacity in hospitals as the number of confirmed cases of coronavirus mounts.
The country has 837 infected patients in hospital with 164 in intensive care and 114 of them needing respiratory assistance. Belgium’s hospitals have 1,900 beds with ventilator equipment, a spokesman for the government’s crisis centre said.
We are not today in a situation where we are below our capacities, but we anticipate an increased demand over the coming days.
The number of confirmed cases in Belgium has risen 25 per cent in 24 hours, official figures show. The data for March 19 show 462 new cases, taking the total to 2,257.
UK property portals prepare for home sale slump
George Hammond in London
Rightmove and Zoopla, the UK’s biggest property sales portals, have cut fees in response to the coronavirus in anticipation of a slump in home sales.
Rightmove plans to cut fees for agents who list properties on the website by 75 per cent for the next four months, which is likely to knock up to £75m off its full-year revenue, around a quarter of the expected total. The group warned of a significant slowdown in the housing market.
Rival Zoopla has appealed directly to agents with an offer of nine months of free usage of its website, as long as they move from Rightmove.
Russia holds key lending rate at 6%
Henry Foy in Moscow
Russia’s central bank held its key lending rate at 6 per cent and said it would set out measures to stem the financial fallout from the coronavirus pandemic.
With the rouble driven towards an all-time low by an oil price slide, the bank was caught between cutting rates to try to bolster growth or holding them to prevent further falls in the currency.
“In February-March, the situation has been developing with a significant deviation from the Bank of Russia’s forecast,” the bank said in a statement on Friday.
The rouble’s depreciation is a temporary pro-inflationary factor. It might prompt annual inflation to exceed the target level this year.
The bank said it would also deploy measures that would “maintain access of small and medium enterprises to bank lending, shore up mortgage lending and protect the interests of people affected by the spreading pandemic”.
The bank has said it will sell foreign reserves and holdings of Russia’s national wealth fund to help bolster the rouble, and assist budget revenues whenever oil prices are below $42 a barrel.
Chief of Marlboro maker Altria contracts virus and takes leave
Patricia Nilsson in London
The chief executive of Marlboro-maker Altria has contracted coronavirus and will be taking a “temporary medical leave of absence”.
Howard Willard, who also serves as chairman of the tobacco company, will be temporarily replaced by chief financial officer William Gifford, Altria said on Friday.
Last month, the company said Mr Willard would not receive an annual bonus owing to the “significant impact … on shareholder value” after the company paid $12.8bn for just over a third of e-cigarette company Juul in late 2018.
Altria has since written down the value of its investment by $4.1bn, slashing by one-third the value of Juul, which has borne the brunt of a political and regulatory backlash following a surge in teenage vaping.
Iran shuts shopping centres as deaths mount
Najmeh Bozorgmehr in Tehran reports:
Iran has announced that all shopping centres will shut for the next two weeks, coinciding with Persian new year holidays, as many Iranians have not conformed with warnings to stay at home.
Domestic media said about 60,000 cars of visitors arrived in the holy city of Mashhad on Thursday even though the shrine, which receives millions of visitors annually, was closed. Mohammad Reza Heydari, head of Mashhad city council, warned of a “human catastrophe” the north-eastern city.
Iran’s deaths increased to 1,433 on Friday.
India state orders workplaces to close from midnight
Amy Kazmin in New Delhi
India’s state of Maharashtra, home to the financial capital Mumbai, ordered
workplaces to close from tonight at midnight until March 31.
The order, issued by chief minister Uddhav Thackeray, will have a significant impact on Mumbai, which is home to the Bombay Stock Exchange and stock market companies, and headquarters of most of major domestic banks.
Essential services will operate and food will remain available, officials said. Government offices will be at 25 per cent of their staff strength and citizens will be urged to reduce unnecessary movement.
Maharashtra is one of the Indian states hardest hit by the coronavirus outbreak. It has 44 of India’s 195 confirmed cases of the disease.
Jordan imposes lockdown
Andrew England, Middle East editor, reports:
Jordan has imposed a ban on all non-essential travel between the country’s 12 governates in the most draconian move yet by a Middle East state to stem the spread of coronavirus.
The army is staffing checkpoints around the main entrances into Amman, the capital, as well as other cities and regions, to help enforce the measures after King Abdullah this week invoked a national defence law. The exceptions to the lockdown are those working in sectors such as health, water, electricity, food and supply chains.
Amjad al-Adaileh, state minister for media affairs, warned that the government could impose a curfew if people do not follow Amman’s instructions.
Jordanian authorities have reported 69 cases of Covid-19 in the country of 10m people. The government this week suspended all international flights to Jordan.
Brent rises above $30 a barrel
Derek Brower and Anjli Raval in London and Henry Foy in Moscow report:
Brent crude oil, the global benchmark, rose above $30 a barrel on Friday, pushed higher by government measures to combat the impact of the coronavirus and reports that US President Donald Trump could intervene in the Russia-Saudi price war.
Brent was up more than 6 per cent in early trading, a gain of almost $2/b, to $30.26, its highest price in four days. Softness in the dollar also helped support the contract. West Texas Intermediate, the US benchmark, was up by about 8 per cent, to more than $27/b, following a 20 per cent rally yesterday.
Carsten Fritsch at Commerzbank said:
The oil market remains characterised by extreme volatility. The current price gains could soon collapse again.
Both benchmarks remain less than half their price from January, weighed down by the collapse of global oil demand and expectations of a new wave of supply from Saudi Arabia and Russia following the collapse earlier this month of their pact to cut production.
President Trump said on Thursday that he would “get involved” in the market-share war between Saudi Arabia and Russia at the “appropriate time”.
Traders have also focused on comments from Russia suggesting its resolve may be softening.
This week, Russian officials have spoken publicly about the economic pain facing the country amid low oil prices, however, it seems the Kremlin is not yet preparing to change strategy.
The comments come even as some energy executives are pushing for Moscow to resume bilateral talks
Many UK leisure facilities remain open
Tom Robbins, Travel Editor
Tourism businesses, state-owned leisure facilities, parks, forests and even ski resorts remain open in the UK amid widespread confusion over official advice on domestic travel.
The prime minister this week said it was time “to stop all unnecessary travel” but the government’s online guidance on social distancing makes no mention of domestic leisure travel – only that people should avoid pubs, cinemas and theatres, and peak time travel on public transport.
While ski resorts across the Alps have closed, on Friday all five main Scottish ski resorts remained open, including Cairn Gorm, which is publicly owned. Conditions are the best they have been all season, and the slopes have been busy all week. Restaurants have closed.
Popular state-owned tourist attractions such as Whinlatter and Grizedale forests in the Lake District National Park, as well as more than 200 other forests and woodlands manged by Forestry England, continue to welcome visitors so they can “have the wellbeing benefits of fresh air and time outdoors”.
The National Trust, a charity that is one of the UK’s largest landowners, has closed its historic stately homes but is encouraging people to visit its parks, beaches and gardens, waiving all parking charges.
The Royal Parks, owned by the crown, remain open for visitors who are “encouraged to come to spend time in nature, relax or exercise”. Mountain Rescue England and Wales, the umbrella body for rescue services, released a statement last week encouraging people “to get outdoors”.
Many are expected to take heed of such advice: this weekend is Mothering Sunday, with sun forecast across most of the UK.
The situation is in stark contrast to France, where the government have released detailed updates on what types of travel and recreation are acceptable: cycling is banned but walking or jogging permitted with a radius of 2km of home.
Indonesian president calls on central bank to protect currency
Stefania Palma reports:
The Indonesian president has directed the central bank to ensure the stability of the rupiah as the currency fell to 15,900 against the dollar, the lowest point since the Asian financial crisis of 1998.
Joko Widodo told a cabinet meeting he had asked Bank Indonesia, the financial regulator and the Indonesia Deposit Insurance Corporation to ensure availability of domestic liquidity and minimise risks “as comprehensively as possible”.
He also called on the central bank to keep inflation under control and accelerate the usage of rupiah accounts in the country.
Bank Indonesia on Thursday cut the seven-day reverse repo, deposit facility and lending facility rates by 25 basis points to 4.5 per cent, 3.75 per cent and 5.25 per cent, respectively.
“Bank Indonesia has reinforced its policy mix towards mitigating the risk of Covid-19 transmission,” it said in a statement, citing new measures including raising the number of daily FX swap auctions to ensure liquidity; as well as stepping up intervention in the spot FX and domestic non-deliverable forward markets while increasing buying of government securities in the secondary market to stabilise the rupiah.
Mr Widodo cautioned that Indonesia’s economic growth, originally estimated at 5 per cent to 5.4 per cent for 2020, would suffer in the face of the virus outbreak. The central bank has revised its growth projection to 4.2-4.6 per cent.
The fourth most populous country in the world, Indonesia counts 32 deaths and 369 confirmed cases. The ministry of health on Friday said that up to 700,000 people could end up being infected.
Saudi Arabia halts domestic transport for two weeks
Ahmed Al Omran in Riyadh
Saudi Arabia has suspended domestic air travel, trains, buses and taxis for 14 days from Saturday as a precaution against the spread of the coronavirus.
The latest step comes hours after King Salman delivered a rare televised address in which he said the kingdom is facing a “difficult phase” as it confronts the disease.
Overnight, the Saudi government also announced a ban on exporting medicines, pharmaceuticals and medical devices.
The kingdom has confirmed 274 infections and no deaths from Covid-19. Eight cases have fully recovered, the health ministry said.
Nationwide withdraws entire tracker mortgage range
James Pickford in London
Nationwide withdrew all of its tracker mortgage products to new customers on Thursday after the second emergency base rate cut by the Bank of England, underlining the tightened conditions banks and building societies face amid the coronavirus crisis.
UK mortgage lenders delivered a mixed response to the rate cut on Thursday, which brought the base rate to a historic low of 0.1 per cent.
Santander said the cut would be reflected across its base rate trackers. HSBC is offering a tracker mortgage at 0.74 per cent on loans up to £5m after passing on the base rate drop from 0.25 to 0.1 per cent. But new customers will need to act quickly, as the offer is due to be withdrawn on Monday night.
Nationwide said: “Although we’re still working through what this may mean for our mortgage members, we took the decision to withdraw all tracker products from sale with effect from midnight last night, Thursday 19 March, and we’ll continue to review market conditions.”
It is the Bank of England’s second rate cut in just over a week, as it attempts to shore up an economy reeling from the coronavirus crisis. While tracker and variable rate deals are likely to become cheaper, most mortgage borrowers, who are on fixed rate deals, will see no change.
Tracker customers should look closely at their terms, however, since many products include “collars” or “floors” that set a lower limit on the mortgage rate, no matter how low the base rate drops.
Aaron Strutt, product director at broker Trinity Financial, warned that some tracker deals may start to vanish as lenders struggle to make the numbers add up. “Some lenders are warning us that tracker rates are going to be withdrawn quite soon as the lender can’t sustain this level of funding.”
Global Covid-19 death toll breaches 10,000
Steve Bernard, data visualisation journalist, writes:
The number of people who have died after being diagnosed with Covid-19 has climbed above 10,000 as Europe and the world struggle to contain the virus.
Italy was once again the worst affected, with an additional 427 fatalities and 5,322 new cases on Thursday — bringing the death toll there above China.
The number of confirmed infections has also risen globally, with cases rising by 26,111 on Thursday — the most yet. The total stands at 245,985.
Several European countries registered more than 1,000 new cases — Spain: 3,308, Germany: 2,994, France: 1,861 and Switzerland: 1,107.
There was some hope in that China recorded its second consecutive day of no new cases.
India relaxes rules around corporate meetings and deadlines
Amy Kazmin reports:
India has relaxed its requirement for large companies to hold board meetings in person for approving financial results, and other critical company business, in light of the threat posed by coronavirus.
In a letter to Indian industries, India’s ministry of corporate affairs said the government had “relaxed the rules … and dispensed with the necessity of holding physical meetings” for approving financial statements, board reports, and restructuring, from now until June 30.
In a separate notification, the Securities and Exchange Board of India said it was extending the deadline by a month for listed Indian companies to report their annual results for the financial year by a month.
Hong Kong faces worst increase yet in Covid-19 cases
Nicolle Liu reports from Hong Kong:
Hong Kong recorded 48 new confirmed cases of coronavirus on Friday, the highest number in a single day, bringing the total to 256*.
Among the confirmed cases, aged from four to 69, 36 travelled or returned from aboard, mainly from Europe but also from Singapore, the Philippines, Indonesia, Thailand, Dubai, Canada and the US. The rest are close contacts of previously confirmed cases, according to the Centre for Health Protection.
The hospital authority has set up two temporary test centres to collect specimens from people arriving in Hong Kong with upper respiratory symptoms.
*This post has been amended to clarify the figure; there are 256 confirmed cases and one highly probable case.
Qatar closes factory area in Doha after cases detected
Simeon Kerr in Dubai
Qatar has closed off a large industrial area in its capital Doha after coronavirus cases were found in the area.
The zone encompasses factories as well as labour camps and residential complexes that mainly house low-income workers. The government media office said the government was providing free healthcare to those affected and was making sure that salaries were being paid.
All shops and salons have been closed until further notice, apart from groceries and pharmacies.
Qatar has 460 cases of the virus, the highest reported tally in the Gulf region.
EU floats possibility of ‘coronabonds’
Guy Chazan in Berlin reports:
Ursula von der Leyen, president of the European Commission, has said that the eurozone could issue “corona bonds” to cushion the economic impact of the pandemic.
Asked in an interview on German radio whether she supported the idea of eurobonds — joint debt instruments backed by eurozone governments — to fight coronavirus, she said:
The principle right now is that we are looking at all tools and whatever helps will be used. That goes for corona bonds too. If they help, if they’re structured correctly, then they will be deployed.
Also speaking on German radio, German finance minister Olaf Scholz held out the prospect of the eurozone rescue fund, the European Stability Mechanism, being used to mitigate the effects of the pandemic, though he stressed there was currently no need to deploy the fund.
Rescue conditions leave Norwegian closer to bankruptcy, says analyst
Richard Milne in Oslo reports:
Norwegian Air Shuttle is “significantly” closer to bankruptcy despite a Norwegian government rescue package as the conditions tied to it are difficult to fulfil, according to analysts at Norway’s biggest bank.
Norway’s centre-right government offered the embattled low-cost airline NKr3bn ($270m) in loan guarantees on Thursday night but made them subject to a number of strict conditions such as almost doubling its equity.
“We believe the package is most likely too small and impossible for Norwegian to access the funds under the conditions made,” said Ole Martin Westgaard, analyst at DNB Markets, who added there was “significantly increased bankruptcy risk” for Norwegian.
The government has stated that it would like to support the airlines including Norwegian. If they understand the conditions they have posed to Norwegian this is not true.
There was a brief halt in trading in Norwegian’s shares on Friday morning as Oslo’s stock market investigated “pricing of the share” due to the government package. Shares had opened up 20 per cent. The Norwegian government also offered NKr3bn in support to SAS and other airlines – predominantly regional carrier Wideroe – but both SAS and Wideroe already fulfill the equity requirements set by Oslo.
Asian Development Bank meeting set to be postponed
Song Jung-a in Seoul reports:
South Korea expects this year’s annual meeting of the Asian Development Bank to be postponed from May to the second half of the year.
This year’s ADB meeting was scheduled for May 2-5 in Songdo, near Incheon International Airport, with Seoul expecting about 5,000 officials from 68 member countries to attend the four-day meeting.
“ADB is now reviewing the possibility of holding the meeting in Seoul in the second half,” Seoul’s finance minister Hong Nam-ki told foreign press reporters on Friday.
UK reveals ‘key workers’ in England eligible for childcare
Bethan Staton reports:
The government has released a list of people, including healthcare workers, who can send their children to school in England.
Schools are to be closed from Friday. The key workers on the list include those running public services such as the justice system, mortuary workers, and public service broadcast journalists. Prison workers, police and security staff, including the armed forces; local and national government; transport workers; and staff in essential financial services, oil, gas, electricity and water supplies, and communications are included.
Children classed as vulnerable, who are supported by social care, or have safeguarding and welfare needs for example, will also continue to attend school.
Pound regains some of its heavy losses
Eva Szalay, Currencies Correspondent, reports:
Sterling bounced more than 3 per cent against the dollar to trade above $1.18 at the start of European hours. The currency’s recovery comes after hefty losses on Wednesday that saw the pound plummet to multi-decade lows at just above $1.14. Sterling also regained some ground against the euro, moving 2.3 per cent higher.
The UK currency’s rebound is down to the easing of dollar funding pressures, which pushed the greenback higher against its peers. The dollar’s gains earlier in the week had been marked against the Australian, New Zealand and Canadian dollars and sterling and emerging markets currencies.
The shortage of dollars was alleviated by the Fed’s decision on Thursday to extend its swap line arrangements with additional central banks, a move that allowed previously suffering currencies to recover against the buck. Additional spending promises from the ECB and the UK also helped to steady investor sentiment.
“The deluge of actions taken by the Federal Reserve in particular were always going to have an impact eventually,” said Derek Halpenny, head of research at MUFG Bank.
FT Analysis: Unpacking the UK’s business promises
Nicholas Megaw, retail banking correspondent, writes:
There’s been some confusion among banks, businesses and the public since the chancellor announced “£330bn of guarantees” for businesses on Tuesday. In reality, the vast majority of the financing scheme for businesses won’t be loan guarantees, and the Treasury has admitted that the £330bn package was merely “indicative” of the overall package size.
The good news is that the Bank of England is actually willing to spend more than £330bn on its commercial paper scheme to provide funding for large businesses. There will also be around £1bn of new government-guaranteed loans for small businesses.
The bad news is industry groups like the British Retail Consortium and fintechs such as Tide and OakNorth Bank are worried the money won’t get to the most vulnerable customers fast enough.
You can read an explainer on the scheme here.
European stock rally accelerates with major markets up 5%
Philip Georgiadis writes:
Global stocks rose as a flurry of support packages from central banks in response to the coronavirus crisis handed markets a reprieve from this week’s brutal sell-off.
European markets were on track to record a second straight day of gains, as London’s FTSE 100 rose 5 per cent in the first minutes of trade. Germany’s Dax shot 6 per cent higher, while in France the Cac 40 was up 5.7 per cent.
Asian markets rose overnight, while on Wall Street futures tied to the S&P 500 gained 2.5 per cent.
The European Central Bank, Federal Reserve and Bank of England unveiled measures ranging from buying hundreds of billions of euros in treasuries, to swap lines and interest rate cuts.
The result has been relative market calm, with currency markets stablising after being upended by a surging US dollar as companies and banks hoard dollars.
Sterling gained nearly 3 per cent to trade at $1.18, rebounding from multi-decade lows touched earlier in the week.
Volvo to stop production in Europe and US
Peter Campbell in London
Volvo Cars will cease production at all of its plants in Europe and the US, the last of the major carmakers to announce site closures in Europe.
A tumultuous week has seen every large European car plant and more than 100 auto facilities across North and South America announce closures, in a wave of measures to try and reduce the spread of coronavirus.
Early in the week, Volvo halted output at its South Carolina facility because of a parts shortage, and closed down its Ghent site in Belgium.
“We need to be more proactive than just reactive,” chief executive Hakan Samuelsson told the Financial Times. “We need to put people’s health and their concern first, it’s not fair to ask them to come into work, it’s a very unpleasant feeling not knowing who has met [someone from] Italy in the last days.”
Volvo’s sites are Torslanda, Skövde and Olofström in Sweden, Ghent in Belgium and South Carolina in the US. The Belgium plant will remain closed until April 5. The Swedish and US plants will be closed between March 26 and April 14.
“We need to plan for normality after Easter, to give people a light at the end of the tunnel,” he said. “Let’s hope that will be the case. Continuing to Christmas would be a disaster.”
The group’s Chinese sites are open again after the shutdown in the country, and business is returning to normal levels again, he said.
This may reassure carmakers forced to weather weeks without revenues in Europe and the US, while costs remain difficult to reduce at short notice.
On Thursday, Ford drew down $15.4bn in credit, as well as nixing its dividend to preserve cash, following a complete shutdown of its North American operations.
European stocks rally sharply
Equities across Europe rallied sharply on Friday as central banks around the world announced a relentless stream of interventions to prop up the economy.
Here is a look at how markets have opened:
-London’s FTSE 100 +5 per cent
-Europe Stoxx 600 +4.9 per cent
-German Dax +6.6 per cent
-French Cac 40 +5.7 per cent
Travis Perkins pauses planned Wickes demerger
Jonathan Eley in London
Travis Perkins has “paused” the planned demerger of its Wickes DIY chain because of market volatility and the disruption to trading caused by the impact of the coronavirus outbreak.
“The intent to demerge remains unchanged,” it said in a statement on Friday. There is no timetable to resume the process.
Travis wants to focus on its trade-led activities, including heavy building supplies and the Toolstation hire business. It expects the trading environment “to change quickly and materially in the coming weeks”.
It has suspended its full-year dividend in response, and plans to cut costs and reduce capital spending.
M&S pulls guidance and cancels dividend
Jonathan Eley in London
Marks & Spencer has become the latest retailer to cancel its dividend and withdraw its financial guidance owing to the impact of the coronavirus outbreak, warning that the disruption will last well into the autumn.
“Trading over the next nine to 12 months in our clothing and home and international businesses is likely to be severely impacted,” it said in a stock exchange statement on Friday. “As a result, it is not possible to provide meaningful guidance on future earnings.”
We are preparing for the contingency that some stores may have to close temporarily.
It expects to recommend a dividend payment in respect of the year to March.
Profit for that current year, which was affected by coronavirus only in its final weeks, could be “at or below” the bottom end of the £440m-460m currently expected by analysts and was “in line with the guidance issued in January until the current week”.
For the year to March 2021, clothing sales and profits will be hit for at least the first three to four months, with margins knocked by the need to discount to clear unsold seasonal stock.
YouTube switches all EU traffic to standard definition by default
Javier Espinoza in Brussels
YouTube is switching its EU traffic to standard definition by default, the EU commissioner for the single market said in a statement on Friday.
Thierry Breton said the move, under which high definition will still be available, came after discussions with Google’s chief executive, Sundar Pichai, and YouTube’s chief executive Susan Wojcick.
“Millions of Europeans are adapting to social distancing measures thanks to digital platforms, helping them to telework, e-learn and entertain themselves,” Mr Breton said.
“I warmly welcome the initiative that Google has taken to preserve the smooth functioning of the internet during the Covid-19 crisis by having YouTube switch all EU traffic to standard definition by default.”
A Google spokesperson added: “We will continue working with member state governments and network operators to minimize stress on the system, while also delivering a good user experience.”
BoE cancels bank stress tests
Delphine Strauss in London reports:
The Bank of England has cancelled its annual stress tests of the banking sector and put much of its routine supervisory work on hold to allow lenders to focus on the challenges of the coronavirus outbreak.
The central bank said that it aimed to lessen the operational burdens on firms and focus on keeping credit flowing to households and businesses.
The cancellation of the stress tests was in line with the decision taken last week to cut the UK’s countercyclical buffer to zero, the BoE said, adding that it expected “all elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this temporary shock”.
The BoE also urged lenders to take into account the “significant economic support” that had been announced globally when they came to apply new accounting rules that require banks to make earlier provision for loans that are going bad.
Norges Bank slashes key interest rate to 0.25 per cent
Norway’s central bank has cut interest rates for the second time in two weeks as it said economic conditions had “continued to worsen”.
Norges Bank reduced its policy rate by 0.75 percentage points to 0.25 per cent after a unanimous decision on Thursday at its monetary policy meeting.
“The measures to contain the spread of coronavirus have led to a number of businesses having to close or reduce their activities,” the bank’s statement said on Friday.
Many workers are being laid off, and unemployment has shown a marked increase. The negative impact on the world economy is intensifying, and oil prices have fallen further. Financial market stress has increased, and higher credit and money market premiums make funding more expensive for Norwegian enterprises.
Norway has room for economic policy manoeuvre, good welfare arrangements and solid banks.
Elsewhere in the FT: Lentils and war games: why Nordics are well prepared for lockdown
European markets set for gains
European stocks were set to record a second day of gains on Friday, as the prospect of significant support packages from central banks offered some reprieve from the volatility that has swept through financial markets.
Futures pointed to gains of around 3.5 per cent for London’s FTSE 100, while the major bourses in continental Europe were also set to record similar rises.
Asian markets rose overnight, while on Wall Street futures tied to the S&P 500 rose 2.5 per cent.
Still, global stocks have been unable to hold on to any gains over the past month, and some analysts have warned that only signs of the pandemic slowing would allow markets to stabilise.
“Markets remain very volatile and the outbreak of Covid-19 in the West is still at an early stage,” said Rodrigo Catril, a senior markets strategist at National Australia Bank in Sydney. “The full extent of the negative economic consequences from containment measures remains uncertain,” he added.
Holiday Inn operator IHG expects 60% drop in global room revenue
Alice Hancock in London
InterContinental Hotels, which operates the Crowne Plaza and Holiday Inn brands, said that demand for its hotels was at the lowest levels the group had ever seen. It plans to slash capital costs and suspend its dividend this year.
“These were not easy choices and we are mindful of the impact these decisions will have on our colleagues and shareholders,” said Keith Barr, the group’s chief executive. “However, we believe that these are essential to ensuring that we come out of this as strong as we possibly can.”
The FTSE 100 hotel group said that revenue per available room, the industry’s preferred metric, had declined by almost 90 per cent in Greater China in February where it has 470 hotels. It said that it was expecting global declines of around 60 per cent this month. China is beginning to re-open but other countries are going into lockdown to block the spread of coronavirus.
IHG plans to cut board and executive management salaries, reduce marketing spend and review all discretionary costs. It has relaxed its brand standards so that hotel owners do not have to maintain capital expenditure costs and withdrawn its planned dividend of 86c per share.
Wetherspoons, the UK pub chain, announced that it would cut its dividend on Friday adding that it was “impossible to provide realistic guidance” for its full-year performance.
Hong Kong experts warn city now at ‘highest risk’ of community outbreak
Nicolle Liu reports from Hong Kong
Hong Kong infectious disease experts warned residents that the territory was now “at the highest risk” of a sustained community outbreak since Covid-19 began.
“[It is] very likely that a massive community outbreak is approaching,” said Gabriel Leung, founding director of the University of Hong Kong’s WHO Collaborating Centre for Infectious Disease Epidemiology and Control.
He warned that people in Hong Kong should not relax precautionary measures as the weekend approaches and a large number of residents return to the city from abroad.
Businesses should consider reducing operating hours or the government might need to step in, Prof Leung said.
He added that the number of imported cases from overseas was now even higher than those imported from mainland China early on and that this would become more severe in the coming weeks.
Health authorities have warned of a “second wave” of infections as the number of imported cases climbs.
Hong Kong has 208 confirmed coronavirus cases.
Prof Leung recommended the authorities improve processing of passengers arriving at the airport following new rules to subject all arrivals to 14 days in quarantine.
He said it was important to protect older adults, especially those in nursing homes and retirement communities, as well as supporting the city’s large domestic-helper community.
Europe: what you might have missed
California ordered its 40m residents to stay at home unless they need to make essential trips, becoming the first US state to implement such measures as the country battles to contain the spread of the coronavirus. Read more here.
Asia-Pacific stocks and currencies rose as a flurry of support packages from central banks in response to the coronavirus crisis handed markets a reprieve from this week’s brutal sell-off. Read more here.
Bentley will close its factory in Crewe for four weeks as the luxury carmaker becomes the latest group to shutter its facilities in the wake of coronavirus. Ford also said it would shut its factories in South America.
The G7 summit will be held by teleconference instead of at Camp David as originally planned to allow the countries involved to direct more resources towards tackling the coronavirus outbreak, the White House said.
The number of new coronavirus infections in South Korea slowed to 87, while China reported no new local cases for a second consecutive day.
Cathay Pacific has said it will reduce passenger capacity by 96 per cent in April and May over new border restrictions introduced by multiple governments.
Moody’s warns over outlook for global shipping industry
Primrose Riordan reports from Hong Kong
Moody’s has put the global shipping industry on a negative outlook and predicted companies’ earnings will decline by 6 to 10 per cent this year.
The rating agency said there had been reduced demand for container services since the Covid-19 outbreak hurt Chinese manufacturing, as well as lower demand for coal and iron ore.
Even though China has relaxed some of its containment measures, demand is falling elsewhere as the virus spreads and many ports are seeing sharp falls in activity
Port workers also worry the virus could be carried by ships’ crews arriving from abroad and are taking precautions.
Standard Chartered employee tests positive for coronavirus in Hong Kong
Primrose Riordan reports from Hong Kong
A Standard Chartered bank branch employee in Hong Kong has tested positive for Covid-19 after attending a private event with others who have since been confirmed to have the virus.
The branch, at Chung On Street, Tsuen Wan, has been closed and all staff are self-quarantining at home for 14 days.
Seoul to test all visitors from Europe in bid to curb new infections
South Korea will start testing people entering the country from Europe, in the latest escalation of its efforts to stem the flow of new infections from arrivals into the country as the global pandemic worsens, Edward White reports.
Yoon Tae-ho, a senior health official, said from Sunday people arriving from European nations will be required to self-isolate for two weeks, even if they test negative.
Officials are also considering expanding the measure to arrivals from the US and Asia.
The move came as Seoul reported a fall in new coronavirus infections on Friday, snapping several days of rising case numbers.
Fears have been building in recent days of new outbreaks in Asia with new clusters discovered and as South Koreans return home from Europe and the US.
Cathay Pacific to reduce capacity dramatically in April and May
Primrose Riordan reports from Hong Kong
Cathay Pacific said on Friday it would reduce its passenger capacity by 96 per cent in April and May due to new border restrictions enforced by multiple governments.
The Hong Kong carrier said it would increase air cargo capacity to meet demand. There will be three Cathay flights a week to London, Los Angeles, Vancouver, Tokyo, Taipei, New Delhi, Bangkok, Jakarta, Manila, Ho Chi Minh City, Singapore and Sydney during the period.
Cathay Dragon will fly three times a week to Beijing, Shanghai, and Kuala Lumpur.
Also on Friday, HK Express, a low-cost airline wholly owned by Cathay, said it would suspend all flights from March 23 until April 30 due to low demand.
China’s ruling party exonerates virus ‘whistleblower’
China’s ruling Communist party faces a backlash over its admission that a doctor hailed as a “whistleblower” for his attempts to raise alarm about the coronavirus outbreak should not have been reprimanded by police, Christian Shepherd reports from Beijing.
Many posted on Chinese social media, repeatedly questioning “Is that it?” after the results of an investigation by the party’s graft busting Central Commission for Discipline Inspection were released on Thursday.
The probe found that the reprimand of ophthalmologist Li Wenliang by Wuhan police was “improper” and did not follow correct legal procedures.
News of Li’s death last month sparked a flood of outrage and disbelief in China, with many commentators hailing him as a hero after he warned colleagues about the outbreak in the central city of Wuhan even as local authorities played down its severity.
The commission avoided admitting fault with higher authorities for encouraging censorship, instead laying the blame with low-level officials in the Zhongnan Road police station that had made Li sign a document apologising for his remarks.
Wuhan’s public security bureau responded to the investigation by apologising to the doctor’s family and saying that the deputy head of the station would be punished.
Since January, dozens of Chinese have been warned by police for posting information that counters Beijing’s official narrative of the outbreak. Two citizen journalists who had been documenting daily life in Wuhan with often harrowing video blogs showing the overloaded health services have been missing since last month.
Thailand to demand all visitors present medical certificates
John Reed reports from Bangkok
Thailand from Sunday will ask all visitors, regardless of nationality, to present medical certificates declaring they have tested negative for coronavirus, enforcing a draconian requirement for a country whose economy relies heavily on tourism.
The move comes after Prime Minister Prayuth Chan-ocha said that Thailand was preparing for a possible “third-stage” or wider outbreak of coronavirus that would require a national lockdown.
Thailand’s Civil Aviation Authority last week began requiring people arriving from countries the government classified as “disease infected zones” hit hardest by Covid-19 — including China, South Korea, Italy and Iran — to present medical certificates.
“This will now include all countries to minimise infection so we can control it,” Mr Prayuth said on Thursday in remarks quoted by Thai media.
Thailand on Thursday reported 60 new coronavirus cases, the biggest daily jump yet, bringing the total to 272.
Ford to close plants in South America
Claire Bushey reports from Chicago
Ford plant closures continue rolling across the globe as the carmaker said it would shut factories in Brazil and Argentina as the pandemic takes hold in South America.
The Detroit automaker has already temporarily shut factories in North America and Europe and has told its white-collar employees to work remotely. General Motors and Fiat Chrysler have also paused production in US factories.
Brazil, which has 534 cases of Covid-19, sealed its borders with eight countries on Thursday. Argentina has 97 cases.
From March 23, Ford will close its Brazilian plants in Camaçari, Taubaté and Horizonte for three weeks. Two days later it will close the Pacheo plant in Argentina for just under two weeks.
The closure will protect employees while also adjusting “production volumes to the lower consumer demand due to this unprecedented situation”, the company said.
The North American plant closures are costing Ford $90m a day and GM $93m a day, according to an estimate from Morningstar analyst David Whiston. On Thursday, Ford said it was borrowing $15.4bn to manage through the shutdown.
Fitch halves global growth forecast on coronavirus fallout
Fitch said the coronavirus crisis was “crushing” global gross domestic product growth and halved its baseline forecast for 2020 to 1.3 per cent.
The rating agency expects global GDP to be $850bn lower this year, compared with its previous forecasts in December, and pointed to supply chain disruptions and the impact of weaker Chinese demand.
“The interruptions to economic activity seen in China — and now in Italy — are on a scale and speed rarely seen other than during periods of military conflict, natural disasters or financial crises,” Fitch said.
Fitch said its baseline forecasts did not yet assume full-scale lockdowns taking place in Europe and the US.
Asia-Pacific stocks gain after central banks boost support
Daniel Shane reports from Hong Kong
Asia-Pacific stocks rose as a flurry of support packages from central banks in response to the coronavirus crisis handed markets a reprieve from this week’s brutal sell-off.
But traders warned that any rebound was likely to be temporary until there were more signs that the pandemic’s spread was stalling.
In early trading in the region on Friday, Australia’s S&P/ASX 200 added 4.6 per cent as the stock index rebounded from a more than six-and-a-half year low.
The yields on 10-year Australian government bonds, which surged on Thursday after the central bank cut its benchmark rate to an all-time low, fell more than 0.16 percentage points after the Reserve Bank of Australia said it would buy up to A$5bn ($2.9bn) in treasuries. Bond prices rise as yields fall.
South Korea’s Kospi benchmark was 3.5 per cent higher. The index closed 8.4 per cent lower the previous day, triggering market circuit breakers and trading halts.
Hong Kong’s Hang Seng index jumped 2.6 per cent while China’s CSI 300 of Shanghai and Shenzhen-listed stocks was up 0.8 per cent after banks left a key lending benchmark unchanged. Japan’s equity markets are closed for a public holiday.
California governor orders people to stay at home
Patrick McGee reports from San Francisco
All Californians have been ordered to “stay at home” effective from Thursday evening in a bid to help contain the coronavirus outbreak.
Governor Gavin Newsom issued the statewide order on Thursday night, days after multiple counties in the Bay Area and Los Angeles issued similar orders.
Earlier in the day, the governor projected that 56 per cent of Californians would get the virus within eight weeks and he requested more than $1bn from the federal government to deal with the expected surge in cases.
“Let me remind you the numbers [assume] that we’re just along for the ride,” he said. “We’re not. We want to manipulate those numbers down. That’s what this order is all about.”
He also said that based on projections assuming a 20 per cent hospital admission rate, the state would have at least 19,000 more people in need of a hospital bed than its capacity.
Up until March 18, 675 Californians have been confirmed to have the virus and 16 people have died.
Mr Newsom’s order to stay at home is the strongest yet for any US state and follows a state of emergency order on March 4.
Australian banks announce $58.1bn repayment holiday
Jamie Smyth reports from Sydney
Australian banks will defer repayments on more than A$100bn ($58.1bn) in loans for small businesses for six months to help them overcome a cash crunch caused by the coronavirus crisis.
Lenders anticipate the repayment holiday will free up at least A$8bn in capital for small businesses, many of which are experiencing a massive hit to revenues caused by widespread disruption across the travel, hospitality and other sectors.
“This is a multi-billion dollar lifeline for small businesses when they need it most, to help keep the doors open and keep people in jobs,” Anna Bligh, chief executive of the Australian Banking Association, told reporters. “Banks are putting in place a fast track approval process to ensure customers receive support as soon as possible.”
The boost for small business follows a separate A$90bn relief package announced by the Reserve Bank of Australia on Thursday, which will provide cheap money to banks to advance loans to small and medium-sized businesses.
South Korea’s new coronavirus infections slow to 87
South Korea reported a fall in new coronavirus infections on Friday, snapping several days of rising case numbers, Edward White reports.
Officials in Seoul reported 87 new cases, down from an increase of 152 a day earlier, and bringing the total case number to 8,652.
The daily increase in new infections in South Korea remains far off the peak of more than 900 last month and the number of people recovering each day continues to outpace new infections, according to data from the Korea Center for Disease Control.
However, the recent resurgence of new infections had fuelled concerns of a second wave of illness across Asia with new clusters discovered and as South Koreans return home from Europe and the US where the pandemic has wreaked havoc.
In response, Seoul had ramped up inspections at high-risk facilities, including nursing homes, as well as toughening travel restrictions.
So far, 94 people in South Korea have died from coronavirus, with three more deaths confirmed on Friday. More than 2,200 people have now recovered from the virus.
Argentina tells citizens to stay at home until end of March
Benedict Mander reports from Buenos Aires
Argentina’s centre-left President Alberto Fernández declared a mandatory self-isolation for all citizens until March 31 to slow the spread of coronavirus.
“From midnight tonight, everyone has to stay at home,” he told Argentines in a nationwide broadcast at 9pm local time on Thursday. “We are going to be very severe with those who do not respect the isolation period.”
Argentines will still be allowed to go to local supermarkets and chemists, and various sectors will be exempt from the measures, including health, energy and the media.
With 128 cases now confirmed in Argentina — and three deaths so far — the government announced the closure of the country’s borders, and the suspension of schools, flights and large gatherings earlier in the week.
It also announced fiscal stimulus including measures such as increased subsidies and tax exemptions that amount to about 2 per cent of gross domestic product.
China reports no new local coronavirus cases for second day
Chinese health authorities reported no new local coronavirus cases on Thursday, for the second consecutive day. The number of imported cases, however, rose to 39 as people returned to China from overseas. That took the total cases in the mainland to 80,967.
The number of deaths rose by three to 3,248. Italy on Thursday surpassed China for the number of recorded fatalities linked to the virus with 3,405 deaths.
Chinese hospitals have discharged 71,150 coronavirus patients.
Economists warn South Korea may need more stimulus
By Edward White and Song Jung-a
South Korea’s unprecedented moves to jawbone local markets and support small business may still be insufficient to protect the economy from a worsening crisis, economists have warned.
On Thursday, Seoul unveiled a series of new measures, including Won50tn ($39bn) in emergency financing to support small and mid-sized companies as well as new funds to stabilise the country’s bond and equity markets. The bond fund could be greater than the Won10tn ($7.7bn) vehicle established in the global financial crisis.
The central bank said it had also inked a $60bn bilateral currency swap agreement with the US to support the local foreign exchange market. The steps came after violent market swings in recent days have left the local currency and the benchmark stock index at their lowest in a decade.
Park Seok-gil, an economist at JPMorgan, said the rout in global markets coupled with the falling pace of growth domestically meant more stimulus measures were needed.
“The key to success would be how fast the government will be in injecting such funds because many companies have no time to wait,” Mr Park said.
Lee Sang-jae, an economist at Eugene Investment & Securities, described the support measures as a “minimum shield” against the risk of small and medium-sized businesses collapsing.
While the stock and bond funds should help “prevent any herd behaviour by investors in capital markets” it remained to be seen “whether they will help the real economy and financial markets recover soon,” Mr Lee said.
Goldman Sachs reports ‘probable’ coronavirus case in Hong Kong
Goldman Sachs notified its Hong Kong staff of a “highly probable” coronavirus case involving one of their colleagues on Thursday, Laura Noonan reports from New York.
The employee is undergoing tests in hospital and is “feeling unwell but not currently experiencing any serious symptoms. The individual has no recent travel history,” according to the bank.
Goldman is identifying other employees the banker may have been in contact with and all ask them to self-isolate for 14 days, according to a memo sent to Hong Hong staff.
Goldman is cleaning its 60th and 67th floors in Cheung Kong Center in Hong Kong’s central business district.
The news comes days after Goldman said all staff in its European and Americas offices should work from home if they could.
In Hong Kong, some employees are working from home and Goldman said anyone not comfortable coming to the office should speak to their manager about work-from-home arrangements.
The bank has reported several other coronavirus cases at its Salt Lake City and Sydney offices.
G7 summit to be held by teleconference
Demetri Sevastopulo reports from Washington
Donald Trump will host the G7 summit via video-teleconference due to the coronavirus crisis, instead of inviting the leaders of the other six powers to Camp David as originally planned.
The White House said the decision to host the June summit over video link was taken so that the other G7 nations – Canada, Japan, France, Germany, Italy and the UK – could save resources for tackling the coronavirus health crisis and the resulting economic turmoil.
Asia-Pacific stocks rise after Wall Street edged higher
Asia-Pacific stocks rose on Friday after global stocks pushed higher in the previous session as a series of emergency packages from central banks soothed fears over the effects of the coronavirus pandemic.
The S&P/ASX 200 in Australia climbed 2.5 per cent, while in South Korea, the Kospi rallied 4.3 per cent. Japanese markets were closed for a holiday.
S&P 500 futures pointed to a 1.3 per cent fall when markets reopen in the US.
Investors’ fears had been soothed by the European Central Bank’s plan to buy €750bn in bonds and after the US Federal Reserve broadened dollar swap lines to ease a shortage of dollars overseas. The Bank of England also cut rates to 0.1 per cent and launched a £200bn bond-buying programme.
The US equity benchmark S&P 500 ended 0.5 per cent higher on Thursday following a day of volatile trading, while the Europe-wide Stoxx 600 composite gained 2.9 per cent. London’s FTSE 100 finished Thursday 1.4 per cent higher.
Bentley to close Crewe factory for 4 weeks
Peter Campbell reports from London
Bentley will close its factory in Crewe for four weeks, as the luxury carmaker becomes the latest group to shutter its facilities in the wake of coronavirus.
Chief executive Adrian Hallmark told the FT the company had enough parts to carry on making vehicles until a planned Easter break in three weeks, but that it had taken a “balanced view” and would shut the site from Friday.
“We have taken a pragmatic view of the scenarios based around ever increasing risk of coronavirus,” he said.
The closure, and the time it takes to revamp operations once it does open, will make a financial impact on the brand that last year clawed its way back to a profit of £65m, compared with a loss of £288m the year before.
However, Mr Hallmark said the company could not calculate the impact of the virus, particularly if the shutdown stretched beyond four weeks.
“It would be very bold to predict what happens for the rest of the year,” he said. The “uncertainty is so high it’s ridiculous”.
He said the brand would pay its staff during the closure, a wage bill that runs into tens of millions for the four weeks.
“We are not going to leave people high and dry and short,” he said, but added that the company was in talks with unions about the exact package.
Bentley has about 4,500 workers, including 1,900 who work on its assembly line hand-making vehicles.
Earlier in the week, parent company Volkswagen said it was preparing to shut all European production facilities.
A wave of closures has left almost no car plants open in Europe. Kia on Thursday said it would close its Slovakian plant, a day after sister group Hyundai announced the closure of its facility in the Czech Republic.
Only Jaguar Land Rover and Volvo Cars have so far avoided closing their home plants in the UK and Sweden respectively, though both have shut European facilities outside their home market.
New Zealand government gives Air New Zealand $509m lifeline
Jamie Smyth in Sydney
The New Zealand government has agreed to bail out the nation’s main airline, Air New Zealand, by providing a NZ$900m ($509m) standby loan to help it survive the coronavirus crisis.
“Without this intervention, New Zealand was at risk of not having a national airline,” said Grant Robertson, New Zealand’s minister for finance, on Friday.
“Air NZ has a unique and critical role in our economy and society. Also, the government owns 52 per cent of the company, which means we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier.”
Mr Robertson said that while the airline would continue to operate, management had advised him there would be job cuts.
The loan facility will enable the airline to draw down on funds should its cash position drop below a minimum threshold. The loan will be available in two tranches over a two-year period at an interest rate of between 7 per cent and 9 per cent and will step up by 1 percentage point if the facility remains after 12 months.
A condition of the loan facility is that Air New Zealand must cancel its 2020 interim dividend of 11 cents per share, which is worth about NZ$123m.
Under the loan scheme it is possible that the debt could be turned into equity, which would increase the government’s stake in the airline, or the government could request an equity raise after six months.
Air New Zealand shares dived 43 per cent to NZ$0.86 on the New Zealand stock exchange when a suspension on trading was lifted on Friday morning. Air New Zealand has slashed international and domestic capacity after the government closed its borders to all non-residents and non-citizens on Thursday.
Wall Street’s muted finish conceals continued volatility
Peter Wells in New York
The S&P 500 has taken 14 sessions to notch up a daily move at the closing bell of less than 1 per cent, after days including the biggest plunge since 1987’s Black Monday and the largest one-day gain since 2008.
That is not to say Thursday’s move for Wall Street’s equities benchmark was without its wild swings. The S&P 500 closed 0.5 per cent higher, but had been down as much as 3.3 per cent and up by as much as 2.9 per cent before arriving at its final destination.
That equates to an intraday trading range of 6.1 percentage points. That is a relative relief when the previous five sessions have seen ranges exceeding 7 per cent, including March 13’s rally that was the biggest one-day gain since October 2008, and March 16’s 12.2 per cent plunge that was the largest drop since Black Monday.
Read more here.
