Trump administration open to restrictions on domestic travel
Kiran Stacey in Washington
Donald Trump said on Tuesday it was “possible” that the administration would impose restrictions on domestic travel, but said no decision had been taken at this point.
But major US passenger airlines warned on Monday that doing so could have serious consequences for an already-distressed industry.
Airlines for America, the industry group said that a 30-day ban on domestic flights would cost them up to $10bn by the end of the year, potentially hastening the demise of some companies.
The organisation said: “A near-term 30-day domestic ban would result in a massive cash draw because… even non-refundable tickets are refundable to the customer, in cash, within seven business days if the service cannot be provided.”
UK chancellor promises ‘whatever it takes’ with £330bn rescue package
Jim Pickard reports:
Rishi Sunak has announced a £330bn emergency rescue package for UK business, saying the UK government will do “whatever it takes” to protect companies and incomes on a huge scale.
Mr Sunak says this is not a time for orthodoxy…and that it is “a time to be bold, a time for courage”.
“I want to reassure every British citizen, this government will give you all the tools you need to get through this,” he says.
He is announcing government-backed loans to support business to get through this, an initial £330bn of guarantees equivalent to 15 per cent of our GDP.
Householders will get a three month mortgage policy, he says.
There is also a new lending facility with the Bank of England to provide low-cost, easily accessible commercial paper to support lending.
He is extending business interruption scheme and loans up to £5m with no interest for six months.
The overall package is worth over £20bn, says the chancellor. This comes on top of the £7bn package from last week’s Budget
Poland’s central bank cuts rates by half-point
James Shotter in Warsaw
The National Bank of Poland has cut its benchmark rate from 1.5 to 1 per cent, becoming the latest central bank to slash rates in response to the coronavirus outbreak.
The rate cut is the first since 2015, and pushes rates to a new record low. It will be accompanied by a series of other steps aimed at mitigating the impact of the virus on the banking sector, including increasing the interest that banks receive on their required reserves and the introduction of the first repo operation for banks in 10 years.
“In the opinion of the [NBP], all these measures will limit the negative economic effects of the spread of coronavirus, and in the longer term, will help the revival of national economic activity,” the central bank said in a statement.
Poland’s economy is in the grip of an almost 30-year boom, and inflation surged to 4.7 per cent in February, far above the central bank’s target of 2.5 per cent.
However, the NBP said that it expected this to fall quickly as a result of the slowdown in economic activity caused by the counter-measures to coronavirus, and the precipitous drop in the oil price.
“[The rate cut] will allow inflation to meet the NBP’s inflation target in the medium term,” the bank said.
Poland’s government is also planning a fiscal stimulus in response to the epidemic, and details are likely to be unveiled on Wednesday.
Poland has so far recorded 221 cases of the novel virus, and 5 deaths.
Boris Johnson: we must act like a wartime government
UK prime minister Boris Johnson has begun his new daily press conference, Jim Pickard writes.
He says that without drastic measures to impede the progress of the coronavirus it would overwhelm any health system in the world. He points out that the Italians have a good health service – but they faced the challenge of huge numbers of patients.
“The shielding of vulnerable groups will prevent suffering,” he says. “We may well have to go further and faster in the coming days to protect lives and the NHS.”
The prime minister also says he is trying to get hold of more testing, more beds and more staff for the NHS.
He says the government will pour resources into R&D to find out what helps treat severe cases and search for a vaccine
” We must act like any wartime government and do whatever it takes to support our economy”
Italy toughens rules for people leaving their homes
Miles Johnson in Rome
Italy has toughened up its self-certification rules for people leaving their houses during the coronavirus outbreak with the threat of up to 12 years imprisonment if they are judged to be recklessly spreading infection.
According to new rules announced by Italy’s ministry of interior on Tuesday, Italians are now required to self-declare on a form that they have not tested positive for coronavirus, or are currently in self-quarantine due to recent exposure. Those who break these rules face a maximum penalty of 12 years in prison for culpable participation in the epidemic.
Since Italy extended its social distancing measures to the whole peninsula last Monday, Italians have been only allowed to leave their houses for urgent work, to buy food or to get drugs or medical assistance.
Those who break the rules already faced a fine or up to three months in prison, with Italian media reporting that 27,500 people and 1,100 shops have been reported by police for not complying since the lockdown began.
Sweden and Denmark offer credit guarantees to airlines
Richard Milne in Oslo
Sweden and Denmark are offering SKr3bn ($300m) in credit guarantees to airline SAS while Stockholm is offering another SKr3.5bn to other carriers in an effort to avoid the collapse of the aviation sector from coronavirus.
Both governments, the top two shareholders in SAS, said on Tuesday evening that they would contribute SKr1.5bn in credit guarantees each to SAS. Sweden’s share comes from a SKr5bn package for this year for other airlines that have their headquarters in Sweden such as air ambulance and helicopter operators.
“SAS is of great importance for accessibility to both Scandinavia and Denmark,” said Nicolai Wammen, Denmark’s finance minister.
He added that the move was only a “first step” and that both countries would do “whatever is necessary” to survive the coronavirus crisis that airline executives have called the worst in aviation history.
Apple retail stores to remain closed ‘until further notice’
Patrick McGee in San Francisco
Apple has extended its global retail stores shutdown to “until further notice”, following a Friday announcement of a two-week closure.
The shutdown applies to more than 400 stores globally but excludes those in Greater China, all 42 of which have reopened six weeks after they were shuttered — a move that itself was extended from an original eight-day closure.
Chief executive Tim Cook said on Friday the closures were aimed at doing Apple’s part to contain the virus. “We do not yet know with certainty when the greatest risk will be behind us,” Mr Cook had said at the time.
Novartis to provide $1m grants to help needy communities fight outbreak
Sarah Neville in London
Novartis, the Swiss drugmaker, has announced a series of measures to tackle the coronavirus, including a $20m “Covid-19 Response Fund” to provide individual grants of up to $1m to help needy communities around the world fight the outbreak.
Novartis said it was still getting its medicines to patients globally and did not currently anticipate any supply chain disruption “given strong mitigation measures and inventory levels”. The company said it had also “activated mitigation plans to ensure ongoing drug supply and smooth operations for its over 500 clinical studies”.
The new fund would help to bolster local and national health systems by funding extra doctors and helping to source medicines and medical equipment, it said, as well as helping the establishment of digital platforms to collect data on the disease.
“Remote delivery of healthcare and effective dissemination of important public health information” would also be covered by the fund.
Novartis will also join two cross-industry R&D efforts to find a treatment: the Bill & Melinda Gates Foundation, Wellcome, and Mastercard -supported Covid-19 Therapeutics Accelerator and a partnership with the Innovative Medicines Initiative (IMI).
Vas Narasimhan, chief executive, said: “We are dealing with an extraordinary and unprecedented public health crisis that requires an incredible level of involvement and collaboration across government, society and business.”
Novartis was also making drug compounds on its stocks available for testing in case any could help develop a treatment, and evaluating its existing products to see if any could be useful in treating victims of the pandemic.
Earlier this month, Sandoz, the company’s generics and biosimilars division, agreed not to raise prices for medicines that may help in the treatment of coronavirus, such as antivirals to reduce the impact of the disease and antibiotics to combat pneumonia.
As from Monday, all Novartis staff in Europe, the US and Canada had been asked to work from home, with the exception of those working in laboratories, manufacturing sites and in the field, it said.
Gatwick executives take 20% pay cut as airport limits hours
Tanya Powley in London
The chief executive of Gatwick Airport and his executive team will take a 20 per cent salary cut and waive any bonus for the current financial year as the UK’s second-largest airport implements a range of emergency measures amid the deepening coronavirus crisis.
The London airport will also no longer operate flights between midnight and 5.30am from Tuesday and will shut down two of the airport’s six piers because of the fall in passenger numbers. It will also cut about 200 jobs employed on temporary fixed-term contracts and contractors.
Gatwick said the spread of coronavirus has had an “unprecedented impact” on the global aviation industry, with its airlines reporting significantly reduced levels of traffic and substantial cuts in their capacity over the next two months.
It said further action is likely to be announced in the coming days to reduce the airport’s operational footprint, and said it planned to defer spending on its investment programme for the forseeable future.
Stewart Wingate, chief executive officer, said:
Gatwick is a resilient business, but the world has changed dramatically in recent weeks and we have been forced to take rapid, decisive action to ensure that the airport is in a strong position to recover from a significant fall in passenger numbers.
Significantly reduced passenger numbers are likely to be sustained, at least in the short to medium term, and I need to prepare people for the news that other serious measures are likely. We also strongly urge the Government to provide support in order to protect the business and the contribution it makes to the region and wider economy.
The statement from Gatwick comes after its trade body warned on Tuesday that UK airports could shut down within weeks if the government does not step in and provide emergency support.
Mnuchin: White House open to shortening Wall Street trading hours
Treasury Secretary Steve Mnuchin said the White House believes in keeping financial markets open, even if it means reducing trading hours at some point.
Speaking at press briefing on Tuesday, he said:
We absolutely believe in keeping the markets open. After September 11, the only reason the markets were closed is because technology was disrupted. I had been on the phones with banks and we may get to a point where we shorten the hours if that is something they need to do, but Americans should know that we are going to do everything to make sure that they have access to money at their banks, in their 401(k)s and in stocks. We intend to keep markets open.
Wall Street begins trading at 9:30 am ET and markets officially close at 4pm ET.
His remarks come amid mounting questions about whether markets should be temporarily closed as fears of the economic fallout from the coronavirus have shellacked markets in recent days, triggering temporary trading halts over the past two weeks.
Stacey Cunningham, president of the New York Stock Exchange, said in a LinkedIn post on Monday: “Closing the markets would not change the underlying causes of the market decline, would remove transparency into investor sentiment, and reduce investors’ access to their money. This would only further compound the current market anxiety.”
Florida puts restrictions on restaurants and orders bars to close
Florida will limit the number of people in restaurants and order bars and nightclubs to close, in new measures aimed at slowing the spread of coronavirus.
Governor Ron DeSantis said all bars and nightclubs in the state will shut down for 30 days beginning at 5pm ET today. Restaurants will be required to cap their crowd capacity by half and keep tables at least six feet apart.
Miami-Dade County is forcing the closure of all restaurants, bars, clubs and gyms, its mayor Dan Gelber announced on Tuesday.
Mr DeSantis also recommended that the state’s 12 public universities shift to remote learning programmes for the rest of the spring semester.
Florida has 192 confirmed cases of coronavirus.
Next round of Brexit talks between UK and EU postponed
Sebastian Payne in London
Downing Street has announced that the next round of Brexit talks will not take place on Wednesday due to coronavirus.
London and Brussels were investigating ways of continuing negotiations through video conference, but have failed to make it work. A UK government spokesperson said in a statement:
In light of the latest guidance on coronavirus, we will not formally be convening negotiating work strands tomorrow in the way we did in the previous round.
We expect to share a draft FTA alongside the draft legal texts of a number of the standalone agreements in the near future still, as planned.
Both sides remain fully committed to the negotiations and we remain in regular contact with the European Commission to consider alternative ways to continue discussions, including looking at the possibility of video conferencing or conference calls, and exploring flexibility in the structure for the coming weeks.
There has been much speculation in Westminster that the UK will ultimately have to seek an extension to the Brexit transition period and prolong the trade talks into 2021. But the spokesperson said there were no such plans. “The transition period ends on 31 December 2020. This is enshrined in UK law.”
Daimler to shut majority of its factories in Europe
Joe Miller in Frankfurt
Daimler is to follow Volkswagen in shutting the majority of its production facilities in Europe for at least two weeks, due to the breakdown of vital supply-chains in the wake of coronavirus disruption.
The Mercedes-Benz maker said the closures would begin this week, and include car and van plants as well as administrative departments.
Daimler runs several factories in Europe, across Germany, Hungary and France.
“Wherever operations need to be continued, the company will take appropriate precautions to prevent the infection of its employees,” the company said.
It also said it could not yet provide an assessment of the impact of coronavirus on its finances.
French Open tennis major delayed until September
Professional tennis’ premier clay court tournament has been postponed, with organisers shifting scheduling of the French Open to September.
“The RolandGarros tournament will be played from September 20 to October 4, 2020,” organisers said in a tweet.
The tournament was supposed to kick off on May 18. Its new dates will mean the fortnight-long event will take place a week after the US Open – the final major in a normal year – is currently slated to end.
Last week, the governing body of men’s tennis, the ATP, announced a suspension of the men’s professional tour up to and including the week of April 20 due to “escalating health and safety issues” arising from the coronavirus outbreak.
Numerous professional sporting events ranging from football and rugby in Europe and the UK to baseball, basketball and ice hockey in North America have also been postponed, while some entire seasons have been cancelled.
Major Peruvian copper mine shut on virus fears
Neil Hume in London reports:
One of the world’s biggest copper mines has been temporarily closed as efforts to tackle the coronavirus pandemic ripple through the natural resources industry.
New York-listed Freeport-McMoRan said it had placed its Cerro Verde mine in Peru on care and maintenance after the government announced a nationwide 15-day quarantine to curb the spread of the virus.
“Cerro Verde will work closely with government authorities to be prepared to restart operations as soon as possible,” it said.
Freeport’s move came just hours after Brazilian Vale said production at its Voisey’s Bay nickel operation in Canada would be stopped for four weeks, highlighting the growing risks to production of key raw materials.
Vale said it has decided to mothball the 40,000 tonne a year nickel mine to help protect the health of indigenous communities in eastern region of Labrador.
Maryland delays primary elections to June
Lauren Fedor in Washington
Maryland has become the latest state to delay its primary elections in the face of the novel coronavirus, following similar measures in Ohio, Georgia and Louisiana.
A spokesperson for Larry Hogan, the state’s Republican governor, said the primary originally planned for April 28 would be held on June 2, the latest possible date to comply with Democratic National Committee rules.
The spokesperson said the state’s board of elections would “develop a comprehensive plan” to conduct the election in June.
Democratic primary voters are heading to the polls in three US states today — Florida, Illinois and Arizona — despite a swath of federal, state and local public health measures intended to limit social interactions and stop the spread of the novel coronavirus. The Democratic presidential primary is now effectively a two-man race between former US vice-president Joe Biden and Vermont senator Bernie Sanders.
Until last night, Ohio had also been expected to hold a primary election today. But the state’s Republican governor Mike DeWine filed a lawsuit yesterday for in-person voting to be postponed, and later overruled a judge’s order that the election go on, after the state’s department of health signed an order closing all polling stations, citing the risk posed by the coronavirus.
“During this time when we face an unprecedented public health crisis, to conduct an election tomorrow would force poll workers and voters to place themselves at an unacceptable health risk of contracting coronavirus,” he said late Monday on Twitter.
Spain to offer €100bn of state loan guarantees
Daniel Dombey in Madrid
Pedro Sanchez, Spain’s prime minister, has announced what he described as the “biggest mobilisation of resources in Spain’s democratic history” to fight the economic impact of the coronavirus crisis.
The biggest part of the government’s plan — set out in a decree — is €100bn of state loan guarantees that Mr Sanchez said would ensure liquidity for all Spanish companies, particularly smaller and medium ones.
The plan also includes a promise to make legal changes to prevent companies from outside the EU from taking over Spanish businesses in “strategic sectors”.
“The Spanish state is going to provide our businesses with all the liquidity they need – all the liquidity they need – so they can stay operating,” he said. “We are not going to allow temporary liquidity problems to become problems of solvency.”
Mr Sanchez said other government commitments would amount to €17bn, and said the whole package, including private money triggered by the loan guarantees, would total €200bn.
Among other moves, Mr Sanchez announced a moratorium on mortgage payments for people whose income has been hit by the crisis, and a similar moratorium for utility bills.
The decree also makes it easier for people to be temporarily suspended from work, rather than laid off, and to retain all of their benefits.
Some social security payments will be suspended and there will be €600m to help vulnerable people and those depending on social services.
“No one is going to be left behind,” Mr Sanchez said.
Chief executives expect virus to hit revenues by at least 10%
Patrick McGee in San Francisco
YPO, an association of 29,000 chief executives around the globe, said its members are seeing “absolute uncertainty” in the face of the spreading coronavirus.
Last week the group sent out a survey to get a “global pulse” for the crisis. Within two hours it had 1,000 responses; within a few days, nearly 2,800. “It’s insane for our scale,” said Elizabeth Zucker, chair of YPO.
She said the “overwhelming response” was businesses expecting a hit to revenue in excess of 10 per cent.
“In general I think you’re going to see absolute uncertainty — nobody is going to want to commit to anything,” Ms Zucker said. “More than anything there’s this fear at the pace at which this is unfolding. It’s extraordinary…and so your head spins when you start to think about, ’how is this going to impact my business?’”
The average member company at YPO has around $40m in revenue. The survey was conducted March 10-13 — before some of the latest developments including US president Donald Trump’s acknowledging that the US “may be” heading for a recession.
The survey indicates CEOs expect “things to get worse in the next months”. The three areas of greatest impact were business travel, new business development and revenues.
Challenges facing northern England businesses underline UK-wide struggle
Chris Tighe, North East England Correspondent, reports:
The importance of government help for UK businesses in the face of coronavirus was underlined this afternoon by analysis showing the potential impact on one relatively small part of the UK.
Economic analysis by the Tees Valley Combined Authority over the last 24 hours shows that a “reasonable worst-case scenario” for its area, home to 667,500 people, suggests the possible loss of almost 17,000 jobs and a near £1bn hit to the local economy in 2020, a contraction of 5.2per cent, if nothing is done to mitigate business losses.
Tees Valley Mayor Ben Houchen – one of the most influential Tory politicians in the “red wall” of northern constituencies which switched to the Conservatives in December’s general election – urged the government to underwrite the losses of businesses, from sole traders to major heavy industry, for twelve weeks to help them and the public during the Coronavirus Pandemic.
Businesses failing would mean families losing incomes, he warned, and cause further pressure on supply chains.
Mr Houchen said:
We are in the midst of a global crisis not seen before, and given the unprecedented challenges for individuals, families, business and public services we need to throw out the rule book on ideology and political motives and take whatever measures are necessary to preserve lives and minimise economic damage over the coming weeks.
Syria closes schools and universities
Asmaa al-Omar in Erbil reports:
The Syrian government has ordered schools and universities to close, citing the move as a precaution to combat the spread of coronavirus.
It has already reduced public workers’ hours since last Friday. Restaurants remain open, but popular water-pipes or “hookahs”, have been banned.
President Bashar al-Assad’s regime, which is fighting a bitter civil war, has not officially acknowledged that anyone has contracted coronavirus in Syria.
Although Syria’s health care system has been badly eroded by a decade of civil strife, the state news agency reported that two quarantine centers will be set up in each province.
Ford becomes latest carmaker to pause European production
Peter Campbell in London
Ford will close all plants in continental Europe from Thursday, adding to the list of carmakers that have shuttered facilities across the region.
The US carmaker will shut Cologne and Saarlouis in Germany, together with the Craiova facility in Romania for “a number of weeks”.
The group’s site in Valencia in Spain was already closed since Monday after three workers were confirmed with coronavirus over the weekend.
The two UK engine plants at Bridgend and Dagenham, which are heavily reliant on orders from former Ford brands Jaguar and Land Rover, will remain open pending customer orders, the company said.
“Due to the dramatic impact this ongoing crisis is having on the European market and the supplier industry – together with the recent actions by countries to restrict all but essential travel and personal contact – we are temporarily halting production at our main continental Europe manufacturing sites,” said Stuart Rowley, president of Ford of Europe.
Last week Ford told all non-production staff to work remotely to limit the spread of the virus.
On Monday, companies including Peugeot owner PSA, Renault, Fiat Chrysler and Toyota announced closures across Europe, as carmakers respond to falling market demand and attempts to contain the spread of the disease.
Authorities in Iran arrest individuals who broke Qom shrine lockdown
Najmeh Bozorgmehr in Tehran
Iran’s judiciary has arrested about a dozen individuals who broke the lock-down to the holy shrine in Qom in protest to the decision by the health ministry to curtail further spread of coronavirus.
“Eleven people are arrested and will remain under detention for further investigations,” Hassan Gharib, the prosecutor of Qom, told the semi-official Fars news agency on Tuesday.
He added that these people “desecrated” the shrine of Masoumeh, the sister of the eighth Imam of Shias, Reza, after officials in Tehran decided on Monday to close the site to pilgrims.
The Islamic republic refused to shut down the shrines across the country since the outbreak of the disease on fears of opposition by radical groups. But this week, armed forces imposed the closure recommended by the health ministry as fatalities have mounted and reached about 1,000 deaths.
Protesters in Qom said they would not abide by guidelines of the health ministry which they said were dictated by the World Health Organisation.
Protesters in the holy city of Mashhad also lashed out at decision-makers in Tehran including president Hassan Rouhani and minister of health Saeed Namaki, saying they would ignore the ban.
Most clerical institutions released statements on Tuesday condemning any radical moves which put the lives of people at further risk.
Israel orders citizens to isolate at home
Mehul Srivastava in Tel Aviv
Israel has ordered all citizens to isolate at home, only allowing them outside to buy groceries and medicine or to travel to essential jobs
The partial closure of all public life came after Israelis rushed to the beaches and national parks on the first day that most firms responded to government orders and told staff to work from home.
“The restrictions don’t mean it’s a holiday,” president Reuven Rivlin said as he asked people to follow orders on social distancing.
Israel has also set up drive-through coronavirus testing centres, following the example of South Korea.
Israel has more 324 coronavirus cases despite some of the harshest measures globally for international travellers and sending tens of thousands of people into self-isolation.
Public transportation will stop operating at night and weekends. The health ministry has also asked people to travel alone in their cars, except if they are members of the same family.
All elective procedures at hospitals were cancelled, and people are to be allowed out for 10 minutes a day to get some exercise with their children or to walk their pets.
Nissan suspends production at Sunderland, UK plant
Chris Tighe, North East England Correspondent, reports:
Nissan’s Sunderland plant, the biggest single car producing site in the UK, has just suspended production.
The company said this afternoon;
Further measures are currently under study as we assess supply chain disruption and the sudden drop in market demand caused by the Covid-19 emergency.
Nissan is north east England’s biggest private sector employer, with 6,000 people at its Sunderland site. Many thousands more work in supply chain companies in the immediate area.
The news, for which there was no public pre-warning, was issued shortly before today’s day shift ended. Workers have since arrived for the night shift. Nissan said; “We have stopped building cars but we are asking people to still come in.”
As long as employees have to report for duty they will be paid. But the company’s future plans are unclear. “We are studying it,” said a spokesman.
Yesterday, Vauxhall’s parent company PSA said it would shut all its European manufacturing plants, including Ellesmere Port and Luton, this week due to coronavirus. They will remain shut until at least March 27.
Amazon to block non-essential shipments to warehouses
Dave Lee in San Francisco
Amazon has told its vendors and sellers it is temporarily blocking shipments into its warehouses for all items other than household essentials, medical supplies and similar high-demand products because of the coronavirus outbreak.
At the weekend, Amazon warned unprecedented strain had meant it was out of stock on many important household goods. This move, communicated to sellers and vendors on Tuesday, will allow them to prioritise replenishment, a spokesperson said.
The measure will begin immediately and run until at least April 5, Amazon said. Goods already in warehouses, or on their way to them, would be handled as normal.
It does not prevent other items being listed and sold on Amazon, but vendors and sellers must now use self-fulfillment methods that avoid using Amazon’s own infrastructure for storing goods, processing orders and handling delivery.
“We understand this is a change for our selling partners and appreciate their understanding,” the spokesperson added.
UK hospitality chiefs call for support to avert ‘cashflow catastrophe’
Alice Hancock in London reports:
Two hundred chief executives in the UK hospitality industry have sent a letter to Boris Johnson calling for emergency tax breaks and working capital support.
The letter, seen by the Financial Times, has been sent ahead of the announcement by UK chancellor Rishi Sunak of a package of measures to stave off the worst economic effects of the coronavirus crisis, which is expected later this afternoon.
The hospitality leaders said that efforts by the government so far, including a relief from business rates, only helped three in 10 companies and if the government did not act immediately to shore up businesses and support staff salaries the industry faced a “fatal cashflow catastrophe”.
Hospitality trade and footfall plummeted by up to 70% prior to your comments yesterday and will undoubtedly have worsened since, genuinely posing an existential threat to our businesses.
The actions they demanded were an extension to the business rates holiday announced for small businesses in the Budget to all hospitality businesses for at least six months, for the government to call on landlords and banks to avoid forfeiture of rent payments and for immediate working capital to fund staffing costs.
The hospitality sector accounts for 10 per cent of UK employment and 5 per cent of GDP, leading many in the sector to warn of a much wider economic impact should it not be saved.
The letter was signed by executives from many of the UK’s biggest hospitality operators including the hotel group Accor, Burger King and the theme park operator Merlin.
European Commission working on aid for aviation sector
Javier Espinoza in Brussels
The European Commission, the executive body of the EU, said it is working with member states to help the ailing aviation sector, including potential aid to Alitalia.
A spokesperson said: “The Commission is ready to work with Italy, as with all other Member States, to discuss possibilities to support the aviation sector, including to Alitalia and other airlines in line with EU rules.”
The statement follows an announcement by EU president Ursula von den Leyen last Friday to temporarily waive the requirement by airlines to keep using their slots in order to avoid so-called ghost flights.
It also comes after the EU announced a relaxation of state aid rules to help companies in need.
“Alitalia, as many other airlines, is and will be heavily impacted by this situation,” the spokesperson added. “Existing state aid rules enable Member States to grant aid to compensate specific companies for the damages directly caused by exceptional occurrences, such as the [coronavirus] outbreak.”
LSE has no plans to suspend trading
Philip Stafford reports:
The London Stock Exchange has said it has no plans to suspend trading, as some investors question whether markets should be shut in response to the coronavirus crisis.
“It is important that markets remain open to support companies who will continue to need access to capital and to ensure pricing is conducted in a fair and transparent manner for retail and institutional investors who need ongoing access to liquidity,” the LSE said in a statement on Tuesday.
It added there were a number of measures in place to ensure an orderly and fair market. Among them include easing the bands by which market makers, normally banks or high-frequency traders, are able to quote prices to buy and sell certain securities and exchange-traded products.
Its stance was backed by the Financial Conduct Authority, the main UK markets regulator. “Our aim is to continue to maintain open and orderly markets notwithstanding current volatility,” a spokesperson said.
To function during the disruption, the LSE has split its teams, with some employees working from remote sites or home.
Moody’s downgrades airline credit ratings
Moody’s has lowered the credit ratings of a host of European airlines and put others under review as carriers struggle to come to terms with a collapse in demand.
The rating agency said on Monday it was cutting the long-term issuer rating of low cost carrier easyJet to Baa2, with the possibility of further downgrades, while Germany’s Lufthansa was reduced to Baa1.
British Airways’ Baa3 long-term issuer rating was put under review for a downgrade, meanwhile, as was that of its parent IAG.
Moody’s ratings cuts and reviews come as international travel restrictions have sent stocks in airlines across the world reeling.
Shares in aviation groups suffered significant falls yesterday as governments from the US to India implemented bans on travel from Europe, prompting airlines to cut capacity by up to 90 per cent for the coming months.
In making its decisions, Moody’s pointed to the International Air Travel Association’s prediction that passenger numbers globally would fall by between 11 per cent and 19 per cent for the year.
Bank of Mexico official tests positive for coronavirus
Jude Webber in Mexico City
An official from the Bank of Mexico has tested positive for coronavirus, but none of the board members charged with setting rates is affected, the central bank said.
Banxico did not name the official, who is at home following health protocols, and did not immediately confirm news reports that the person had attended last week’s annual banking conference. But it said it had been in touch with those people with whom the official had been in contact in previous days.
“As of this moment, the members of the board have not presented symptoms related to the illness,” the statement said.
The bank’s next scheduled rate-setting meeting is on March 26. With the key lending rate at 7 per cent, most economists believe the bank has ample margin to cut. But the peso has plunged to new historic lows – breaching 23 to the dollar on Monday and trading at 22.98 on Tuesday morning – which could prompt the bank to opt for caution.
Mexico’s stock exchange twice suspended trading for 15 minutes on Tuesday after plunging 7 per cent at the opening.
WHO urges south-east Asia to boost steps to tackle virus outbreak
Camilla Hodgson in London
The World Health Organization has urged states in south-east Asia to urgently scale up “aggressive” measures to combat coronavirus.
The number of cases in the region had risen to 480 on Tuesday, with eight dead so far. Thailand so far has the highest number of confirmed cases, 177, while Indonesia has 134 and India has 125.
“The situation is evolving rapidly. We need to immediately scale up all efforts to prevent the virus from infecting more people,” said Dr Poonam Khetrapal Singh, regional director for the WHO south east Asia region.
The number of cases in the region is “increasing quickly,” the WHO warned. Mr Singh said some of the countries were moving towards the “community transmission” phase of the virus, which should be prevented if possible. If the disease does begin to spread rapidly between citizens, medical centres and hospitals would need to coordinate a “triage and surge” plan in order to avoid overcrowding, the organisation said.
Fed looks to steady money markets by deploying commercial paper facility
Brendan Greeley, Colby Smith and Joe Rennison report:
The Federal Reserve announced on Tuesday that it would begin buying commercial paper through a facility last invoked during the 2008 financial crisis, marking another move to prop up dysfunctional financial markets.
Commercial paper is a crucial short term debt market for companies looking to raise cash to cover funding needs. Analysts at Bank of America said last week that the market had become “frozen”, as a rise in funding demand collided with a pullback in buying activity from money market funds – one of the biggest buyers of commercial paper.
“The commercial paper market has been under considerable strain in recent days as businesses and households face greater uncertainty in light of the coronavirus outbreak,” the Fed’s Board of Governors said in a statement. “By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to once again engage in term lending in the commercial paper market.”
Federal Reserve announces more support for markets
Colby Smith in New York
The Federal Reserve will offer an additional $500bn in overnight funding in the repo market, where investors borrow cash in exchange for high-quality collateral like US Treasuries, in its latest bid to quell strains that have emerged in funding markets.
The new overnight offering comes just hours after the Fed made available $500bn in a two-week loan as well as $175bn in an overnight loan. On Tuesday, market participants snapped up $47bn of the two-week loan and $142.6bn in the overnight loan.
This is just the latest attempt by the Fed to address pressures that have built up in short-term funding markets in recent days. On Monday, the repo rate at one point spiked above 2.5 per cent.
Norway’s unemployment rate jumps as virus and oil plunge hit
Richard Milne in Oslo
Norway’s unemployment rate has more than doubled in the past week alone as the coronavirus pandemic and plunge in oil prices hit the rich Nordic nation hard.
More than 149,000 Norwegians are out of work, or 5.3 per cent of the population, according to provisional figures on Tuesday from the Norwegian Labour and Welfare Administration.
That is an increase of almost 84,000 people on the previous week, when the unemployment rate stood at 2.3 per cent.
“Such a shock has not hit us in modern times,” Kjersti Haugland, chief economist at lender DNB, told website e24.
India locks down Mumbai
Benjamin Parkin reports:
India introduced controversial new measures to lock down the financial capital Mumbai and the surrounding state after it emerged as the centre of the country’s coronavirus epidemic.
The number of confirmed infections in Maharashtra, where Mumbai is located, has risen to 36. That’s the highest tally in India, which has confirmed 137 cases in total, despite the fact that Maharashtra didn’t report a single infection in the early weeks of the virus’ spread. Maharashtra also announced its first death.
That has prompted local authorities to roll out a string of measures to try and halt its spread, including banning public gatherings in some cities.
But this also includes an unusual initiative to stamp with indelible ink the hands of those told to self-quarantine, such as arrivals from foreign countries, with orders instructing them to remain at home. This will effectively shame them from venturing into public.
Authorities proceeded to cancel a number of intercity trains. They stopped short, however, of suspending Mumbai’s local rail service for now. The rickety municipal trains are the city’s arteries, providing millions of its residents with their only means of travel.
Republican McConnell says Senate to stay in session until fiscal stimulus bill passed
Lauren Fedor in Washington
Mitch McConnell, the Senate’s top Republican, said the upper chamber of the US Congress will stay in session until a third fiscal stimulus package is passed to address the economic fallout from the novel coronavirus.
“Senators on both sides are eager to assist workers, families and small businesses with the financial fallout of this extraordinary period,” Mr McConnell said on the Senate floor on Tuesday morning, adding: “Senate Republicans are convinced that the House’s non comprehensive bill can only be the beginning, the beginning of our efforts to support our health system, assist individual Americans and families, as well as stabilise the US economy.”
Last week, Nancy Pelosi, the Democratic speaker of the House, struck a deal with US Treasury secretary Steven Mnuchin on emergency measures, including two weeks of paid sick leave for US workers afflicted with Covid-19. That deal was revised late Monday and is expected to pass the Senate this week. An initial $8.3bn emergency aid package was passed earlier this month.
But the White House is now pushing for a third fiscal stimulus to the tune of $850bn. Mr McConnell said he and some Republican senators “conferred with Secretary Mnuchin” late Monday and the Treasury secretary would meet the full Republican caucus in the Senate over lunch today.
“These conversations are ongoing. We’re making progress. The House of Representatives may have left town, but the Senate is right here at work, crafting the major legislation that the American people deserve in the face of this major challenge,” Mr McConnell added, in a dig at Ms Pelosi and the Democrat-controlled House, which is currently in recess.
Steny Hoyer, the Democratic House majority leader, said on Monday that House members would be given 24 hours’ notice before any votes in DC, and that plans were being drawn up so that members would not need to be on the House floor at the same time.
Last week, Mr McConnell cancelled the Senate’s own recess, which was also planned for this week. He said on the Senate floor this morning: “The Senate will not adjourn until we have passed significant and bold new steps above and beyond what the House has passed.”
Deutsche Bank tells UK staff to work from home
Stephen Morris in London reports:
Deutsche Bank has accelerated its UK contingency planning after new guidance from the British government yesterday. The investment bank, based on Great Winchester Street in the City of London, told staff today in a memo that from tomorrow all should work from home if they can.
Previously the bank was planning to split employees into two teams and work in the office on a rota system from Monday next week.
There are exceptions for traders and their support staff in areas such as technology and compliance, who will remain divided into teams working from the office, backup sites and home.
“Where there is a job that can be done from home we are encouraging people to do so,” a spokesman said.
Facebook to offer $100m in financial support to small businesses
Hannah Murphy in San Francisco
Facebook will offer small businesses $100m in cash grants and advertising credits in a bid to support their operations as coronavirus hits local economies around the world.
Chief operating officer Sheryl Sandberg on Tuesday said in a Facebook post: “The longer the crisis goes on, the greater the risk to small businesses and to the livelihoods of their owners and employees.
She added: “We’ve listened to small businesses to understand how we can best help them. We’ve heard loud and clear that financial support could enable them to keep the lights on and pay people who can’t come to work.”
The social media group, which counts more than 90m small businesses among its clients, will offer the grants to 30,000 eligible small businesses in more than 30 countries, according to a statement. It will begin accepting applications “in the coming weeks”, it said.
Ms Sandberg also said that the company had set up a new “business hub” to “make it easier for businesses everywhere to find help and receive training and support from our teams”.
Passenger flight freeze triggers cash shortage at Ukrainian banks
Roman Olearchyk in Kyiv reports:
Ukraine’s central bank is urging citizens not to panic amid a fall in the country’s currency and “temporary” shortage of US dollars at local banks, caused by flight cancellations.
“There are certain difficulties with the availability of cash dollars [at banks], but this is linked only with foreign currency cash having been brought in from abroad to the bank sector by airplanes,” Kateryna Rozhkova, deputy head of the National Bank of Ukraine, said.
“We are working with banks now address this, to establish a different system of supplying foreign currency cash to Ukraine,” Ms Rozhkova said suggesting government and cargo planes could be used.
Ukraine’s hryvnia has slipped by 5 per cent since early March. The country’s central bank has continued to intervene on the domestic currency market this week by selling US dollars, after last week spending nearly $1bn from a $26bn stockpile of reserves. A senior Ukrainian official recently told members of Ukraine’s business community that devaluation of the currency was planned to provide a boost for exporters and counter budget shortfalls.
Fears loom that the war-torn country could struggle financially amid the snowballing coronavirus crisis and expected global recession. Late on Monday, President Volodymyr Zelensky unveiled plans to swiftly seek financial assistance from the International Monetary Fund.
Companies issue new debt amid lull in market volatility
Joe Rennison, Capital Markets Reporter, writes:
Verizon, Pepsi and recently downgraded Exxon Mobil were among the companies looking to take advantage of a lull in market volatility and sell bonds on Tuesday, after Monday’s sharp sell-off froze out issuers.
Verizon is looking to sell seven-, 10-, and 30-year bonds, with prices initially targeting a range of 2.3 per cent to 2.7 per cent above equivalent maturity treasuries, according to people familiar with the deal.
The new deal exemplified the rise in borrowing costs facing corporate America, with the price guidance markedly higher than spreads of around 0.7 per cent for a 10-year bond issued by Verizon in December.
Pepsi launched bonds with maturities from five- to 40-years, while Exxon announced five tranches from five- to 30-years in maturity, according to the people. Exxon, which had its rating cut one notch to double A by S&P Global Ratings on Monday, is also one of the largest issuers of commercial paper held by money market funds — a corner of the credit market that has come under strain over the past week.
“These are top blue chip names trying to add to stability and confirm that markets are still working — choppy but working,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “In some sense it is a vote of confidence in a scary world right now.”
Uefa postpones Euro 2020 until next year
Murad Ahmed, Sports Editor, reports:
Uefa, European football’s governing body, has postponed the Euro Championships until June 2021, becoming the latest flagship global sports event to be disrupted by the coronavirus outbreak.
The competition, which was expected to generate $2.5bn from broadcasting, ticketing and sponsorship, will be delayed in an effort to allow the continent’s domestic football leagues to finish their seasons, it was announced on Tuesday.
The move came after Uefa held crisis talks over teleconference with representatives of national football governing bodies, clubs, and leagues and players across the continent to plot their response to the crisis. Almost every football division in Europe has suspended matches or started playing matches in empty stadiums in response to the pandemic.
The hope is that by postponing the Euros, which was set to start in June and be hosted by 12 European cities, national leagues will be able to resume games after the peak of the outbreak has passed. Uefa said that all its competitions, such as the Champions League and Europa League “have been put on hold until further notice,” and that decisions such as when to resume games will be worked out over the coming weeks.
Football executives across the continent warned Uefa that many clubs would go bust if this season’s broadcasting contracts were not honoured and cancelled league matches led to a devastating loss of ticketing income.
Tanzania closes schools
Donald Magomere in Nairobi reports:
Tanzania’s government has announced the closure of all schools for the next 30 days, effective today.
So far, the country has only reported one case of the virus, involving a 46-year-old woman who travelled from Belgium.
In Kenya, leading mobile operator Safaricom has waived fees on cash transactions via Mpesa for less than Kshs 1000 ($9.60) in a bid to promote cashless transactions.
Kenya has reported four confirmed cases of the virus.
‘Herd immunity’ may not be the right way to contain outbreak, WHO doctor
Camilla Hodgson in London
A top World Health Organisation doctor said on Tuesday that “herd immunity” might not be the right way to contain the coronavirus outbreak.
Countries including the UK and the Netherlands have discussed pursuing a herd immunity strategy, which involves allowing a large number of people to catch the virus and develop immunity to it to stop it spreading more widely.
However, the WHO’s health emergencies coordinator for Europe, Dr Dorit Nitzan, said on Tuesday that since so little is known about coronavirus it is “not the right time for us to recommend [herd immunity].”
“It’s a new virus and we have to learn [about] it,” she added. Although the strategy could work, coronavirus might alternatively behave like flu and mutate every year, meaning people would not develop total immunity.
Singapore posts largest daily jump in cases
Stefania Palma in Singapore reports:
Singapore has reported 23 new confirmed cases, the largest daily jump to date that takes the country’s total to 266.
Seventeen cases are imported while two are connected to previous patients and four remain unlinked.
The imported cases — which are driving a second wave of infections in the city state — are Singaporean, British, Canadian, French and Swedish travellers, among others, who returned from countries including Denmark, Sweden, Norway, the UK, France, Italy, Spain and Portugal.
Church of England suspends services
The Church of England has suspended public services, with its leadership calling for its clergy to transform it into a “radically different kind of church” during the battle against coronavirus.
In a statement, the Archbishops of Canterbury and York said public services would be put on hold “until further notice” but said church buildings would where possible remain open, observing social distancing recommendations.
Anglican clergy were asked to live stream services if they had the resources to do so.
“This is a defining moment for the Church of England,” the archbishops said. “We urge you sisters and brothers to become a different sort of church in these coming months: hopeful and rooted in the offering of prayer and praise and overflowing in service to the world.”
US derivatives regulator to ease record-keeping rules for work-at-home traders
Kadhim Shubber in Washington
The Commodity Futures Trading Commission is set to temporarily lift certain record-keeping rules for traders working from home in response to the coronavirus pandemic.
On Tuesday, the US derivatives regulator will issue limited exemptions to rules that require banks and other trading firms to keep extensive records of transactions and communications like phone calls. The exemptions will allow traders working from home to instead keep manual records of their trades and last until June 30.
The Wall Street Journal first reported the plans on Tuesday morning and a CFTC spokesman confirmed the report.
“The key here is giving registrants some temporary flexibility so there continues to be orderly trading and liquidity in our derivatives markets as these firms move to telework,” the spokesman said.
Race to develop self-test kits underway, says WHO
Camilla Hodgson in London
Researchers are racing to develop at-home coronavirus testing kits as countries struggle to cope with a shortage of lab equipment, the World Health Organisation said on Tuesday.
Dr Richard Pebody, head of infectious hazard management at WHO Europe, told a press conference on Tuesday there was “work underway to try to develop self-tests,” but added that the “gold standard” remained those tests that are undertaken in labs. Tests are based on the detection of the virus in samples from people’s respiratory tracts, which are then analysed in local labs.
On Monday, the WHO’s director general said his message to countries was to “test, test, test” in order to contain the spread of the disease.
Hans Kluge, regional director of WHO Europe, said on Tuesday the organisation was “aware of some critical shortages” of medical equipment in Europe and was working with manufacturers and labs to increase countries’ testing capacities.
He said governments should prioritise those with the most serious symptoms and underlying health conditions, though stressed that as many people with symptoms should be tested as possible. People should have equal access to healthcare regardless of their financial situations, he added. Policymakers have come under fire in recent days as celebrities and politicians have been tested but ordinary people without severe symptoms have not been.
“The need for support is growing, resources are critical to sustain our effort so that no one is left behind,” Mr Kluge said.
Airlines could run out of money within two months, trade body warns
Tanya Powley in London
The global airline industry could need up to $200bn in emergency support as its trade body warned that the majority of carriers could run out of money within two months amid the widening coronavirus outbreak.
The International Air Transport Association on Tuesday warned that the vast majority of carriers are facing a cash crisis as air travel grounded to a virtual halt across the globe in recent days.
Brian Pearce, chief economist at Iata, said there was a risk that a large number of carriers would run out of cash within two months.
“There are a number of airlines who have credit lines and access to cash, but there is a much larger number that are in a weaker position,” he said.
Iata has estimated that the entire airline industry could need between $150bn to $200bn in emergency support from governments, which could include cash as well as loan guarantees.
The trade body added that its previous worst case scenario, forecast just a week ago, that the global airline industry could be hit with losses of up to $113bn was now “undoubtedly” too low following the virtual closure of the North Atlantic market. It is expected to make revised estimates next week.
The warning from Iata comes a day after a large number of airlines grounded most of their fleets and announced plans to lay off thousands of staff to preserve cash. On Monday more than 14 airlines announced new measures to slash costs with some reducing the number of flights by as much as 90 per cent.
The US airline industry has called for $50bn in emergency support. Airlines for America, the trade body that represents the largest US passenger airlines, including United, Delta and American, on Monday said it wanted the government to provide $25bn of loans and $25bn of grants to help the industry survive the coronavirus outbreak. The organisation warned that all seven of its members that carry passengers would run out of money before the end of the year if the crisis continued.
Truck queues build up at Portugal-Spain borders
Peter Wise in Lisbon
Lines of trucks kilometres long built up at crossing points along the Spanish-Portuguese border on Tuesday, awaiting authorisation after the Iberian neighbours restricted crossings to goods vehicles and people travelling for work.
The average wait at the main crossing points was about an hour, according to local media. The queues built up after the Madrid and Lisbon governments agreed to suspend air, train and sea travel between the two countries as well as restrict border crossings. The measures aimed at limiting the spread of coronavirus came into effect at midnight on Monday Spanish time.
Portugal on Tuesday reported 448 confirmed cases of the Covid-19 virus, an increase of 117 cases, or 35 per cent, in 24 hours. Health authorities said 206 people with the virus were being treated in hospital, including 17 who were in intensive care. Portugal reported its first death from the disease on Monday.
António Sales, Portugal’s secretary of state for health, said about 30 health service workers, including 18 doctors, were among those infected.
“We’re in the phase of accelerated contagion,” he told a news conference.
US factory output edged up before virus impact
US industrial production rose by the most in three months driven by utilities, while manufacturing edged up just before the coronavirus outbreak impact was felt domestically.
Industrial production, a gauge of output from factories, mines and utilities, rose 0.6 per cent in February from the previous month when it fell 0.5 per cent, the Federal Reserve said. That exceeded economists’ expectations for a 0.4 per cent increase.
Manufacturing output climbed 0.1 per cent, but stripped out large gains for cars and parts and a large drop for civilian aircraft output was unchanged.
Ian Shepherdson, economist at Pantheon Macroeconomics, said the drop in non-auto manufacturing could reflect the hit to supply chains from the lockdown in China’s Hubei province. However, he said “that’s nothing compared to what’s coming in the wake of the U.S. domestic turmoil triggered by the virus. Production will plummet in March and April as demand drops; firms will prefer to run down inventory instead.”
Output from utilities jumped 7.1 per cent amid cooler temperatures, while mining output fell 1.5 per cent.
CDU leadership candidate tests positive in Germany
Guy Chazan in Berlin reports:
Friedrich Merz, one of the candidates to lead Germany’s biggest party, the Christian Democratic Union, has tested positive for coronavirus.
He said in a statement, released by the German news agency DPA, that he would go into quarantine at home till the end of next week.
A millionaire corporate lawyer, Mr Merz is a former head of the CDU parliamentary group. An old rival of Angela Merkel’s, he quit politics in the 2000s but made a comeback in 2018 when he ran for the CDU leadership, eventually losing out to Annegret Kramp-Karrenbauer. When she announced earlier this year she was stepping down, Mr Merz threw his hat in the ring once again.
He is running against Armin Laschet, prime minister of North Rhine-Westphalia, and Norbert Röttgen, a CDU MP who is head of the Bundestag’s influential foreign affairs committee.
US stocks jump 2% at open after worst rout since 1987
Philip Georgiadis writes:
US stocks opened higher while European equities came under fresh bouts of pressure in another day of hectic trading across global markets.
The S&P 500 opened just over 2 per cent higher on Tuesday, a day after the worst sell-off to hit Wall Street since 1987.
London’s FTSE 100 swung throughout the session as volatility continued to pulse through stock indices. The London blue-chip benchmark was 1 per cent lower by early afternoon on Tuesday, having opened 3 per cent higher before selling off. The European composite Stoxx 600 was down 0.8 per cent and has lost more than a third of its value in less than a month.
White House to ask Congress to launch $850bn stimulus programme
Demetri Sevastopulo and James Politi report from Washington:
The Trump administration plans to ask Congress on Tuesday for a new stimulus package worth between $800bn and $850bn to limit the damage to the US economy from the coronavirus outbreak, according to a senior US official.
The request marks a shift by the White House towards a much more aggressive economic policy response as the spreading disease has already forced the closure of schools, bars, restaurants and manufacturing plants across the country, and led to a sharp decline in business in sectors ranging from airlines to hospitality.
Steven Mnuchin, the US Treasury secretary, has already agreed two smaller pieces of legislation to help America confront the coronavirus crisis with Nancy Pelosi, the Democratic speaker of the House of Representatives, but $800bn-$850bn could be more contentious.
The Trump administration has proposed a cut to payroll taxes, which fund government pensions and healthcare programmes, and stimulus to stricken sectors of the economy, while Democrats are pushing for measures that are more tailored towards low-income families, such as unemployment assistance and food aid.
Some lawmakers, including both Republicans and Democrats, are pushing for direct cash payments to US households for the duration of the crisis, but it is unclear if Congressional leadership supports such measures.
Mr Mnuchin was expected to lay out the Trump administration’s proposals at a meeting with Senate Republicans on Tuesday.
“There is an absolute need for government in a time of crisis and we have a health crisis and an economic crisis,” said John Barrasso, a doctor who is a Republican senator from Wyoming. “We won’t solve the economic crisis until we solve the health crisis.”
Ontario premier Doug Ford declares state of emergency
Canada’s most populous province has declared a state of emergency until March 31 due to the coronavirus outbreak.
“We need to do everything possible to stop the spread of Covid-19… to avoid overwhelming the healthcare system,” he said in a press briefing. The move prohibits organised evernts of more than 50 people and includes closures of libraries, private schools, theatres, concert venues, facilities providing recreational activities, and bars and restaurants with the exception of takeout and deliveries.
Mr Ford announced C$304m “first stage” relief package to help contain the spread, with the funding committed to more care beds, assessment centres and medical supplies.
Canada on Monday said it was closing its border to non-citizens and non-residents but made exemptions for Americans, flight crews and diplomats.
S&P predicts global recession
S&P Global forecasts a worldwide recession this year as “the coronavirus pandemic escalates and growth heads sharply lower against a backdrop of volatile markets and growing credit stress”.
Among its more jarring conclusions, the New York-based rating agency said the default rate on nonfinancial corporates in the US may rise above 10% and into the high single digits in Europe over the next 12 months.
Overall, S&P expects global growth of 1-1.5 per cent, with risks remaining “firmly” on the downside.
S&P’s chief economist Paul Gruenwald said:
The initial data from China suggests that its economy was hit far harder than projected, though a tentative stabilisation has begun. Europe and the US are following a similar path, as increasing restrictions on person-to-person contacts presage a demand collapse that will take activity sharply lower in the second quarter before a recovery begins later in the year.
Cineworld to close all cinemas in UK and Ireland
Alice Hancock in London reports:
Cineworld has announced that it will close all its cinemas in the UK and Ireland until further notice after the UK government advised citizens to avoid visiting enclosed spaces such as pubs, bars and restaurants despite it stopping short of requiring entertainment venues to close.
Mooky Greidinger, the group’s chief executive, said that the chain was committed to “providing safe and healthy environments for employees and guests” and took the decision to close ahead of any mandatory closures ordered by the government.
Cineworld operates 102 cinemas across the UK and Ireland. Last week it warned that the impact of the coronavirus could leave it unable to pay its debts and remain in business causing it to shed a fifth of its market value. Shares in the company have fallen almost 90 per cent this year.
The group announced on Monday that it would close the 542 cinemas it owns in the US under the Regal brand, which it bought for $3.6bn in 2017, after US authorities advised against gatherings of more than 10 people.
Last week, Mr Greidinger said that the group was looking to control costs by stopping rent payments and reducing its number of temporary staff.
British horse racing suspended until end of April
Murad Ahmed in London
The British Horseracing Authority has suspended racing across the UK until the end of April, forced into a U-turn by the government’s advice to end mass gatherings.
On Monday, the BHA, the governing body of UK horseracing, had said fixtures would behind closed doors. But the plan fell apart after the government said support from emergency services could no longer be provided for sporting events due to the Coronvirus outbreak.
On the same day, the Jockey Club, the group that runs the country’s leading racecourses, cancelled the Grand National, the biggest event in UK Horseracing which was due to take place in April.
On Tuesday, it was announced a suspension of all horseracing would come into force from tomorrow.
Nick Rust, BHA chief executive, said:
This is a national emergency the like of which most of us have never seen before. We’re a sport that is proud of its connection to rural communities and to the local businesses that support our industry. But our first duty is to the health of the public, our customers and to racing industry participants and staff so we have decided to suspend racing following the government’s latest advice.
There will be difficult months ahead for many of us. We need to focus now on ensuring that we can continue to look after our horses as the virus affects the thousands of participants and staff who dedicate their lives to caring for animals. We need to do what we can to support businesses inside and outside racing and the many people whose livelihoods depend upon this £4 billion industry.
Goldman says the ‘physical end is near’ for commodities
Henry Sanderson in London reports:
The spread of the coronavirus is likely to drive commodity prices down by at least 25 per cent over the next three months as the virus hits demand across a whole swathe of industries, Goldman Sachs says.
The bank said the “physical end is near” as it lowered its forecasts for copper, gold and oil.
“Demand losses across the complex are now unprecedented,” the bank said.
Commodity prices have fallen by 23 per cent year-to-date, according to the Bloomberg Commodity Index. Copper prices have dropped by 15 per cent, while Brent crude oil has tumbled by 55 per cent to $30 a barrel.
Goldman said it estimates oil demand has fallen by 8m barrels a day and coffee demand by around 10 per cent. Gold sales to emerging market central banks have also weakened, it said. The bank now expects copper prices to fall to $4,900 a tonne and oil to be at $20 a barrel in the second quarter.
While financial markets are forward-looking and are likely to rebound once the contagion stabilises, commodity markets are spot assets and must clear the surpluses developing today from weak demand and rising supply.
US retail sales tumble in February
Retail sales in the US shrank in February by the most in more than a year, pointing to what might bear out as an abrupt weakening of consumer health as the coronavirus outbreak began to spread.
Headline retail sales tumbled 0.5 per cent last month from January, the steepest pace of contraction since December 2018, data from the commerce department revealed on Tuesday. That widely missed the median forecast among economists for a 0.2 per cent increase.
The drop was all the more sharp because January’s growth had been revised upwards to a six-month high of 0.6 per cent from 0.3 per cent previously.
Retail sales excluding automotive purchases were down by 0.4 per cent, from an upwardly revised 0.6 per cent in January.
Control sales, which exclude items like autos, petrol and building materials, were at zero last month, undershooting economists’ forecasts for 0.4 per cent growth. January’s result was revised higher to 0.4 per cent from zero.
UK Serious Fraud trial halted
Kate Beioley in London reports:
The UK Serious Fraud Office’s trial against three individuals accused of bribery connected to Moncaco-based oil consultancy Unaoil has been halted until the end of the month.
Mr Justice Beddows halted the trial of Ziad Akle, Stephen Whiteley and Paul Bond at Southwark Crown Court until March 31, in line with government advice to stop the spread of the virus.
The SFO’s case, which began in 2016, is one of its most high-profile and concerns some $6m Unaoil allegedly paid in bribes to secure oil infrastructure contracts worth $800m in war-torn Iraq in the late 2000s.
The stoppage came as the body representing UK barristers called upon the government to end the “Russian Roulette” of criminal trials by jury and end all jury trials during the COVID-19 outbreak.
New jury trials in Northern Ireland and Scotland have already been suspended but criminal cases are continuing in England and Wales despite a number of cases where jurors have had to be discharged due to sickness. The UK government has said that the courts were continuing business as usual but it has issued further guidance for jurors.
UK advises citizens to avoid foreign travel
Laura Hughes in London reports:
The UK Foreign Office has advised the British public against all non-essential travel for the next 30 days.
Speaking in the Commons, foreign secretary Dominic Raab said:
With immediate effect I’ve taken the decision to advise British nationals against non essential travel globally, for an initial period of 30 days and of course subject to ongoing review.
Mr Raab told MPs: “Based on the fast-changing international circumstances today I am announcing changes to FCO (Foreign and Commonwealth Office) travel advice.
UK travellers abroad now face widespread international border restrictions and lockdowns in various countries.
The FCO will always consider the safety and the security of British nationals so with immediate effect I’ve taken the decision to advise British nationals against non-essential travel globally for an initial period of 30 days and of course subject to ongoing review.
The department said it was not currently advising British people to immediately return to the UK if they are overseas, “except for a few countries detailed in our travel advice.”
However, it added that British people should keep in mind that flights may be cancelled and other travel restrictions may be put in place by foreign governments.
If people do want to return to the UK soon, then they need to take account of the fast moving situation and plan accordingly, while flights remain available in many places.
Banks draw €110bn of ultra-cheap funding from ECB
Martin Arnold in Frankfurt reports:
The European Central Bank has provided almost €110bn of ultra-cheap funding to eurozone banks to ease the strains of coronavirus in the financial system.
Announcing the results of the first in a series of special weekly liquidity windows launched as part of the ECB’s response to coronavirus last week, it said 110 banks had participated in the process. It is the highest amount of low cost liquidity the ECB has injected into the banking system for three years.
Frederik Ducrozet, strategist at Pictet Wealth Management, said the move “could be the reflection of anticipated funding stress in money markets, but more likely also part of liquidity management”. He added that banks are due to repay €92.6bn from an earlier ECB auction on March 25, “so the net increase in excess liquidity will be around €16.5bn”.
The ECB said last week it would provide extra-cheap liquidity to banks at its deposit rate of minus 0.5 per cent in a series of weekly auctions through its longer-term refinancing operations (LTRO).
These weekly operations run until June when the next auction for bank liquidity at an even cheaper rate of minus 0.75 per cent will be launched under its newly beefed up targeted longer-term refinancing operations (TLTRO). This is meant to incentivise banks to keep lending to small businesses, which may face a damaging credit crunch due to the pandemic.
The last time banks took more liquidity in an ECB auction was March 2017, when they collected just over €233bn from the central bank.
L Brands draws down credit facility, scraps first-quarter guidance
The part-owner of Victoria’s Secret has drawn nearly $1bn from a credit facility to shore up its finances and scrapped first quarter earnings guidance after announcing temporary store closures across the US and Canada.
L Brands said on Tuesday morning that “in an abundance of caution and as a proactive measure” it yesterday drew down $950m from a $1bn secured revolving credit facility. That gives the company $2bn of cash to help it ride out the additional disruption it faces from the impact of the coronavirus.
Like a growing number of rivals, the retailer said it would temporarily close all Bath & Body Works, Victoria’s Secret and Pink stores in the US and Canada from today through March 29. Those able to work from home have been asked to do so, while all employees will continue to receive pay and benefits during the closure period, the company said.
In light of the closures, L Brands said it was withdrawing its first quarter earnings guidance and would refrain from providing an outlook. In February, the company said it forecast an adjusted loss per share of about $0.05 a share for the three-month period.
L Brands last month announced an historic shake-up that saw Les Wexner step down from his leadership roles following a deal with Sycamore Partners in which the private equity firm paid $525m for a 55 per cent stake in Victoria’s Secret.
Scepticism in Norway over bailouts for private airlines
Richard Milne in Oslo reports:
Norway’s political parties are discussing potential airline nationalisations and other measures but there is “great scepticism” about the state taking a stake in private airlines, according to people involved in the talks.
Norwegian Air Shuttle is widely viewed as one of Europe’s most vulnerable airlines due to the low-cost carrier’s high debt burden.
Political parties are discussing various ways of supporting airlines after Norway’s centre-right government cut various passenger and airport taxes. But there is cross-party opposition at present to bailing out the shareholders of a privately-owned airline at the moment and there are no concrete proposals on the table, according to the people in the talks.
Norwegian’s chief executive Jacob Schram stressed the airline’s Norwegian roots and importance for domestic travel in a press conference on Friday even though the low-cost carrier has in recent years emphasised its operations in Ireland, Spain, the UK and US among others.
Philippines declares nationwide ‘state of calamity’
John Reed in Bangkok reports:
Filipino president Rodrigo Duterte has declared a nationwide “state of calamity” in response to the coronavirus.
National and local government authorities will now have greater scope to tap into state funds to respond to Covid-19 and continue providing basic services, according to a notice distributed to media on Tuesday.
Earlier on Tuesday, the Philippines postponed trading on its stock, bond and currency markets indefinitely. Residents of the capital Manila and Luzon island remain under a lockdown procedure that is being called “enhanced community quarantine.”
The Philippines has to date reported 187 cases of coronavirus, and 12 people have died. The state of calamity is to last for six months, according to the government notice, “unless earlier lifted or extended as circumstances may warrant.”
Dunkin brands to restrict service at its US restaurants
Dunkin Brands, owner of the eponymous doughnut chain and Baskin Robbins ice cream, will restrict service in an effort to limit the spread of the coronavirus.
Those looking to grab a doughnut or coffee can only do so by choosing drive-thru, carry-out and delivery only options, the company said in a statement on Tuesday. The restrictions take effect from today.
The majority of Dunkin’s US restaurant transactions are already carry-out orders, but it said franchisees will take further steps to ensure the safety of employees and consumers. These include: removing furniture to prevent congregation of customers; encouraging people to use mobile ordering with the Dunkin’ app and reducing operating hours.
Some franchisees will be given the option to temporarily close some locations in markets where there are other Dunkin’s outlets nearby.
Italian and Spanish debt sustains fresh blow
Tommy Stubbington reports:
The sell-off in eurozone government bonds showed no sign of abating on Tuesday, as investors continued to question the European Central Bank’s commitment to acting as a backstop for markets.
Italy’s 10-year yield surged above 2.3 per cent, its highest since June last year, and up from 1 per cent two weeks ago. Spain’s 10-year yield has climbed from 0.2 per cent to more than 1 per cent over the same period, while Greece and Portugal have also seen sharp rises in borrowing costs.
ECB president Christine Lagarde triggered the sell-off last week when she said it is not the central bank’s job to “close the spread” — the gap in yields between Germany and the rest of the eurozone — in bond markets.
Despite an apology from Ms Lagarde, and public attempts by her governing colleagues to walk back the comments, the selling has continued. The rise in borrowing costs comes at a time when many governments are relying on bond markets to fund their efforts to contain the coronavirus crisis.
UK builders face ‘catastrophic and unavoidable’ hit
George Hammond in London reports
The impact of coronavirus “will be catastrophic and unavoidable” for the UK’s construction industry should building sites be forced to close, warned two of the country’s largest trade bodies on Tuesday.
Among the possible effects of site closures would be job losses, delays to major infrastructure projects and the collapse of a swathe of small and medium sized construction businesses, said Alasdair Reisner, chief executive of the Civil Engineering Contractors Association, one of the bodies.
Mr Reisner said:
From a public health perspective, there will be a strong desire to close sites. But there is no option for home working in construction: you’re either delivering onsite or you’re not… As soon as you shut down sites, companies very quickly get in trouble. The UK construction industry is not one that sits on huge cash reserves.
The CECA’s 300 member organisations employ between 150,000-200,000 people, working on some of them of the UK’s biggest infrastructure projects, such as HS2.
As well as a “severe impact on jobs in the sector,” a shutdown of sites would throw into question the contractual obligations of construction companies. While many larger businesses might have Force Majeure provisions to cover black swan events such as the spread of the virus, SMEs would not, said Mr Reisner.
We’re hoping the government might step in and look at contractual issues. It doesn’t make sense to let a huge number of companies across the industry collapse because we didn’t consider this risk.
Fifteen Polish ministers isolated
James Shotter in Warsaw reports:
Fifteen Polish ministers are in quarantine after the environment minister Michal Wos tested positive for coronavirus.
Poland’s government spokesman said that all the ministers who had taken part in the most recent cabinet meeting were tested on Monday, and that their results should be known later today.
He added that until then, the ministers would isolate themselves and work from home. Prime minister Mateusz Morawiecki was not affected, as he did not attend the most recent cabinet meeting due to a clash with a meeting of Poland’s national security council.
Michal Dworczyk, the top aide to Mr Morawiecki, said that the measures would not impair the cabinet’s functioning.
The cabinet is functioning normally. According to the existing rules, we can take decisions… without meeting. So the continued functioning of the government is ensured.
Poland has so far recorded 205 cases of the virus. Five people have died.
UK insurance body says most businesses not covered for closures
Oliver Ralph in London reports:
The Association of British Insurers has said that most companies will not be covered for the costs of business closure due to coronavirus, regardless of what the government says. Pub and restaurant owners have claimed that the only reason the government did not order a widespread closure on Monday was that doing so would trigger insurance payouts.
But the ABI, which represents the industry, says that most businesses simply do not have the correct insurance in place.
An ABI spokesperson said: “Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade
A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased.
LME to move open outcry trading to back-up site in Essex
Henry Sanderson in London
The London Metal Exchange said it will move all open outcry trading at its iconic “Ring” to a backup site in the English county of Essex and prepare for a move to full electronic trading following the latest UK government instructions on the coronavirus.
The LME said its traders would move to Chelmsford, about 55km north-east of London, starting on Wednesday in order to “minimise the transit of Ring-based personnel through London.”
The LME has one of the last open outcry trading floors in Europe, where traders still shout buy and sell orders for metals around a circular red sofa. The trading sets the prices of industrial metals such as copper, aluminium, zinc and lead.
The move comes a day after the LME said that a member of staff of an LME Ring-dealing member was diagnosed with Covid-19.
The exchange also said that “if current trends continue,” it will shut the Ring and move to electronic pricing on the 23 March.
“Ring trading would then be suspended until conditions normalise in respect of Covid-19, at which point Ring trading will resume,” it said.
Turkey lowers borrowing costs as virus outbreak bites
Laura Pitel in Ankara reports:
Turkey’s central bank slashed it benchmark interest rate by 100 basis points as part of emergency measures aimed at limiting the effects of the coronavirus outbreak.
The bank’s monetary policy committee lowered its main one-week repo rate to 9.75 per cent after holding an emergency meeting on Tuesday.
At the same time, the central bank said it would begin offering repo auctions with a longer maturity and an interest rate 150 basis points points lower than the benchmark rate, a move that would effectively provide an even deeper rate cut than the headline announcement if it is used extensively.
Other measures include reducing the mandatory amount of reserves that commercial banks must hold with the central bank if they meet certain credit growth conditions, extending the maturity of swap mechanisms that allow banks to exchange dollars for lira, and offering new types of swaps.
Turkey has repeatedly reduced interest rates over the past eight months, even after a recent uptick in inflation, as president Recep Tayyip Erdogan has sought to kickstart a cycle of credit-driven growth.
The central bank had previously said that its room to cut rates further was limited. Tuesday’s steps were needed it said “to limit the possible adverse effects on the Turkish economy of the global uncertainty created by the coronavirus pandemic”.
Iranian fatalities approach 1,000
Najmeh Bozorgmehr in Tehran reports:
Iran has recorded 125 new coronavirus deaths in the last 24 hours, with fatalities in the nation now approaching 1,000.
A total of 988 people have now died from the virus in Iran, the health ministry said on Tuesday, while those testing positive rose to 16,169. Iran’s death rate is the highest outside of China.
Iran, which is struggling with medical equipment shortages, received a first batch of supplies from China on Tuesday. More supplies, including millions of face masks, gowns and thermometers, are expected over the course of this week.
This evening, Iranian families who do not have fixed incomes are set to receive their first payments under a new government financial assistance programme.
State television said 3m households could receive from 2m to 6m rials ($48 to $143) , depending on the number of family members, with three more payments to come in the next three months.
EU lays out draft proposal for state aid framework
Javier Espinoza in Brussels
Competition commissioner Margrethe Vestager said on Tuesday the EU had sent a draft proposal for a state aid temporary framework “to support the economy” in the context of the coronavirus pandemic “to remedy a serious disturbance across the EU economy”.
“Managing the economic impact of the [coronavirus] outbreak requires decisive action,” Ms Vestager said in a statement. “We need to act fast. We need to act in a coordinated manner. EU State aid rules provide a toolbox for member states to take swift and effective action.”
The temporary framework, not seen since the banking crisis more than a decade ago, will allow EU countries to “set up schemes direct grants (or tax advantages) up to €500,000 to a company … give subsidised state guarantees on bank loans … (and) enable public and private loans with subsidised interest rates”.
The scheme will place an emphasis on allowing banks “to channel aid to final customers, in particular small and medium-sized enterprises”.
UK business calls for greater protection
Daniel Thomas in London reports:
Business lobby group the CBI has called on the British government to work with the insurance industry to help provide cover for businesses facing months without any customers after the government told people to stay at home.
At the Business, Energy and Industrial Strategy Committee, Rain Newton-Smith, chief economist at the CBI, said that there were ways for the government to help provide “co-insurance” for firms at risk, pointing to efforts to provide state-backed flood cover.
The committee asked the Association of British Insurers for a response. In a statement read out this morning, the ABI said that only a small number of firms would have the right sort of insurance in place.
The CBI is pushing the UK government to provide a wide ranging package of business bailout measures when the chancellor unveils his plans this afternoon. Ms Newton-Smith said that the situation could “very quickly get critical”, and the government needed “swift action to project as many jobs as possible”.
She added the government needed to say “we will do whatever it takes” to protect businesses most at risk, such as in aviation and hospitality.
The committee also heard concerns that banks were not providing support for businesses outside the supportive comments from the boardrooms, and still deciding whether businesses were viable under circumstances no longer relevant after the outbreak of covid-19.
India reports third death from coronavirus
Jyotsna Singh in New Delhi
India reported its third death from coronavirus after a 64-year-old man who had traveled to Dubai, died at a hospital in Mumbai.
According to the health ministry 22 foreigners are among the total 126 confirmed cases of coronavirus in India.
Although the number of people infected with Covid-19 virus has been steadily rising, health officials said ‘there is currently no community transmission’ of the disease.
Many believe India might be underreporting as testing is restricted.
As the country of 1.3 billion battles to stem the spread of the novel coronavirus the government has published a list of measures to ensure social distancing, including the closure of schools, gyms, clubs, cinemas, theatres.
The government has also advised people to reduce the number of guests at weddings that are already planned.
Unpacking the hit to China’s economy
Alan Smith, head of visual and data journalism, reports:
A new index created by the FT that tracks China’s economic activity reveals the damage caused to the economy by coronavirus.
Traditionally, the Chinese economy slows down as the lunar new year holiday approaches and picks up immediately after. The index, which combines information on real estate sales, coal consumption, container freight, traffic congestion, cinema attendance and air pollution, reveals a very different pattern for 2020.
The shutdown, which began in Wuhan on January 23, triggered a slowdown which has kept economic activity well below 2019 levels ever since.
Laura Ashley on brink of insolvency as virus hits
Laura Ashley is on the brink of insolvency as the clothing retailer is set to become the UK’s first corporate coronavirus casualty, saying that the outbreak has had an “immediate and significant impact” on trading.
Directors at the UK retailer on Tuesday filed notices of intention to appoint Robert Lewis and Zelf Hussain as administrators.
The clothing and homeware group said a month ago that MUI Asia, its Malaysian majority shareholder, was in discussions with Wells Fargo as it sought cash to meet its “immediate funding requirements and to draw down additional amounts to meet ongoing working capital needs . . . in the short to medium term”.
Trading improved 24 per cent in the seven weeks up to March 13 from the previous year, the group said on Tuesday, but the spread of the virus has hit it hard.
The statement added that the directors are in advanced discussions for the provision of third-party debt funding.
Based on the company’s revised cashflow forecasts and the increased uncertainty facing the group, the company expects that it will not be in a position to draw down additional funds from third party lenders in a timely manner sufficient to support working capital requirements.
MUI Asia said it is unable to provide financial support in the required time limit.
UK financial regulator calls on banks to be flexible
Matthew Vincent in London reports:
Britain’s financial regulator has told banks and investment managers to take a flexible approach to loan repayments, account fees and savings withdrawal penalties, to help “meet the challenges coronavirus could pose to customers and staff.”
On Tuesday, the Financial Conduct Authority issued detailed new guidance for firms on responding to the difficulties that consumers and businesses face as the Covid-19 pandemic restricts normal activities.
Measures include using the flexibility within existing rules to give customers easier access to their cash, such as waiving fees for individual savings accounts (ISAs) and allowing them to cash in fixed-term deposits early. Other recommendations are that lenders support borrowers who are in difficulty and “show greater flexibility to customers in persistent credit card debt.”
Further steps to help mortgage borrowers are being discussed with the industry and the FCA said it will provide an update on assisting homeowners in the coming days.
Spanish cases pass 11,000
Daniel Dombey in Madrid reports:
More than 11,000 people have contracted coronavirus in Spain and 491 have died, the government said on Tuesday morning. Over 180 people have died since Monday.
There have been 1,987 new cases since Monday, bringing the total since the crisis started to 11,178. Some 1,028 people have been cured. Madrid remains the most affected region, with 4,871 cases.
Fernando Simon, the doctor helping coordinating the country’s response, said the roughly 18 per cent increase since Monday gave the impression that the spread of the virus was “slowing a little”.
Spain has been under lockdown since Saturday.
Malaysia reports first deaths, reveals harsh penalties for lockdown breakers
Stefania Palma in Singapore
Malaysia has outlined its intent to imprison or fine people who breach a national lockdown that comes into effect on Wednesday.
The health ministry said in a statement warned that those who breach the lockdown face imprisonment of up to two years as well as a potential fine, in the first instance. For subsequent offences, jail time jumps to a minimum of five years and fines total Rm200 ($46) at most per day.
The warning comes as the country reported its first deaths by coronavirus and as the number of confirmed cases jumped by more than 100 for the third consecutive day.
The two victims are Malaysian men aged 34 and 60. The younger case had no pre-existing conditions. He took part in a mass religious gathering at Kuala Lumpur’s Sri Petaling mosque which was attended by about 16,000 people and is generating a second wave of infections in the country. The 60 year old had a history of chronic illness.
Malaysia has reported 120 new cases, 95 of which are linked to the Sri Petaling mosque event. The country’s total has nearly trebled in three days to 673 cases.
So far, 49 cases have fully recovered and have been discharged from hospital.
Calls to help UK businesses grow
Daniel Thomas in London reports:
Andrew Griffith, MP for Arundel & South Downs and former business advisor to Boris Johnson, said that industry needs “measures focussed on two of the biggest costs – people and property” and called on the government to step in and protect the ability of firms to keep employing their staff “even in face of little or no revenues coming in for the next 12 weeks”.
The former finance director at Sky, who was made an MP in the last election after several months in Downing Street, is still close to the prime minister.
Mr Griffith added:
Businesses and the self-employed urgently need our help. The Chancellor produced an excellent package of measures in the budget a week ago but things have moved on. This is not about the ability to borrow but the ability to balance incomings and outgoings.
He also said that in time “we will need measures to boost consumer demand as we emerge from the current emergency”, but measures set out by the Chancellor this afternoon should be “a package of measures to avoid many businesses not making it out alive”.
German investor sentiment crashes on virus fears
Martin Arnold in Frankfurt reports:
German investor sentiment about the economy plummeted in March to its lowest level since the 2008 financial crisis, after the severe disruption of the coronavirus pandemic shut down many activities across the region.
The Zew survey of financial market experts found that sentiment about the outlook for the eurozone and German economies suffered record month-on-month falls in March.
Fears of contagion, school closures, event cancellations, border closures and travel restrictions on workers are freezing many activities across Europe and many economists predict the region will suffer its worst recession for over a decade.
The Zew survey’s measure of investor sentiment about the economic outlook for the eurozone fell by 59.9 points to reach minus 49.5, its lowest reading since the financial crisis that caused the collapse of Lehman Brothers in 2008.
Investor sentiment about the German economy also dropped by a record 58.2 points to reach minus 49.5, while the gauge of sentiment about the current economic situation dropped by 27.4 points to minus 43.1.
“The majority of experts currently believe that the corona pandemic is responsible for a decline in the growth of real GDP [in Germany] of about one percentage point”, said Achim Wambach, Zew president. “For the economy the signals are red.”
He said financial market experts expected German GDP to fall in both the first and second quarters.
Germany’s chancellor Angela Merkel this week announced a shutdown of shops, churches, sports facilities, bars and clubs, while imposing controls on its land borders with many countries in measures she admitted were “drastic” and unprecedented in Germany’s postwar history.
Art galleries and some museums close their doors
Antonia Cundy in London reports:
UK art galleries are closing their doors after the government told the public to reduce interaction and avoid non-essential travel in the latest advice in its strategy to combat the coronavirus outbreak.
The British, Victoria and Albert, and Science museums are still open but South London Gallery has shut. The National Gallery plans to postpone its next big exhibition, on Artemisia Gentileschi, which was due to open on April 4.
After Boris Johnson’s announcement last night, the Tate gallery group said it will be closing all its UK spaces: Tates Modern and Britain in London, Tate Liverpool, and Tate St Ives, which together attracted around 8.2m visitors last year, will be closed until May 1.
The gallery group, which joins London’s Institute for Contemporary Art and Hyde Park’s Serpentine Gallery in closing its doors to the public, said memberships would be extended for the duration of the closure, and those with tickets for events would be contacted soon.
Commercial galleries are to be closed or will turn to appointment-only schedules and online viewing rooms. David Zwirner, Pace, and Gagosian have closed their spaces worldwide while White Cube said it would close its London spaces at the same time as it reopens its outpost in Hong Kong as Asia gradually brings the pandemic under control.
Thaddeus Ropac is set to close its London and Paris spaces.
The galleries’ decisions come alongside the UK’s main theatres wiping their performance schedules after the prime minister last night warned Britons to avoid “pubs, clubs and theatres”.
Some theatregoers in London, who had picked up tickets an hour earlier, were turned away at the door on Monday. As many as 50 theatres in London and 250 elsewhere in the UK will close.
Sterling slides as risk assets suffer
Eva Szalay, Currencies Correspondent, reports:
The pound was under pressure again after huge falls at the end of last week. The currency lost 0.8 per cent against the dollar in European hours, trading as low as $1.2154 after also slipping overnight.
Deutsche Bank analyst Oliver Harvey noted that the currency is highly sensitive to souring mood in markets, which means that “sterling underperformance is likely to continue as long as market conditions remain stressed.”
So far this year sterling has lost nearly nine per cent against the dollar, and 5.2 per cent since the start of March. Against the euro, it has notched up similar losses.
Tuesday’s move lower came despite positive employment data.
Airport trade body warns of shutdown risk without government support
Tanya Powley, Transport Correspondent, reports:
UK airports could shut down within weeks if the government does not step in and provide emergency support, a trade body has warned.
Karen Dee, chief executive of the Airport Operators Association, said with travel bans proliferating around the world traffic through airports has plummeted.
UK airports are taking immediate and drastic action to cut costs and are scaling back investments in light of the situation. Due to the fixed costs of operating airports, the Government will need to provide additional support.
The trade body sent a letter on Tuesday to the prime minister and chancellor calling for the government to make an “unequivocal commitment” to do whatever it takes to sustain the UK aviation industry.
Some UK airports have seen traffic numbers plunge by as much as 70-80 per cent over the past week, leaving many regional airports fighting for survival.
Airlines have grounded the majority of their fleets and taken steps to conserve cash. On Monday, United Airlines of the US, IAG — parent of British Airways, Aer Lingus and Iberia — Air France-KLM, easyJet, Finnair, Air New Zealand and Aeroflot unveiled drastic measures to cut costs after several countries, including Germany and Spain, closed their borders.
Ms Dee said “we are clear that airports will shut down in weeks unless urgent action is taken” to support the industry.
AOA has called on the government to provide emergency financing as a measure of last resort, suspend business rates and other government taxes on airports, as well as to require banks to temporarily not enforce financial performance-based banking covenants.
It would also like the government to share the employment cost of airport staff laid off during the crisis and indefinitely postpone major increases to airport’s regulatory costs, such as the requirement to invest in next-generation security technology.
The warning from the UK airport trade body comes after its European counterpart on Monday evening warned the industry is bracing itself for a “near total collapse” of its traffic and revenues because of the coronavirus pandemic.
ACI Europe is now forecasting that these airports will collectively lose over 100m passengers in the first quarter of this year, which will see Europe’s airports lose €2bn in revenue. This is based on estimates before the EU’s ban on entry into the Schengen area.
S&P puts car rental groups Hertz and Avis Budget on negative watch
Car rental groups Hertz and Avis budget both face a credit rating downgrade as the collapse of air travel hits demand for airport rental vehicles.
S&P said it was placing both groups — which rely heavily on business from people renting cars at airports — on “creditwatch negative” until it becomes clear how they will cope with the effects of the coronavirus pandemic, which has caused global restrictions on travel and sent airport footfall tumbling.
The overall rental industry in the US downsized its fleet by around a fifth following the September 11 terror attacks in 2001, returning vehicles to manufacturers as air travel dried up. But S&P said most of Hertz and Avis’s vehicles today were not covered by agreements that would allow them to do this.
The ratings agency said that while air traffic may begin to recover later this year, a recovery could be delayed, placing further pressure on the companies’ credit metrics.
S&P said it would resolve the “creditwatch” position on both groups “as we learn more about the severity of the coronavirus impact and timing of the recovery” and how this will affect their financial positions.
UK budget watchdog: Economy ‘probably shrinking as we speak’
Chris Giles, Economics Editor, reports:
The government’s budgetary watchdog said that the UK economy is “probably shrinking as we speak” as it called for “big early actions” to limit the long-term damage to businesses and households.
Charlie Bean, the macroeconomic specialist at the Office for Budget Responsibility, said that last week’s Budget measures to deal with the economic effects of coronavirus were “all in the right space”, but the question now was “whether the scale is appropriate”.
Saying that insurers had limited pockets, he said the state had a role here as insurer of last resort for companies to avoid mass bankruptcies and damage the supply side of the UK economy in the long term.
The comments came before chancellor Rishi Sunak is due to unveil a new compensation package as the UK moves into a stage of suppressing the virus as large sectors of the economy shuts down.
All of the OBR experts said this was not the moment to be caring about “a few £bn here or there”.
Robert Chote, chair of the OBR said the appropriate comparison was the second world war when the UK ran budget deficits of 20 per cent of national income for five consecutive years.
“It’s no abdication of budget responsibility to be spending what you need to be spending,” he said.
Indonesia to apply strict measures to international visitors
Stefania Palma in Singapore reports:
Indonesia is to impose stricter restrictions on international visitors, suspending visas on arrival, any diplomatic and visa-free measures and short-stay visits from any foreign citizens.
The measures will be in place for a month.
International visitors will need to submit health certificates and apply for visas to enter the country. Five people infected with coronavirus have died and the case tally is 172.
US corporate bond market faces fresh wave of selling pressure
Joe Rennison reports:
Pressure has continued to mount in the corporate debt market as the premium investors demand to hold riskier US corporate bonds has soared close to the peak last hit during the energy sector crisis in 2016.
The additional yield above Treasuries on US junk bonds jumped by more than 1 percentage point on Monday, rising to 8.4 points and closing in on its February 2016 high of 8.9 points.
The sharp sell-off marked the biggest one day jump in spreads since last Monday’s rout and the second largest increase since October 2008, when the global financial crisis began to intensify.
High yield bonds have come under sustained selling pressure as investors reassess the creditworthiness of companies in light of the coronavirus outbreak.
In Europe, an index of 75 high yield credit default swaps run by Markit rose to 640 basis points on Tuesday, implying the highest cost of protecting against corporate defaults since July 2012.
High-yield, or junk, bonds are considered riskier than their investment grade peers and tend to face particularly tough conditions during times of market stress.
US Uniqlo stores to shut temporarily
By Kana Inagaki in Tokyo
Fast Retailing will temporarily shut all of its 50 Uniqlo stores in the US from on Tuesday, after coronavirus cases in the country continued to rise.
“This is a difficult decision for any business to make, but we believe it is the right thing to do for our community,” the operator of the Uniqlo clothing chain said in a statement on its US website.
The move in the US, which has more than 4,200 reported cases, follows the closure of 27 stores in France, Spain and Italy.
While online stores remain open, its sales have already been hit hard by the global pandemic as it was forced to close about half of its 750 stores in China in February. Many of the stores in China, however, have started to reopen with only about 30 locations remaining closed.
European stock markets and US futures in sharp turn lower
A rally in European stocks and US stock futures has turned into yet another drop as investors continue to assess the disruption caused by the Covid-19 outbreak.
The Stoxx Europe 600 was recently down 3 per cent, marking a dramatic shift in direction from gains of 3.5 per cent earlier. US S&P 500 futures were down 1 per cent, having climbed earlier by 3 per cent in a rally so strong it hit the circuit breakers for the largest possible rise in price outside normal trading hours.
Investors had warned earlier in the day, when stocks were still rising, that there was a serious risk markets would turn around given the fundamental situation has shown little signs of improvenent.
Wall Street stocks plummeted 12 per cent on Monday in the heaviest fall since the Black Monday crash of 1987.
Sweden closes universities and schools for over 16s
Richard Milne, Nordic and Baltic Correspondent, reports:
Sweden is closing universities and schools for students aged over 16 but keeping them open for younger children as the Scandinavian country faces questions about its crisis response.
Sweden’s centre-left government said that high schools, colleges and universities should move to distance-learning from Wednesday but that pre-school and elementary schools for those aged 1-16 should be kept open for now.
“We need to take the right measures at the right time,” Stefan Lofven, Sweden’s prime minister, told a press conference on Tuesday. “And when we take decisions, we base them on the views of experts.”
Sweden’s government has come under criticism for acting slower than neighbouring Norway and Denmark, which closed their schools last week. Mr Lofven has also kept Sweden’s borders open, unlike all of its neighbouring countries.
Sweden’s state epidemiologist has said that closing all schools would only push problems into the future and that it would cause unacceptable effects, especially for health workers.
Norway is keeping its schools open for children of essential workers but closed for everybody else.
Coronavirus accelerates its spread in Europe
Steve Bernard in London illustrates:
Italy remains the worst affected by the spread of the coronavirus after China while Spain, Germany and France have had a surge in cases. Worldwide Covid-19 has claimed more than 7,000 lives.
Here are Tuesday’s maps:
Ukraine cracks down on travel and quarantine violations
Roman Olearchyk in Kyiv reports:
Ukraine’s parliament on Tuesday sanctioned hefty fines and arrests for citizens who violate government-imposed travel restrictions and quarantines, including decisions adopted overnight to halt cities’ underground train systems, intercity railways and buses.
The measures, adopted to prevent a spike in Covid-19 infections that could overwhelm Ukraine’s dilapidated healthcare system, were added to earlier restrictions such as closures of schools and shopping centres, prohibiting foreign visitors entering the country and grounding international passenger flights.
“China’s experience shows that unpopular and tough decisions overcome the virus and save lives,” Ukraine’s president Volodymyr Zelensky said in a televised address ahead of the vote.
Ukraine’s grocery stores and pharmacies will remain open, while restaurants will be closed for visits but permitted to deliver food to households.
“I strongly recommend that all people stay home, except for the need to buy food or pharmaceuticals,” the president said.
As of Tuesday, Ukraine had seven confirmed cases of Covid-19, although concern is growing that low level of testing has left many infections undetected.
European markets slip after early rally swiftly loses steam
Hudson Lockett, Daniel Shane, Leo Lewis and Philip Georgiadis write:
Strong gains in Europe quickly fizzled and morphed into losses as investors remained on edge following Wall Street’s worst day in more than 30 years.
London’s FTSE 100 was down 1.7 per cent in early dealings, wiping out a gain of 3 per cent. Europe’s Stoxx 600 composite fell 1 per cent after rising as much as 3.5 per cent earlier on Tuesday.
S&P 500 futures were also off their best levels and pointed to gains of 1.7 per cent when Wall Street reopened later in the day following a report that the Trump administration had privately urged Senate Republicans to approve a bill to help the US deal with the economic fallout of the pandemic.
Investors had warned that the earlier rebound would be shortlived without firmer indications Europe and the US were bringing the outbreak under control.
John Woods, Asia-Pacific chief investment officer at Credit Suisse, said despite the sharp losses recently he was still not recommending clients re-enter equity markets without signs of stronger fiscal measures to support economies hit by the outbreak. “The knife is still falling,” he said.
Jim Reid, a strategist at Deutsche Bank, added that “the impact of the various Western World shutdowns will mean that at its peak the Covid-19 impact on the global economy will likely be worse than the peak of the financial crisis.”
UK to launch business rescue package to fight coronavirus fallout
George Parker, Jim Pickard, Clive Cookson and James Pickford in London report:
British chancellor Rishi Sunak will on Tuesday announce a major package of measures to help UK businesses through the coronavirus crisis, amid warnings the economy could be living with the fallout for a year or more.
Mr Sunak will hold a press conference in Downing Street to announce moves to help companies deal with the consequences of the dramatic moves announced by Boris Johnson on Monday to tackle the outbreak.
Mr Johnson’s new strategy was guided by modelling by Imperial College London that warned the government’s previous more measured approach could have led to an estimated 260,000 deaths, with hospitals overwhelmed by demand for intensive care beds.
The new policy brings Britain closer into line with other EU countries, which have placed their economies in lockdown, but the consequences are likely to be dramatic and prolonged damage to companies and staff, who face being laid off.
Mr Sunak’s new support for the economy is expected to focus initially on airlines and other travel companies, along with the hospitality and entertainment sector, which will be hit by Mr Johnson’s advice that people avoid pubs, clubs, theatres and music venues.
France joins European trio with temporary short selling ban
Philip Stafford reports:
France has joined a trio of European countries in launching temporary bans on short selling stocks to calm investors rattled by heavy falls on the region’s stock markets.
The Autorité des Marchés Financiers (AMF), the French regulator, said the ban would cover 92 stocks and last a day. It will apply to many of France’s blue chip stocks such as Air France-KLM, BNP Paribas and Renault, but also many small and mid cap stocks.
Overnight, Spain, Italy and Belgium all instituted EU-wide bans. UK authorities have complied as required. European rules allow national regulators to apply a temporary EU-wide ban if there are falls of more than 10 per cent for the most actively-traded shares, or 20 per cent or more for less liquid shares.
The Italian and Belgian bans cover a selected number of stocks and last for one day; the Spanish ban covers all listed companies and will last for a month.
Copper miner Antofagasta reviews spending plans
Neil Hume in London reports
Copper producer Antofagasta is reviewing its spending plans because of the grim outlook for the global economy and seeking increased storage capacity in case of cancelled sales.
The London-listed miner said its $1.5bn capital expenditure programme for 2020 was being re-examined to identify possible savings and up to $200m.
“The outbreak of Covid-19 is impacting global GDP growth and the outlook for the year,” the company said in a statement, noting that copper prices were trading close to a three-and-a-half year low of $5,300 a tonne.
It is not clear how long copper will trade at these levels, which will depend on how quickly the spread of Covid-19 is controlled and how quickly the Chinese and other major economies return to normal.
Antofagasta said it was also seeking to secure access to critical supplies and to increase storage capacity for its products in case of cancelled sales, although it had not experienced any meaningful disruption on production and shipments for now.
Australia’s Regional Express asks for government guarantees
Jamie Smyth in Sydney reports:
Regional Express (Rex), one of Australia’s largest regional airlines, has asked the government to provide sovereign guarantees on new loans and waive a range of fees and charges to prevent it from going out of business.
The company, which operates a fleet of 60 aircraft in Australia, entered a trading halt on Tuesday and published an open letter from its chief operating officer Neville Howell to the government, which warned coronavirus could decimate the industry and regional communities.
Michael McCormack, Australia’s deputy minister, said on Monday the government is considering measures to help airlines.
Volkswagen prepares for Europe-wide shutdown
Joe Miller in Frankfurt reports:
Volkswagen confirmed on Tuesday that its European plants are preparing for a shutdown of at least two weeks, following supply-chain constraints caused by the coronavirus outbreak.
Chief executive Herbert Diess said:
Production will be halted at our Spanish plants, Setubal in Portugal, Bratislava in Slovakia and the Lamborghini and Ducati plants in Italy before the end of this week.
Most of the other German and European plants will begin preparing to suspend production, probably for two weeks.
The carmaker confirmed that 31 of its 33 Chinese production sites were back up-and-running, but refused to issue a precise outlook for 2020, saying “it is virtually impossible to issue a reliable forecast”.
Frank Witter, Volkswagen’s chief financial officer, confirmed the spread of coronavirus was “taking greater precedence” over meeting strict EU-wide emissions targets this year.
“The crisis in Europe and worldwide has yet to come,” Mr Diess added.
Pakistan impacted by people returning from Iran
Farhan Bokhari in Islamabad reports:
Pakistan has reported its first coronavirust death and confirmed a total of 189 cases — a number that more than doubled since Sunday — as it reels from the impact of infected travellers returning from Iran.
A senior government official in Islamabad told the FT that the “situation is extremely alarming. The government is working day and night to stop this problem in the first place, but we just can’t say if its already spread widely”.
The largest proportion of the cases are in the southern Sindh province, where 155 people have so far tested positive. The cases in Sindh largely consist of Pakistani travellers returning from Iran who brought this virus home, officials said.
Analysts have raised concerns that Pakistan’s weak health system is unprepared to handle a coronavirus outbreak.
Greece shuts down religious services
Kerin Hope in Athens reports:
Greece has banned the Eastern Orthodox church, the country’s established religion, from holding services for the next two weeks, disregarding opposition from church authorities.
Other faiths, among them the country’s small Muslim and Catholic minorities, are also included in the ban.
The Athens synod of Orthodox bishops agreed to reduce the number of daily services at churches around the country but wanted to schedule fullscale mass on Sundays, which normally attracts crowds of worshippers.
Prime minister Kyriakos Mitsotakis said in a tweet:
All services in all places of religious worship, of whatever religion or faith, are suspended. Churches will remain open only for private prayer. The need to protect of public health imposes clear choices.
The ministry of education and religion added that weddings and christenings were included in the ban but that priests would be allowed to conduct funeral services.
Taiwan suspends visa-free travel for foreigners
Kathrin Hille in Taipei reports:
Taiwan has suspended all visa-free travel for foreigners to the country, in an attempt to further discourage and filter arrivals from aparts of the world where coronavirus infection numbers are soaring.
Health authorities said they would check national health insurance records of all Taiwanese who returned from abroad between March 3 and 14 and test all those who had since seen a doctor for symptoms that could be associated with Covid-19.
Taiwanese who recently travelled abroad, mainly to Europe, are spreading infections back home at a growing speed. On Tuesday, the Epidemic Command Centre reported 10 new confirmed cases, the first daily double-digit increase, raising Taiwan’s total count to 77.
Six of the 10 are part of infection clusters within tour groups, the Epidemic Command Centre said. The people recently returned from holidays in countries including Austria, the Czech Republic, Germany, France, Iceland, Egypt and the US.
The rising numbers of imported infections come as Taipei resists a full ban on overseas group travel, which it had quickly imposed against China in late January when the epidemic was escalating there. Health minister Chen Shih-chung said the coming two weeks are a key risk period, as people who had gone on trips before stricter travel warnings took effect return home.
City Pub Group seeks rent holidays and will cut costs
Cat Rutter Pooley in London reports:
The City Pub Group — a market tiddler, but one with some resonance for the rest of the restaurant sector — says it has enough working capital to cope for six months without extra cash even if the government forces all pubs and bars to close.
But it is seeking rent holidays for 3-6 months and will try to cut back on the cost of Sky and BT Sport services where possible — something that if replicated across the industry could hurt the two media groups.
Read more on the London market’s key corporate stories in the FT’s Opening Quote email.
London-listed Compass warns of significant hit
Alice Hancock in London reports:
Compass, the world’s largest contract caterer has warned that its operating profits for the first six months of the year will be up to £225m lower than expected.
The FTSE 100 group, which operates in 45 countries globally, said in a statement that measures taken to contain the virus in Asia had not materially affected the business but that the spread of the disease to Europe and North America meant its volumes were “severely impacted”.
The group added that it was “implementing mitigation plans”.
Compass has contracts to serve food to offices including the American Airlines headquarters, universities such as New York and Boston, and sports venues including Wimbledon tennis club and the new NFL stadium in Las Vegas. Many have now closed.
The group reassured investors that it had enough liquidity to see out the crisis thanks to a £2bn revolving credit facility but warned that it expected organic revenue growth could slow to zero in the first half of the year.
Anglo American becomes latest miner to slow work
Neil Hume in London reports:
A day after Rio Tinto said it had slowed work on its flagship copper project in Mongolia, Anglo American has done the same on the other side of the world.
The London-listed miner said it had withdrawn the majority of staff and contractors from its Quellaveco copper project in Peru after the government announced a 15-day national quarantine to curb the spread of Covid-19.
As a result, the construction work on the $5.3bn project will be significantly slowed,, with only critical areas of the project continuing as normal, until the 10,000-strong workforce can return, Anglo said in a statement.
Anglo chief executive Mark Cutifani said:
Our development of this world-class project has progressed ahead of schedule and within our budget and we would expect to be able to accommodate this slowdown within our market guidance on both timing and costs at this stage.
High in the Andes, Quellaveco will be one of the world’s biggest copper mines when production starts in 2022. During the first ten years of full production, the mine — Anglo’s most important growth project — is expected to produce approximately 300,000 tonnes per year.
Dixons Carphone to close mobile phone stores, at a cost of 3,000 jobs
Dixons Carphone Warehouse plans to close all its UK stores, which represent 8 per cent of its UK selling space, and nearly 3,000 jobs will go as part of a restructuring of its mobile business.
The FTSE 250 group in its statement on Tuesday said it has not yet seen a “material impact from Covid-19, though we are preparing for one”.
Dixons expects 2,900 redundancies, accounting for about 60 per cent of the jobs affected. Mobile telephone services will be sold through Currys PCWorld stores and online. The moves are part of a restructuring to return this part of the business, which is expected to make £90m loss this year, to profitability.
Pre-tax profit for the full fiscal year 2019/2020 is expected to keep to previous estimate of £210m and net debt to be lower than last year.
The company will close its 531 standalone Carphone Warehouse stores in the UK on April 3 and focus on selling mobile services through its shop-in-shops in 305 big Currys PCWorld stores and online, its statement said.
Malaysia to close Singapore border
Stefania Palma in Singapore:
Malaysia will shut its border with Singapore as part of Kuala Lumpur’s national lockdown, stopping hundreds of thousands of workers commuting cross-border every day.
Khairul Dzaimee Daud, Malaysia’s director general of immigration, said in a statement:
The country’s ban on Malaysian citizens as announced by the [prime minister] includes those commuting to work in Singapore and Thailand from March 18 to March 31, 2020.
Malaysia on Monday announced it would close its borders after the number of coronavirus cases more than doubled in just two days to 553.
About 415,000 people travel between the two countries on a daily basis, with Malaysians often based in Johor crossing the strait to work in the city state.
Singapore’s ministry of manpower has encouraged affected employees to stay with family or friends in the island nation. Singapore is making hotels, dormitories, public and private residential properties available until the end of the month and is considering offering financial support to companies “that need to urgently accommodate their affected workers,” the manpower ministry said.
Lee Hsien Loong, Singapore’s prime minister, reassured the public in a Facebook post in which he summarised a phone call with his Malaysian counterpart. “I was happy to hear his reassurance that the flow of goods and cargo between Singapore and Malaysia, including food supplies, would continue,” Mr Lee said.
A small city state with limited natural resources and no self-sufficiency in terms of water supply, Singapore is heavily dependent on imports from its northern neighbour.
Turkish cases nearly triple to reach 47
Laura Pitel in Ankara reports:
The number of confirmed coronavirus cases in Turkey almost tripled overnight, bringing the total to 47.
Turkish officials say that strict measures taken to fend off the virus helped to delay its onset among their population of 83m people.
Turkey, which has close links with virus-stricken nations in Europe, reported its first instance of Covid-19 last week. The number has climbed rapidly since then.
Fahrettin Koca, the country’s health minister, announced 29 new cases late on Monday night. “Contact with foreign countries continues to be a risk,” he wrote on Twitter. “Let’s strictly adhere to the rules.”
Turkey has closed schools, universities, cafes, restaurants, bars and hammams — traditional public bathhouses — in a bid to prevent the spread of the virus. On Monday night, mosques issued an announcement after the evening call to prayer that urged worshippers to perform their prayers at home instead.
The Turkish lira has been badly by a broader sell-off of emerging market currencies as concern about the impact of the virus has sent shockwaves through financial markets. It has fallen to its lowest level against the dollar since September 2018, when Turkey was reeling from a currency crisis.
Trio of European countries launch new short selling bans
Philip Stafford reports:
European countries have introduced fresh bans on short selling stocks in a bid to calm investors following heavy falls on the region’s markets.
Spain, Italy and Belgium have all instituted EU-wide bans, and UK authorities have complied with the rules as required.
In a statement late on Monday Spain’s CNMV said its ban for all Spanish stocks would last for a month, and said the prohibition may be extended if needed.
It blamed the extreme volatility in European markets, and the state of emergency that was declared by the Spanish government over the weekend. It will also extend to derivatives that involve creating a short position.
Consob, the Italian regulator, has restricted short selling on 20 of Italy’s biggest companies for all of Tuesday. The lists consists mainly of mainly banks and insurance companies like Unicredit and Mediobanca, but also includes Fiat Chrysler and Telecom Italia. The ban on 17 Belgian stocks will also last for one day.
Short selling is when investors borrow shares to sell them, hoping to buy them back later at a lower price, before returning them and pocketing the difference. The practice has sometimes been blamed for exacerbating volatility during times of stress.
Italy and Spain are the countries that have have recorded the most number of cases of Covid-19 in Europe and both are on lockdown. Last week the regulators banned investors from betting against the prices of a combined 154 stocks but it lasted only for a day.
France promises €45bn economic aid package
Victor Mallet in Paris reports:
French measures to help companies and employees weather the coronavirus storm will be worth some €45bn, the country’s finance minister Bruno Le Maire said on Tuesday.
He told RTL radio the package of financial aid, which includes payments to temporarily redundant workers and deferments of tax and social security bills, would help “the economy to restart once the coronavirus epidemic is behind us”. Previously he had referred to “tens of billions of euros”.
Mr Le Maire said ammunition to prop up the economy also included €300bn of French state guarantees for bank loans to businesses and €1tn of such guarantees from European institutions.
The French government was assuming the economy would shrink about 1 per cent this year, instead of growing more than 1 per cent as previously predicted, Mr Le Maire said.
On Monday night, President Emmanuel Macron ordered a stricter lockdown on France to try to stop the rapid spread of the pandemic.
European stocks set to rise 3 per cent
European stocks were primed to stage a tentative recovery on Tuesday, as a measure of calm returns to global markets following a brutal selloff.
Futures trade pointed to rises of around 3 per cent at the open for London’s FTSE 100, Germany’s Dax and France’s Cac 40.
The gains would go some way to wiping out Monday’s significant losses, when the pan-European Stoxx 600 level fell to its lowest level since 2012 with a drop of nearly 6 per cent.
S&P 500 futures pointed to gains of as much as 3.8 per cent when Wall Street reopened later in the day following a report that the Trump administration had privately urged Senate Republicans to approve a bill to help the US deal with the economic fallout of the pandemic.
Overnight, the S&P 500 plunged 12 per cent in its biggest one-day fall since Black Monday in October 1987 as the US and other countries tightened restrictions on public movements to curb the spread of the virus.
Airbus halts production in Spain and France
Airbus is stopping production and assembly operations in Spain and France for the next four days as the two countries enter lockdowns in a bid to stem the spread of coronavirus.
The European aerospace group said the move to “pause” activities in the country over the coming days would give it time to implement “stringent health and safety conditions” in terms of hygiene, cleaning and self-distancing.
Where possible, employees will work from home, it said.
Spain and France have become two of Europe’s worst hit countries with almost 10,000 and 7,000 cases respectively. Both countries have entered wide scale lockdowns with sweeping restrictions on people’s freedom of movement.
Australian stock market rallies after worst day in decades
Jamie Smyth in Sydney
Australia’s share market rallied almost 6 per cent on Tuesday, as investors sought buying opportunities following its worst one day fall since Black Monday in 1987 just a day earlier.
The S&P/ASX 200 index closed up 291.4 points at 5293.4. Banks performed strongly with Commonwealth Bank of Australia adding 13 per cent to close at A$67.64 and ANZ Bank surging 11 per cent to close at A$18.40.
Travel stocks remained under pressure with Qantas closing at A$5.30, a fall of 5 per cent, after the airline announced it was cutting international capacity by 90 per cent.
The market rout on Monday caused UniSuper, a large pension fund with A$85bn under management, to stop lending the shares it owns out to short sellers.
John Pearce, chief investment officer of UniSuper, said the fund believed the market was gripped by panic and that restricting short selling would help promote an orderly market.
“We are only one fund and the efficacy of our actions will depend on how many other funds follow a similar path,” he said. Australian Super, the nation’s largest pension fund, did not respond to a request for comment on whether it would follow UniSuper’s lead on short selling.
Europe: what you might have missed
Hong Kong will quarantine all arrivals to the city from Thursday and expects to expand school closures beyond April, chief executive Carrie Lam said on Tuesday.
The world’s largest social media companies, including Facebook, Google and Twitter, put out a first-of-its-kind joint statement saying that they are working together to fight fraud and misinformation related to coronavirus.
Eight of America’s biggest banks have begun tapping the Federal Reserve’s discount window for funding, their industry group said on Monday night in the US, in a move that reactivates a lending facility largely dormant since the financial crisis.
The Philippines shut down stock, bond, and currency trading on Tuesday until further notice, becoming the first major financial market to close because of the coronavirus outbreak.
New Zealand unveiled a NZ$12.1bn ($7.3bn) stimulus package on Tuesday aimed at cushioning the blow to the economy caused by the coronavirus crisis.
Asia-Pacific stocks rose following the biggest sell-off on Wall Street in more than 30 years as investors looked to the US for stronger economic support measures.
Asia-Pacific stocks gain after Wall Street sell-off
By Hudson Lockett, Daniel Shane and Leo Lewis
Asia-Pacific stocks rose following the biggest sell-off on Wall Street in more than 30 years as investors looked to the US for stronger economic support measures to fight the impact of the coronavirus.
S&P 500 futures pointed to gains of as much as 3.8 per cent when Wall Street reopened later in the day following a report that the Trump administration had privately urged Senate Republicans to approve a bill to help the US deal with the economic fallout of the pandemic.
However, investors warned that any rebound would be shortlived without firmer indications Europe and the US were bringing the outbreak under control.
On Tuesday, Australia’s S&P/ASX 200 stock index jumped 5.8 per cent after plunging nearly 10 per cent a day earlier. Japan’s Topix was 2.6 per cent higher after earlier falling as much as 3 per cent. Hong Kong’s Hang Seng added 0.2 per cent while China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed stocks was down 0.7 per cent.
Overnight, the S&P 500 plunged 12 per cent in its biggest one-day fall since Black Monday in October 1987 as the US and other countries tightened restrictions on public movements to curb the spread of the virus.
Cathay Pacific reinstates flights to Manchester
Cathay Pacific is reinstating two flights from Manchester to Hong Kong later this week, as the airline seeks to respond to demand from students to return to the territory as the outbreak gathers pace in Europe.
Earlier this week, Cathay announced it was adding flights from London and Hong Kong, citing “strong demand”.
“As the home carrier of Hong Kong, Cathay Pacific understands that many Hong Kong students and citizens in London are eager to come home as soon as possible and in time for the Easter break,” the airline said.
Macau restricts entry to limit spread of coronavirus
Macau, the Chinese casino hub, will close its borders to anyone who is not a resident of the territory, mainland China, Hong Kong or Taiwan from Wednesday as it seeks to limit imported coronavirus cases.
The territory, which is near Hong Kong, said it was taking the step to protect the health of its residents. Macau recorded two separate new imported coronavirus cases on Sunday and Monday, taking its total to 12.
The city’s first 10 patients to contract the virus had all been discharged from hospital by March 6.
Mexico’s coronavirus tally jumps to 82
Jude Webber in Mexico City
Mexico on Monday announced a more than 50 per cent leap in confirmed coronavirus cases, to 82 from 53 the previous day, as a new poll found a third of Mexicans believes Mexico’s coronavirus strategy is wrong and that the country’s health service is totally unprepared for the epidemic’s impact.
Asked how confident people were that the Mexican government was taking the correct measures, the survey, by Mitofsky on the impact of Covid-19, found 32 per cent of respondents said they were not at all confident, ahead of the 30.7 per cent who felt very reassured.
The poll also found that 35.1 per cent believed that the health service was not prepared at all, compared with 16.3 per cent who thought it was very ready and 28 per cent who believed it was somewhat prepared.
The poll, in which 1,000 respondents were surveyed by mobile telephone from March 13-15, showed 36.8 people believed there were more confirmed cases than the government has acknowledged.
The poll also found a change in habits, even though the government has not yet imposed stringent restrictions: 75.5 per cent of respondents said were not going to crowded places, compared with 55.1 per cent in the previous survey.
Mexico’s president Andrés Manuel López Obrador has come under criticism for continuing to hold mass rallies, hug fans and kiss babies, despite the health ministry’s recommendation to curb mass events.
The country also became embroiled in a high-profile diplomatic row on social media earlier in the day with El Salvador’s President Nayib Bukele, who asserted that an Avianca flight due to have flown this afternoon from Mexico City to San Salvador had 12 coronavirus patients on board.
The flight was cancelled before take-off and Mexico’s Foreign Minister Marcelo Ebrard later tweeted that all passengers had been checked.
“Mr President, we verified the passengers on the Avianca flight and I can confirm to you that they are healthy. Health authorities did not find coronavirus, including the 12 young Salvadorans wearing masks. You will be very happy to hear this. Cordially,” the foreign minister said.
Tom Hanks discharged from Australian hospital
Jamie Smyth reports from Sydney
US actor Tom Hanks and his wife, Rita Wilson, have been discharged from a hospital on the Gold Coast, Australia, five days after they were diagnosed with the coronavirus.
People Magazine cited a representative for the actor, who said the couple are now resting at a rental property in Australia and remain under quarantine.
Mr Hanks is in Australia to work on a movie about Elvis Presley with director Baz Luhrmann. The production has been put on hold since the actor, who starred in Castaway, was diagnosed with coronavirus.
Mr Hanks revealed his diagnosis last week on social media.
“Hello, folks. Rita and I are down here in Australia. We felt a bit tired, like we had colds, and some body aches. Rita had some chills that came and went. Slight fevers too. To play things right, as is needed in the world right now, we were tested for the Coronavirus, and were found to be positive,” he wrote.
India closes Taj Mahal as part of new measures to limit spread of virus
By Amy Kazmin in New Delhi
India is closing its famous Taj Mahal and all other archeological sites, monuments and museums, as part of an effort to control the spread of the deadly coronavirus.
India’s culture ministry said that 3,000 monuments run by the Archeological Survey of India and hundreds of national museums would be shut down until at least March 31.
The move marks the first time that the Taj Mahal will be closed to visitors since 1971, when it was shut for a few days in the wake of the India-Pakistan war of that year.
The closures comes as part of a wider effort to enforce social distancing among a dense population of 1.3bn people in a country that has also imposed sweeping travel restrictions in a bid to stop the import of the virus from abroad.
The Indian government has advised the closure of all educational institutions, gyms, cultural and social centres, swimming pools, and theatres, and restricted all gatherings to no more than 50 people in a bid to stop the deadly pathogen from circulating.
India currently has 114 confirmed coronavirus cases, though many experts have warned that this likely understates the magnitude of the outbreak.
Hong Kong to quarantine all arrivals from Thursday
Alice Woodhouse and Nicolle Liu in Hong Kong
Hong Kong will quarantine all arrivals to the city from Thursday and expects to expand school closures beyond April as it seeks to control the number of coronavirus cases in the city, chief executive Carrie Lam said on Tuesday.
The city’s Centre for Health Protection on Monday warned of a “second wave” of coronavirus infections after the majority of recent cases were found among people returning from overseas. The city has so far recorded 157 cases of Covid-19.
The measures are an extension to quarantine requirements already in place for arrivals from mainland China, South Korea, dozens of countries in Europe and to upcoming restrictions on those entering from the UK and US. The new restrictions will not apply to arrivals from Taiwan or Macau.
Ms Lam said there are around 1,600 spaces in official quarantine centres, so the government will reserve these facilities for high-risk cases, such as contacts of confirmed cases. The majority of arrivals will be put under home quarantine and will be monitored through phone calls and by sharing their locations on Whatsapp.
There are now 20,000 people under home quarantine in the city. Ms Lam appealed to people placed under home quarantine to be disciplined to protect their families and others in Hong Kong to preserve efforts made over the past two months.
“Hong Kong and Singapore never really had a first wave yet. We have never really had a self-sustained local epidemic yet,” said Professor Gabriel Leung, epidemiologist and dean of the University of Hong Kong’s medical school, in a live question and answer on Tuesday morning. “Everything we’ve got is highly clustered, about half of them are imported cases.”
Schools will be restarted in stages with older students returning first, Ms Lam said, adding that younger pupils might not return to class for the next one to two months. Schools were originally set to resume April 20.
US Food and Drug Administration loosens rules on coronavirus testing
Hannah Kuchler reports from New York
The US Food and Drug Administration is loosening rules around who can oversee the development of coronavirus tests, as it tries to rapidly expand access to the diagnostics.
The regulator said on Monday that states may now take responsibility for tests developed in their state public health laboratories. The FDA also said that all commercial labs – not just the high complexity ones – would be able to distribute tests before gaining an emergency use authorisation.
Stephen Hahn, FDA commissioner, said these measures would help “a surge to meet the demand we expect to see”, though he admitted that it was hard to quantify what that could be and that there was still pressure in the supply chain to provide materials for tests.
Laboratories will also be able to develop serological tests that check for antibodies to the virus, which are simpler but less accurate, as long as they are distributed with a warning that says they will not be the only tool used for diagnosis.
Such tests can be useful to track the spread of a disease in a community, especially on people who are barely symptomatic.
America’s biggest banks begin tapping Fed discount window for funding
Laura Noonan reports from New York
Eight of America’s biggest banks have begun tapping the Federal Reserve’s discount window for funding, their industry group said on Monday night, in a move that reactivates a lending facility largely dormant since the financial crisis.
Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, State Street, and Wells Fargo have all used the discount window, the Financial Services Forum said.
“While Forum member institutions individually have substantial liquidity and multiple sources of funding, they believe it is important to lead by demonstrating the value of the Federal Reserve’s discount window facility and to encourage its use by other financial institutions,” the FSF said.
JPMorgan Chase, which last month said it would likely use the discount window to remove its stigma, said drawing on it was a “symbolic transaction” that “demonstrates that this liquidity and cash management tool is an important part of the financial system”.
The Federal Reserve has been actively encouraging banks to use the discount window for borrowing, and on Sunday night lowered the amount it charges banks.
The news came at the end of a brutal day for Wall Street’s banks, when several of them lost more than 15 per cent of their market value, as investors digested the impact of a 100 basis point cut to the Fed’s key interest rate, as well as the impact of the escalating coronavirus pandemic.
Monthly survey shows plunge in Japanese business confidence
Leo Lewis reports from Tokyo
A monthly survey of Japanese business confidence conducted by Reuters showed the severe plunge that analysts had widely expected – a drop to decade lows as manufacturers and non-manufacturers across multiple sectors turned pessimistic about business conditions.
The sentiment index at manufacturers, reported Reuters, fell to minus 20 in March from minus 5 in the previous month, indicating the increasing degree to which pessimists now outnumber optimists. The service-sector gauge dropped 25 points to minus 10.
Even before the coronavirus outbreak dominated the news, Japan’s economy was beginning to look shaky, with GDP in the final quarter of 2019 hit by the combination of a controversial sales tax hike last October and the US-China trade war.
The Reuters Tankan survey, which in this case drew on responses from 242 non-financial Japanese firms, is treated by some investors as an indicator of what the Bank of Japan’s closely-watched quarterly Tankan survey will show when it is released on April 1.
In their responses to the survey, reported Reuters, large Japanese companies cited fears of a sharp drop in sales and possible downward revisions to profits caused by the spread of the virus and its disruption to the economy.
China reports 21 new coronavirus cases as imported infections rise
Health authorities in China reported 21 new coronavirus cases to the end of Monday, 20 of which were in people who had returned from overseas. The new local case was in Wuhan. The mainland has now reported a total of 80,881 cases.
There were 13 new deaths in the country, taking the total to 3,226. The number of people discharged from hospital rose to 68,679.
S Korea mulls school shutdown extension as infection rate creeps higher
By Edward White
South Korea is expected to extend school closures as the number of new coronavirus cases crept higher on Tuesday, reversing several days of declines.
Education officials, who have already delayed the start of the school semester this month because of the virus, are expected to make the announcement this afternoon, according to state news agency Yonhap.
The precaution comes as the Korea Centers for Disease Control reported 84 new cases nationwide. That was higher than 74 cases reported on Monday but still well off the peak of 909 cases reported on February 29.
The trend of declining cases has drawn international praise and fuelled optimism that South Korea’s programme of mass testing and widespread social distancing is working to contain the virus.
However, although the number of daily cured patients continues to outpace new infections in recent days, officials have been concerned over new clusters breaking out following incidents at a call centre and a church over the past week.
Officials have also been worried about infections spreading from people arriving from foreign countries, as the global pandemic sweeps across Europe and the US.
The total case number in the country of 51m is now 8,320.
Honduras tells citizens to stay at home unless essential
Jude Webber reports from Mexico City
Honduras has imposed a seven-day state of exception, barring people from leaving their homes except to buy food, go to the bank or pharmacy, to travel to jobs deemed essential or to care for vulnerable, elderly or disabled people.
All public and private sector jobs, except those deemed essential – for example, in the health and energy sectors, petrol stations and restaurants offering take-out food – will be banned during the period. In addition, the decree halts public transport and seals Honduras’ borders. Shopping centres will be shut, public religious ceremonies banned and public events of all kinds, with any number of people, will not be allowed.
The Central American country has six confirmed coronavirus cases, including a pregnant woman and a baby. The government said there were three other suspected cases, including one 18-year-old migrant who had been deported from Mexico.
To help meet the financial cost of battling coronavirus in one of the region’s poorest countries, the government agreed 2 per cent budget cuts from all government departments with the exception of health, education, energy, security and defence.
Qantas slashes international flight capacity by 90%
Jamie Smyth reports from Sydney
Qantas Airways is slashing international flight capacity by 90 per cent and domestic capacity by 60 per cent until the end of May due to the coronavirus crisis, the airline said on Tuesday.
The emergency measures represent the grounding of about 150 aircraft and will lead to a significant labour surplus across its workforce of 30,000 people, said Qantas in a statement.
The airline said it is working to manage the impact as much as possible through the use of paid and unpaid leave but warned the slump in travel demand would likely last months.
Australian airlines are in discussions with the government about support measures, including relief on government charges and access to stimulus funds.
Social media companies release joint statement on virus misinformation
Hannah Murphy in San Francisco
The largest social media companies have put out a first-of-its-kind joint statement saying that they are working together to fight fraud and misinformation related to coronavirus, as the groups battle to moderate their platforms amid a move towards more remote working.
Facebook, Google, LinkedIn, Microsoft, Reddit, Twitter and YouTube put out a statement on Monday saying they were “working closely together on COVID-19 response efforts” following growing reports of misleading information being shared about the virus.
“We’re helping millions of people stay connected while also jointly combating fraud and misinformation about the virus, elevating authoritative content on our platforms, and sharing critical updates in coordination with government healthcare agencies around the world. We invite other companies to join us as we work to keep our communities healthy and safe,” the statement said.
Groups such as Facebook and Twitter have in recent weeks created new policies designed to curb misinformation on the topic, after fake cures and false information about the origin of the virus began proliferating on public platforms as well as through private messaging.
Separately both Google’s YouTube and Twitter put out statements saying that they were shifting towards automating more of their content moderation process to reduce the need for people to come into the office.
YouTube said it was “temporarily increasing” its use of automation, while Twitter said that the increased automation of some of its enforcement calls “might result in some mistakes”.
Goldman Sachs confirms 2 further coronavirus cases
Laura Noonan reports from New York
Goldman Sachs confirmed two more US staff coronavirus cases on Monday night, as well as a “suspected” diagnosis for one of its medical providers at the bank’s New York head office.
The two employee cases are at Goldman’s tech hub in Salt Lake City, according to a memo sent to staff there. The staff members have not been in the office since March 12, and are now recovering at home, Goldman said.
The New York case involves an employee of Premise Health, which staffs the health centre at Goldman’s 200 West Headquarters in downtown Manhattan.
“Out of an abundance of caution, the health center will be closed on Monday, March 16 and will undergo an additional deep cleaning before reopening on Tuesday,” Goldman told staff based in New York and New Jersey.
When the health centre re-opens, visiting staff will have to wear masks.
On Sunday, Goldman confirmed a case of coronavirus at its Sydney office, and another at its European headquarters in London.
Stock, bond and currency trading suspended in the Philippines
John Reed reports from Bangkok
The Philippines is shutting down stock, bond, and currency trading on Tuesday until further notice, becoming the first major financial market to close because of the coronavirus outbreak.
The Philippine Stock Exchange announced the move in a statement late on Monday, and said it was in connection with President Rodrigo Duterte’s decision to place all of Luzon island under an “enhanced community quarantine.”
Ramon Monzon, the PSE’s chief executive, said that the market would remain shut until further notice “to ensure the safety of employees and traders in light of the escalating cases of the coronavirus disease (COVID-19).”
The Philippine market has been among those hit hardest in Asia by the global markets rout, down 32 per cent in the year to date. The country has reported 142 coronavirus cases to date, and 12 deaths.
New Zealand announces $7.3bn stimulus package
Jamie Smyth reports from Sydney
New Zealand unveiled a NZ$12.1bn ($7.3bn) stimulus package on Tuesday aimed at cushioning the blow to the economy caused by the coronavirus crisis.
The extra spending on health services, income support, wage subsidies for affected business and support for airlines is equivalent to 4 per cent of gross domestic product, which makes it on a per capita basis one of the largest stimulus packages unveiled globally.
“Our immediate goal is to support people and businesses as we weather the impact of Covid-19. We must then ready the economy to recover,” said Jacinda Ardern, New Zealand’s prime minister.
Australia’s stimulus package announced last week amounted to spending worth just under 1 per cent of GDP but is already considered too small. Canberra is due to announce a second stimulus package on Thursday.
Grant Robertson, New Zealand’s finance minister, said the stimulus package is not a one-off and the government would monitor the situation and adjust its response.
Asia stocks drop after US sell-off
Hudson Lockett reports from Hong Kong
Stocks in Japan took another leg down and equities in Australia were giving up early gains on Tuesday after the US stock market suffered its worst single-day drop since 1987, in the face of growing global lockdowns to curb the spread of coronavirus.
Tokyo’s Topix dropped 2.5 per cent shortly after the open, taking the benchmark index down more than 30 per cent for the year to date, while Sydney’s S&P/ASX 200 was up 1 per cent paring earlier gains after dropping 9.7 per cent on Monday.
Oil prices were wavering, with Brent crude, the international benchmark, down 0.4 per cent at $29.22 a barrel. US marker West Texas Intermediate rose 1.7 per cent at $29.19.
The S&P 500 index of US stocks closed 12 per cent lower on Monday, lurching lower in the final minutes of trading to mark the biggest one-day fall since the crash of October 1987. On Tuesday in Asian trading futures tipped the US stock benchmark to rise 0.9 per cent at the open on Wall Street.
