California reports another record daily increase in deaths
California reported a record increase in coronavirus deaths for the second day in a row on Friday and nearly 10,000 new cases.
A further 159 people in the state died from Covid-19, California’s health department said this afternoon, from Thursday’s then-record jump of 157.
California has now reported 8,186 deaths from the disease since the pandemic began. That is the fourth-highest number of fatalities for any US state, but about one-third of first-ranked New York.
Just this week, the three most populous states – California, Texas and Florida – have each reported their biggest single-day jumps in deaths. That helped push the daily national death toll above 1,000 a day for the third day in a row on Thursday, the first such instance since May 29.
Florida reported a record 173 deaths on Thursday and a further 136 today, while Texas had a record jump of 197 on Wednesday and its most recent data showed an increase of 173 yesterday.
California confirmed a further 9,718 people had tested positive for Covid-19 over the past 24 hours, down from 12,040 on Thursday. That took the total number of cases to 435,334, the most of any US state and having overtaken longtime leader New York on July 22.
CDC sets out new guidelines for reopening US schools
Hannah Kuchler in New York
Schools across the US should reopen if the positive test rate for Covid-19 is less than 5 per cent in the surrounding area, according to the US Centers for Disease Control and Prevention, in new guidance that echoes Donald Trump’s insistence that children return to classrooms in the autumn.
Robert Redfield, CDC director, said influenza had caused more deaths than Covid-19 had for under 18s, even though the coronavirus is far more serious for older populations. He warned that the US is seeing a rise in adolescent suicide and drug use disorder, as examples of public health problems that could be exacerbated by school closures.
Mitchell Zais, deputy education secretary, said opening had to be the “default”.
He estimated that parents staying off work to look after their children was costing the economy $232bn. He added they should be able to take the tax dollars spent on educating their children to other institutions, including faith and other private schools, if their current school is closed due to the pandemic.
“It is not a matter of if it should be done but rather how it must be done,” he said on a call with the press.
McDonald’s to require masks for all US customers
McDonald’s is to become the latest company to require customers in the US to wear face coverings and is also postponing the reopening of indoor dining as coronavirus cases in the country continue to rise.
While more than four fifths of its restaurants are in jurisdictions that already mandate the coverings, the fast food chain said on Friday it would from the start of August require them to be worn even in places where authorities did not have such a policy.
It follows similar announcements from Starbucks and retailers like Walmart and Target among many other companies.
Corporate America has found itself in the middle of a politically charged debate over mask-wearing. While companies feel the need to take action to prevent the spread of the virus, they also face the threat of a backlash from customers upset about being told what to do.
McDonald’s said in cases where the customer is unwilling or unable to cover, its employees would focus on “quickly finding solution”, adding that it would be rolling out training for staff on how to handle the requirement.
“In those situations where a customer declines to wear a face covering, we’ll put in place additional procedures to take care of them in a friendly, expedited way,” read a letter to restaurant operators and employees from Joe Erlinger, president of McDonald’s USA, and Mark Salebra, chair of the National Franchisee Leadership Alliance, a body that represents about 2,000 franchisees.
The vast majority of McDonald’s US restaurants are open, but most are confined to drive-through, delivery and take out. Seating is available in only about 2,200 outlets, about 15 per cent of the total.
The chain, which said at the start of July that it would postpone sit-in reopenings by three weeks, said on Friday that it would hit the pause button for another 30 days.
Paris urges French travellers to avoid Catalonia amid virus resurgence in Spain
Ian Mount in Madrid
Paris recommended French citizens avoid travel to Catalonia and Norway announced a 10-day quarantine requirement for travelers coming from Spain as Madrid fought rapidly growing outbreaks across the country.
France’s Prime Minister Jean Castex “strongly” recommended French travelers to avoid Catalonia “until the health situation improves.” The northeastern Spanish region has been the site of Spain’s two largest outbreaks, around Barcelona and in the agricultural region of Segrià.
Mr Castex discarded the idea of closing the border, but he said French authorities were pushing their Spanish counterparts to come up with ways to ensure that movements from Spain to France were “as limited as possible.”
For its part, Norway said it would re-impose a 10-day required quarantine for those arriving from Spain due to the recent surge in Covid-19 cases. The re-imposed quarantine — which had been lifted July 15 — will go into effect Saturday.
On Friday, Spain’s health ministry announced 922 new infections diagnosed in the last 24 hours, and the number of cases diagnosed over the previous 14 days — the clearest picture of the virus’s spread — rose 8.7 per cent, to 17,842.
Spain has 281 active outbreaks, considered a cluster of three or more related cases, concentrated among temporary agriculture workers, family reunions, and nightlife. “This may already be a second wave,” said María José Serra of Spain’s health emergency center.
BA parent IAG weighs €2.8bn rights issue to shore up balance sheet
British Airways owner IAG is considering launching a rights issue of up to €2.75bn to strengthen its balance sheet amid the coronavirus pandemic.
The airline group said on Friday it was “evaluating the merits” of the capital raising, but said that no decision has yet been made as to whether or when to proceed with a rights issue.
IAG, which also owns Iberia, Aer Lingus and Vueling, issued the statement following a news report by Reuters that suggested the group was weighing a potential rights issue.
It comes as airlines around the world have taken steps to shore up their balance sheets after the industry has been hit by the worst crisis in its 100-year history.
In April, IAG became one of the first airline groups to start restructuring its business, announcing plans to cut up to 12,000 jobs at BA, almost 30 per cent of its workforce, as a result of the coronavirus crisis.
Willie Walsh, chief executive of IAG, has previously warned that BA is “fighting for its survival” with passenger numbers not expected to return to pre-coronavirus levels for several years.
Florida case tally tops 400,000 after reporting large jump in infections
Florida became the third state in the US to confirm more than 400,000 cases of coronavirus after reporting another large jump in infections on Friday.
A further 12,444 people tested positive for Covid-19 over the past 24 hours, the state’s health department revealed, from 10,249 on Thursday.
That was the state’s fifth-biggest daily increase on record and pushed the total number of cases to 402,312. Only California and New York have confirmed more coronavirus cases, with the former overtaking the latter on Wednesday to become the US state with the highest number of infections since the pandemic began.
A further 136 people died, down from a record 173 on Thursday, but the fatalities for the fourth day in a row have risen by more than 100.
Global industrial output climbs for first time since February
Federica Cocco in London
Global industrial production picked up in May for the first time since the coronavirus pandemic caused a widespread lockdown of economies but world trade volume continued to deteriorate.
Industrial production increased by 0.8 per cent in May compared with the previous month, according to the CPB world trade monitor compiled by the Netherlands Bureau for Economic Policy Analysis — the first expansion since February. This is up from a contraction of 8.5 per cent in April.
It rose the most in the eurozone: 13.4 per cent compared with a 1.4 per cent rise in the US. In Africa and the Middle East industrial production plunged 19.3 per cent.
Trade volume declined 1.1 per cent on the month and was down overall 17 per cent since the start of year. There are stark regional differences. In the eurozone, both imports and exports rose markedly by 6.5 per cent and 10.2 per cent respectively.
The reduction is less severe in emerging Asia where May trade levels were 0.9 per cent above April. This is because the coronavirus pandemic and subsequent lockdown started in China first.
In the US, on the other hand, imports declined 1.5 per cent while exports deteriorated a further 6.2 per cent.
“Looking at the share of container vessels in service, world trade will probably improve after May, as more ships seem to be returning to service in June,” said Timme Spakman, an economist at ING. But Spakman said “we are still not back to normal” .
“The contraction caused by Covid-19 is causing a global recession and with global PMIs still below 50, we’re looking at a continuing worsening of economic conditions.”
US new home sales jump to highest since 2007
Sales of newly built homes in the US rebounded to their strongest level in 13 years as lower mortgage rates have helped drive the recovery in the housing market.
New home sales rose to a seasonally adjusted annual rate of 776,000 units in June, a 13.8 per cent increase over the prior month and the highest level since July 2007, the US Census Bureau said on Friday. Economists had forecast sales to rise 4 per cent to 700,000.
Figures for May were revised higher, to 682,000 from 676,000, to reflect a 19.4 per cent rise.
The housing market has recovered as mortgage rates have tumbled to record lows and younger renters have been more likely to be affected by pandemic layoffs than first-time homebuyers who have a median age of 47.
“Indicators such as mortgage applications for home purchase and homebuilder sentiment point to strong underlying demand for homes, some of which seems to be due to city dwellers (re)discovering the benefits of more space, both indoor and outdoor, if telecommuting and maybe home-learning are going to become more lasting and/or more frequent events,” said Joshua Shapiro, economist at MFR.
Portugal regrets being left off UK government’s quarantine-free list
Peter Wise in Lisbon
Portugal voiced regret at being kept off a UK list of “travel corridors” in a move that is likely to deal a blow to an economy that welcomed about 2m British holidaymakers last year.
The decision is “not consistent with reality and facts”, Augusto Santos Silva, foreign minister, wrote in a social media post after Britain updated its list of about 75 countries that need no quarantine measures.
The changes for British visitors abroad will take effect on Tuesday. Returning visitors from mainland Portugal will still have to endure a 14-day quarantine, along with those coming back from Brazil, Sweden, Russia and the US.
Mr Santos Silva echoes his words on July 3, the day the list was first published, when he said the decision was “deeply unjust” and “absurd” with no basis in science.
Portugal is trying to bring down one of the highest rates in Europe for daily new coronavirus cases per 100,000 inhabitants. The large majority of new cases have been detected on the outskirts of Lisbon.
Tougher lockdown measures have been brought back in 19 districts around Lisbon where more than 70 per cent of new coronavirus cases have been recorded in recent weeks.
Mr Santos Silva has previously suggested that arrangements could be made for British tourists to visit the Algarve and other regions without passing through Lisbon or having to quarantine on their return.
The number of registered unemployed in the southern sun-soaked beach region of the Algarve more than tripled in June, compared with the same period last year. That was a rise from about 8,000 to more than 26,000 people.
Pandemic leads to near-wipeout for 2020 major movie releases
A slate of blockbuster movie releases for 2020 have been pushed back, dissolving the little hope that cinemas had of staging a strong recovery by the end of the year.
Top Gun: Maverick, Mulan and Tenet are among the major releases slated for the second half of the year to be delayed, as coronavirus continues to set back filming and deters viewers from visiting movie theatres.
Some releases planned for subsequent years such as Avatar 2 and the new Star Wars have also been pushed back.
Director James Cameron said that the sequel to Avatar, which was scheduled to feature on cinema screens in December 2021 prior to the virus outbreak, could no longer meet its target release date.
He said that live action filming in New Zealand had been delayed but the pandemic was preventing virtual production work taking place on stages indoors in Los Angeles. “That work is just as critical to the films as the live action work,” he said.
Film studios are considering strategies to release movies outside of the US as the gulf widens between the worsening outbreak in the world’s biggest economy and the recoveries in Asia and Europe. Cinemas in Beijing partially reopened on Friday.
Shares in Cineworld slumped 11 per cent on Friday, after saying that it would delay reopening its US cinemas until mid-August. AMC Theatres was down 1.5 per cent in pre-market trading on Friday, while Disney was 2.3 per cent lower and ViacomCBS, which owns Paramount Pictures that is producing Top Gun:Maverick, fell 1.1 per cent.
UK adds 5 countries to quarantine-free list but keeps US on it
Britain has added five countries to its list that spares returning visitors from a 14-day quarantine but has kept Portugal, Brazil, Sweden, Russia and the US off the list.
Estonia, Latvia, Slovakia, Slovenia and Caribbean archipelago St Vincent and the Grenadines have been added to the list of more than 70 “travel corridors”, while Serbia was removed from the list with effect from July 11.
The changes will take effect in England from July 28, the UK government said on Friday.
Spain, the most popular tourist destination for Britons with about 18m visiting last year, remains on the UK’s “safe” list, even as it has endured a spike in cases in three of its regions.
Public Health England said on Friday it is monitoring “recent reports of substantial increases” in Covid-19 cases in Aragón and Catalonia, which include the cities of Zaragoza and Barcelona. Galicia is another region with an accelerated increase in cases.
A 14-day self-isolation demands people remain at home, with even local walks prohibited.
The UK remains the third-worst affected country in the world with more than 45,600 coronavirus deaths recorded.
And here are some of the latest caseload and deaths of the following countries that did not make the list:
US: 4m+ cases and more than 144,000 deaths as it remains the worst affected in the world by a long shot;
Brazil: 2.3m cases and 84,000 deaths;
Russia: almost 800,000 cases;
Sweden: almost 80,000 cases and 5,697 deaths;
Portugal: almost 50,000 cases and 1,705 deaths.
Honeywell sales fall less than feared as pandemic hits aerospace business
Industrial giant Honeywell said its sales and profits fell less than feared but cautioned it continues to face “challenges” in the aerospace and oil and gas sectors as a result of the coronavirus pandemic.
Revenues fell 19 per cent in the second quarter from a year ago to $7.48bn, better than expectations for $7.29bn.
Sales in aerospace, the company’s largest division, fell 27 per cent to $2.5bn when stripping out foreign exchange effects. The decline was driven by lower demand in the market for commercial jet spare parts, due to a “steep decline in flight hours” and the impact from Boeing’s 737 MAX production halt, which only ended in late May.
However, demand for respiratory personal protective equipment helped drive a 1 per cent increase in its safety and productivity solutions.
The company “aggressively” cut costs and expects to generate savings of between $1.4bn and $1.6bn this year.
Net income fell to $1.08bn or $1.53 a share, down from $1.54bn or $2.10 a share in the year-ago quarter. Adjusting for one-time items, earnings of $1.26 a share topped analyst expectations for $1.21 a share.
The company, which has withdrawn its guidance, said it “expects ongoing top-line challenges due to the current market conditions, particularly in the aerospace and oil and gas sectors”.
Japanese public unsettled by plans for postponed Olympics in 2021
On the day that the Tokyo Olympic Games was due to host the opening ceremony, the Japanese public feels uneasy about hosting the event next year as coronavirus spreads around the world.
A small group of protesters took to the capital’s streets to express their view that the games should be cancelled next year as the Covid-19 threat could still hang over the world.
A public opinion poll released this week by national broadcaster NHK showed that a quarter of Japanese support the Olympics going ahead, while about a third thought the games should be cancelled for good, largely because they think Covid-19 looks likely to keep spreading.
Yoshiro Mori, leader of the committee for the Tokyo Olympics, previously told local media that they would not countenance postponing the games again, yet he has also said that they are against the idea of holding the event without any spectators.
Japan recorded 723 new coronavirus cases on Friday with about a third of those in Tokyo, after the country recorded 981 cases on Thursday, its highest daily number of cases since the pandemic began.
Onus on retailers to enforce face-covering rule, police in England stress
Police officers will only intervene as a “last resort” between any shopper refusing to toe the line and retailers, as it becomes compulsory in England to don a face mask in shops and cafes.
The rules, clarified only a day earlier, make it mandatory to cover your face when out shopping and eating as the UK government, albeit in a muddled way, has sought to slow the spread of coronavirus.
Retailers in England must make it “crystal clear” to customers that if they are not wearing a face covering, they will be refused entry, the Police Federation of England and Wales said.
“It is our members who are expected to police what is a new way of living and I would urge retail outlets to play their part in making the rules crystal clear,” John Apter, the national chair of the police federation, said.
“If you are not wearing a face covering then you are not coming in,” Mr Apter said. “Officers will be there to help stores if needed – but only as a last resort, as we simply do not have the resources.”
Downing Street has made it mandatory in shops and cafés serving takeaway food two weeks after Scotland did exactly that. The four devolved nations of the UK have followed different paths in tackling the difficulties of the coronavirus pandemic.
Exemptions in England include children under 11, people with breathing difficulties and people living with a disability. The rules do not apply for pubs, restaurants, bars, hair salons, gyms and dining areas in shopping centres. Entertainment venues such as cinemas, concert halls and theatres will also be exempt.
Anyone not wearing a covering can be refused entry by an officer, be instructed to put one on or forced to leave the premises. Adults may be fined £100, reduced to £50 if paid within 14 days.
Official guidance published just hours before the new rules come into force clarified that it will be compulsory to wear a face covering when buying food and drink to take away. However, the public will be permitted to sit down in the same outlet and remove their mask to consume their purchase.
Amex profits and revenues weighed down by spending decline
Robert Armstrong in New York
American Express said profits slumped and revenues fell 29 per cent from a year ago in the second quarter, as consumers put away their cards amid the economic uncertainty of the Covid-19 pandemic.
At $7.7bn, revenues missed the expectations of Wall Street analysts, who had pencilled in $8.5bn for the quarter. The company added $628m to its reserves for credit losses, reflecting “the deterioration of the global macroeconomic outlook”. That was significantly less than the $1.7bn in reserves the company added in the first quarter.
Amex profits tumbled 85 per cent from a year ago, with net income falling to $257m or 29 cents a share, down from $1.76bn or $2.07 a share in the year-ago period. Analysts had expected a lossmaking quarter.
“Spending volumes, which declined to their lowest point this quarter in April, gradually improved in May and June, with small businesses being the most resilient,” said chief executive Stephen Squeri.
Amex’s stock has fallen by 30 per cent, roughly in line with the wider financial sector, since the virus first hit markets in February.
Schlumberger hit hard by collapse of US shale patch
Schlumberger, the world’s biggest oilfield services company, said its revenue in North America tumbled by more than half in what it described as the “most challenging quarter in … decades” as the collapse of US shale production sapped demand for its services.
The company said customers in North America had “dramatically cut back” on spending, sending revenue in the continent down by 58 per cent in the second quarter compared with a year earlier and leaving overall revenue down by 35 per cent.
It also recorded $3.7bn in impairment charges, with $1bn of that made up of severance costs.
“This has probably been the most challenging quarter in past decades,” said chief executive Olivier Le Peuch. “This speaks volumes about an industry confronted with historic oil demand and supply imbalances caused by demand destruction from the global Covid-19 containment effort.”
Schlumberger’s grim results round out the big three international oilfield services providers after Halliburton and Baker Hughes reported earlier this week. Services groups keep producers operating by doing everything from maintaining roads to drilling wells and installing production equipment. They tend to be hit particularly hard by downturns, as oil companies cut expenditure and put any new work on hold.
But despite the dropoff, Schlumberger’s results, like those of its competitors, were broadly in line with Wall Street expectations. Shares were flat in pre-market trading. The company also maintained its shareholder dividend.
Schlumberger reported total revenue of $5.3bn for the quarter, down 35 per cent year on year and 28 per cent versus the previous quarter. North American revenue made up $1.8bn of that. Net loss was $3.4bn, dragged lower by the heavy impairment costs.
UK regulators to extend insurance guidance until end of October
Oliver Ralph in London
UK regulators are planning to extend measures telling insurers to be more flexible with their customers during the coronavirus crisis.
In May, the Financial Conduct Authority told the insurance industry to help its customers out by cutting premiums when risks change, offering alternative products, waiving fees if people want to change their policies and deferring premium payments.
The measures were supposed to last until mid-August. However, on Friday the FCA said that it wanted to extend the guidance until the end of October.
“It is important that customers don’t leave themselves uninsured, and that their insurance cover meets their demands and needs,” the FCA said in a statement.
Russia lowers key interest rate to record 4.25 per cent
Russia’s central bank cut borrowing costs to a record on Friday as national lockdown measures imposed in response to the coronavirus pandemic weighed on its economy.
The 25 basis-point cut took its benchmark lending rate to a post-Soviet low of 4.25 per cent. The decision came after the World Bank forecast that the Russian economy would experience a 6 per cent fall in gross domestic product this year.
Russia imposed sweeping quarantine measures in March in its efforts to stem its rapidly rising cases of Covid-19. That caused manufacturing output to shrink by the largest amount on record and pummelled domestic demand, while at the same time the price of oil — its key export — fell 40 per cent.
“The revival of business activity is still moderate and uneven across industries and regions,” the central bank said in a statement. “The recovery of the global and Russian economies will be gradual despite the fact that the easing of restrictions revives economic activity.”
UK services activity rose to 5-year high as relaxed lockdown lifts demand
Chelsea Bruce-Lockhart in London
UK services activity surged in July, suggesting a recovery is in full swing after being held back by government-imposed coronavirus lockdowns while demand adjusted for a less certain future.
The IHS Markit / Cips flash, or interim, purchasing managers’ services index for July rose to 56.6 from 47.1 the previous month, a level not seen since the same period in 2015.
That pushes it well above the 50 mark that means the majority of business leaders surveyed see an improvement in activity compared with the previous month, suggesting the sector is expanding.
The figure was significantly higher than economists had anticipated, who, according to a poll conducted by Reuters, estimated a rise to 51.5. It was the first time that business leaders in the services sector indicated an improvement in business activity since February.
“The UK economy started the third quarter on a strong footing as business continued to reopen doors after the Covid-19 lockdown,” said Chris Williamson, chief business economist at IHS Markit.
The surge in business activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter.
The UK’s interim manufacturing PMI surged to a 32-month high of 57.1, from 50.1 in June bringing the composite index to 57.1 from 47.7.
European stocks knocked by US-China tensions
European equities fell sharply after China ordered the US to close one of its consulates in retaliation to a similar step from Washington as tensions escalated between the world’s two largest economies.
The Euro Stoxx 600 followed its counterparts in Asia-Pacific with a 1.7 per cent drop in early morning trade on Friday, while Germany’s Dax and France’s CAC 40 moved more than 2 per cent lower. In London, the FTSE 100 shed 1.6 per cent.
Beijing told the US on Friday to shut its mission in Chengdu, a location described by analysts at MUFG as diplomats’ key “listening post for developments in Tibet”. The reaction was in response to Washington’s ordering Chinese officials this week to vacate their Houston consulate.
The pullback in European stocks came despite data showing that German and French business sentiment rebounded from the coronavirus pandemic as lockdown measures in both countries were eased.
IHS Markit’s purchasing managers’ index on Friday showed Germany’s manufacturing sector avoided contraction for the first time in 19 months.
“I doubt the risk mood is going to recover much,” Kit Juckes of Société Générale said. “The US-Chinese spat doesn’t help and as much as anything else, August is approaching.” Mr Juckes said August was traditionally a good month for investors in defensive assets, such as the yen, the Swiss franc and gold.
German business activity rises but jobs remains key issue
Federica Cocco in London
The recovery in German business activity picked up markedly in July after restrictions related to the pandemic were completely lifted but the labour market situation remains one of concern, a survey shows.
The IHS Markit Germany flash purchasing manager index for services rose to 56.7 in July from 47.3 in June. The reading is well above the 50.5 expected by economists polled by Reuters.
“July’s PMI registered firmly in growth territory and well above expectations, in a clear sign that business conditions are improving across Germany as activity and demand recover,” said Phil Smith, principal economist at IHS Markit.
Germany’s PMI index for manufacturing rose to 50 in July from 45.2 in May, beating consensus expectations by 2 points. The composite PMI, an average of the two sectors, improved to 55.5 from 47 in the previous month.
The rise in the manufacturing PMI is significant, according to Smith, because the German economy is steered by exports.
But employment data added a sour note to the release, with figures showing the fifth monthly decline, which accelerated for manufacturing employment as 30 per cent of goods producers reported a drop in staff numbers.
France’s services activity picks up at fastest pace in more than 2 years
Federica Cocco in London
France’s private sector rebounded strongly in July while manufacturing activity fell short of expectations, as the eurozone’s second-biggest economy heads for recovery after coronavirus-induced lockdown measures stifled activity.
The IHS Markit France flash purchasing manager index for services rose to 57.8 in July from 50.7 in June, the fastest acceleration in two-and-a-half years. Economists polled by Reuters expected an improvement to 53.2.
“The July PMI figures pointed to strong growth in French private sector business activity, confirming that the economy has entered its recovery phase following the Covid-19 lockdown,” said Eliot Kerr, economist at IHS Markit. “The results for new orders suggest that domestic demand is finally beginning to recover with more and more businesses reopening and consumers starting to adopt some of
their former spending habits.”
Business executives in the manufacturing sector recorded a slight reduction in activity. The PMI manufacturing index fell marginally to 52 in July, from 52.3 in June.
The composite PMI, an average of the two sectors, improved by 5.9 points to 57.6 in July, a 30-month high, beating analysts’ expectations of a rise to 53.5.
July’s increase in the PMI score reflects the easing of lockdown measures, with a rising proportion of businesses saying activity improved compared with the previous month.
The reading is above the 50 mark that indicates a majority of businesses reporting an expansion. That said, PMIs are not an accurate measure of the extent to which economic activity has recovered relative to pre-virus levels. They can tell us how broad-based the recovery is but they cannot measure its pace.
Schindler to cut 2,000 jobs as Covid-19 deals blow to construction sector
Schindler, the Swiss elevator maker, said that it will cut 2,000 jobs over the next two years, as it expects a recovery to pre-pandemic levels in demand for the installation and modernisation of lifts in buildings to take until 2022.
The 3 per cent reduction in its total workforce came as the group reported an 8.7 per cent decline in sales to SFr4.96bn ($5.37bn) in the first half of the year, while net profit fell to SFr313m, down 25 per cent on a year earlier.
The pandemic has hit the global construction industry hard, with Schindler expecting its revenues to contract by as much as 6 per cent in 2020. The acceleration in the appreciation of the Swiss franc was acting as another headwind, the group said.
“Adverse conditions have been accelerating over the last few months and that calls for cost adjustment measures along the whole value chain,” said Thomas Oetterli, chief executive of Schindler.
Equinor reports profit despite pandemic knocking oil demand
Anjli Raval in London
Norway’s Equinor reported a profit despite the coronavirus pandemic taking its toll on the industry, as the company was buffered by its trading division and a government tax change to aid the domestic oil sector.
Equinor announced a second-quarter adjusted net profit of $646m, which was down from $1.1bn a year ago but the earnings surpassed analysts’ expectations of a net loss.
“Our financial results for the second quarter were impacted by very low realised oil and gas prices due to the Covid-19 pandemic, but also by a strong trading performance in volatile markets,” Eldar Saetre, chief executive, said on Friday.
While he said Equinor now sees “a gradual reopening of society in some parts of the world”, he added that “we expect market volatility to continue going forward”.
The company, which cut its dividend earlier this year in the face of the crisis, has yet to reassess long term crude prices as its European peers have done. These companies have announced a series of impairment charges as they believe the pandemic will impact oil demand for longer and accelerate the energy transition.
Still, Equinor said: “The long-term market implications from Covid-19, with possible lower demand and reduced investments in the industry, remain uncertain.”
Hotel Chocolat to create 200 jobs in response to online demand
Alice Hancock in London
Hotel Chocolat, the UK-based chocolate maker, said that it will recruit 200 new jobs and expand its distribution centre to keep up with a surge in online demand prompted by the pandemic.
Consumers switching to online reduced the impact of store closures, the group, which operates chocolate shops in the UK, US and Japan, said on Friday. Its physical stores would usually account for 70 per cent of sales in the first half of the year, which includes Easter and Mother’s Day.
As a result, sales in the six months to the end of June were down by only 14 per cent to £45m.
Digital sales more than tripled over the past three months, Hotel Chocolat said, compared with the same period in 2019. Its east-England factory, having been shut for eight weeks to be adapted to new health and safety requirements, is now operating at 90 per cent of its normal capacity.
Many retailers, particularly in the food sector, have struggled to adapt to the sudden shift to online sales, which are much lower margin than store-based purchases due to delivery and distribution costs.
Hotel Chocolat said it had raised £22m in March that had allowed it to sign a new lease on a larger distribution centre and increase its manufacturing capacity.
“Online, our brand is now set to a significantly faster growth trajectory, delivering gifts, subscriptions and household indulgence,” said Angus Thirlwell, Hotel Chocolat’s chief executive.
He added that the 200 new roles would be added in the company’s distribution centre and factory.
European stocks poised to fall at open on US-China tensions
Futures markets tipped European stocks to open lower, following Asian markets that took fright at signs of escalating tensions between the US and China.
The FTSE 100 looked set to drop 1.2 per cent at the open, with the Euro Stoxx 600 to fall 1.3 per cent. The S&P 500 was on course to slip 0.5 per cent when US trading begins later in the day.
The Beijing government told the US to shut its mission in the western Chinese city of Chengdu, an office from where US diplomats observe the situation in Tibet, in an apparent retaliation to president Donald Trump closing the Chinese consulate in Houston earlier this week.
China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks fell by as much as 5 per cent on Friday, while currency investors retreated to traditional havens.
The Swiss franc hit a four-month peak of 0.9239 per dollar while the yen was lifted to 106.38 per dollar, its strongest since late June.
Pearson swings to loss as disruption closes schools and colleges
Bethan Staton in London
Pearson swung to a first-half operating loss as coronavirus disruption shut schools and colleges and accelerated its transition from a print to a digital business.
The education publisher reported an adjusted operating loss of £23m, compared with a profit of £144m last year, as underlying revenue fell 17 per cent.
The expected decline was due to the coronavirus pandemic, which meant the shutdown of university campuses, school examinations and a 20,000-strong worldwide network of VUE testing centres. The group though said the disruption had paved the way for healthy growth in online education.
“Covid-19 has had a major impact on trading, but we are encouraged by the improving trends and pick up in sales in June,” said John Fallon, the company’s outgoing chief executive.
“Uncertainty remains, but the purpose, grit, speed and ingenuity shown by Pearson colleagues is helping educators and learners around the world to adapt to the pandemic and will ensure that the company itself emerges stronger from it.”
Sales in online learning grew 5 per cent worldwide in the first half while applications for the company’s Virtual Schools program increased 61 per cent.
About a third of Pearson’s revenues last year were in print, with the remainder in digital courses, testing centres or digital versions of traditional course materials. It said in July it would cease to publish regularly updated textbooks.
UK retail sales pick up in June as stores reopen
Chelsea Bruce-Lockhart in London
Growth in UK retail sales picked up in June, driven by a rebound in non-food and fuel purchases as non-essential retail shops reopened during the month.
The volume of retail sales rose 13.9 per cent last month, from the figure recorded for May, the Office for National Statistics revealed on Friday. This was much higher than the 8 per cent increase expected by a group of economists polled by Reuters.
“Retail continued to recover from the sharp falls seen in April, with overall sales now almost back to pre-pandemic levels,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.
The promising retail sales figures were welcome news for the UK economy after it posted a 1.8 per cent increase in output in May, following a historical drop of 20.4 per cent in April, which suggested the UK recovery from any fallout from the coronavirus was going to be slower than expected.
The volume of Britain’s retail sales in June compared with the same period last year was down 1.6 per cent as the sector has yet to recover from the shock of government-imposed lockdowns and the wider repercussions of the pandemic on consumer behaviour.
Blame game escalates as Catalonia grapples with second wave
Ian Mount in Lleida
José Luis Morales Rull, lead coronavirus doctor at one of the main hospitals in the Catalan city of Lleida, took his first time off in months after Spain’s original lockdown ended on June 21.
With a single Covid-19 patient remaining, he looked forward to closing the dedicated ward and going back to normal. But when he returned to work two days later, there were 16 infected patients and the numbers have not stopped rising since.
Dr Morales this week opened a fourth Covid-19 ward to treat the influx of victims after a second wave of infections around Lleida and the regional capital Barcelona prompted authorities to impose new restrictions on the province.
Catalonia, with 16 per cent of Spain’s population, has accounted for almost half of its 16,410 Covid-19 cases recorded in the past two weeks.
“They underestimated the enemy,” the doctor said.
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More than 10,000 African health workers infected
The World Health Organization has voiced growing concern at the number of health workers becoming infected by Covid-19 in Africa, with more than 10,000 cases.
There have been more than 750,000 cases of the disease on the continent in total, with more than 15,000 deaths.
“The growth we are seeing in Covid-19 cases in Africa is placing an ever-greater strain on health services across the continent”, said Dr Matshidiso Moeti, the WHO’s regional director for Africa. “This has very real consequences for the individuals who work in them, and there is no more sobering example of this than the rising number of health worker infections.”
Globally, according to the WHO, about 10 per cent of Covid-19 cases are among health professionals. Information on health worker infections in Africa is limited, the WHO added, though preliminary data reveal they comprise more than 5 per cent of all cases in sub-Saharan Africa.
“One infection among health workers is one too many,” said Dr Moeti.
Wealthy buyers snap up private islands as they flee pandemic
Jamie Smyth in Sydney
With its pristine beaches, coral reefs and 32 acres of lush tropical gardens, Fiji’s Mai Island could be the perfect place to hunker down and see out the coronavirus pandemic. And for a few million dollars it could be yours.
The island, which has previously been on the market for just more than $4m, is one of a host of offshore retreats being marketed to the super-rich as ideal spots to escape the ravages of Covid-19.
The South Pacific, Caribbean and remote parts of the US and Europe are among the most popular destinations, according to real estate agents who are rushing to tap the surge in demand for private hideaways even as the world economy goes into a deep recession.
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World leaders to work from home in ‘virtual’ UN General Assembly
The most high-profile event in the UN’s annual calendar will be a slimmed-down affair this September due to the pandemic, with world leaders staying away from New York and contributing speeches via video link, a UN spokesperson said.
While the number of new Covid-19 cases in New York has fallen dramatically, the US now has more than 4m reported cases in total, higher than any other country.
In a press briefing on Thursday, Reem Abaza, spokesperson for the UN president of the General Assembly, Tijjani Muhammad-Bande, said that each member state, observer state, and the European Union had been invited to submit a pre-recorded video for the General Debate of the UN General Assembly.
The videos will be played in the UN’s General Assembly Hall, introduced by a representative of each state, who will be physically present.
The same procedure will apply for a series of special high-level sessions scheduled to take place in New York, including commemoration of the 75th anniversary of the UN, a summit on biodiversity, and a meeting to promote the International Day for the Total Elimination of Nuclear Weapons.
Victoria reports highest one-day death toll
Australia’s state of Victoria reported a one-day record of six new deaths linked to Covid-19, as the country’s prime minister said his cabinet was committed to a strategy of suppressing the virus.
Daniel Andrews, premier for Victoria, said the six people were in their 80s and 90s, and were connected to aged care centres. The deaths take Victoria’s total Covid-19 death toll to 55.
Australia will continue to pursue a strategy of suppressing the virus, Prime Minister Scott Morrison said on Friday.
“The goal of that is obviously and has always been no community transmission,” Mr Morrison said. “There will always be cases that come, because Australia has not completely shut itself off from the world. To do so would be reckless.”
New South Wales reported seven new cases on Friday, six of which could be traced to existing infections.
Health officials in the state warned that community transmission of the virus was continuing. And called on residents to avoid non-essential gatherings, avoid crowds and consider wearing a mask when social distancing was not possible.
German stocks recover from Covid-19 effects faster than peers
Germany’s benchmark Dax index turned briefly positive for the year this week, a rare spot of green among European stock indices that have mostly failed to return to where they started 2020 after shedding value in March’s sharp sell-off.
Although the index of 30 German blue-chips closed in negative year-to-date territory on Thursday, its rally over the past few months has brought it to just 1.1 per cent below where it ended 2019 — making it Europe’s best performing main equity market.
By contrast, the continent-wide Stoxx 600 benchmark is down about 10 per cent in the year to date, while the UK’s FTSE 100 has dropped about 18 per cent.
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Global stocks drop as US economic recovery in doubt
Hudson Lockett in Hong Kong
Global stocks dropped after US unemployment claims jumped for the first time in four months in a sign that the world’s largest economy is struggling to recover from the coronavirus pandemic.
China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks skidded 1.4 per cent in early trading on Friday and Hong Kong’s Hang Seng was down 1.3 per cent. Australia’s S&P/ASX 200 fell 1.1 per cent. Japan’s stock market was closed for a public holiday.
On Wall Street overnight, stocks suffered their biggest one-day fall in almost four weeks after jobs data showed the first weekly rise in unemployment since the early days of the health crisis.
The S&P 500 fell 1.2 per cent as the five largest components of the index — Microsoft, Apple, Amazon, Alphabet and Facebook — all slid by more than 3 per cent. US jobless claims climbed to 1.4m last week, up from 1.3m a week earlier, adding to concerns the US economic recovery was stalling.
Futures markets tipped the S&P 500 to rise 0.1 per cent when US trading began later in the day. London’s FTSE 100 was set to fall 0.7 per cent.
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Fitch downgrades S Korean outlook after economy falls into recession
Edward White in Wellington
Fitch Solutions has downgraded its outlook for the South Korean economy this year to a contraction of 0.7 per cent after official data showed the coronavirus pandemic has pushed Asia’s fourth-biggest economy into a recession.
The research arm of the Fitch group said the worse-than-expected 3.3 per cent contraction in the second quarter had forced the downward revision from an earlier forecast of a 0.3 per cent drop for 2020.
Corporate results in Seoul this week reflected a mixed second quarter. SK Hynix, the world’s second-largest chipmaker, reported a steep rise in earnings on the back of solid computer chip demand, while Hyundai, one of the world’s top carmakers, and steelmaker Posco saw profits slump on weak global demand.
Fitch analysts still expect a gradual recovery for the South Korean economy in the second half on forecasts that domestic demand will be buoyed by record government stimulus.
However, they warned the recovery could be derailed by “a second global wave of Covid-19 infections” as well as problems in South Korea caused by rising unemployment and high household debt.
“According to the latest data, the unemployment rate stood at 4.3 per cent in June compared to 3.3 per cent at the beginning of the year. This puts our view for a robust recovery in private consumption in 2021 at risk. Moreover, household debt-to-GDP still remains at elevated levels at around 95.5% as of the end of 2019 — this could mean that over the medium term, households may prefer deleveraging and in turn this will depress the outlook for private consumption.”
Mexico reports record rise in coronavirus cases
Jude Webber in Mexico City
Mexico hit a new daily record increase in confirmed coronavirus cases, with 8,438 added to the tally, bringing the overall number to 370,712, the health ministry said on Thursday.
The authorities have confirmed 41,908 deaths, a rise of 718 from the previous day’s count.
Mexico has reported the world’s fourth-highest overall death tally.
Hugo López-Gatell, Mexico’s coronavirus tsar, has argued in recent days that the number of cases has been increasing at a slower rate. In Mexico City, hospitalisations have continued to increase.
The government, which has acknowledged its figures do not represent all cases because of a low level of testing, estimates 404,092 cases, 43,139 deaths and 50,935 cases currently active.
Hollywood to debut summer blockbusters outside the US
Alex Barker and Anna Nicolaou
Hollywood is preparing to tear up its playbook for releasing billion-dollar blockbusters, as the pandemic forces big movie studios such as Disney and Warner Bros to lean more heavily on cinemas outside the US.
After repeatedly postponing the release of Tenet, a $200m-budget thriller directed by Christopher Nolan that would have been the first big post-lockdown release, Warner Bros is now privately committing to a late-August debut in markets that are ready, according to people familiar with the matter.
Meanwhile, Disney on Thursday pulled its release date for Mulan, which was slated for August 21, dealing another blow to cinema operators who were banking on the movie to help revive attendance.
But the company said it had “paused” its plans in order to explore how to “most effectively bring this film to audiences around the world”, hinting at potentially using new approaches to roll out the film in different jurisdictions.
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Xinjiang coronavirus cases near 100
Health authorities in China reported a further 13 cases of Covid-19 in the western region of Xinjiang, taking the tally for the week-old outbreak to almost 100.
Xinjiang, which is home to the Uighur ethnic minority, has now reported 95 cases of Covid-19 since last Wednesday. The region has put its capital city, Urumqi, on a “wartime” footing following the outbreak and conducted mass testing.
Two further cases were found in the industrial province of Liaoning in China’s north-east. Fifteen people tested positive for coronavirus but were not showing symptoms, according to Liaoning’s health commission.
China also reported six new imported cases.
The country’s overall reported tally for Covid-19 now stands at 83,750.
Trump cancels Florida convention as US cases top 4m
James Politi in Washington and Peter Wells in New York
Donald Trump cancelled plans to hold the bulk of the Republican national convention in Jacksonville, Florida, as the US reached the milestone of 4m coronavirus cases.
The decision represents a remarkable reversal for the president, who throughout the pandemic had doggedly insisted on holding a large in-person event to clinch his party’s nomination for re-election, despite warnings the gathering could be a big source of new Covid-19 infections.
“We won’t do a big crowded convention per se, it’s just not the right time for that,” Mr Trump said at a news conference on Thursday evening. “I just felt it was wrong to have people going to what turned out to be a hotspot.”
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Asia-Pacific stocks track Wall Street lower
Stocks in Asia-Pacific fell on Friday after rising US unemployment claims pushed Wall Street lower amid concerns over the country’s economic recovery.
The Kospi in South Korea was down 0.5 per cent and Australia’s S&P/ASX 200 fell 0.6 per cent. Futures tip the Hang Seng in Hong Kong to fall 1.2 per cent as tensions between China and the US escalate.
New US jobless claims climbed to 1.4m last week, up from 1.3m a week earlier and the first increase in almost four months.
Those figures and concerns over the progress of the next round of US stimulus pushed the S&P 500 1.2 per cent lower to notch its largest one-day drop in almost four weeks.
S&P 500 futures were up 0.2 per cent.
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Intel has pushed back the planned launch of its next generation of chips by six months, throwing into question its attempt to regain the manufacturing edge it lost to TSMC and wiping 10 per cent from its market value in after-market trading on Thursday.
US stocks suffered their biggest declines in almost four weeks on Thursday, after data showed the first weekly rise in new unemployment claims in almost four months.
Senator Jeff Merkley, who tweeted a photo of himself on a crowded American Airlines flight, has introduced a bill to bar airlines from filling middle seats during the pandemic.
The UK government has spent £100m on a manufacturing facility in Essex to scale up production of a Covid-19 vaccine, as a growing number of pharmaceutical companies report promising results in early-stage trials.
People have flocked to Twitter during the coronavirus pandemic and civil rights protests, adding 20m new daily users in its second quarter from the previous three months, but sales still fell as the internet group warned of a choppy advertising market.
Dubai’s Emirates has become the first airline to say that it will cover medical expenses and quarantine costs for all passengers should they contract coronavirus while travelling away from home.
US deaths rise by more than 1,000 for third consecutive day
The number of coronavirus cases in the US topped 4m on Thursday, with the world’s hardest-hit country reporting back-to-back days of more than 70,000 new infections and more than 1,000 new deaths for the third straight day.
A further 71,027 people in the US tested positive over the past 24 hours, according to Covid Tracking Project data, from 70,043 on Wednesday. That pushed the total number since the pandemic began to almost 4.02m.
The US comprises about 26 per cent of total infections worldwide and almost 22 per cent of deaths, with 136,477 nationally since the outbreak began. A further 1,039 people in the US died from Covid-19, down from 1,126. It was the first time since late March the country has record three consecutive days of more than 1,000 fatalities.
Earlier this month, the seven-day average of daily deaths fell below 500 a day for the first time since April 1. That has now risen to 834.
California (12,040), Florida (10,249) and Texas (9,507) reported the biggest increase in cases, and were among the 16 states that had daily jumps of more than 1,000 new infections.
California (157) and Florida (173) both reported record daily increases in fatalities, while Texas (173) eased from yesterday’s record jump of 197.
The number of patients currently hospitalised in the US with coronavirus stood at 59,363 as of Thursday, down 265 from the previous day’s total.
It is the highest since mid-April when hospitalisations were mostly concentrated in north-east states that were the hardest-hit at the time.