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US stocks rose for a third day running, as investors continued to measure better-than-expected corporate earnings against dire forecasts because of the pandemic. The S&P 500 added 0.4 per cent, led higher by energy. The tech-heavy Nasdaq also rose about 0.4 per cent to a fresh record. The Dow Jones Industrial Average rose 0.6 per cent. Gold jumped above $2,000 for the first time.
Ireland has blocked the reopening of about 3,500 pubs for a second time because of mounting anxiety that rising infections could threaten plans to reopen schools later this month. Schools shut in mid-March, days before the pub sector closed with the loss of 50,000 jobs. Prime minister Micheál Martin deferred the reopening next Monday of non-food pubs by another three weeks.
Sotiris Tsiodras, Greece’s chief epidemiologist, has called for “increased vigilance” after health authorities reported the highest single-day number of cases since April 22, when the country was under a strict lockdown. Authorities said 121 confirmed cases were recorded on Tuesday, including clusters linked to a meat processing plant and several wedding receptions across northern Greece.
Germany has partially lifted its travel warning for Turkey, imposed at the height of the pandemic. A government statement said the warning would be lifted for Antalya, Izmir, Aydin and Mugla, which had a "low rate of infection" — about five per 100,000 people in seven days. German authorities said if the situation deteriorates, the travel warning for the four regions might be reintroduced.
Corporate news you might have missed …
PizzaExpress has put its UK business up for sale and warned of 1,100 job cuts as it takes drastic action to stave off collapse as a result of the crisis. The 55-year-old pizza chain will close 67 restaurants — 15 per cent of its UK estate — and offload its Chinese business. The company announced a fresh £144m cash injection to refinance debt and fund the reopening of its 449 UK restaurants.
EasyJet generated £7m revenue over a three-month period when few people were flying, as governments imposed strict lockdowns and grounded planes in their efforts to staunch the spread of the pandemic. But the low-cost airline has improved its previously dire expectations as it predicts a smaller loss in the fourth quarter compared with the third.
Second-quarter revenues jumped 69 per cent at Beyond Meat, the US plant-based meat group, as sales increases at retailers more than offset the fall in fast-food chains and restaurants because of the pandemic. Beyond Meat said revenues for the three months to June totalled $113.3m after its retail sales almost tripled to $90m while food service revenues fell 61 per cent to $6.5m.
Disney took a $3.5bn hit to operating income at its theme parks, as the pandemic ground some of the entertainment giant’s most lucrative businesses to a halt. The company faced three months in which Covid-19 bruised nearly all of its businesses apart from streaming. Disney has depended on its theme parks and blockbuster movies to deliver profits even as traditional media has declined.
California cases slow as deaths surge in Texas
Peter Wells in New York
California reported fewer than 5,000 new cases for the second day running, continuing signs that the spread of the coronavirus may be starting to slow in the most populous US state.
But Texas reported one of its biggest daily increases in deaths since the pandemic began, and Florida also had one of its biggest one-day jumps in Covid-19 fatalities on record.
A further 4,526 people tested positive in California over the past 24 hours, the state government revealed on Tuesday, down from 4,752 a day earlier. These are the smallest daily increases since late June.
Deaths rose by 113 to 9,501 overall, from an increase of 32 reported on Monday. Over the past week, an average of 140 people a day have died, a record rate for the state.
In Texas, 245 more people died from the virus, the state's health department revealed. On Monday, 179 fatalities had been reported, but this essentially spanned two days because the state's Covid-19 dashboard underwent a scheduled upgrade on Sunday.
Over the past week, health officials in Texas have made several changes to how they categorise new cases and new fatalities, leading to some large day-to-day swings between figures. The state has averaged about 198 deaths a day over the past seven days, though.
A further 9,167 people tested positive over the past 24 hours, officials said, compared with a combined 11,529 for the previous two days.
Florida’s health department revealed on Tuesday morning that 247 Florida residents and non-residents had died from coronavirus, up from 73 yesterday.
The latest data push the seven-day average of deaths there to a record of about 184, according to Financial Times analysis of Covid Tracking Project data.
That continues a recent trend for Florida — and other hotspots such as California and Texas. They have reported record daily jumps in fatalities, but alongside new infections retreating from the peak levels of July.
Scottish pupils’ exam scores downgraded because of pandemic
Bethan Staton in London
Scottish secondary school pupils have had nearly a quarter of their results downgraded under a new marking system that was adopted after exams were cancelled because of the pandemic.
Results for National 5s, Scottish Highers and Advanced Highers released on Tuesday showed that the Scottish Qualifications Authority, the regulator, had adjusted 133,000 entries, more than one quarter of all results, from the grades predicted by teachers. Most of them, 93 per cent, were adjusted down.
The results expose concerns over the fairness of the system that replaced cancelled exams with predicted grades based on mock exams, coursework, and teacher assessment. These were then moderated by the SQA, based on the past performance of each school.
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NZ finds half of symptomatic patients not tested
A study in New Zealand has found that almost half of people who reported having symptoms of Covid-19 infection had not taken a test.
The health ministry said on Tuesday that a survey of 800 New Zealanders, conducted in late July, found that just under 50 per cent of those with symptoms had decided not to get tested.
Three-quarters of those said they did not think they had Covid-19, the survey found.
The survey also showed that the majority of respondents — 65 per cent of adults and 80 per cent of children — stayed at home when they had such symptoms.
On Tuesday, the ministry also published its recommendations to boost the sector charged with caring for the elderly, in which most deaths from coronavirus occurred. Director-general of health Ashley Bloomfield said a national outbreak management policy would be developed to include the sector.
Australia relies on quarantine 'trust', says senior doctor
One of Australia's most senior physicians acknowledged on Tuesday that the quarantine system was still based on trust, despite a huge surge of new cases in Melbourne, the country's second largest city.
Nick Coatsworth, a deputy chief medical officer, said in an interview that controlling the new surge relied on voluntary self-isolation, including by those using the Melbourne-Sydney route, one of the world's busiest city-to-city air corridors.
"There are reasons why people still need to travel and, by and large, they're dealt with individually by state health officers," Dr Coatsworth said. "So the amount of travel ... has significantly decreased – so it's far less of a risk."
He acknowledged the system relied on people going into voluntary quarantine. "We are relying on the whole community – that's what combating Covid-19 is all about."
Dr Coatsworth told the Nine Network's Today Show that people breaking quarantine rules risked a criminal record and jail time. "So anybody who's contemplating that sort of thing, you just got to ask yourself, is it really worth it both for you personally and for the whole of the Australian community?"
North Korea illegal coal exports rise as economy plunges
Edward White in Wellington
North Korea has increased its illegal smuggling of coal, suggests new satellite imagery, as dictator Kim Jong Un faces the country’s worst economic downturn on record.
While North Korean authorities have not confirmed a single case of coronavirus, internal travel restrictions have been tightened in recent weeks. International experts are sceptical about the truth of Pyongyang's claims.
The country is heading for an 8.5 per cent contraction in annual gross domestic product this year, which would be its worst economic downturn on record, according to Fitch Solutions.
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Pandemic fuels the fires of European separatism
European independence movements are on the offensive but suffer from disunity, writes Jonathan Parker, PhD candidate at the University of Sussex.
In the Spanish region of Catalonia, pictured, an early election has loomed since January. The nationalist Republican Left of Catalonia party had been exploring a dialogue with the Socialist-led Madrid government of Pedro Sánchez, but this drove a wedge between the Left and the more hardline Junts per Catalunya alliance.
In Belgium, the pandemic has radicalised territorial conflicts. Policymaking is rendered difficult by the gulf between a right-leaning, increasingly secessionist Flanders and a leftist Wallonia that is not interested in more decentralisation.
For the UK, the pandemic has been a story of steady divergence between the central government in London and the authorities in Scotland, Wales and Northern Ireland. Next year promises to be one of the most consequential in Scotland's modern history as it holds elections with independence on the agenda.
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San Francisco delays fee payments by hard-hit businesses
San Francisco plans to delay collection of about $63m in fees due between now and March 2021 to help small businesses such as restaurants ravaged by the coronavirus pandemic.
The city said on Tuesday it would defer business registration and licensing fees paid by restaurants and other food businesses, bars, convenience stores, small retailers, hotels and tour operators.
“Businesses in San Francisco continue to struggle with a loss of revenue and unfortunately we know that the Covid-19 pandemic isn’t going away any time soon,” said London Breed, the city's mayor.
Ms Breed said when the decision to defer some city fees was originally made, the city was counting on federal assistance to make up for the shortfall, "but the lack of a co-ordinated federal response to the pandemic has only exacerbated the situation".
The city said it would defer payments of about $49m in registration fees and $14m in licensing fees.
US pandemic death toll returns to 1,000-plus level
Peter Wells in New York
The US saw the number of new coronavirus deaths jump back above 1,000 on Tuesday as Texas and Florida reported large increases in fatalities.
While daily deaths linger at levels previously seen in May, new Covid-19 cases on Tuesday hovered around 50,000 for the third day in a row, continuing a recent trend of new infections peeling back from record highs despite a rise in fatalities.
A further 1,176 people died from coronavirus, according to Covid Tracking Project, up from 519 on Monday. Over the past week, the US has reported an average of 1,049 fatalities a day.
Florida reported a further 247 deaths, 10 shy of its record from last week, while Texas had a further 245 deaths that was among its biggest since the pandemic began.
Over the past 24 hours, 51,568 people tested positive for coronavirus, up from 49,561 on Monday. The US has averaged almost 59,200 new cases a day over the past week, down from a record rate of nearly 66,900 two weeks ago.
Texas (9,167), Florida (5,446) and California (4,526) had the biggest single-day increases in new cases.
Olympics chief strikes defiant tone over Covid-19 delay
Robin Harding and Leo Lewis in Tokyo
The 2021 Olympic Games will be held “with corona”, according to the chief executive of the Tokyo organising committee, even as sceptics question whether the games will ever happen.
Toshiro Muto struck a defiant tone in an interview with the Financial Times, asserting that the Olympics would take place even without a resolution to the Covid-19 crisis.
His comments come as the country deals with a struggling economy, record infection rates in Tokyo, closed borders and questions about the government’s management of the health crisis.
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Novavax reports ‘robust response’ to vaccine candidate
Novavax, one of the biotech companies that has secured US government funding to accelerate the development of a coronavirus vaccine candidate, revealed that its potential treatment showed promising results in an early-stage trial.
The company's shares, which have surged more than 3,000 per cent so far this year, swung wildly in after market trade on Tuesday as investors perused the data from its trial.
Maryland-based Novavax said participants in a phase-one trial who took its potential Covid-19 vaccine produced neutralising antibodies, which scientists believe are necessary to help build immunity to the disease.
The vaccine candidates were "generally well-tolerated and elicited robust antibody responses numerically superior" to that from serum obtained from people who have recovered from the disease, the company said in a statement.
The stock, which finished the regular trading session up 0.8 per cent to $157.17, swung between a loss of 30.6 per cent and a gain of 13.9 per cent in after-hours trading, before steadying with a gain of about 9 per cent.
Novavax has yet to have any vaccines approved, but in early July signed a deal worth up to $1.6bn with the US federal government's vaccine programme, known as Operation Warp Speed, to accelerate development of a coronavirus cure.
US president Donald Trump, pictured, last month visited a North Carolina laboratory where some components of the Novavax vaccine candidate are produced.
The company hopes to use the money to fund a larger phase-three trial, of up to 30,000 participants, later in the year.
The Novavax agreement was, at the time, the largest deal that had been announced in Operation Warp Speed, topping a partnership with AstraZeneca worth up to $1.2bn.
The vaccine programme includes other big pharmaceutical companies such as Johnson & Johnson, Pfizer and Merck, as well as biotechs such as Moderna and Emergent BioSolutions.
Novavax shares have gained about 3,850 per cent so far in 2020.
Asia-Pacific stocks open lower as gold hits new high
Stocks in Asia-Pacific were broadly lower and gold touched a new record high as concerns swirled over the post-pandemic recovery.
Japan’s Topix dropped 0.6 per cent, the S&P/ASX 200 in Australia shed 0.3 per cent and the Kospi in Seoul added 0.3 per cent. S&P 500 futures dipped 0.1 per cent.
In Asia on Wednesday, China’s Caixin services purchasing managers’ index will provide pointers on the state of the country’s economy outside manufacturing, months after lockdowns were lifted.
Investors are awaiting details of the next US recovery package, which has been stalled by disagreements over the size of extra unemployment benefit payments.
Economists have warned that a failure to reach an agreement would deal a blow to the global economic recovery.
Gold, which is seen as a haven, surged above $2,000 an ounce to a record high on Tuesday. The metal was up 0.5 per cent at a new record of $2,029 in early trading in Asia.
US Treasury yields hit record lows on Tuesday amid concerns over the economic recovery from the pandemic. The 10-year yield was steady at 0.5151 in morning Asia trading.
Overnight on Wall Street, the S&P 500 and the Nasdaq Composite added 0.4 per cent with the latter closing at a new record high.
Virgin Australia lays off a third of workforce as Covid-19 bites
Virgin Australia said on Wednesday it would lay off 3,000 employees — about a third of its workforce — and shed its long-haul jets as part of a restructuring under new owner Bain Capital.
The airline, which went into voluntary administration, a form of creditor protection, in April owing A$6.8bn (US$4.9bn), said the moves would make it a "stronger, more profitable and competitive" carrier.
In a statement issued on Wednesday, the airline said the moves were a necessary "reduction in cost base to meet sector uncertainty and Covid-19 market conditions".
Virgin would let go of its Boeing 777 and Airbus A330 long-haul aircraft, its short-haul turboprops and short-to-medium-haul Airbus A320 planes, to become an all Boeing 737 fleet.
The budget Tigerair brand would cease to operate, the airline said.
“Our aviation and tourism sectors face continued uncertainty in the face of Covid-19 with many Australian airports recording passenger numbers less than 3 per cent of last year and ongoing changes to government travel restrictions,” said Virgin Australia group chief executive Paul Scurrah.
The company said customers would retain “travel credits post administration with validity dates extended for bookings made prior to administration”.
UK panel blames Covid-19 spread on lack of early quarantine
Laura Hughes in London
The British government’s decision to maintain loose border controls in the early months of the pandemic “accelerated” the spread of coronavirus, parliamentarians have concluded in a new report.
The House of Commons home affairs select committee said on Wednesday that the government’s decision not to impose quarantine rules increased the number of “imported” infections and saw “many more” people contract the virus.
As the pandemic spread, Britain remained in a small club of nations that failed to match the tighter borders and stringent quarantine rules on arriving travellers that had become common in other countries.
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Hong Kong PMI dips as Covid-19 cases climb
Business activity in Hong Kong was hit in July as the government imposed social-distancing measures in a bid to combat a new wave of coronavirus infections, according to a private survey.
The IHS Markit Hong Kong purchasing managers’ index fell to 44.5 in July after a slowing in the number of new cases and lifting of restrictions saw the index climb to 49.6 in June. A reading below 50 marks a fall in activity compared with the previous month.
"Latest PMI data pointed to a marked deterioration in private sector conditions across Hong Kong, representing a setback to the economic recovery,” said Bernard Aw, principal economist at IHS Markit. “The tightening of Covid-19-related measures in response to a rise in new infections dealt a new blow to the economy”
Despite the deterioration, the July reading was still above that seen during February to April during the worst of the pandemic.
Companies surveyed said business activity shrank sharply and new orders fell as the city experienced a third wave of coronavirus infections forcing the government to close businesses deemed as high-risk. Restaurants are limited to take-out only after 6pm and bars that do not serve food are shut.
The third wave of infections piles pressure on an already delicate economy. Hong Kong entered a recession in 2019 on the effects of the US-China trade war and social unrest.
Employment levels remained “broadly unchanged”, said Mr Aw, but “the concern is that further severe deteriorations in business conditions well see a new round of job losses”.
US stimulus negotiations ‘far away’ from a deal
Lauren Fedor in Washington
Congressional leaders and White House officials warned on Tuesday that they were still far away from a deal on more economic stimulus for the pandemic-ravaged US economy.
Nancy Pelosi and Chuck Schumer, the top Democrats in the House and Senate, respectively, have met regularly with Mark Meadows, White House chief of staff, and Steven Mnuchin, Treasury secretary, since emergency unemployment aid ran out last week.
After talks on Capitol Hill on Tuesday, Mr Mnuchin told reporters that negotiators had agreed to work “around the clock” to “reach an overall agreement” by the end of the week so that a bill could be drawn up and approved by the Democratic-controlled House and Republican-held Senate next week.
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ADB approves $1.5bn loan to help Thailand fight virus
The Asian Development Bank on Tuesday said it would provide a $1.5bn loan to Thailand to help the kingdom fight the coronavirus pandemic.
The Manila-based multilateral lender said that although Thailand has one of the more developed healthcare systems in south-east Asia, the country remains “highly vulnerable” to the pandemic.
"Potential surges in Covid-19 cases could overwhelm the system, resulting in constraints in human resources and medical equipment," ADB said in a statement.
The loan would help fund the government’s relief packages, the bank said, which are aimed at better preparing the healthcare system against possible future waves.
Some money would support small and medium-sized enterprises, ADB added, specifying sectors most affected by the outbreak such as tourism and manufacturing.
The bank has forecast Thailand’s economy to contract by 6.5 per cent in 2020, a sharp downgrade from its December 2019 projection of 3 per cent growth.
The ADB said it feared an economic crisis in Thailand would have repercussions in Cambodia, Laos, Myanmar and Vietnam.
In addition to economic havoc caused by Covid-19, the kingdom was hit this week by flooding in its north-eastern provinces, pictured.
Covid-19 to trigger M&A and succession shake-ups, says Mizuho chief
Leo Lewis in Tokyo
The president and chief executive of Mizuho bank has forecast a broad shake-up of Japan's business world as Covid-19 accelerates succession plans and triggers a wave of dealmaking.
In an interview, Tatsufumi Sakai said Japanese companies could not afford to wait patiently for a return to pre-pandemic conditions, warning that instead they should adapt businesses and financial structures to a “with-corona” era that will probably stretch into years.
Over that period, he added, the modest liquidity issues of the early months of the crisis risk deepening into solvency problems for many companies, increasing the need for capital and accelerating trends that many Japanese companies have been slow to address.
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US to send first cabinet member to Taiwan in 6 years
The US secretary for health and human services, Alex Azar, would visit Taiwan in the next few days to congratulate its government on its response to the coronavirus pandemic, Washington announced on Tuesday.
The department said in a statement that Mr Azar would be the first US cabinet member to visit Taiwan in six years, and the highest level official visitor from Washington since 1979.
“Taiwan has been a model of transparency and co-operation in global health during the Covid-19 pandemic and long before it,” Mr Azar said in the statement.
Mr Azar "will meet his Taiwan counterparts, Covid-19 responders and experts, and other Taiwan partners to discuss the Covid-19 response, global health, the US-Taiwan partnership, and Taiwan’s role as a reliable global supplier of medical equipment and critical technology", the statement said.
Wynn Macau shares dip as pandemic hits casinos
Shares in Wynn Macau dipped in Hong Kong on Wednesday after its parent company reported an almost $640m loss in the second quarter as the pandemic hit casinos.
Wynn Macau shares slipped 2 per cent after Wynn Resorts reported the $637.6m net loss in the three months to the end of June, from a $94.6m profit in the same period last year.
Wynn Macau reported a $351.6m loss down from a $169m profit a year earlier.
Revenue from Wynn Resorts’ casino business fell by more than 99 per cent to $9.4m during the period. Casino revenue in Macau was negative in the second quarter, from $1bn a year earlier.
Casinos in Macau were forced to close for two weeks in February to limit the spread of the virus in the Chinese territory. But the gambling hub has struggled to recover owing to strict quarantine restrictions on its core mainland Chinese clientele.
Gaming revenue in Macau for the seven months of the year was down almost 80 per cent compared with the same period in 2019.
Casinos have reopened with limits on the number of people per table and with temperature checks, Wynn said.
“In Macau, the authorities have begun to gradually and thoughtfully ease some visitation restrictions, and we are confident the market will benefit from the return of the Chinese consumer as we move through the back half of 2020,” said Matt Maddox, Wynn Resorts chief executive.
Restrictions on travel between neighbouring Guangdong and Macau were eased in July, allowing those who test negative for the virus to cross the boundary.
Eighth Bolsonaro cabinet member tests positive
Andres Schipani in Brasília
Another minister in the government of Brazilian President Jair Bolsonaro tested positive for coronavirus on Tuesday, bringing the tally to eight as infections continue to rise in the country suffering from the world’s second-worst coronavirus crisis after the US.
Secretary of the Presidency Jorge Oliveira said in a tweet that he had quarantined himself on Tuesday after testing positive for Covid-19. "I have mild symptoms and follow up under medical supervision", he wrote.
The news of his infection came less than a week after Brazil's first lady, Michelle Bolsonaro and the country's science minister, Marcos Pontes, also tested positive.
According to the government, 178 civil servants working at the Brazilian presidency office have tested positive through July 31.
"Captain Corona”, as detractors call Mr Bolsonaro, who is a former army captain, has repeatedly played down the seriousness of the pandemic despite having tested positive for the virus himself. He claimed to have recovered in late July.
With 51,603 new cases and 1,154 deaths in the past day, on Tuesday evening Latin America's largest country confirmed more than 2.8m infections and 95,819 fatalities since the pandemic began.
Australian state reports record Covid-19 deaths and new cases
Australia’s state of Victoria reported its highest one-day tally of both new Covid-19 cases and deaths a day after it introduced higher fines for people who break isolation orders.
Daniel Andrews, Victoria’s premier, said the state had found 725 new coronavirus cases in the past 24 hours, and 15 deaths.
The new fatalities take Victoria’s total from the pandemic to 162.
Of those deaths reported on Wednesday, 12 were linked to care homes for the elderly, which have become a focus of public health efforts in the state.
Victoria has tightened its lockdown on Melbourne after the virus continued to spread.
Essential workers will have to carry a permit issued by their employers and photo identification when traveling to and from work starting from Thursday.
Mr Andrews asked those who were not following the coronavirus restrictions in Melbourne to change their behaviour and said those who are sticking to the rules were “amazing”.
Treasury yields plumb new depths as bond investors fret
Colby Smith in New York
US Treasury yields closed at new lows on Tuesday as anxious bond investors continued to drive a “relentless rally” in government debt that stood in stark contrast to America’s much more optimistic equity market.
The yield on the 10-year Treasury note dropped 0.05 percentage points to a record low 0.52 per cent, according to the US Treasury department’s daily closing calculation.
The debt benchmark has only once briefly fallen below that number in intraday trading at the height of the coronavirus crisis. On March 9, the 10-year yield plunged to 0.31 per cent before rising again.
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US CDC warns of parallel surge of children's disease
The US Centers for Disease Control and Prevention on Tuesday warned that public health systems battling the coronavirus pandemic are likely to face another challenge from a life-threatening illness affecting children.
Acute flaccid myelitis, a serious paralytic condition affecting mostly children, is due for a return to the US in 2020 as enterovirus d68, which causes AFM, tends towards a two-year cycle.
"This means it will be circulating at the same time as flu and other infectious diseases including Covid-19 and could be another outbreak for clinicians, parents, and children to deal with," said CDC director Robert Redfield.
"AFM affects the nervous system, specifically the area of the spinal cord called the grey matter," he said. "Most patients develop sudden arm or leg weakness."
Dr Redfield said AFM can progress quickly and patients can become paralysed over the course of hours or days and require a ventilator to help them breathe. "Some patients will be permanently disabled," he added.
CDC data indicate the US experienced its worst outbreak in 2018, with 238 cases in 42 states. "Most cases were in young children," said Tom Clark, a paediatrician and deputy director of CDC's viral diseases division. "The average age was five years."
Covid-19 delays prison for ex-Google self-driving car chief
Anthony Levandowski, co-founder of Google’s self-driving car project, has been sentenced to 18 months in prison for stealing trade secrets and allegedly using them to help build a rival driverless programme at Uber.
Mr Levandowski, who had pleaded guilty to one of the 33 counts against him in March, will not go to prison right away because of coronavirus concerns. He has previously called prison time a “death sentence” because of Covid-19, after prosecutors had earlier recommended a sentence of 24-30 months.
Judge William Alsup has ordered him to be under house arrest until his sentence can begin, describing his actions as “the biggest trade secret crime I have ever seen”.
Mr Levandowski is suing Uber for $4bn.
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China resumes issuing visas to some South Koreans
Song Jung-a in Seoul
China resumed visa issuance for South Korean students and workers on Wednesday to boost bilateral exchanges as its neighbour largely contained the coronavirus pandemic.
South Korea is the first country for which China eased entry restrictions after it banned foreign arrivals at the end of March amid the pandemic.
The move comes as South Korea has brought the virus outbreak under control with aggressive testing, contact-tracing and isolation tactics.
Late last month, China agreed to resume visa issuance for South Korean students studying or planning to study in China, employees hired to work in the country and those with residence permits. But they have to submit health certificates that show they tested negative for coronavirus.
The move comes after Seoul and Beijing agreed in April to run a “fast-track” entry system for businesspeople in an effort to minimise economic fallout from Covid-19.
South Korea will also begin to issue visas for Chinese in a similar way. The two countries are also in talks to increase bilateral flights to meet growing demand.
UK start-ups face £15bn pandemic funds shortfall
Andy Bounds in Huddersfield and Daniel Thomas in London
UK start-ups face a cash shortage of up to £15bn this year after investor funding fell away during the coronavirus pandemic, with companies outside London notably struggling for financial support, in what will be a blow to the government’s efforts to boost underperforming regions.
An annual report into so-called growth capital — money needed to support the UK’s fast-growing businesses — found that the funding shortfall for start-ups has doubled from about £7.5bn in 2019 because of the Covid-19 crisis.
The report by the ScaleUp Institute, a think-tank, and Innovate Finance, which represents the interests of the non-bank lending sector, comes as the government starts work on how to address the vast equity needs of companies that have accumulated large debts during the pandemic.
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Alibaba healthcare unit to pile $1bn into ecommerce
Primrose Riordan in Hong Kong
Alibaba's healthcare arm said it would use the proceeds of a more than $1bn follow-on share sale to develop its ecommerce offering, as it seeks to capitalise on the rising popularity of digital services due to coronavirus.
Hong Kong-listed Alibaba Health Information Technology’s sold 498.7m new shares at HK$20.05 (US$2.59) each, or an 8 per cent discount to Tuesday’s HK$21.80 closing price.
“Online healthcare consultation services have had a significant positive social impact during the Covid-19 pandemic,” the company said in a statement.
“The net proceeds of the placing will provide further flexibility ... and allow it to have access to and compete in new areas in the internet healthcare industry,” the statement added.
Credit Suisse and Citibank acted as placing agents.
UK broadcasters lose ground to streaming services
Alex Barker in London
Britain's BBC and ITV broadcasting networks are losing ground to big US streaming services post-lockdown, with new viewers sticking with Disney+, Amazon and Netflix.
The annual report on viewing habits by Ofcom, the UK’s media regulator, noted the dramatic inroads made by streaming services since the coronavirus crisis, with sign-ups rising by 12m and overall viewing time doubling.
The accelerated shift to online viewing was particularly marked with younger people. Under 34s watched almost six-and-a-half hours of audiovisual content — a more than 40 per cent increase during lockdown — including two hours of streamed content every day.
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Second member of Modi cabinet tests positive
Amy Kazmin in New Delhi
India’s petroleum minister, Dharmendra Pradhan, has become the second member of Prime Minister Narendra Modi’s cabinet to be sent to hospital with coronavirus, as the pathogen spreads through the senior leadership of the ruling Bharatiya Janata party.
Mr Pradhan, pictured, was one of among 51,000 people in India to test positive on Tuesday, bringing the country’s total confirmed infections to 1.9m, the third-highest burden in the world, after the US and Brazil. Of those known to be infected, more than 39,800 have died.
The virus now appears to be circulating widely among India’s political class, particularly members of the ruling BJP. Home minister Amit Shah, Mr Modi’s most trusted lieutenant and the second-most powerful man in the country, was admitted to hospital over the weekend after testing positive for the virus.
The chief ministers of the states of Karnataka and Madhya Pradesh - both ruled by the BJP - have also both been hospitalised with the virus, as has Karnataka’s opposition leader.
In Uttar Pradesh — another BJP stronghold — a member of the state cabinet died at the weekend; another state cabinet minister is infected, and the BJP state chief has also tested positive.
Mr Modi will be spending time at close quarters with Uttar Pradesh’s chief minister Yogi Adityanath on Wednesday, as the two men preside over grand ceremonies for the ground-breaking of a temple dedicated to Lord Ram on the site of a razed temple in the small city of Ayodhya.
Palestinian leaders grapple with Covid-19's economic fallout
Mehul Srivastava in Ramallah
As the coronavirus pandemic wreaked havoc on the world’s economy, Azzam Shawwa watched with envy as central bankers across the globe deployed their full arsenal of tools to support their nations through it.
But as the governor of the Palestine Monetary Authority, Mr Shawwa had few options. The best he could do was cobble together a $300m fund to offer struggling businesses loans at below-market interest rates. He also asked banks to give borrowers a four-month repayment holiday and allow some Palestinians to overdraw their accounts. Then, his ammunition ran out.
Mr Shawwa’s travails underscore the challenges that Palestinian authorities are grappling with as they try to support their battered economy — as well as the struggle they face in their fight to break the chain of infection.
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Price surge puts ETF among world’s biggest gold owners
Robin Wigglesworth in Oslo
An exchange traded fund has become one of the world’s biggest owners of gold, surpassing even the central banks of Japan and India, as investors have scrambled to buy the precious metal and pushed it to record highs.
SPDR Gold Shares, an ETF that owns physical bullion rather than just financial derivatives, has hoovered up gold this year as investors seeking price gains or a haven asset channel more money into the fund.
Enthusiasm for the metal is being driven by some investors who fret that extraordinary moves by central banks to damp the economic impact of coronavirus could ultimately ignite long-dormant inflationary pressures.
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UK warehouse group Segro boosted by e-commerce and data centre boom
Coronavirus has boosted the logistics and warehousing sector, according to bellwether Segro, which announced on Wednesday that the value of its portfolio had increased during the crisis.
Segro, the UK’s largest listed property company by market capitalisation, said it was “clear that the structural trends that have been contributing to occupier demand for our space over recent years have strengthened as a result of the pandemic”.
“E-commerce penetration has accelerated markedly across all our markets, there is a renewed focus on the efficiency and resilience of supply chains, and the demand for data centre space is increasing as a result of the need for additional data storage to support remote working and video streaming services,” added the company.
Where owners of shops and offices have seen the value of their portfolios diminish as a result of uncertainty about the future of work and retail, Segro and others in the logistics and warehousing space have not.
The value of the company’s portfolio of UK and European warehousing and logistics sites increased by 0.7 per cent to £11.2bn over the six months to the end of June. Adjusted pre-tax profits were up 6.5 per cent, to £140.4m, compared with the same period of 2019.
Segro’s share price has risen during a time of intense strife in the broader property industry. It is up 7 per cent over the year to date, to £9.63 as of Tuesday’s close.
Segro raised £680m in June, which it intends to spend on new ”last-mile” delivery sites across the UK and continental Europe.
UK's Metro Bank swings to loss as bad loan charges mount
Nicholas Megaw in London
Metro Bank fell to a £241m loss in the first half of the year as it became the latest lender forced to set aside hefty sums to deal with expected loan losses.
The bank, which is dealing with the first recession since it was established a decade ago, reported £112m of of expected credit losses, up from just £4.4m in the same period last year. The majority of the total - £97m - was due to changes in economic forecasts rather than actual customer defaults.
Government rescue schemes and programmes such as loan repayment holidays have so far kept customer default rates low, but banks are predicting a sharp increase later in the year as more businesses collapse and the unemployment rate rises.
However, the bank insisted the disruption caused by coronavirus had not derailed its turnround plans. Metro recently announced a four-year restructuring programme based on cutting costs and shifting its focus toward more profitable areas of lending, after a reporting error last year forced it to abandon its previous strategy of rapidly expanding its branch network and lending in the highly competitive mortgage market.
European futures indicate equities to open higher
European stock futures were higher on Wednesday while gold extended its surge above $2,000 a troy ounce as investors monitored the progress of US talks on more economic stimulus.
Stoxx 600 futures rose 0.2 per cent while FTSE 100 ones gained 0.4 per cent, implying a positive start for the indexes. Futures however tipped Wall Street’s S&P 500 to fall 0.2 per cent when US trading begins, after closing Tuesday up 0.4 per cent.
In Asia-Pacific however equities have lost some fizz. Japan’s Topix index trimmed earlier losses to be little changed while Australia’s S&P/ASX 200 dropped 0.5 per cent. China’s CSI 300 of Shanghai and Shenzhen-listed stocks was 0.1 per cent down, while Hong Kong’s Hang Seng added 0.3 per cent.
Congressional leaders and White House officials admitted on Tuesday they are far from a deal on more economic stimulus.
Gold, viewed as a haven during times of uncertainty, accelerated its gains, with a 1.1 per cent push to $2,023.7 an ounce. The metal rose as high as $2,024.9 overnight.
The price of gold has climbed more than 30 per cent this year as weak corporate earnings fuelled concerns about the US economic recovery.
UK car industry shows signs of recovery
British car sales showed signs of recovery last month as dealerships reopened following a national lockdown.
New car registrations rose 11 per cent in July to 175,000 units, the Society of Motor Manufacturers and Traders said.
In March, April, May and June, registrations fell 44.4 per cent, 97.3 per cent, 89 per cent and 34.9 per cent, respectively.
The SMMT expects new car sales in 2020 to be 30 per cent lower than in 2019.
The industry body said:
While July’s growth is undoubtedly good news, this is largely due to pent-up demand following showroom closures through the spring, so the growth should be treated cautiously.
Understanding the true levels of underlying consumer confidence will take a little longer. We may need to wait until September to get the full picture.
William Hill to close dozens of stores in push towards online gambling
Alice Hancock in London
William Hill, the UK bookmaker, said it would permanently close 119 shops and merge its retail and online operations after lockdown accelerated a trend towards online gambling.
But it added that a “strong recovery” since sports fixtures resumed would allow it to repay £24.5m that the company received from the government to pay its 7,000 employees during the lockdown period.
“Our trading was strong before Covid-19, we controlled costs effectively during lockdown and we have recovered well post-lockdown,” said Ulrik Bengtsson, William Hill’s chief executive.
The company said it would be closing shops as a result of early breaks in those leases as it anticipated that “retail footfall will not return to pre-Covid levels”.
William Hill reported a 32 per cent fall in revenue year on year to £554.4m in the six months to the end of June. The bookmaker, though, achieved a pre-tax profit of £141.1m, up from a loss of £63.5m in the same period in 2019, thanks to a VAT refund of about £200m after a tribunal found that it and rival GVC had overpaid tax on fixed-odds betting terminals for at least eight years.
Without the boost from the tax refund, it reported a £14.2m pre-tax loss.
Gambling companies have fared better than the majority of the leisure sector despite the near total shutdown in global sports as customers have moved to bet on casino and poker games online.
Last year William Hill closed about 700 high street shops due to the introduction of a £2 limit on the stake permitted on fixed-odds betting terminals, leaving it with a store estate of about 1,500 shops.
BMW reports loss as car sales slide
BMW swung to a loss in the second quarter as the coronavirus pandemic and lockdowns weighed heavily on car sales.
The German carmaker reported a pre-tax loss of €300m over the three months, down from a profit of more than €2bn in the previous year. The group delivered slightly more than 485,000 vehicles to customers in the second quarter, down 25 per cent.
Still, the company reported positive signs from the Chinese market, which it said had shown signs of recovery since April.
“We are now looking ahead to the second six-month period with cautious optimism,” said chairman Oliver Zipse. BMW left its outlook for the rest of the year unchanged with profit expected to be “significantly lower” than in 2019.
Dutch-Belgian supermarket owner Ahold Delhaize boosts outlook
Supermarket owner Ahold Delhaize has raised its outlook for this year following “unprecedented demand” from shoppers.
The Dutch-Belgian food retailer reported net sales of €19.1bn in the second quarter, up 17 per cent on the previous year.
The sharp rise was largely down to changing shopping habits during the pandemic and lockdowns, but also flattered by the impact of strikes at the US operation during the previous year, the group said.
Ahold Delhaize, which generates a significant portion of its revenue from the US with brands including Stop & Shop and Hannaford, raised its guidance for 2020 earnings, operating margin and free cash flow.
"The engagement and strong execution of our teams have translated this unprecedented demand in both the US and Europe, due to Covid-19, into outstanding results,” said chief executive Frans Muller. Shares rose more than 5 per cent in early trading.
Business activity in Spanish services sector picks up in July
Activity in Spain's services sector improved in July even as the eurozone's fourth-largest economy experienced a surge in coronavirus cases, a survey of business leaders in the sector showed.
Activity picked up, albeit modestly, for a second month after services almost ground to a halt at the peak of the government-imposed lockdown in April.
The IHS Markit purchasing managers’ index for the services sector rose to 51.9 from 50.2 the previous month. This kept the reading above the 50-point threshold that indicates the majority of business leaders reported an improvement in activity on the previous month. The reading was in line with economists' expectations in a Reuters poll.
Although the reading was positive, sentiment seemed muted with further job cuts reported and expectations for the future at historic lows. Orders for new work deteriorated in July.
The PMI measure is a useful indicator in suggesting whether the sector is expanding or contracting and is more timely than official releases, which tend to lag behind by a few weeks from the period they cover. But it does not give an indication as to the pace of growth, or in this case, the pace of recovery from the shock of the pandemic.
Paul Smith, economics director at IHS Markit, said:
The latest services data proved to be somewhat disappointing, with only muted growth of the service sector recorded and, most worrying of all, incoming new business failing to regain meaningful traction as the economy opened up.
Honda reports biggest quarterly loss in a decade
Kana Inagaki in Tokyo
Honda has forecast a 64 per cent drop in annual profits following its biggest quarterly loss since 2009 as a coronavirus-driven collapse in sales has spread beyond cars to motorcycles.
Disclosing its yearly forecast for the first time, the Japanese group said it expected its net profit to decline to ¥165bn ($1.5bn) and warned of a 60 per cent cut to its full-year dividend. The forecast came in below analysts’ expectations of ¥248bn in profit, according to S&P Global Market Intelligence.
Honda has historically managed to offset a downturn in car sales with its more profitable motorcycle business. But the pandemic’s impact has been widespread, sparking a 62 per cent fall in first-quarter motorcycle sales led by declines in India and Indonesia.
For the April to June quarter, the company reported a net loss of ¥80.9bn, compared with a profit of ¥172.3bn a year earlier, due to slumping car sales across Japan, the US and Europe.
Seiji Kuraishi, Honda’s executive vice-president, said the company would aim to return to profitability for the full year, pointing to a robust recovery of car sales in China and motorcycle sales in Vietnam and Thailand.
Italy's services sector activity improves as expectations strengthen
Italy followed Spain with a modest uptick last month in services sector activity while sentiment improves, a survey of business leaders showed.
The IHS Markit purchasing managers’ index for the services sector increased in July to 51.6, from 46.4 in June. A reading of more than 50 means most business leaders reported an improvement on the previous month. Economists polled by Reuters had expected the gauge to reach 51.1.
Sentiment in the industry in Italy seemed to improve, with expectations for the year ahead strengthening to a six-month high. IHS cautioned the recovery remained muted, however.
"There is an abundance of ground to make up following such an extensive downturn, with ongoing downside risks stemming from a second wave of the pandemic and the reintroduction of lockdown measures," Lewis Cooper, IHS economist, said.
Light-touch Sweden again an outlier as economy outpaces many peers
Richard Milne, Nordic and Baltic Correspondent
Sweden posted a far better economic performance than most of Europe even as its economy shrank the most since the second world war as the Scandinavian country appeared to benefit from its lighter-touch approach to the coronavirus crisis.
Gross domestic product in the second quarter fell by 8.6 per cent compared with the previous three months, a flash estimate from Statistics Sweden revealed. But that was significantly better than falls of 12 per cent for the eurozone, 18 per cent for Spain and 10 per cent for Germany.
Sweden has been at the centre of an international debate about the merits of locking down. It refused to follow the rest of Europe into a formal shutdown, keeping its schools, restaurants and borders open.
After being one of the very few European countries to eke out positive growth in the first quarter, Sweden repeated the trick of being an outlier in April, May and June – the peak of the pandemic in Europe.
Only Latvia and Lithuania performed better with GDP declines in the second quarter of 7.5 per cent and 5.1 per cent, last week's estimates showed.
Eurozone retail sales recover to pre-Covid levels
Retail sales across the eurozone jumped back to pre-crisis levels in June as many governments eased their pandemic lockdowns enough to open non-essential stores.
The volume of sales in the 19 countries increased month-on-month by 5.7 per cent in June, according to seasonally adjusted figures from Eurostat, after a record 20.3 per cent jump reported for the previous month. The May figure was revised upwards from a previously reported 17.8 per cent.
Compared with the same period of the previous year, eurozone retail sales were up 1.3 per cent in June.
Shoppers kept up their interest in clothes and shoes, after many had put a pause on these purchases during the coronavirus-related lockdown period. Sales in fuel picked up.
Online purchases and mail orders slipped across the bloc, suggesting consumers were returning to the high street, rather than relying on home deliveries.
Overall output in the eurozone fell 12.1 per cent between the first and second quarters of 2020, showed preliminary Eurostat data. This was the sharpest drop in 25 years of records, following a decline of 3.6 per cent in the first quarter, plunging the bloc into a historic recession.
Gold keeps its shine as investors shun dollar
Sarah Provan in London and Hudson Lockett in Hong Kong
Gold added to its recent gains, surging past its $2,000 milestone, as historically low interest rates and expectations for continued dollar weakness boosted the yellow metal’s lustre.
Equities have maintained their ascent even in a year when gold has added a third of its value, a counterintuitive scenario that highlights worries among some market participants that the trillions of dollars in stimulus deployed by governments and central banks could at once stoke an economic rebound and a bout of high inflation.
Europe’s shares gained in mid-morning Wednesday trade, with the region’s Stoxx 600 rising 0.7 per cent. Frankfurt’s Dax rose 1 per cent and London’s FTSE 100 climbed 1 per cent.
“The market’s tea leaves, as largely determined by the trajectory of bond yields (and gold), are suggesting that, in no uncertain terms, more pain lies ahead,” Rabobank analysts said.
Virtual care groups Teladoc and Livongo combine in $18.5bn deal
James Fontanella-Khan and Ortenca Aliaj in New York
Teladoc Health and Livongo, two virtual care companies, have agreed to combine in an $18.5bn cash-and-stock deal as they seek to create a telemedicine giant at a time when demand for remote healthcare services has boomed during the pandemic.
Under the terms of the agreement, Livongo’s shareholders will receive 0.5920 shares of Teladoc plus $11.33 in cash for each of their shares. Once the merger is complete Teladoc shareholders will own about 58 per cent of the combined company and Livongo’s shareholders will own the rest.
Coronavirus has led patients to stay away from hospitals and doctor’s clinics for fear of infection over the past year driving demand for telemedicine this year, a trend that is expected to continue as uncertainty remains about when the pandemic will end.
“Covid-19 has caused a massive acceleration in the use of telehealth,” McKinsey said in a May report. “Consumer adoption has skyrocketed, from 11 per cent of US consumers using telehealth in 2019 to 46 per cent of consumers now using telehealth to replace cancelled healthcare visits.”
The valuations of telemedicine companies have also rocketed during the period. Shares in Teladoc have gone up 200 per cent since the start of the year, while Livongo’s stock rose nearly 500 per cent during the same period.
Scotland reimposes lockdown on Aberdeen
The Scottish government has reimposed lockdown restrictions on Aberdeen following a “significant outbreak” in infections in the north-eastern city.
Scotland's first minister Nicola Sturgeon has ordered pubs, restaurants and other hospitality venues to close from Wednesday afternoon, and imposed travel restrictions.
She said the Scottish government was acting “extremely reluctantly” following a cluster of 54 reported cases in Aberdeen.
“We are at a stage of this pandemic where extreme caution is necessary and also, in my view, sensible,” she said.
Among the restrictions, people have been advised not to travel to Aberdeen, while those in the city should not visit other homes or travel more than five miles for leisure. Travel to work or education is still permitted.
Ms Sturgeon said one of the main reasons for the new restrictions was to give schools the best possible chance of returning when the Scottish education system reopens later this month.
Other parts of the UK have also seen localised restrictions imposed, as the Westminster government works to avoid a blanket national lockdown, with its associated severe economic costs.
Oil prices return to March levels while silver strikes gold
Oil prices reclaimed the levels struck at a time of heightened Saudi-Russian tension as many other commodities advanced in the slipstream of a gold streak.
The benchmark Brent crude has had a four-day spurt, rising nearly 4 per cent in early afternoon trading on Wednesday in Europe to hit $46.12, a price last seen on March 6. At that time Saudi Arabia and Russia were initiating a price war, just as the coronavirus pandemic was spreading beyond Asia. Subsequent lockdowns in many countries brought on deep recessions.
Brent crude fell to as low as $15.98 on April 22, one of the darkest periods during the pandemic crisis, as demand ground to a halt since people stayed at home.
Following on from gold's surge, in which it it has risen 13 days over the past 14 sessions, silver rose nearly 4 per cent. The precious metal advanced to an all-time high of $27.02 an ounce, its fourth day of gains. Silver has risen 52 per cent this year.
Gold was recently trading at $2,035.1, a day after it breached the milestone $2,000 a troy ounce, adding a third to its value for the year.
"Momentum in the traditional safe haven has surged in recent weeks as the global economic outlook continues to sour," said Rabobank analysts on Wednesday.
Attempts across the globe to ease restrictions have to date, in almost every instance, led to a rollback and re-imposition of restrictions as initial attempts to re-start high streets, hospitality, sporting and leisure activities have all resulted in a fresh wave of cases.
Pockets of communities have recorded resurgences in case counts, leading to some governments shutting local restaurants, bars and shops down again, raising concern that the Covid-19 pandemic still has long to run.
"We are looking at this recovery as very stop/start, not a V-shaped recovery," said Hugh Gimber, global markets strategist at JPMorgan Asset Management.
"Continuing outbreaks of the virus really restrain how quickly activity can recover and prevent a comprehensive rebound until a vaccine is available," he added.
US private sector payrolls miss expectations
The US private sector created fewer jobs than expected last month signalling the recovery in the labour market slowed as coronavirus cases began to rise across the south and west.
Non-farm private employers added 167,000 jobs last month, according to a report from payroll processor ADP. While the figure was below expectations for a gain of 1.5m, it followed a sharp upward revision to June's figures, which showed private payrolls grew by 4.3m (compared with 2.37m previously).
The service sector drove the bulk of last month’s increase, adding 166,000 jobs, with the biggest gains in the professional and business and education and health category. Financial and information-providing sectors were the only ones to shed jobs.
Large companies with 500 or more employees and small companies with fewer than 50 employees both reported job growth, while mid-sized companies cut roles.
“The labour market recovery slowed in the month of July,” said Ahu Yildirmaz, vice-president and co-head of the ADP Research Institute. “We have seen the slowdown impact businesses across all sizes and sectors."
A resurgence in coronavirus cases in the US and a stimulus stalemate in Congress has raised fresh concerns about the US labour market and the broader economy.
US Treasury to sell record amount of debt to fund pandemic relief
Colby Smith in New York
The US Treasury has boosted the size of its auctions for longer-dated debt, to fund the emergency measures passed by legislators to minimise the economic damage inflicted by the coronavirus outbreak.
The agency plans on August 15 to sell a record $112bn of debt maturing in three, 10 and 30 years. It will auction $48bn in three-year notes, $38bn in 10-year notes and $26bn in 30-year notes. It also said it would expand the size of its auctions for two, three and five-year notes by $2bn per month. Collectively, the Treasury said this will result in additional issuance of $132bn over the next three months compared with the previous quarter.
The department has leaned heavily on the market for Treasury bills, which mature in one year or less, but has shifted the focus of its borrowing to longer-dated securities.
The increases come as Congress is attempting to iron out a new stimulus bill in order to revive a recovery that has flagged in the face of surging coronavirus cases nationwide. Additional unemployment benefits have expired, adding urgency to negotiations.
In a statement, the Treasury acknowledged that borrowing needs will remain "elevated" in the coming quarters in anticipation of "additional legislation" to shore up the economy.
US exports and imports climb for first time since March
The US trade deficit narrowed in June after exports and imports grew for the first time since March, as businesses begin to recover from coronavirus shutdowns.
The Census Bureau said on Wednesday the nation’s goods and services deficit was $50.7bn, a 7.5 per cent drop compared with a revised $54.8bn in May.
Exports were up 9.4 per cent to $158.3bn, buoyed by vehicles and related parts. That outpaced a 4.7 per cent rise in imports, which totalled $208.9bn on gains in industrial supplies, auto parts and consumer goods.
“Exports and imports increased in June following monthly declines since March that were, in part, due to the impact of Covid-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travellers across borders was restricted,” the Census Bureau said.
Recent data have shown signs of improvement in the US economy, including the housing and manufacturing sectors. However, the outlook remains uncertain, with economists warning that the recovery may stall amid new Covid-19 outbreaks in some regions.
A closely watched survey from the Institute for Supply Management indicated that the manufacturing sector expanded for a second consecutive month in July. A survey of the services sector is due to be published later on Wednesday.
Wayfair sales jump as ecommerce group rides wave of online spending
Wayfair cemented its status as one of the biggest corporate winners from lockdown as the US online homewares group reported an 84 per cent jump in sales that allowed it to turn a rare quarterly profit.
Shares in the ecommerce company have more than tripled this year, giving it a market capitalisation of $27.5bn, as housebound consumers have wanted to upgrade their living areas, but been less willing to visit bricks-and-mortar stores.
Wayfair’s figures show how internet retailers are riding a wave of online consumer spending, in stark contrast to struggling bricks-and-mortar-oriented companies that have been hard hit by the pandemic.
Capri Holdings, the clothing group behind Versace, Michael Kors and Jimmy Choo which relies more on department stores and malls, on Wednesday became the latest US retailer to report a sharp decline in sales. Capri’s revenues in the quarter that ended on June 27 plunged 67 per cent to $451m, pushing the company to a net loss of $180m, although the results were not as bad as the cgroup had forecast.
A sharp rise in customer numbers helped Wayfair, which sells furniture, lighting and decor online, produce net revenue in the three months to the end of June of $4.3bn, which was $2bn more than the same period one year ago. The surge led the company, which has had successive years of losses, to generate net income of $274m in the period.
Niraj Shah, co-founder and chief executive, argued the quarterly performance “highlighted the inherent structural profitability of the business”.
However, the stock is also among the most shorted in the US retail sector. Bears remain sceptical about the group’s expenses, including marketing costs. Operating costs totalled $1bn in the quarter compared with $731m a year ago.
Wayfair’s stock weakened on Wednesday following the spectacular rally, down 3.7 per cent in pre-market trade. The better than forecast figures from Capri meanwhile sent its shares up 7.6 per cent in pre-market trade.
US services sector grows at quickest pace since February 2019
The US services sector grew at its quickest pace in more than a year in July, continuing its recovery after damage caused by coronavirus-related shutdowns.
An index measuring economic activity in the vast services sector rose to 58.1, its second consecutive month of expansion after a reading of 57.1 in June, according to the Institute for Supply Management. It was the highest mark for the services PMI since February 2019 and better than economists’ forecast of 55. The survey indicated that the services sector was in contraction in April and May.
The ISM’s manufacturing PMI released earlier this week also indicated growth for a second month running in another sign of continued improvement in the US economy. However, some economists have cautioned that new Covid-19 outbreaks in parts of the country could slow the recovery.
“Respondents remain concerned about the pandemic; however, they are mostly optimistic about business conditions and the economy as businesses continue to reopen,” said Anthony Nieves, chair of the ISM services business survey committee.
A sub-index for new orders jumped to its highest level on record at 67.7, up from 61.6 a month earlier. But the employment sub-index fell one point to 42.1, its fifth straight month in contraction.
CVS profits top view as elective procedures deferred
Pharmacy chain CVS on Wednesday boosted its full-year earnings outlook and reported upbeat quarterly results after it recorded fewer insurance claims as patients deferred elective procedures during the coronavirus pandemic.
The Rhode Island-based company now expects adjusted earnings of between $7.14 and $7.27 a share, up from $7.04 to $7.17 a share previously "reflecting an update to its estimated full-year effective income tax rate".
Revenues rose 3 per cent to $65.3bn in the second quarter ending June 30, topping analyst expectations for $64.2bn, according to a Refinitiv survey.
Net income climbed to $2.98bn or $2.26 a share, up from $1.9bn or $1.49 a share in the same period a year ago. Adjusted earnings of $2.64 a share eclipsed analyst expectations for $1.93 a share.
The company reported fewer prescriptions in its retail arm "driven by reduced new therapy prescriptions due to lower provider visits" and said its front-store revenues fell 4.6 per cent as people stayed at home to curb the spread of coronavirus.
"The environment surrounding Covid-19 is accelerating our transformation, giving us new opportunities to demonstrate the power of our integrated offerings and the ability to deliver care to consumers in the community, in the home and in the palm of their hand which has never been more important," Larry Merlo, chief executive, said. CVS retail prescription home delivery volumes rose more than 500 per cent in the second quarter, compared with the first.
The company also reported lower costs as people delayed elective procedures during the coronavirus crisis. CVS said the medical care ratio — the portion of premiums collected by insurers that get paid out to medical providers — at its insurance unit fell to 70.3 per cent, from 84 per cent. Revenues in its insurance business rose 6.1 per cent to $18.5bn.
CVS shares, which are down 12 per cent year-to-date, rose 3 per cent in pre-market trade.
Florida surpasses 500,000 coronavirus cases
Florida became the second US state after California to have confirmed half a million coronavirus cases since the beginning of the pandemic.
A further 5,409 people in Florida tested positive for Covid-19 over the past 24 hours, the state's health department revealed on Wednesday morning, up from 5,446 a day earlier.That took the total number of infections to 502,739, second only to California, which had confirmed 519,427 in its data up to August 3.
Within the past two weeks, the total confirmed Covid-19 caseloads in the three most populous US states - California, Texas and Florida - each overtook New York, which had been the early hotspot for the virus in the country.
The three states, which have been at the forefront of a surge in cases across the US sunbelt over the summer, have begun to see signs that daily new cases are easing back from peak rates in July. The trio have, however, reported record daily jumps in deaths within the past week.
Florida on Wednesday reported a further 225 people had died, down from 247 on Tuesday and compared with a record 257 on July 31. The daily death toll in the state has jumped by 200 fatalities five times in the past eight days.
A decision last Friday to shut state-run coronavirus testing sites due to the approach of tropical storm Isaias towards Florida's eastern coast has probably kept new daily case and testing figures on the low side.
Florida's health department said it conducted nearly 57,300 tests over the past 24 hours. That is in line with levels over the past three days, but down from levels of about 100,000 in late July. The percentage of tests that came back positive inched up to 10.89 per cent.
US fuel demand slides as oil recovery stalls
Myles McCormick and Derek Brower
US fuel demand fell sharply last week as a recovery in the country’s oil market stalled, reflecting weaker economic performance following a surge in coronavirus cases in some states.
Overall fuel demand of 17.9m barrels a day was off about 6 per cent compared with the previous week, with gasoline demand slipping 2 per cent to 8.6m b/d as Americans opted to stay at home.
The figures come as states in the US south and west -- from Texas and Arizona to California and Florida -- continue to struggle with fresh surges in cases of Covid-19.
But commercial crude oil stocks fell by 7.4m b/d, above market expectations, as refineries consumed more crude to make fuel.
Crude oil imports rose sharply to 6m b/d, as domestic production remained depressed. Saudi imports continued to fall to just 190,000 b/d, compared with a recent peak of about 1.6m b/d during the oil price war this year. Crude oil imports from Canada rose.
New York City to deploy ‘checkpoints’ to enforce travel quarantine
New York City is expected to set up “checkpoints” as part of an effort to enforce a quarantine for travellers from other parts of the US.
The plans call for a checkpoint at Penn Station, a major train hub, to start on Thursday to distribute contact-tracing forms and inform travellers of the restrictions. Similar measures have been taken at New York airports. Checkpoints are planned for other entry points, such as bridges and tunnels.
“The checkpoints are going to send a very powerful message that this quarantine is serious. Even if we can't reach every single person I think it'll get the message across,” Mayor Bill de Blasio said in announcing the move.
New York and the neighbouring states of New Jersey and Connecticut announced in June that they would require 14-day quarantines for travellers who arrive in the area from states with elevated Covid-19 infection rates. The quarantine list recently included 34 states and Puerto Rico.
Travellers flying into New York from those areas have been subject to a mandatory quarantine and a $2,000 fine if they do not submit a contact-tracing form.
Mr de Blasio said the city intended to deploy “full-fledged checkpoints” where possible.
Chicago schools to start academic year learning from home
Chicago school students will restart the academic year learning from home as the most populous city in the Midwest contends with a renewed rise in coronavirus cases.
Mayor Lori Lightfoot announced on Wednesday that Chicago public schools would learn from home through to the end of the first quarter.
"Prior to the beginning of the second quarter, we will assess the state of Covid-19 and the safety of switching to a hybrid learning model," she said.
Officials said that in the previous academic year, more than 128,000 computing devices were distributed to students as schools shifted to online learning as the coronavirus pandemic took hold in the US. An additional 36,000 devices will be sent to children who still need them before the first day of school on September 8.
In the early days of the outbreak, the first known case of human to human transmission of coronavirus in the US was in Chicago. About one-third of the 184,712 Covid-19 cases in Illinois are in its most populous city.
Like many northeastern states, Illinois managed to bring the initial spread of the disease under control. However, daily case rates in Chicago began to climb again over the summer, and on Wednesday the city had averaged 277 new cases a day over the past week. Two weeks ago, Chicago reintroduced restrictions on bars, restaurants and gyms when its public health commissioner then warned that daily case numbers would probably rise above 200 a day again.
California reports second-biggest single-day jump in deaths
California’s coronavirus death toll rose by just over 200, its second-biggest single-day jump on record.
A further 202 people in the most-populous US state died, health officials said today, up from 113 a day earlier. That took its overall total since the pandemic began to 9,703, the third-highest among all US states.
California reported a single-day record of 219 fatalities on August 1, the same day it became the first US state to have confirmed 500,000 coronavirus cases. The state has averaged a record 141 deaths a day over the past week, according to Financial Times analysis of Covid Tracking Project data, echoing trends in hard-hit sunbelt states such as Texas and Florida that are dealing with elevated levels of daily fatalities while new Covid-19 infections show signs of easing.
A further 5,295 people in California tested positive for coronavirus over the past 24 hours, up from a six-week low on Tuesday of 4,526.
Nasdaq tops 11,000 for first time
The Nasdaq Composite briefly surpassed 11,000 for the first time on Wednesday while the S&P 500 re-approached a fresh high on hopes that Congress is making progress on stimulus talks.
The tech-heavy Nasdaq Composite climbed as much as 0.6 per cent to a fresh intraday high of 11,002.11 — less than two months after it first crossed the 10,000 mark. The index was eyeing its sixth consecutive daily gain.
Meanwhile, the S&P 500 rose 0.5 per cent to 3,324.30 edging closer to its record closing high of 3,386.
Sentiment was boosted by hopes for a deal on more economic stimulus. “Fiscal stimulus that supported the economy during the first half of the year is wearing off and it’s unclear whether Congress will be able to provide more fiscal support, but for now markets continue to price that another stimulus package is a done deal,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said.
Investors also parsed through a fresh batch of earnings, with Disney shares up 9 per cent after it reported a surprise quarterly profit and unveiled plans to sell the film ‘Mulan’ online for $30.
Wall Street marches higher amid stimulus hopes
US stocks extended their winning streak to push the S&P 500 closer to a record high, as investors maintained optimism that lawmakers will reach a deal on fresh stimulus.
The S&P 500 gained 0.6 per cent to close at 3,327, bringing the benchmark index about 1.8 per cent from its closing high set in February. The Nasdaq Composite notched its third all-time high in as many days, finishing 0.5 per cent higher, and briefly rising above 11,000 for the first time. The Dow Jones Industrial Average was up 1.4 per cent on gains in Walt Disney and Boeing shares.
Republicans and the Trump administration have been locked in negotiations with Democrats over the contents of another stimulus package, with a possible extension of supplemental jobless aid among the issues under debate.
Investors have also responded favourably to corporate earnings that have largely outpaced downbeat expectations given the pandemic’s impact.
Shares in Disney rallied 8.9 per cent after the media giant posted an unexpected quarterly profit and set plans for an online debut of its upcoming film “Mulan”.
The yield on the 10-year Treasury note rose 0.04 percentage points to 0.549 per cent, as investors moved out of the debt. The dollar index dropped 0.6 per cent.
Gold continued to advance after topping $2,000 for the first time earlier this week. The yellow metal was up about 1 per cent to $2,038 per troy ounce.
Georgia surpasses 200,000 coronavirus cases
Georgia has become the fifth US state to confirm more than 200,000 coronavirus cases, after adding nearly more than 3,000 new infections on Wednesday.
The state’s health department revealed 3,817 people had tested positive over the past 24 hours, up from 2,513 on Tuesday and the biggest one-day jump in five days.
That took the state’s total number of infections since the pandemic began to 201,713. That is still less than half of the number of total cases in New York, the fourth-ranked state, and well short of the more than 500,000 cases that have each been reported by California and Florida.
Over the past week, Georgia’s tally has crept ahead of New Jersey and Illinois, which were hit hard in the early stages of the pandemic in the US.
Georgia reported 65 new fatalities, taking its total to 3,984, the 11th-most among US states and surpassing Arizona.
Former Colombian president Uribe tests positive for coronavirus
Gideon Long in Bogotá
Álvaro Uribe, Colombia’s former president, who is arguably the most influential politician in the country, has tested positive for coronavirus just a day after being placed under house arrest as part of an investigation into bribery and witness tampering.
A senator from Mr Uribe’s Democratic Centre party confirmed the news, saying the 68-year-old felt fine, had not displayed any major symptoms of the virus and had no difficulty breathing.
Mr Uribe was Colombia’s president for eight tumultuous years until 2010, and is hated and revered alike. A senator and standard-bearer for Colombian conservatism, he waged war on leftwing guerrillas from the Farc and staunchly opposed the peace deal that a later government signed with the group in 2016.
His supporters see him as the man who restored order to Colombia. His detractors say he abused human rights and had links to rightwing death squads and drug traffickers. He denies all the charges.
On Tuesday, the Supreme Court ordered him into house arrest while prosecutors continue to investigate him in a case that dates from 2012 when a senator, Iván Cepeda, accused him of links to the paramilitary death squads that terrorised the country in the late 1990s and 2000s. Mr Uribe took Mr Cepeda to court but the court threw out the case and instead opened an investigation into him for alleged witness tampering.
The case has implications for Colombia’s president Iván Duque, who won election in 2018 thanks in large part to the support of Mr Uribe. Mr Duque has vigorously defended Mr Uribe against all charges of misconduct and on Tuesday said he would “always believe” in his mentor’s innocence.
“As a Colombian it pains me that many people who have lacerated the country with their savagery are free to defend themselves – and even have guarantees that they won’t go to prison – while an exemplary public servant … is not allowed to defend himself freely under the presumption of innocence,” Mr Duque said.
Supporters and opponents of Mr Uribe took to the streets of several Colombian cities on Tuesday night to protest against – and celebrate – the court decision.
Zynga lifts earnings guidance after lockdowns boost game downloads
Patrick McGee in San Francisco
A record number of people have been playing poker and digital slot machines on their phones while under coronavirus lockdown, forming habits that games developer Zynga thinks will lead to sustainable profits.
The California-based company might still be best known for the success of its FarmVille app on Facebook a decade ago, but against the backdrop of Covid-19 it has now lifted its 2020 earnings guidance twice, reflecting how more people are engaging with its ad-driven games.
Zynga on Wednesday said it anticipates $2.2bn in bookings this year, referring to revenue booked but not necessarily paid yet. That is up $360m from its June prediction, and 41 per cent higher than last year.
“Free-to-play mobile games are very resilient in tough times,” said chief executive Frank Gibeau.
Zynga shares, already up by two-thirds this year, rose as much as 10 per cent in after-hours trading after it posted record bookings of $518m for the second quarter, up 38 per cent and ahead of estimates at $503m. That was driven by the success of games such as Zynga Poker, Social Slots and Words With Friends.
The company also announced it would spend $168m to purchase Istanbul-based Rollic, signaling an expansion into the genre known as “hyper casual” games — simple, mass-appeal games often played by consumers who would not identify as “gamers”. Rollic’s portfolio including Go Knots 3D and Tangle Master 3D, requiring players to untangle digitally-displayed cordage.
Texas Covid-19 fatalities jump by 236
Texas reported one of its largest one-day jumps in coronavirus fatalities since the onset of the pandemic, but new infections hovered around 9,000 for a second straight day.
A further 236 people died in Texas, the state’s health department revealed today, from 245 a day earlier.
Over the past week, the state has averaged about 187 deaths a day, a drop of about 90 from its peak rate several days ago.
A further 8,706 people in the Texas tested positive for Covid-19 over the past 24 hours, from 9,167 on Tuesday.
This post has been updated to reflect deaths in Texas rose by 236, according to the state's health department
Brazil’s central bank slashes rates to record low
Andres Schipani in Brasília
Brazil’s central bank slashed 25 basis points off the benchmark interest rate, taking it to a historic low of 2 per cent as the country enters its second recession in less than five years.
The monetary policy committee, known as Copom, unanimously brought down the Selic rate after 21 successive cuts since October 2016, when the rate was at 14.25 per cent.
The latest cut comes as Brazil is exiting a broad shutdown stemming from the coronavirus pandemic that is likely to trigger a contraction this year, potentially as deep as 8 per cent, according to the World Bank.
“The Copom believes that the current economic conditions continue to recommend an unusually strong monetary stimulus but it recognises that, due to prudential and financial stability reasons, the remaining space for monetary policy stimulus, if it exists, should be small,” the bank said in a statement.
Latin America’s largest economy is wrestling with the world’s second worst Covid-19 outbreak after the US, with more than 2.8m confirmed infections and over 95,000 deaths. Between 2015 and 2016 Brazil, a major commodities exporter, suffered a brutal recession.
US reports biggest jump in deaths in a week
The US reported its biggest one-day jump in coronavirus deaths in a week, with several hard-hit sunbelt states revealing near-record daily increases in fatalities.
A further 1,401 people in the US died from the disease, according to data from Covid Tracking Project, up from 1,176 on Tuesday.
Texas (236), Florida (225) and California (202) reported the largest one-day jumps among states. Georgia (142) had a record jump.
The daily death toll in the US has exceeded 1,000 a day 13 times in the past 16 days, resembling patterns previously seen in May.
A further 51,825 people in the US tested positive for Covid-19 over the past 24 hours, up from 51,568 on Tuesday. Over the past week, the US has averaged 57,019 cases a day, the lowest rate since July 11, according to Financial Times analysis of Covid Tracking Project data.
Texas (8,706), Florida (5,409) and California (5,295) reported the largest one-day jumps in new cases among states.
Florida’s total number of cases since the pandemic began topped 500,000, a tally second only to California, while a jump of 3,765 in Georgia made it the fifth US state to have confirmed more than 200,000 infections.
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