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Record increase for Texas propels daily US case count above 44,000
Peter Wells in New York
The US reported a near-record number of new coronavirus cases on Tuesday, marking the fourth time in five days the increase has topped 42,000.
A further 44,358 people in the US tested positive over the past 24 hours, according to data compiled by the Covid Tracking Project, up from almost 36,500 on Monday.
That level is just 15 cases shy of a record one-day increase on June 26, but also means the daily case rate in the US has more than doubled since May 31, when 21,672 people tested positive.
The data come in the wake of a warning today from Anthony Fauci, a member of the White House's coronavirus task force, that the US could see new cases soar to 100,000 a day.
Texas reported a record daily increase of 6,975 new cases, just days after governor Greg Abbott reversed the state's reopening and ordered bars, such as the deserted Houston tavern pictured, to close.
California, where only some bars in certain counties have been ordered to close, reported a further 6,367 cases.
Florida's tally rose by 6,093. Bars across the latter state were ordered on Friday to close owing to the surge in new cases, which have risen more than 800 per cent since the end of May.
A handful of other states variously responded to their rising case numbers. Virginia is set to move into the third phase of its reopening on Wednesday, but governor Ralph Northam announced this afternoon that bar areas inside restaurants and taverns would not be part of that next step.
This followed a similar move by Delaware governor John Carney who today said that bars at its popular beaches must be closed from July 3 and that the state would not move ahead with any additional reopening.
Arizona's increase of 4,682 was a one-day record for the state, but was boosted by a batch of data that was too late for Monday's count. Georgia (1,874), South Carolina (1,755, a record), Tennessee (1,212), North Carolina (1,186) and Louisiana (1,014) were the other states that reported increases of more than 1,000.
Rounding out the six states to report record increases were Oklahoma (585), Idaho (433) and Alaska (36), according to Financial Times analysis of Covid Tracking Project data.
FedEx results top view boosted by home deliveries
Mamta Badkar in New York
Parcel delivery company FedEx reported better than expected results in a quarter that was "severely affected" by the coronavirus pandemic helped by a surge in ecommerce deliveries as people worked from home during lockdowns.
FedEx, which is typically regarded as a bellwether for global economic activity, said revenues slid 2 per cent from a year ago to $17.4bn in the fourth quarter. However, that exceeded analysts' expectations for $16.4bn.
Fedex shares rose 9 per cent in after-hours trade to $153.37.
"Virtually all revenue and expense line items were affected by the Covid-19 pandemic during the quarter," said chief executive Frederick Smith. "While commercial volumes were down significantly due to business closures across the globe, there were surges in residential deliveries at FedEx Ground and in transpacific and charter flights at FedEx Express, which required incremental costs to serve."
The Memphis, Tennessee-based company reported a loss of $334m, compared with a loss of $1.97bn in the year ago quarter, which included a large accounting charge. Adjusting for one-time items, the company reported earnings of $663m or $2.53 a share, down from $1.32bn or $5.01 a share in the year ago quarter. That topped expectations for $1.52.
FedEx said its operating costs climbed by about $125m as it spent on personal protective equipment and medical and safety supplies.
The company did not provide an outlook for fiscal 2021 as it said the near term outlook is "unclear" but added that it expects to "benefit from the global recovery". FedEx also said it would lower its capital expenditures by $1bn to $4.9bn.
FedEx shares were down 7 per cent year-to-date as of Tuesday's close.
Mexican state criminalises risky behaviour
Nico Davidoff in Mexico City
The northern Mexican state of Nuevo León says anyone who knowingly has Covid-19 and puts others at risk could face up to three years in jail under new legislation that came into force on Tuesday.
“The use of face masks is compulsory,” Manuel de la O Cavazos, health secretary of the state that is the centre of Mexico’s business community, told his daily news briefing.
He announced that an infected person who endangers others or does not comply with the state’s stay-at-home orders would face a fine of 34,752 pesos ($1,500) and three months to three years in prison.
The tough measures were approved unanimously by the state legislature last month.
Nuevo León has seen a dramatic increase in Covid-19 cases as it begins to reopen its economy, with more than 600 cases confirmed on each of the past three days. Even more alarming, the average death rate has doubled from five to 10 per cent in the past two weeks.
“Now is not the time to give up,” Nuevo León governor Jaime Rodriguez, pictured, wrote on Twitter. “It’s not time to let our guard down. The numbers in our state are very alarming, and if we continue in this way our hospitals could be overrun.”
Nationwide, Mexico has confirmed 220,687 cases and 27,121 deaths.
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Robert Redfield, head of the US Centers for Disease Control and Prevention, called on Americans to wear face masks as states from Florida to Arizona record surges in Covid-19 cases. “It is critical that we all take the personal responsibility … and embrace the universal use of face coverings,” Dr Redfield told a Senate health committee hearing.
A national face mask mandate in the US could act as a substitute to renewed lockdowns that would otherwise deduct about 5 per cent from gross domestic product, Goldman Sachs analysts argued in a report, as a number of states have paused or reversed easing measures in response to growth in coronavirus cases.
Parcel delivery company FedEx reported better than expected results in a quarter "severely affected" by the pandemic, helped by a surge in ecommerce as people worked from home. FedEx, a bellwether for global economic activity, said revenues slid 2 per cent from a year ago to $17.4bn in the fourth quarter, exceeding analysts’ forecasts of $16.4bn.
US medical officials questioned American Airlines’ move to fill all seats as the carrier tries to increase passenger loads. “That is something that is of concern,” said Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases. Robert Redfield, head of the Centers for Disease Control and Prevention, said he was disappointed with the airline.
The rate of daily coronavirus cases has at least doubled during June for nearly one-third of US states, prompting some governors to reverse or pause economic reopening plans, according to FT analysis of Covid Tracking Project data. Florida experienced the biggest increase and is averaging about 6,600 new cases a day, compared with 760 a month ago.
Greece re-opens its 27 airports to direct international flights on Wednesday. Tourists from EU member states and 15 other countries, including Australia, New Zealand, Japan and South Korea, will be welcome, but visitors from Sweden, the UK and Turkey will be excluded at least until July 15, he added. US, Russian and Chinese tourists cannot yet enter Greece.
Budget airline easyJet has outlined plans to cut as many as 727 pilot jobs in the UK as well as potentially closing its bases at Stansted, Southend and Newcastle airports. The airline on Tuesday started a formal consultation with its unions, Unite and Balpa, over plans to cut up to 1,900 jobs in the UK. It could axe up to 4,500 jobs across its 15,000-strong workforce.
The Swedish government will investigate its handling of the coronavirus pandemic amid mounting criticism of its liberal approach and higher fatality rate compared with its Nordic neighbours. Prime minister Stefan Lofven launched the inquiry on Tuesday. Public opinion has begun to turn against Sweden’s light-touch restrictions as its death toll climbed.
The UK economy is recovering much faster than the Bank of England had expected, casting doubt on the need for further stimulus. The recovery is “so far, so-V [shaped]”, BoE chief economist Andy Haldane said on Tuesday, explaining that he voted against pumping another £100bn of newly created money into the economy.
The mayor of the English city of Leicester has urged fellow residents to stay at home and demanded government help as the city comes under "special restrictions" due to a revived coronavirus outbreak. Peter Soulsby said local authorities will need to discover where the virus is concentrated in the city and take measures to stop the spread of the virus.
Asia-Pacific ekes out gains after Wall St records best quarter since 1998
Alice Woodhouse in Hong Kong
Asia-Pacific stocks edged higher on Wednesday ahead of the release of private surveys on the region’s manufacturing sector and after Wall Street notched up its best quarter in more than 20 years.
The Topix in Japan and the S&P/ASX 200 in Australia both nudged up 0.1 per cent, while Kospi in Seoul added 0.8 per cent. Hang Seng index futures point to a 0.4 per cent fall, when markets reopen after Wednesday's public holiday, after China revealed tougher-than-expected national security laws.
The manufacturing purchasing managers’ index for Japan, South Korea, Taiwan and south-east Asian countries will give investors clues on the state of the sector after months of disruption from the pandemic.
The S&P 500 closed 1.5 per cent higher, taking its gain for the quarter to more than 20 per cent making the last three months its best quarter since 1998.
Chicago awards $56m contact-tracing tender
The city of Chicago said on Tuesday it has awarded a $56m contract to set up a contact-tracing service to help combat the coronavirus pandemic and focus on neighbourhoods most affected by Covid-19.
Chicago public health officials said the contract would be awarded to the Chicago Cook Workforce Partnership, a jobseekers' nonprofit agency.
The partnership would collaborate with the University of Illinois at Chicago School of Public Health, the National Opinion Research Center at the University of Chicago, Malcolm X College — one of the City Colleges of Chicago — and Sinai Urban Health Institute to analyse data.
"This exciting contact-tracing initiative will not only significantly bolster our efforts to stay ahead of this terrible disease, but it will also create new jobs and opportunities for individuals to join in the fight against Covid-19," said mayor Lori Lightfoot.
South Korea exports decline for 4th straight month
Edward White in Wellington
South Korean exports have reported their fourth successive month of double-digit declines, according to preliminary data, in an indication of the worsening economic fallout from the global coronavirus pandemic.
The value of shipments from Asia’s fourth-largest economy in June dropped 11 per cent to $39.2bn, from $44bn a year ago, and down from a 5 per cent gain in February this year, according to the Ministry of Trade, Industry and Energy.
The pace of the decline was worse than the 8 per cent drop forecast by economists polled by Reuters but still marked an improvement after year-on-year slumps of more than 20 per cent in April and May.
South Korean trade data can be viewed as an early bellwether for the health of regional trade. And shipments to China, the country’s most important trading partner, rose by 10 per cent, reflecting the economic re-opening underway in the world’s second largest economy.
However, South Korea’s exports to the US were down 8 per cent and those to Europe dropped 17 per cent, highlighting that export-dependent countries such as South Korea will struggle to escape the worsening economic impact globally from the pandemic, despite adept handling of their local public health crises and government efforts to stimulate domestic spending.
NYC trims $1bn from police in metropolitan budget
New York City will reduce its police funding by $1bn in its 2020-2021 budget, as the metropolis struggles to recover financially from the coronavirus pandemic.
Mayor Bill de Blasio and the New York City Council announced on Tuesday they had agreed on an $88.2bn budget.
The mayor said the city had spent more than $2.7bn in combatting the Covid-19 pandemic, including $800m on personal protective equipment and $800m on payroll and support. He said the city spent $450m on food supplies.
Mr de Blasio said the police budget savings would be redirected, including to education, social services and summer youth programming.
The budget was balanced despite the lack of a borrowing authority from the state government in Albany or a federal stimulus from Washington, the mayor added.
The city estimated it had lost $9bn in expected revenue as the pandemic ravaged businesses. “It was a challenge when you suddenly are missing $9bn to come to an agreement to figure out the priorities,” Mr de Blasio said on Tuesday.
Japan funds ADB grant for Nepal to fight Covid-19
The Japanese government is funding a $3m Asian Development Bank grant to Nepal to help the South Asian country fight the coronavirus pandemic.
The grant will be used to improve quarantine facilities to effectively manage the inflow of returning migrants, especially in border areas. The grant will also fund laboratory and medical equipment, medicine and infection control supplies, the ADB said on Monday.
ADB previously made a $250m loan to Nepal to fund improvements to public hospitals and infrastructure.
Nepal has recorded more than 13,000 Covid-19 cases, of which 29 have been fatal, according to health and population ministry data.
US Senate votes to extend PPP business-bailout scheme
Laura Noonan in New York
The US Senate has voted to extend the government's small business bailout programme until August 8, giving companies stricken by the coronavirus extra time to access the facility’s remaining $130bn. The legislation still needs to pass the House of Representatives for final approval.
The news comes hours after Steve Mnuchin, treasury secretary, told the House Financial Services Committee that there was bipartisan support for extending the $659bn Paycheck Protection Program, which was due to expire on July 1.
Lawmakers have tweaked the terms for the PPP several times since its April 3 launch, giving businesses longer to spend the money, but also raising the bar for bigger companies that want to make use of the facility, particularly those granted loans of more than $2m.
That led to slowing demand, as companies feared they would not be able to meet the revised demands. PPP loans are forgiven in full if they are spent on wages and other eligible costs over a period of 24 weeks.
Japan business sentiment slumps to lowest since financial crisis
Robin Harding in Tokyo
Business sentiment in Japan has slumped to its lowest level since the 2008-09 recession with a 26-point fall in the Tankan index for large manufacturers to a reading of minus 34.
The quarterly Tankan index, compiled by the Bank of Japan, is based on a survey of almost 10,000 enterprises with a 99 per cent response rate, making it the most comprehensive indicator of the business cycle in Asia’s largest developed economy.
The plunge in sentiment confirms the economic impact of the state of emergency caused by Covid-19, but also suggests that, so far, the downturn is less severe than in 2008-09. The manufacturing index troughed at minus 58 in that recession. The index for large service companies fell to minus 17 in the latest Tankan compared with minus 31 in March 2009. Companies continued to forecast growth in investment this year.
The fall in the Tankan was particularly severe for companies affected by consumers staying home during the state of emergency in April and May. Restaurants and hotels recorded a reading of minus 91 and services for individuals a reading of minus 70. Motor manufacturing fell to minus 72.
By contrast, construction still recorded a reading of plus 15 and information services were at plus 20. The indices subtract companies reporting “unfavourable” from those reporting “favourable” conditions, giving a theoretical range of minus 100 to plus 100.
Aeroméxico files for bankruptcy protection
Jude Webber in Mexico City
Aeroméxico, the Mexican flag carrier, filed for Chapter 11 bankruptcy in the US on Tuesday, becoming the country’s biggest corporate casualty of the Covid-19 pandemic.
The airline, in which US airline Delta has a 49 per cent stake, said in a statement to Mexico's BMV stock exchange that the company and some of its subsidiaries had “begun a process of voluntary financial restructuring under Chapter 11 legislation, which will continue while it continues operating as an ongoing concern”.
The company said it was “in conversations to obtain new preferential financing … as part of the restructuring” and was confident that, together with existing cash flow, it would have enough liquidity to continue meeting its obligations.
Aeroméxico this week announced it was reopening routes and nearly doubling the number of domestic flights and quadrupling the number of international routes from June levels as of July.
President Andrés Manuel López Obrador has ruled out any corporate rescues. Interjet, another Mexican airline, is widely thought to be teetering on the brink of collapse after the collapse in tourism.
Chile’s Latam Airlines and Colombia’s Avianca have also filed for protection from creditors.
Moody’s Investors Service in March downgraded Aeroméxico’s corporate family rating to B2 from B1 and its senior unsecured rating on global notes due 2025 to B2 from B1, saying “all ratings remain on review for downgrade”.
Aeroméxico shares closed half a percentage point down at 5.82 pesos.
Global joblessness worse than expected, says UN agency
The number of working hours lost to the coronavirus pandemic in the first half of 2020 was significantly worse than previously estimated, according to a UN agency report released on Tuesday.
The International Labour Organization estimates that there was a 14 per cent drop in global working hours during the second quarter of 2020, equivalent to the loss of 400m full-time jobs based on a 48-hour working week.
The ILO had earlier estimated the drop at 10.7 per cent drop or 305m job equivalents.
Regionally, working time losses for the second quarter were 18.3 per cent in the Americas, 13.9 per cent in Europe and Central Asia, 13.5 per cent in Asia-Pacific, 13.2 per cent in the Middle East and 12.1 per cent in Africa.
“The vast majority of the world’s workers — 93 per cent — continue to live in countries with some sort of workplace closures, with the Americas experiencing the greatest restrictions,” the report noted.
The report found that women workers had been disproportionately affected by the pandemic, “creating a risk that some of the modest progress on gender equality made in recent decades will be lost”.
Australia to boost defence spending to counter post-virus China threat
Jamie Smyth in Sydney
Australia will increase defence spending and acquire long-range strike missiles for the first time in response to a more dangerous post-Covid-19 world and greater strategic competition in the Asia Pacific region, the government has said.
A new defence strategy, which was released on Wednesday, sets a goal of ensuring Canberra is able — and understood to be willing — to deploy military power to shape its environment, deter actions against the nation’s interest and, when required, respond with military force.
It commits A$270bn (US$187bn) to defence spending over a decade — A$70bn more than the A$200bn committed at the time of the last defence white paper in 2016 — and includes a shopping list of sophisticated new weaponry, including the AGM-158C long-range anti-ship missile system from the US.
The government’s review concludes that strategic competition in the Asia-Pacific region has evolved faster than expected, with Canberra facing more capable military systems and “grey zone tactics”, such as use of paramilitary forces or economic coercion, that are under the threshold for a conventional military response.
It says the long-term impacts of the coronavirus pandemic are not yet clear but warns it has deeply altered the economic trajectory of the region and the world with implications for Australia’s prosperity and security.
Strategic competition, primarily between the US and China, will be the principal driver of strategic dynamics in the Indo-Pacific, says the review.
Scott Morrison, Australia’s prime minister, said the nation needed to prepare for a post Covid-19 world that was poorer, more dangerous and more disorderly.
“Now we must face that reality, understanding we have moved into a new and less benign strategic area, one in which the patterns of co-operation that have benefited our prosperity and security for decades are now under increasing, and I would suggest almost irreversible, strain,” he said in a speech outlining the new defence strategy.
The review and boost to defence spending — which will rise to about 2 per cent of gross domestic product by July, a key target demanded of US allies by Washington — comes as diplomatic relations between Canberra and Beijing have fallen to their lowest level in a generation.
Euan Graham, an analyst at IISS-Asia, a research institute, said the commitment to invest in long-range strike weapons and offensive cyber capabilities would reshape Australia’s largely defensive military posture towards a more conventional deterrence role. He said this was recognition of a rapidly deteriorating strategic environment, in which China loomed front and centre, and that the primary role in conventional deterrence was likely to fall on Australia, rather than on its ally the United States — except in the nuclear domain.
“This [review] represents a fundamental break with the practice of contributing armed forces designed to fight as part of a coalition in distant deployments to the Middle East, for example. Australia is facing potential direct military threats in its surrounding region, currently, and probably extending into its immediate periphery in future.”
Airbus slashes 15,000 jobs in wake of travel collapse
Peggy Hollinger in London, David Keohane in Paris and Claire Bushey in Chicago
Airbus is slashing 15,000 jobs, marking the biggest single reduction in its passenger jet business since the creation of Europe’s flagship aircraft maker 20 years ago.
The cuts, forced by the collapse in air travel as a result of the coronavirus pandemic, come as Guillaume Faury, chief executive, warned that air traffic might not recover to 2019 levels before 2025.
The job cuts account for roughly 17 per cent of the group’s 90,000-strong commercial aerospace workforce and have been carefully calibrated to avoid rivalry between unions in France and Germany.
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South Korean manufacturing sector shrinks in June
Edward White in Wellington
South Korean manufacturing activity contracted in June, as the coronavirus global pandemic damps new orders and output from factories.
The IHS Markit manufacturing purchasing managers’ index increased to 43.4 last month from 41.4 in May. Despite the small improvement from May — which marked the worst result since the global financial crisis — the number remained well below the 50-point marker separating contraction from expansion and economists warned that the outlook remained bleak.
“It seems that expectations of a release in pent-up demand following the lifting of lockdown measures around the globe were certainly misplaced as anecdotal evidence and survey results reveal a widespread and marked decline in new orders once again,” said Joe Hayes, an economist at IHS Markit.
The government in Seoul has announced virus-related spending of about $230bn as it attempts to shore up battered industries and financial markets as well as protect jobs.
However, it is unclear whether these measures are yet flowing through to the country’s manufacturers which underpin the economy. Earlier on Wednesday, South Korean official data showed the value of exports had fallen 10 per cent in May, in the fourth-straight month of declines.
Separately, health officials are grappling with a new potential cluster of virus infections after three confirmed cases at a school near Seoul, in what might be one of the first cases of transmission among school children in the country. The Koreas Centers for Disease Control reported 51 new coronavirus cases on Wednesday, including more than 30 locally transmitted infections.
Test refusals blamed for driving Melbourne Covid-19 outbreak
More than 300,000 residents of Australia's second-largest city are in lockdown after a spiralling Covid-19 outbreak that caught authorities unaware.
The country's acting top medic indicated in a television interview on Wednesday that people refusing to be tested on their return to Australia might have driven the outbreak in Melbourne's northern suburbs that has seen dozens of new positive cases.
Acting chief medical officer Paul Kelly said in an interview with the Nine Network that returned travellers in hotel quarantine and refusing tests were "the major driver of this issue in the wider community".
He added: "The issue [is] with the hotel quarantine ... two of the hotels in Melbourne that have been hosting returned Australians coming back to Australia."
Prof Kelly said the government was "very worried" about the situation but "much less worried" than on Tuesday.
He described the Victorian state government's response as "strong and proportionate", adding: "I'm confident that that will get on top of the situation in Melbourne."
Victorian premier Daniel Andrews announced on Wednesday afternoon that 73 new cases had been reported in Melbourne, following 75 recorded on Tuesday.
Ten Melbourne suburban postal codes, including Brunswick, pictured, will return to full lockdown restrictions from midnight on Wednesday evening. Prof Kelly said authorities had created "a border within a state".
International flights carrying returning travellers destined for quarantine in Melbourne would be diverted away from Victoria.
Prof Kelly said the government would have to deal with people refusing to be tested. "That's something that the Victorians are working on. It's an issue, I think, of explaining to people why it's important."
He said the situation in Melbourne demonstrated how rapidly Covid-19 could get out of control.
Coronavirus leads to decline in North Korean defector numbers
Edward White in Wellington
The number of North Koreans arriving safely in South Korea after escaping Kim Jong Un’s regime has slumped to the lowest level on record after the restrictions on the movement of people in North Korea and China were tightened in response to the coronavirus.
Only 12 North Korean defectors entered South Korea in the three months to the end of June, down from 135 in the first quarter and marking the lowest level of defections since Seoul’s unification ministry started publishing the data.
“The biggest reason behind the decline is that the national borders of these countries were closed after the outbreak of the coronavirus and cross-border movement became difficult,” said Yoh Sang-key, a unification ministry spokesperson.
The sharp decline in defections follows Pyongyang’s sudden closure in January of most land, air and sea routes into North Korea, as the Kim regime moved swiftly to isolate the country from what was at the time a rapidly deteriorating situation in Wuhan, China.
In addition, there have been stricter controls on domestic travel inside North Korea and in China, closing routes that defectors have to use if they are to reach safety in south-east Asia.
World Bank and AIIB to lend $7m for Maldives pandemic fight
The World Bank and the Asian Infrastructure Investment Bank said they would jointly lend the Maldives $7.3m to help the Indian Ocean nation fight the Covid-19 outbreak.
The loan would go to providing personal protective equipment and boosting testing capabilities.
It is China-backed AIIB's first loan to the Maldives, the bank said in a statement on Wednesday.
Chinese electric car maker Byton suspends operations
Christian Shepherd and Emma Zhou in Beijing
Chinese electric car start-up Byton is suspending operations and furloughing staff, making it the first high-profile victim of a shakeout in the country’s electric vehicle sector exacerbated by the coronavirus outbreak.
From Wednesday Byton will furlough all staff involved in production and halt the majority of its operations in China for six months, according to company emails seen by the Financial Times and confirmed by Byton employees.
It will then begin a process of cost-cutting and reorganisation, the emails said.
Read more here
UK house prices show first annual decline in eight years
Bethan Staton in London
UK house prices fell for the first time since 2012 last month, a building society survey said, as the property market makes an uncertain return to business after lockdown.
Nationwide’s house price index showed prices in June were down 0.1 per cent year-on-year, after increasing 1.8 per cent the previous month, in the first decline since December 2012.
UK house prices fell by 1.4 per cent month-on-month, taking into account seasonal changes, after a fall of 1.7 per cent the previous month. House prices in June were 3.2 per cent lower than in April.
Robert Gardner, Nationwide’s chief economist, said stalling house price growth was “unsurprising” given the pandemic’s shock to the economy, which has forced viewings and transactions to freeze and seen economic output slump.
While latest data from HMRC showed a slight pick-up in residential property transactions from April’s low, in May they were still 50% lower than the same month in 2019.
Owners and buyers are now looking with caution to the uncertain outlook of the next few months. Nationwide’s figures showed a further slowdown in mortgage activity, with only 9,300 approvals for purchasing homes in May, down 86 per cent from the same month last year. In February there were 73,700 mortgage approvals.
UK corporate round-up
British Land, the property group whose sprawling office and retail portfolio includes Broadgate in the City of London and the Meadowhall mall in Sheffield, revealed it had collected just 36 per cent the rent due from shopping centre tenants in the June quarter.
“We are holding productive discussions with larger retail and leisure operators who have been disproportionately affected by lockdown,” the group said. Its discussions with tenants involve “moves to monthly rents, deferrals and partial settlement of March and June rents, typically in return for the removal of lease breaks, lease extensions, reduced incentives or commitments for additional space,” British Land explained. Office rent collection was much better, with 88 per cent of rents collected.
Value retailer B&M said like-for-like sales rose by 27 per cent in the quarter to June 27, compared with the same time last year, thanks to cost-conscious shoppers flocking to its stores during lockdown. Chief executive Simon Arora warned that this stunning performance may not be repeated because “there are a great deal of uncertainties ahead.”
Smith & Nephew said it will lose out from the Covid-19 pandemic, however, forecasting a 29 per cent drop in quarterly revenues. The group, which makes surgical devices, has suffered from hospitals delaying elective procedures to focus on treating coronavirus patients.
Meanwhile, Britain’s Financial Conduct Authority has pledged further support to people struggling with debts such as credit cards, store cards and personal loans. It has told banks to extend payment freezers to borrowers who are still struggling. Those who have not yet applied to temporarily stop debt payments have until October 31 to apply to do so.
Online food sales double to drive overall growth at Sainsbury's
Jonathan Eley in London
J Sainsbury said online grocery sales almost doubled in the first quarter of the year, driving overall growth to 8.5 per cent, but said it expected group profit to remain flat year-on-year.
Total grocery sales were up 10.5 per cent in the 16 weeks to June 27, with general merchandise up 7.2 per cent. But there was no change to the guidance offered at the time of the company’s full-year results, with £500m of additional costs related to Covid-19 broadly offset by the benefit of increased sales.
The sales figures do not include fuel, sales of which more than halved as lockdown curtailed car travel. Including fuel, which is low margin but has a significant working capital benefit, sales were down 2.1 per cent in total in the period.
Sales at Argos, the general merchandise chain acquired in 2016, were up 10.7 per cent in total, despite the closure of the entire 574 Argos stores for much of the period. Argos customers could choose instead opt for home delivery or collect their order in a Sainsbury’s store.
However Simon Roberts, who took over as chief executive of the UK’s second-largest supermarket when Mike Coupe retired in June, cautioned against extrapolating the heady sales growth across the full year.
Germans release pent-up spending with record retail sales rise
Martin Arnold in Frankfurt
German consumers rushed back to shops in May as a wave of pent-up spending drove retail sales up by a record 13.9 per cent from the previous month.
The jump in May was the highest since the start of the data series in 1994, the Federal Statistical Agency reported on Wednesday, and it followed a 6.5 per cent monthly decline in April.
German retail sales in May were 3.8 per cent higher than they were the same month last year, underlining how the lifting of lockdowns imposed to contain coronavirus has prompted consumers in the country to release pent-up spending.
The data add to evidence of how the German economy is rebounding from its post-pandemic low-point now that the national lockdowns have largely been lifted, albeit with social distancing rules still in place and many large scale public events still closed. The news from Germany comes a day after consumer spending on goods in France rose 36.6 per cent as shoppers opened their wallets again in May to splash out on cars, shoes and furniture.
However, the economic impact of the pandemic is still taking its toll on the German jobs market, according to separate figures published by Destatis on Wednesday, which showed the number of people in employment had fallen by 209,000 to 44.6m in May.
Upper Crust owner SSP to cut 5,000 jobs in the UK
SSP Group, the travel food retailer behind outlets such as Upper Crust and Caffè Ritazza, plans to cut more than half its jobs in the UK as the travel industry has been ravaged by the coronavirus pandemic.
The axing of 5,000 roles in head office and across the UK comes as the air travel industry has virtually shut down and passenger numbers at railway stations have dropped 85 per cent compared with a year earlier as travellers avoid public transport.
The company made the decision to axe the jobs on expectations that only a fifth of its outlets will be in a position to reopen by autumn. The costs associated with the restructuring are expected to be as much as £10m.
Before the Covid-19 outbreak, SSP employed 40,000 people for operations in 35 countries. The job cuts unveiled on Wednesday are limited to the UK, where it operates 570 units in railways and airports that need 9,000 workers in peak summer season.
"Covid-19 continues to have an unprecedented impact on the travel industry and on SSP's businesses in all geographies,” said Simon Smith, chief executive of SPP. “In the UK the pace of the recovery continues to be slow. In response to this, we are now taking further action to protect the business and create the right base from which to rebuild our operations.”
The company has not begun large-scale job cuts in continental Europe, North America or the rest of the world as it expects a more rapid recovery, a longer time for workers to receive government support or contractual lay-off arrangements.
Riksbank extends asset purchases to SKr500bn until June
Sweden’s central bank, which on Wednesday left its key interest rate at 0 per cent, will extend its asset purchases for another year and dip into the corporate bond market as it seeks to prop up the economy ravaged by the pandemic crisis.
The Riksbank is to expand its quantitative easing programme to SKr500bn ($53bn), from SKr300bn, up to the end of June 2021. The central bank will begin purchasing corporate bonds in September, planning to scoop up SKr10bn by June next year.
The bank added that it is prepared to cut the repo rate, “if this is assessed to be an effective measure”. Still, in its forecast released on Wednesday the bank keeps its rate path at 0 per cent until the third quarter of 2023.
Governor Stefan Ingves said in April that cutting interest rates would not be the right response to the coronavirus crisis, adding that he is focused instead on ensuring problems from the economy do not “migrate” to the financial industry.
The bank predicts gross domestic product to shrink 4.5 per cent for this year. It had earlier forecast the economy would contract by 7 to 10 per cent this year.
"Overall, the message was softer than our expectations," Cathrine Danin, senior economist at ING, said in a note. "In the short term, the new GDP forecast was slightly more positive."
The measures, put in place to avoid an “unnecessarily prolonged and deep decline in the economy and inflation", will help maintain access to low-cost funding, the bank said on Wednesday.
Sweden ended its five-year experiment with negative rates at the end of last year and has been reluctant to return below zero.
The country, which has kept shops, pubs and restaurants open during the coronavirus outbreak, has been the worst-affected Scandinavian country. It has reported more than 5,000 deaths and its Covid-19 case count has surpassed 68,000, Johns Hopkins University figures show.
Manufacturing downturns ease in France, Italy and Spain
Valentina Romei in London
The eurozone factory downturn eased markedly across some of its largest economies in June, a survey of manufacturing activity showed.
The IHS purchasing managers' index, based on companies’ responses to questions about business activity, rebounded above the 50-mark in France, which is the level that separates expansion from contraction.
The index for Spain remained below this level, although it jumped 10 points to 49, beating economists’ expectations. Italy’s reading rose by 2 points to 47.5, which was less than forecast by economists polled by Reuters.
“Spain’s manufacturing economy moved closer to stabilisation during June as economic activity showed signs of picking up in line with a loosening of Covid-19 restrictions,” said Paul Smith, economics director at IHS Markit, which compiles PMI surveys.
However, reports from all three countries said that weak demand remained a serious issue, with plants in Spain still not operating at full capacity and French manufacturers reporting declining demand from overseas customers.
For the eurozone as a whole, the PMI hit 47.4 last month, up from May’s 39.4 and ahead of an earlier flash reading of 46.9.
But all member countries recorded a drop in manufacturing employment, led by Germany, Italy and the Netherlands.
Branson group commits £200m funding for Virgin Atlantic
Tanya Powley in London
Sir Richard Branson’s Virgin Group has committed £200m of immediate funding for Virgin Atlantic as the grounded airline races to secure a £1bn rescue package early this month.
The commitment will help bolster the struggling airline’s cash reserves in the coming months in the face of a slow recovery in international air travel that has been decimated by the coronavirus pandemic.
While Virgin Group is planning to provide about £200m in cash now, according to people close to the process, additional shareholder support of about £400m has also been committed.
This will come from Delta Air Lines, which has a 49 per cent stake in the airline, as well as Virgin Group, the majority shareholder with a 51 per cent holding.
The £400m is likely to be in the form of deferred payments such as brand fees and shared IT and back office platforms. The deal will be structured to ensure no change in Virgin Atlantic’s current shareholding.
The cash injection comes as Virgin Atlantic is attempting to finalise a multipronged refinancing package of about £1bn.
On top of the £600m from existing shareholders, another main part of the airline’s rescue package is expected to come from private investors, who will provide about £250m in debt funding.
Over the weekend, US private equity group Centerbridge Partners re-entered talks with the airline — alongside hedge funds Davidson Kempner Capital Management and Elliott, according to people close to the talks.
Virgin Group, Davidson Kempner and Elliott declined to comment and Centerbridge did not respond to request for comment at the time of publication.
German unemployment rate hits five-year high
German unemployment has ticked up to a five-year high of 6.2 per cent in June, despite millions of workers being shielded from the impact of the pandemic on the economy by the state-subsidised furlough scheme.
Europe’s largest economy had been close to full employment before the pandemic struck. But since then its jobless numbers have increased to levels not seen for five years. This persisted in June as the number of unemployed people rose by 40,000 to 2.85m, increasing its jobless rate from 6.1 to 6.2 per cent.
The job market has been largely protected by the Kurzarbeit furlough scheme, which allows companies to send workers home and to have much of their wages paid by the government.
The Federal Employment Agency said companies had applied for a further 342,000 people to join the Kurzarbeit scheme in June, taking the total number of applicants above 12m.
By April it said 6.8m people were receiving benefits under the scheme, up from 2.5m in March and well above the 1.5m peak reached by the scheme after the 2008 financial crisis.
There has been a sharp drop in the number of new job vacancies being advertised with the Federal Employment Agency, which were down 227,000 from a year ago at 570,000 in June.
“The labour market remains under pressure due to the corona pandemic,” said Detlef Scheele, head of the Federal Employment Agency. “The massive use of Kurzarbeit stabilises the labour market.”
Iran reimposes lockdown measures in a third of provinces
Najmeh Bozorgmehr in Tehran
Iran will reinstate restrictions on people's movements in about a third of its provinces after coronavirus cases surged.
From Saturday, president Hassan Rouhani said in a cabinet meeting, those in the affected provinces "cannot hold weddings, mourning ceremonies or parties like before”.
In the holy city of Mashhad, where official figures showed the number of confirmed cases has doubled over the past month, public places such as schools, universities, libraries, cinemas and beauty salons in Mashhad will be shut down for at least a week.
Iran’s death toll hit 10,958 on Wednesday, out of 230,211 individuals who have tested positive for the virus.
VW to scrap Turkish plant as car sales plummet
Joe Miller in Frankfurt
Volkswagen will cancel plans to build a car plant in Turkey owing to the severe slowdown in the global car market, the German manufacturer confirmed on Wednesday.
The factory, which was due to be built near Izmir, had been put on hold after VW supervisory board members expressed concern about building a base in Turkey following its incursion into Syria last year.
The proposed plant was to produce as many as 300,000 cars annually from 2022 and formed a vital part of the German carmakers' plans to capitalise on rapid population growth in eastern Europe and the Middle East.
However, car sales are expected to shrink by at least a fifth worldwide in 2020 as a result of Covid-19. VW delivered 30 per cent fewer vehicles in Eastern Europe and the Middle East in the first five months of the year.
Fears for English football as Wigan Athletic goes into administration
Andy Bounds in Huddersfield
English football club Wigan Athletic has collapsed into administration in a move that will heighten fears about the survival of some of its rivals while stadiums are shut to fans.
Administrators from Begbies Traynor said Wigan, who play in the Championship, English football's second tier, would fulfil its fixtures while a buyer was sought. But the 12 point deduction for entering administration could see the club relegated at the end of the extended season.
Wigan has changed hands twice since the family of Dave Whelan, the former player who founded JJB Sports, sold the club two years ago. It was acquired by Next Leader Fund, a limited partnership headed by Hong Kong businessman Au Yeung Wai Kay, only this month.
Gerald Krasner, joint administrator, said:
Our immediate objectives are to ensure the club completes all its fixtures this season and to urgently find interested parties to save Wigan Athletic and the jobs of the people who work for the club.
Obviously the suspension of the Championship season due to Covid-19 has had a significant impact on the recent fortunes of the club.
Wigan Athletic has been a focal point and source of pride for the town since 1932 and anyone who is interested in buying this historic sporting institution should contact the joint administrators directly.
Wigan are 14th in the Championship. The team have won all three fixtures since football returned to action.
US private payrolls rise by 2.4m in June
US private sector employment grew by more than 2m in June and May's figures were revised sharply higher as businesses brought back furloughed workers and hiring resumed amid easing restrictions.
Private employers added just 2.37m jobs last month, payroll processor ADP said on Wednesday, however, that missed economists’ expectations for a gain of 3m according to a Reuters poll.
Notably, ADP also sharply revised higher its job gains in May. Private sector employment grew by 3.07m in May, up from its initial estimate of 2.76m job cuts the previous month. While the company did not explain the sharp revision, ADP's model incorporates official numbers for the previous month's nonfarm payroll report, which could partially explain the discrepancy.
Small businesses, which have less than 50 employees, led the way in June creating 937,000 new jobs, followed by large companies, which have 500 or more employees, at 873,000 and mid-sized companies at 559,000.
Hiring also rebounded more sharply in the vast services sector, which added 1.9m jobs, while manufacturers added 457,000 jobs.
"As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses," Ahu Yildirmaz, co-head of ADP Research Institute, said. "In fact, 70 percent of the jobs added this month were in the leisure and hospitality, trade and construction industries."
However, with a surge in new coronavirus cases in the south and west, a number of states have begun to pause or reverse their reopenings, which has created further uncertainty for the outlook on the US labour market.
Biggest US Pizza Hut franchisee files for bankruptcy protection
The largest operator of Pizza Hut restaurants in the US has filed for bankruptcy protection, underlining the financial pressures that the pandemic is taking on fast food franchisees.
NPC International, which operates 1,225 Pizza Hut outlets as well as 385 Wendy’s, buckled under the weight of its debt burden after sales dropped during the coronavirus lockdown. It employs more than 37,000 people and is based near Kansas City.
The company, which opened its first Pizza Hut outlet in 1962, filed for Chapter 11 bankruptcy protection in federal court in Texas on Wednesday.
Pizza Hut said in a statement: “We view it as an opportunity to create a better future for NPC’s Pizza Hut restaurants.”
US Treasury reaches deal to bail out trucking group YRC
James Politi in Washington
The US Treasury department has reached a deal to bail out YRC, a struggling, heavily-unionised US trucking company, with a $700m loan using funds from the $2.2tn stimulus legislation passed in March.
The agreement was announced on Wednesday and will give the US government a 29.6 per cent stake in the Kansas-based company, which employs 30,000 freight workers including 24,000 members of the International Brotherhood of Teamsters union.
The rescue of YRC came from a $17bn pot of money in the US fiscal stimulus legislation designed for companies deemed critical to national security. Boeing was expected to be the main beneficiary of the money, but was able to secure funding independently as corporate credit markets recovered in recent weeks.
The US Treasury department said that YRC was a vital provider of military transportation, but was also key to supplying retail and industrial customers across the country. “This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers,” Steven Mnuchin, the US Treasury secretary said.
James Hoffa, the Teamsters’ president, described the deal as an “essential bridge loan”. “They recognised the urgency and acted swiftly to avoid our members’ health benefits from being cut and, in the long term, to protect 24,000 Teamster jobs,” Mr Hoffa said in a statement.
BioNTech and Pfizer’s Covid-19 vaccine trial yields positive results
Joe Miller in Frankfurt
A coronavirus vaccine from Germany’s BioNTech has yielded positive trial results, generating immune defences in participants that were stronger than those of the average recovered Covid-19 patient, according to preliminary data released by the company.
Investors have been sensitive to any incremental updates over the possibility of a Covid-19 vaccine or treatment, and US stock futures rose following the announcement.
In a clinical study run with pharmaceutical group Pfizer in the US, 24 people between the ages of 18 and 55 who received two doses of the vaccine had “significantly elevated” antibodies within four weeks of their first injection.
In total, there were 45 people in the study, with some receiving placebos and others getting higher doses of the vaccine.
Constellation buys direct-to-consumer company Empathy Wines
Constellation Brands is snapping up Empathy Wines, a direct-to-consumer wine company, as it seeks to grow its digital business at a time when bars and restaurants are closed and people are drinking at home.
Constellation, the company behind Modelo beer and Robert Mondavi wines, said it would work with Empathy Wines to "build DTC and digital capabilities that Constellation intends to scale across its wine and spirits brands to help deliver strong and sustainable growth for its portfolio".
Empathy Wines, which has a $20 per bottle price point, has sold 15,000 cases since its launch last year and has acquired 2,000 subscription customers to date. Transaction terms were not disclosed.
The news accompanied quarterly results that showed Constellation's net sales fell more than 6 per cent to $1.96bn in the first quarter, just shy of analysts' estimates for $1.98bn.
"While the slowdown of our Mexican beer production due to Covid-19 created short-term impact to distributor inventory levels, shipments and net sales, we continue to win in sales channels that are open, consumer demand for our brands remains strong and our outlook for the year remains positive," said Bill Newlands, chief executive officer.
The company reported a loss of $177.9m or 94 cents a share in the three months ending May 31, compared with a loss of $245.4m or $1.30 a share in the year ago quarter. Adjusting for one-time items, earnings of $2.30 a share, topped expectations for $2.01.
Constellation Brands shares climbed 5 per cent to $184.38.
US stocks edge higher after strong second-quarter rally
Wall Street pushed higher in the first day of third-quarter trading as an increase in US employment and news of a potential coronavirus vaccine lifted sentiment.
The S&P 500 opened up 0.5 per cent on Wednesday, while the tech-heavy Nasdaq gained by a similar amount, after the ADP employment report showed that US private payrolls rose by 2.37m in June.
On Tuesday, US stocks capped off their best quarter in more than two decades on the back of a broad rally encouraged by central bank support measures and hopes of a powerful economic recovery.
Futures trading had pointed to the indices opening lower about 40 minutes before the opening bell. “Big reversal in US stock futures,” said Mohamed El-Erian, chief economic adviser at Allianz, with the “reversal accentuated by headlines on a Covid vaccine pursued by Pfizer”.
A potential vaccine from Germany’s BioNTech has yielded positive trial results, preliminary data released on Wednesday revealed. The clinical study was run with pharmaceuticals group Pfizer in the US.
However, the rise in cases in southern and western US states threatens to derail the positive momentum. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned on Tuesday that daily new cases could more than double to 100,000, saying the country was “going in the wrong direction” on the pandemic.
US manufacturing industry shows early signs of recovery in June
US manufacturing activity rebounded in June to record its highest rate of growth in 14 months as lockdowns eased and businesses resumed operations.
In its monthly survey, the Institute for Supply Management said its index measuring factory activity jumped to 52.6 — the highest reading since April 2019.
Economists polled by Thomson Reuters had forecast a rise to 49.5. A reading below 50 indicates contraction.
The report also showed new orders and employment sub-indices of the report grew, although employment and new export orders remained in contraction territory.
"As predicted, the growth cycle has returned after three straight months of Covid-19 disruptions," Timothy Fiore, chair of ISM's manufacturing business survey committee, said. "Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year."
However, economists caution that uncertainty amid a recent surge in coronavirus cases in the US and weak demand still pose a challenge to the manufacturing sector.
Global tourism faces $1.2tn losses, UN trade body says
The world’s tourism industry is on course to lose at least $1.2tn, or 1.5 per cent of global economic output, from the four-month standstill in travel because of the pandemic.
The UN’s trade and development body warned that the loss could rise by a further $1tn if the break in international tourism extends for another four months and total $3.3tn if overseas travel is restricted until March next year.
“These numbers are a clear reminder of something we often seem to forget: the economic importance of the sector and its role as a lifeline for millions of people all around the world,” said Pamela Coke-Hamilton, director of international trade at the UN Conference on Trade and Development.
Developing countries are likely to be hit the hardest with Jamaica and Thailand set to lose out on 11 per cent and 9 per cent of their gross domestic product respectively, while popular European and north American destinations stand to lose billions of dollars, the UN body said.
It estimates that for every $1m lost in international tourism revenue, a country’s national income could decline by two or three times that amount.
Read more on whether Europe can save its summer here
US petrol demand drops as lockdown keeps motorists at home
Myles McCormick in London
US petrol consumption slipped last week, dashing hopes of an economic bounceback as a surge in coronavirus cases has forced states to put off plans to lift lockdowns and motorists to stay at home.
The volume of gasoline supplied to petrol stations and other smaller storage outlets — a proxy for demand — fell by about 1 per cent in the week to June 26 to 8.6m barrels a day, according to figures from the federal Energy Information Administration.
The fall in gasoline consumption, which had last week surged as motorists returned to the roads, indicated a recovery in domestic crude demand may take longer than anticipated, despite a higher-than-expected drawdown in commercial crude oil stocks, which retreated from record highs by about 7.2m barrels.
US oil prices fell on the news to just above $39 a barrel before bouncing slightly.
The figures come as a wave of new coronavirus cases forces authorities in the biggest petrol consuming states to stall plans to lift lockdown measures. Texas last week reversed its reopening plans as case numbers leapt.
The Saudi crude oil onslaught into the US market has also begun to ease, with imports dropping by more than 500,000 b/d compared with a week earlier — though shipments from the kingdom remained at about 830,000 b/d, much higher than their rate before Riyadh launched its price war this spring.
GM claims 'resilient sales' despite 34% fall in second quarter
Claire Bushey in Chicago
General Motors reported US vehicle sales fell 34 per cent in the second quarter compared with a year ago, as the pandemic hit both supply and demand for carmakers.
The Detroit company delivered 492,489 cars, trucks, vans and sports utility vehicles between March and June. Full-size pickup trucks remained popular with buyers.
“Our resilient sales reflect an improving demand curve and the strong efforts of GM and our retailers in unprecedented times,” said Kurt McNeil, US vice president for sales operations. “GM entered the quarter with very lean inventories. Now we are refilling the pipeline by quickly and safely returning production to pre-pandemic levels.”
GM said demand outstripped supply later in the quarter. It closed factories in March as Covid-19 spread across the US and car workers feared contracting the disease in the close quarters of an assembly line. Now pick-up truck and full-size SUV plants are running at three shifts, while “nearly all” plants making cars and crossovers — vehicles with the look and features of an SUV, built on a car chassis — are operating at pre-pandemic productivity levels.
The carmaker plans to operate most US plants through the two-week traditional summer shutdown as it tries to restock dealers’ lots.
New York City takes indoor dining off the menu in reopening rethink
New York City has decided against allowing indoor dining as part of the next phase of its reopening plan having observed its role in the recent rise in coronavirus cases across states in the west and south of the US.
"We cannot go ahead at this time with indoor dining in New York City," mayor Bill de Blasio said at a press conference on Wednesday morning. "Even a week ago, honestly, I was hopeful we could, but the news we have gotten from around the country gets worse and worse all the time."
Mr de Blasio said science and data were increasingly showing "problems" related to people congregating indoors in bars and restaurants, which has contributed to a surge in cases in cities and states around the US, particularly among those that were early in reopening their economies.
The move follows similar steps by other states in recent days to curtail dining and drinking activities. New Jersey governor Phil Murphy on Monday announced that New York's neighbouring state, and one of the early hotspots for the virus, would halt plans to include indoor dining as part of its next phase of reopening.
On Tuesday, Colorado ordered bars across the state to close, while Virginia said bars would not be part of its next step of reopening that begins today, and Delaware ordered bars near its beaches to close as part of a broader pause to its reopening plans.
Over the past week, Texas, Florida and Arizona have all ordered bars to close as part of moves to reverse their reopening process amid the rapid spread of the virus through those states. California's governor has ordered some counties to close bars in their region."A lot of other parts of this country, very sadly, made decisions based on something other than the data in the heat of the moment," Mr de Blasio said.
A further 44,358 people in the US tested positive for coronavirus between Monday and Tuesday, according to data compiled by the Covid Tracking Project. That is just 15 cases shy of a record one-day increase on June 26 and meant the daily case rate in the US rose by 105 per cent during the month of June.
The data came in the wake of a warning on Tuesday from Anthony Fauci, a member of the White House's coronavirus task force, that the US could see new cases soar to 100,000 a day.
Greece signs agreement with German tour operator Tui to boost travel
Kerin Hope in Athens
Greece has signed a "strategic cooperation" agreement for Tui, Europe's largest tour operator, to bring up to 1.5m tourists this year to help make up losses from the lockdown in the first half of the season.
Haris Theocharis, the tourism minister, said Tui would try to bring 50 per cent of the 3m tourists the group flew to Greece last year by extending the season into October and November. The scheme would be promoted with a joint advertising campaign.
Greek tourism authorities would encourage hotels, bars and restaurants at destinations served by Tui to remain open for four to six weeks longer than usual, while the operator would extend the average length of a package holiday in Greece for its customers.
Greece is looking to boost visitors from Germany to keep its tourism sector afloat this year, amid concern that British and Scandinavian arrivals will fall sharply because of a slower recovery after the pandemic.
Tui, the largest tour operator working in Greece, has kept going during the crisis thanks to a €1.8bn loan from the German government. Bookings are picking up, but only one-third of its summer holiday offerings have been sold to date, a company representative in Greece said.
Citi delays return to office plans in 13 states
Laura Noonan in New York
Citigroup has abandoned plans to return hundreds of workers to the bank's offices across 13 western and southern US states that have seen soaring numbers of coronavirus cases, a person familiar with the situation told the Financial Times.
Goldman Sachs added a "small percentage" of staff to its technology hub in Austin, Texas, last week and is "monitoring the situation there as we think about continuing to expand return to office," a person familiar with that bank's plans said.
Citi's decision affects 30 of its sites including those in Texas, Florida, Idaho, Georgia and some parts of California, the person said. Citi, which employs about 70,000 people in the US, had been due to increase numbers at those sites from a handful to 5 per cent between July 1 and July 2. The delay was first reported by Bloomberg news.
"We have always said our plans to return to the office would prioritise the health and safety of our colleagues and be centered around data not dates,” Citigroup said. “Consistent with that, we delayed our return to a number of sites across the US given the health data in those locations.
Citi's plans to increase numbers at its New York head office in that order are still on track, while San Francisco will also welcome employees back as planned even as those due to return to work in other parts of California are told to stay at home.
The person said the staff affected largely work in call centres, technology, engineering and back office functions. Main sites include Tampa and Jacksonville in Florida, which both employ thousands, and Boise, Idaho.
A spokesperson confirmed that Citi had "delayed our return to a number of sites across the US given the health data in those locations", but declined to give further details.
Texas, Florida and Idaho are among the states that have reported soaring numbers of Covid-19 cases in recent weeks, prompting them to either pause their opening (in the case of Idaho) or reverse reopening measures by shutting bars and other facilities, as in Texas and Florida.
Covid hospitalisations push Houston-area ICUs past full capacity
Intensive care unit beds in the largest hospital system in the US have passed full capacity, as a record daily increases of coronavirus cases in Texas weigh on the state's healthcare infrastructure.
The Houston-based Texas Medical Center revealed on Wednesday there were 1,350 patients in its ICU wards in the area, surpassing normal capacity of 1,330. Patients with coronavirus accounted for 36 per cent of those beds.
TMC is using all of its normal ICU capacity and is having to implement plans to create new intensive care beds and by moving some patients to other parts of the hospital.
In an effort to expand hospital capacity, governor Greg Abbott on Tuesday ordered hospitals in four counties to suspend elective surgeries, having last week ordered hospitals in the regions around the state's biggest cities - Austin, Dallas, Houston and San Antonio - to do the same.
Just over 6,500 people were currently hospitalised with coronavirus across Texas, according to the most recent data from Covid Tracking Project on Tuesday, a record high. At the end of May, just 1,684 people were hospitalised with the disease, an increase of about 290 per cent through June.
The state also reported nearly 7,000 confirmed cases of the virus yesterday, a record one-day increase.
California reports record daily rise in coronavirus cases
California became the latest coronavirus hot spot to report a record increase in cases, with nearly 10,000 people testing positive over the past day.
The state's health department reported a further 9,740 cases since Tuesday, taking the total number of positive cases in the state to nearly 233,000. Just over 87,000 tests were conducted over the period, a drop from back-to-back days of more than 105,000.
Only New York, an early hot spot for Covid-19, has reported bigger daily increases. Within the past week, Florida became the first state other than New York to report increases of more than 8,000 cases in a single day.
California governor Gavin Newsom is reportedly set to announce a new round of lockdowns for restaurants in Los Angeles county, which has more coronavirus cases than any other region in the US. The lockdown will last for three weeks, LA Eater reported, citing one person within the mayor's office. Dining rooms in Los Angeles county restaurants were allowed to reopen from May 29 with a 60 per cent occupancy limit.
Fed moves closer to offering interest rate guidance
James Politi in Washington and Colby Smith in New York
Federal Reserve officials moved closer to offering detailed guidance on the path of interest rates and asset purchases last month as they discussed reinforcing their policy tools in response to the recession triggered by coronavirus.
According to minutes from the Federal Open Market Committee meeting held on June 9 and 10, there was a growing consensus within the central bank that the Fed should “further clarify” its monetary policy intentions, though no firm timeline was given for such a move.
“Most participants commented that the committee should communicate a more explicit form of forward guidance for the path of the federal funds rate and provide more clarity regarding purchases of Treasury securities and agency mortgage-backed securities as more information about the trajectory of the economy becomes available,” the minutes said.
The minutes indicated that “a number” of participants “spoke favourably” about tying forward guidance to inflation outcomes.
“They saw this form of forward guidance as helping reinforce the credibility of the committee’s symmetric 2 per cent inflation objective and potentially preventing a premature withdrawal of monetary policy accommodation,” the minutes said.
Others saw a benefit in using the unemployment rate as the key metric, meaning the Fed would not raise rates until joblessness fell to a certain level, while another group suggested a “calendar-based” approach.
Apple to close 30 more stores across seven states, including California
Patrick McGee in San Francisco
Apple is closing for a second time 30 more of its US retail stores as new cases of coronavirus surge across America, signalling that large parts of the country are not prepared for the economy to safely reopen.
The announced closures bring the total number to second shutdowns to 77, representing nearly 30 per cent of the 271 Apple locations in the country. Apple said the "majority" of stores remain open, but it declined to specify a number. Some of its stores have been closed since the first wave of closures in mid-March.
Apple closed 16 stores on Wednesday, including 10 locations in Texas where new daily cases spiked to almost 7,000 on Tuesday, versus just 1,332 a month earlier. It also closed stores in Florida, Mississippi and Utah.
It then announced 30 more closures for Thursday, including 15 locations in California. New daily cases in the Golden State hit a record of 9,740 on Tuesday, taking the total number of positive cases in the state to nearly 233,000.
Stores to close as of Thursday:
California orders 19 counties to cease some indoor operations
California governor Gavin Newsom has ordered businesses with indoor operations and bars in some of the state's most populous and hardest-hit counties to close, continuing the state's partial reversal of its reopening plans.
The new measures apply to restaurants, wineries, tasting rooms, cinemas, zoos, museums and casinos in 19 of California's 58 counties that are on a monitoring list, unless they are able to offer outdoor or takeaway versions of their operations.
Mr Newsom also said that all parking facilities at southern California and Bay Area beaches will be closed for the Independence Day long weekend and encouraged counties that have been hit with mandatory business and event closures to consider cancelling fireworks shows in an effort to limit large social gatherings.
The new measures come just a couple of hours after the state's health department reported a record 9,740 people tested positive for coronavirus over the past 24 hours.
US stocks edge higher after strong second-quarter rally
Philip Stafford and Harry Dempsey in New York
US stocks rose on the first day of the third quarter as bullish investors cheered economic data and news of a potential coronavirus vaccine.
The S&P 500 index rose 0.5 per cent in New York on Wednesday after the ADP employment report showed US private payrolls rose by 2.37m in June after a sharp upward revision to the previous month's data and a gauge of manufacturing rebounded to its highest level in 14 months.
FedEx, seen as an economic bellwether, led gainers, up 12 per cent after benefiting from a boom in online shopping and home deliveries.
The tech-heavy Nasdaq Composite index rose 1 per cent.
The gains made for a positive start to the third quarter. On Tuesday, US stocks capped off their best quarter in more than two decades on the back of a broad rally encouraged by central bank and fiscal support measures and hopes of a powerful economic recovery.
A potential vaccine from Germany’s BioNTech further fuelled hopes for a recovery. A trial yielded positive results, preliminary data released on Wednesday revealed. The clinical study was run with pharmaceuticals group Pfizer in the US.
Elsewhere in markets, the yield on the US 10-year Treasury note, which rises as the price of the bond falls, ticked up 2.3 basis points to 0.674 per cent.
Texas reports record increase in new coronavirus cases
Texas reported more 8,000 new cases of coronavirus on Wednesday, a record increase, and that nearly 7,000 people were hospitalised across the state with the disease.
The state's health department said 8,076 people tested positive over the past 24 hours, topping the previous record set yesterday by just over 1,100. Deaths rose by 57, the most since mid-May.
Texas now has 6,904 people hospitalised across the state with Covid-19. Earlier today, the Houston-based Texas Medical Center, — the biggest hospital system in the US — revealed there were 1,350 patients in its ICU wards in the area, surpassing normal capacity of 1,330. Patients with coronavirus accounted for 36 per cent of those beds.
TMC is using all of its normal ICU capacity and is having to implement plans to create new intensive care beds.
McDonald's postpones plan to reopen indoor dining at US restaurants
McDonald's is postponing plans to reopen dining areas in its US restaurants by three weeks because of a jump in coronavirus cases.
While 99 per cent of McDonald's US restaurants are open, 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.
Now the chain is hitting the pause button on more reopenings as several states, including California, Texas and Arizona, report record numbers of new cases and various jurisdictions including New York backtrack on plans to allow restaurants to resume indoor dining.
"This surge shows nobody is exempt from this virus – even places that previously had very few cases," 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, wrote in a letter to restaurant operators viewed by the Financial Times.
"We will continue to monitor the situation and adjust as needed to protect the safety of our employees and customers."
US reports more than 50,000 new cases for first time ever
The number of new coronavirus cases in the US topped 50,000 for the first time on Wednesday, led by record increases in California, Texas and Arizona that have emerged as some of the new hot spots for the virus
A further 52,982 people tested positive over the past 24 hours, according to data compiled on Wednesday by Covid Tracking Project, up from 44,358 on Tuesday. The daily increase surpassed the previous record on June 26 by just over 8,600.
California's health department said earlier on Wednesday 9,740 people tested positive for Covid-19 over the past day, a record increase. Only New York, the early hot spot for the virus in the US, has experienced single-day increases bigger than this, according to Financial Times analysis of Covid Tracking Project data. Just over 87,000 tests were conducted in the state, a drop from back-to-back days of more than 105,000.
Texas (8,076), Arizona (4,877), Georgia (2,946) and North Carolina (1,843) all had record jumps, while Florida (6,563), Louisiana (2,083), Tennessee (1,806), South Carolina (1,520) and Ohio (1,076) were the others with more than 1,000 new cases.
Washington (671) and Alaska (38) were among the seven states to report record increases in cases, according to FT analysis of Covid Tracking Project data.
(This post has been updated to reflect the inclusion of data for California)
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