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Latest news
While coronavirus is in decline in many parts of the world, fresh pockets of infection highlight the need for continued vigilance and illustrate the complexity of managing the right response.
Hong Kong is closing schools from Monday and has tightened social-distancing requirements after a resurgence in local cases. Most were in a public housing estate, an elderly care home and in local restaurants, with taxi drivers also thought to have spread the disease.
Victoria, Australia’s second most populous state, reported a record 288 new cases of Covid-19 infection on Friday, as Melbourne, the state’s capital, began a six-week lockdown.
Bulgaria has banned gatherings of more than 30 people at weddings, high-school graduation parties and other social events following a surge in infections.
But the most spectacular increase has been in the US. Florida, Texas and California — the three most populous states in the US — each reported a record jump in deaths on Thursday after a spike in new infections in recent weeks. Georgia and Arizona also reported large increases in infections.
While some Republican US states were slow to enforce and swift to ease social distancing and other infection control methods, Democrat-controlled California has become a case study in how a few bad decisions and local delegation of decision-making can undermine months of good work.
Persuading 40m people to go into lockdown for a second time will not be easy, but Dr Bob Wachter, chair of the department of medicine at the University of California, San Francisco, remained optimistic. “California has led the way in emission standards for cars, smoking cessation and other things,” he said. “We have Hollywood, Silicon Valley — we’re pretty good at convincing people to do stuff.”
Markets
UK government borrowing costs sank to record lows on Friday as a global bond rally pushed yields on short-term debt even further below zero. If investors are willing to pay the government to take their money, it’s largely because of the demand for gilts injected into the market by the Bank of England’s bond-buying programme. Today’s moves are down to a pick-up in prices of the safest government debt after a rise in US coronavirus cases.
Chinese shares stalled following a week-long rally after China Securities Journal urged caution by reminding investors of the stock market volatility five years ago that led to a plunge in equities. The country’s retail investors had rushed to participate in a booming stock market, reflecting a widely held belief that rising prices are sanctioned by the state and that any dips will not last.
The resurgence of coronavirus cases in several parts of the world is “casting a shadow” over the oil market’s nascent recovery. The International Energy Agency warned in its monthly oil outlook: “In some countries, [the] accelerating number of Covid-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside.”
Business
Great Portland Estates, one of London’s largest landlords, has collected just 28 per cent of the rent owed by retail, restaurant and leisure businesses in its estate. In broader signs of high-street pressure, retailers Boots and John Lewis are set to cut 5,300 jobs and shut stores, and three-fifths of Britons said they felt uncomfortable about dining in restaurants.
Ford is facing potential parts shortages from suppliers in northern Mexico as the pandemic throttles production, threatening the ability of US factories to keep manufacturing vehicles. The governor of Chihuahua, an important region supplying the US automotive industry, has barred employers from operating with more than half their workforce in an attempt to control the spread of Covid-19.
Staggering from hurricane and typhoon damage, reinsurers were suffering even ahead of coronavirus. The virus has already triggered write-offs of €800m at Munich Re and $476m at Swiss Re. The second-quarter impact is likely to be much worse, pushing many in the sector to develop new instruments.
Global economy
Britain’s leading public finance research body has warned that taxes will have to rise to fund the longer-term effects of borrowing about £350bn this year to support the UK government’s stimulus package. Paul Johnson, director of the Institute for Fiscal Studies, said: “The time to pay for all this will come.”
Emerging market debt is the pandemic’s ticking time-bomb. Rich nations can tap their central banks and poor nations can benefit from G20’s debt relief, but 106 middle-income countries stand to be hardest hit by coronavirus. Countries in difficulty should seek to reach deals with creditors to ensure sustainability and the IMF should support any nation with a credible programme, argues the FT.
EU countries facing a Brexit economic shock are in line to get access to a €5bn crisis reserve, under a draft plan from the president of the European Council designed to end a deadlock over the bloc’s recovery fund and long-term budget. Charles Michel, council president, ceded to demands for extra financial support to withstand a possible double economic shock from Brexit and Covid-19.
Get in touch
How is your workplace dealing with the pandemic? And what do you think business and markets — and our daily lives — will look like after lockdown? Please tell us by emailing covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks
The essentials
Fancy taking to two wheels to avoid infection on public transport? The coronavirus-driven cycling revolution has been stopped in its tracks — by a worldwide shortage of bikes. Social-distancing measures requiring gaps between workers, and staff absences due to illness or self-isolation, combined with disruptions to supply chains and the shutdown of factories and ports, have curbed production.
After months of working at home, many Londoners fed up with the capital’s often cramped and expensive housing are looking further afield for housing than before. A suspension of acquisition taxes for homebuyers has helped. “The ‘new’ commuter belt has been shunted by somewhere in the range of half an hour to an hour beyond where it previously was,” said Peter Edwards, a partner at estate agent Knight Frank.
Anthony Fauci, the veteran US scientist, tells the FT over lunch of homemade turkey and provolone sandwich that the independent-minded immigrant attitude of Americans helps explain why they do not always trust the government. “That is very, very problematic right now.” But the feisty 79-year-old, who expertly dodges around Donald Trump, says: “I will retire when I perceive, or the people that are close to me perceive, that I’m not doing 100 per cent. Right now, I haven’t lost any of my energy.”
Final thought
Enforced captivity during lockdown has mobilised columnist Robert Shrimsley’s son to clear out his room. For years, “it was easier to chuck [old toys] in a cupboard than have the argument”, he says, revealing the tensions between the sentimental hoarders and declutterers among other members of his family. “Soon we are going to have to drive the children out of their home just to make room for all their old stuff.”
Source: Economy - ft.com
