Your level-headed briefing on how the coronavirus epidemic is affecting the markets, global business, our workplaces and daily lives, with expert input from our reporters and specialists across the globe.
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Latest news
New international rules on banks’ capital requirements and disclosures are to be deferred by a year, to allow lenders to focus on responding to the financial impact of coronavirus
Virgin Atlantic to ask for UK state aid worth hundreds of millions of pounds, as the carrier battles the aviation industry’s worst crisis in decades
Edouard Philippe, France’s prime minister, has extended the nationwide lockdown for a further two weeks until April 15
A little calm before the storm
European stock markets were downbeat on Friday, as was trading on Wall Street, as the drumbeat of bad coronavirus news continued. But the whipsaw patterns of recent weeks seem to have become less extreme, at least for the time being.
The week in fact saw Asia and Wall Street’s best three-day run since the 1930s, while the MSCI All-World index of global stock markets was set for one of its best weeks on record. One investor said the US $2tn stimulus had “alleviated the panic”.
The outlook for the global economy, however, looks as bleak as ever.
“The first phase of the market correction has been completed as we learn how to cope with the virus,” said Schroders’ chief investment officer in London. “The next phase [of the sell-off] will be about processing the economic consequences.”
Markets
The US Federal Reserve’s choice of BlackRock, the asset management giant, to run new easing programmes, has raised eyebrows on Wall Street. Some say BlackRock’s dominance in the ETF market raises questions over conflicts of interest.
Orange juice is now the best performing of all commodities, as consumers load up with extra vitamin C to boost their immune systems. The jump in prices comes even as the market has been languishing amid a rise in production in Brazil and Florida. Consumption had also been waning over the past few years as shoppers switched to water and other drinks with less sugar.
Market turbulence and the temptation of bargain prices have lured many people in Japan into trading from home as they are forced to work remotely. The surge of new accounts in March has brought as many as 250,000 new investors into the market across Japan’s five largest online trading houses.
Business
The global quest to source more ventilators for coronavirus patients took on an almost surreal turn, as the UK blamed “communications problems” for not taking part in an EU joint procurement scheme, even though it had been announced publicly. Meanwhile across the Atlantic, President Donald Trump said on Thursday he doubted so many of the devices were needed, but by today he was haranguing motor companies on Twitter to step up production.
One of the biggest beneficiaries from the coronavirus crisis is Yu Xiaoning, a Chinese manufacturer of material for surgical masks. The value of his holding in the company surged by almost $2bn earlier this month. The melt-blown fabric is one of the world’s most highly sought after commodities.
US market regulators had to step in and halt trading in a small Chinese company as investors had confused it with Zoom, the US video-calling company that has seen spectacular growth during the coronavirus crisis.
Global economy
Farmers in Europe and the US are experiencing severe disruption as travel restrictions curtail the flow of migrant workers, just as farms gear up for harvest. “Every first-world economy is used to workers coming from other economies to pick their fruit and veg,” said one sector representative. “What you’re talking about is a major societal shift.”
Chief Economics Commentator Martin Wolf quotes US senator Lindsey Graham to talk about the state of the UK: “There is no functioning economy unless we control the virus.” The economic as well as social costs of the lockdown are likely to increase exponentially over time, so this breathing space must be used to expand, train and deploy an enlarged healthcare workforce and ramp up testing.
Europe should expect much higher public debt levels in the future as a result of dealing with the pandemic, writes Mario Draghi, former president of the European Central Bank. States have always done so in the face of national emergencies, he notes. This is how wars — the most relevant precedent — were financed.
As much of Asia braces for a second wave of infections, governments are stepping up interventions. India cut its benchmark interest rate to its lowest level ever to try to mitigate the economic fallout from a 21-day lockdown. Watch James Kynge, our global China editor, on why the country’s indebtedness means it is probably unwilling and unable to launch a stimulus package like it did in 2009 after the financial crisis.
The essentials
US Pharma Correspondent Hannah Kuchler reports on the global hunt for a coronavirus drug. Scientists are investigating three main types: antivirals to stop the virus from replicating; anti-inflammatories that treat the lungs after the immune system is overwhelmed; and antibodies to be given to the seriously ill or as a temporary prophylactic for healthcare workers.
The scale of the hit to the Chinese economy from the Covid-19 outbreak can be clearly seen from the FT’s China Economic Activity Index, comparing real-time economic activity with the same measures a year ago. The index is 21 per cent lower than at the same point in 2019, but there is some good news — yesterday saw the highest level since the lunar new year in late January, 27 per cent higher than its absolute low on February 17.
Our Lex business comment desk is running a Coronavirus Advice Exchange, where readers can swap advice, queries and opinions. Send us your thoughts via lexfeedback@ft.com on subjects such as staying solvent, business continuity, staff welfare, investment and the practicalities of running complicated businesses remotely. Read today’s session on the misery of cramped homeworking.
We also ran a readers’ forum earlier today with questions for our M&A and banking reporters about the effects of Covid-19 on banks, corporate finance, your money and more. Here are the highlights.
Readers respond
Reader Factcheck4567 comments on the hunt for a coronavirus drug (see story above). “Most companies have exited infectious disease for a reason. It is financially not rewarding. If you discover a new antibiotic, government will keep it for future use and not support commercialisation. We should reward companies that find a good treatment for this pandemic. A few billion dollars spent on treatment is better than trillions of dollars spent on emergency funds. It is the job of government to ensure that industry get paid for their R&D efforts.”
Get in touch
How is your workplace dealing with the coronavirus? Please tell us what your company is doing by emailing covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks.
Final thought
The phenomenon of public applause for health workers echoes the ancient practice of cheering military victory parades, says Simon Kuper: a sign — if one was needed — that medics and carers have replaced soldiers as our new heroes.
Source: Economy - ft.com
