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Latest news
The European Commission is scrapping customs duties and VAT on imports of medical devices and protective equipment, saying it wants to make them more affordable for hospitals and charities
The Hong Kong Monetary Authority is halving the level of regulatory reserves banks have to keep against bad loans, releasing a possible HK$200bn (US$25.7bn) of lending capacity
The coronavirus death rate in the UK could peak at Easter, the government has said, as the country suffered its biggest daily jump in fatalities
Jobs wiped out as virus hits global economy
“Eye-watering” was the description of this week’s US jobs figures by one analyst.
In normal times, today’s non-farm payrolls data showing the US had shed 700,000 jobs in a month and hit a jobless rate of 4.4 per cent would be pretty big news. But this was not even the worst employment story of the week.
The non-farm figures only capture the first part of March, before the full impact of the pandemic took hold. More illustrative of the general direction are yesterday’s figures showing that more than 10m Americans have registered for unemployment benefits in the past two weeks alone.
The US numbers follow similarly dire data across Europe, although many of these workers may only be unemployed for a period while the state pays part of their wages.
About 4m French workers — a fifth of the country’s private-sector employees — have been temporarily laid off in the past two weeks. Spain saw its biggest jump in unemployment ever, with than 800,000 people losing their jobs last month. In the UK, years of employment growth have been wiped out, with almost 1m people applying for universal credit, the government’s new state benefits scheme, which was already suffering from birth pains.
The message from the analyst quoted at the top of this piece? Government programmes are too late, and companies have already reacted.
Markets
A sharp rise in the price of oil thanks to hopes of a ceasefire in the Russia-Saudi Arabia price war — fuelled mainly by President Trump’s talk of a deal — cheered global investors, if only briefly. US shale producers, victims of the recent collapse in demand, are trying to persuade the White House to support new sanctions against Russia and the Saudis.
Li Daxiao, a Chinese celebrity stock guru whose quirky videos can move markets, came under fire from investors and regulators for his ultra-bullish tone, continuing until just days before the market began to melt down. Some small investors blame his unbridled enthusiasm for wrecking their retirement savings.
Rating agencies are in the line of fire after a wave of downgrades. Critics say ratings were set too high before the coronavirus outbreak because of the business models of the agencies, which are paid by the companies and the governments whose creditworthiness they assess.
FT markets editor Katie Martin looks at the sell-off over the first quarter and the pandemic’s effect on stock markets, the dollar, the economy and the financial system. A sort of calm has arrived but investors face a conundrum: “It’s too late to sell but it’s too early to buy”.
Business
Several large Indian companies have invoked “force majeure” or “act of God” clauses to halt payments to suppliers as the country’s lockdown of 1.37bn people batters demand for goods and services, putting companies at risk of bankruptcy. Indian banks are also set to come under strain as the decline in economic activity leads to a rise in corporate delinquencies.
Governments around the world may be united in their calls for people to stay at home but huge sections of the workforce have no option but to continue with their daily routine and face the possibility of infection, especially those working in informal sectors or the “gig” economy. A lack of clarity from governments about what constitutes “essential” work does not help.
Dividends are becoming a lightning rod for political anger. European and UK regulators this week told banks that their efforts should focus on supporting the economy rather than shareholders. The FT revealed that four out of the UK’s five largest institutions resisted pressure by the Bank of England to voluntarily cancel their dividends, forcing the central bank to get tough. The issue is contentious: a dividends freeze hurts pension funds, charities and other savers who rely on the steady income they provide. Some UK companies have conceded to politicians’ and investors’ demands for executive pay cuts.
Global economy
The services sector in the UK and mainland Europe collapsed in March, according to a closely watched survey, with Spain, France and Germany all recording their largest-ever monthly falls. Italy, the first European country to enter a strict lockdown, dropped the most, offering others a foretaste of what is to come as businesses stay closed and workers are laid off.
The FT revealed that the Beijing-based Asian Infrastructure Investment Bank plans to lend at least $5bn to member countries to help them fight the pandemic. The Asian Development Bank also wants to build on its $6.5bn package announced in March. The four-year old AIIB has moved quickly by the standards of most development institutions to adapt its mandate to embrace health, from its initial focus on infrastructure projects.
“If nothing else, the coronavirus pandemic is teaching a lot of people an under-appreciated fact about the global trading system,” says Alan Beattie in our Trade Secrets newsletter. “A lot more of it is about paperwork and regulation and a lot less of it about tariffs than you’d imagine.” Only when it is stress-tested by a pandemic do some companies find out just how complex a trading system can be.
Readers respond
Christian Ihre says:
“We have offices in Stockholm and Singapore and we run a virtual morning coffee at 9am in Stockholm which is 3pm in Singapore and right in time for their afternoon coffee. 48 people connected from home on Teams works surprisingly well and is much appreciated. Almost as much as our virtual AW on Fridays where everyone prepares their own martini or drink of choice or shares a recipe for others to copy online. It’s so important to find new ways of having casual interactions also virtually, especially with young employees who are used to a high social pace and who are living in small spaces never intended to be a 24h isolation cell.”
The essentials
Bookmark this: Our new animated map shows the changing pattern of government lockdowns across the world. Beginning in Wuhan, China, on January 23, the measures become more stringent across Asia, then Europe, then North and South America. You can find the daily updated map and the rest of our charts in our tracking hub.
Dan Thomas, our chief business correspondent, took readers’ questions on how UK companies can access government help during the crisis. The FT’s pensions correspondent, Josephine Cumbo, also jumped in. Here are the highlights.
Do masks work? Our reporters examine the conflicting advice on the wearing of face masks and how effective they might be in stopping the spread of coronavirus. Western countries are slowly adopting a practice that is already widespread across parts of Asia. Medical reasons aside, masks also have an important symbolic function, adds columnist Gillian Tett.
From classical concerts to rock gigs and theatre, online performances are really taking off. And of course, time zones and borders are not an issue. Here’s one great example: the BBC’s virtual festival. Fashion programmes are also having a bit of a moment, according to Anna Nicolaou, our US media correspondent. Apparently they make great “quarantine TV”.
Final thought
Thanks to cancelled business dinners, closed restaurants and disappearing tourists, Japan’s government has a rather novel crisis on its hands, writes Leo Lewis from Tokyo: how to shift hundreds of tons of succulent, perfectly marbled Wagyu beef in a hurry.
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
Source: Economy - ft.com
