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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Companies strive to keep working under Covid-19 restrictions - as it happened

A Ryanair departures board and sign at Dublin airport.
A Ryanair departures board and sign at Dublin airport. Photograph: Brian Lawless/PA

FTSE 100 closes higher

And finally, Britain’s blue-chip index couldn’t quite hold onto the 6,000 point mark.

The FTSE 100 has closed 55 points higher, though, at 5994 -- a gain of nearly 1%.

Vodafone led the charge, ending the day 8.7% higher after maintaining its dividend and sounding generally calm about the current situation.

Retailers had a good day too, with Ocado jumping 7%.

On the FTSE 250 index, Kingfisher jumped almost 10% after reporting a pick-up of sales as its reopens its DYI stores.

But Land Securities ended the day 12% lower in London after slashing the value of its property assets by over a billion pounds as the lockdown forces tenants to close and miss rent payments. Other property companies also slid.

AJ Bell’s Russ Mould says there’s lots to worry about in Land Sec’s results.

It is hard to work out what is upsetting investors more – the cancellation of the fourth quarter dividend; a £23 million provision against next year’s rental income; a drop in net tangible value per share that wipes out most of the increases seen in the previous five years or management’s forecast that economic activity may not return to pre-COVID-19 levels until 2022.

In Dublin, shares in Ryanair ended 2% higher after it outlined plans to resume some flights in July (with face masks, temperature checks, and other restrictions):

But the big story today was the extension of the UK’s jobs retention scheme until October (but with companies picking up more of the bill).

Goodnight, GW

Heads-up. CNBC have updated their interview with Ben Broadbent, to explain the Bank of England deputy governor has said more monetary easing is possible.

We originally thought Broadbent had indicated negative interest rates were on the table (in earlier post) , but he seems to be talking about expanding QE (which two other MPC members voted for last week already).

Research: Frontline staff at greater risk as Covid-19 lockdown ends

Frontline workers, such as those in factories and building sites, are particularly vulnerable to coronavirus risks as the lockdown eases, as they’re less able to voice safety concerns.

That’s according to new research released by Nottingham Trent University today, which highlights the divide between office workers and those in “frontline operational roles”

Those frontline workers are less likely to have access to channels which allow them to speak up about issues and worries, according to Nottingham Business School (NBS), which interviewed over 2,300 UK employees.

The study also found that the ‘command and control’ structure of many operational roles often led to a culture of verbal abuse and management structures which did not allow for employees to raise concerns without fear of repercussions.

In contrast, office-based staff were more likely to feel confident to speak out -- and are better able to access information and communicate with others (by using computer systems, for example). Their managers may also be more open to hearing feedback, or ‘voice’.

Nottingham’s professor Helen Shipton points out that employers need to listen to staff’s concerns about safety, as they work out how resume work.

“The pandemic has created a number of issues that employees in the past may not have felt comfortable taking to their employer about, such as their personal life, family, finance and health circumstances.

Workers are differentially impacted by shutdown, including their psychological and emotional wellbeing, and cannot just expect to go back to normal without being able to raise concerns about their workplace being Covid-secure.

Professor Daniel King, Professor of Organizational Studies at NBS, adds that the problem goes beyond technology:

“It’s not just technological issues creating barriers – it’s also existing societal divides such as education, language and gender. For example, many people in operational workplaces don’t have English as their first language, how do they receive key information and feed-back? New divides have also been created, which areas of the business are safe? How do people travel to and from work?

“Frontline staff, for most organisations, are mostly likely to be some of the most challenging roles to continue socially distant ways of working and simultaneously are also the ones that are also most likely to not feel about to speak out.”

Trump calls for negative interest rates

US president Donald Trump has tweeted that America’s central bank should consider introducing negative interest rates.

With negative rates, commercial banks would pay to hold deposits at the Fed, called reserves, rather than collect interest (as already happens in the eurozone). It’s meant to encourage banks to lend money to the real economy.

In recent days, investors have been pondering whether US rates, already at record lows, could go below zero.

Reuters explains:

Rate options, which gauge monetary policy expectations, on Monday implied a 23% probability that the key federal funds rate will go below zero by the end of December.

But as the Bank of England’s Ben Broadbent pointed out today, negative rates have drawbacks. They hurt bank profitability, and could also drive US bond prices to new record highs, pushing bond yields below zero (which could then force capital overseas, or into riskier assets in search of better returns).

Updated

The US stock market has opened higher, despite Covid-19 anxiety.

The Dow Jones industrial average has gained 135 points, or 0.5%, to 24,357.

The steady flurry of awful economic news in recent weeks hasn’t stopped Wall Street rebounding from its March lows.

But Christopher Smart, chief global strategist at Barings, says investors need to be discriminate in assessing which companies will survive the pandemic. Especially now that cases have been reported among White House staff.

“The US may be facing its own “Boris Johnson” moment with reports of the coronavirus jumping the White House perimeter and infecting staff around both the president and vice president. This will only add to the uncertainty around how quickly the Federal government will chart a path to relaxing measures, even as states and cities offer their own very different approaches.

“Perhaps the most striking trend underway last week has been the recovery of small cap stocks, which have lagged. While it’s easy to dismiss as excessive liquidity desperate for a home, it may be investors simply expecting the third quarter to be better than the second quarter and next year looking better than this year. Of course, it also requires some careful differentiation among businesses that will make it and those that won’t.

“As investors look through the shocking jobs numbers last week, the real focus now will be on just how many of the unemployed still believe they have jobs to return to. There will clearly be stores and factories that never re-open, which will make them a longer-term drag on the recovery.”

Fast food chain McDonalds has announced that it hopes to reopen all its drive-through restaurants in the UK and Ireland by early June.

McDonalds says it will test a reduced menu offering at 30 drive-through sites next week. These pilot sites will be open from 11am to 10pm, with fewer workers on site (to address physical distancing rules).

It is also starting to supply deliveries from 15 sites in the south-east of England tomorrow (something it announced last week).

Incidentally, some experts are questioning whether US inflation actually fell sharply last month, as today’s data show.

The problem is that the items which became cheaper - ie gasoline - weren’t in demand last month, while the things people were actually keen to buy, like food, became pricier.

FTSE 100 back over 6,000 points

Back in the City, the FTSE 100 has pushed over the 6,000 point mark for the second time since the Covid-19 crisis began.

The blue-chip index has gained 66 points, or 1.1%, to 6006 points. That’s its highest day in seven sessions.

Vodafone is still the top riser, up 7.3% after retaining its dividend today. Supermarket chains are also doing well, with Morrisons (who reported a strong sales boost this morning) and Ocado both up 4%.

The FTSE 100 in the last quarter
The FTSE 100 in the last quarter Photograph: Refinitiv

Russ Mould, investment director at AJ Bell, says:

Banks and miners acted as the main drag on the FTSE 100 index whereas the main gains were found among telecoms, utilities and pharmaceutical stocks. Vodafone led the list of risers with investors relieved it is still paying dividends.

But what about those fears about Covid-19, and a second wave of infections? Well, Germany’s DAX is only up 0.1%, and France’s CAC is down 0.4% - so the overall picture is less rosy.

US inflation slumps under lockdown

Just in: Inflation across America has fallen sharply under the Covid-19 lockdown.

US consumer prices dropped by 0.8% in April, compared to the previous month.

This pulled the annual inflation rate down to just 0.3%, from 1.5% in March.

The drop was partly due to cheaper energy, with falling demand leading to a glut of oil and gasoline stocks.

But core inflation, which excludes volatile food and fuel costs, fell 0.4% month-on-month.

That dragged annual core inflation down to just 1.4%, from 2.1% year-on-year in March.

Back in the travel sector, embattled Brussels Airlines is cutting 1,000 staff - a quarter of its total workforce.

Brussels, which is owned by Germany’s Lufthansa, is also putting 10 aircraft out of service as it reduces its number of destinations by 22.

The company explains:

The extremely negative impact of the coronavirus crisis on the company’s finances and the persistently low demand for air travel are forcing Brussels Airlines to take substantial and necessary measures.

“The total size of the company, and consequently its workforce, will decrease by 25%.”

CEO Dieter Vranckx warned the coronavirus had been disastrous for the airline sector saying (via Reuters)

“Corona has hit us hard and fast...

The year 2020 will be a disaster.”

Full story: Furlough scheme extended

Updated

Rishi Sunak also rejected the idea that UK workers might be ‘addicted’ to the newly-extended furlough scheme - pointing out that no-one chose the current situation.

The chancellor says the scheme will keep paying 80% of wages (up to £2,500 per month) - there had been rumours it might be cut to 60% or lower.

He’s also planning to adjust the scheme in August, to create “greater flexibility” - including allowing furloughed staff to return part-time. He also talks about employees picking up some of the bill....

Sunak explains:

Employers currently using the scheme will be able to bring furloughed employees back part-time.

And we will ask employers to start sharing with the government the cost of paying people’s salaries.

Full details will follow by the end of May, Sunak adds.

Here’s more details and reaction:

Updated

UK furloughing scheme extended to October

Just in: Chancellor Rishi Sunak has announced that the government is extending its Jobs Retention scheme for another four months.

This means UK firms will be able to furlough workers until the end of October, rather than making them unemployed.

Sunak has also told MPs that 7.3 million people have been furloughed in the UK, with almost one million employers taking up the scheme.

Our main UK Covid-19 liveblog has all the details, as Sunak updates MPs about his plans.

Sales of used cars slumped 30.7% across the UK in March as showrooms closed due the Covid-19 lockdown, wiping out solid growth in January and February, according to the main industry group.

The Society of Motor Manufacturers and Traders (SMMT) said sales declined 8.3% in the first three months of the year, with 1.8m used cars sold. Sales of petrol cars fell by 9.3% while diesel sales were down 7.8%, and the average price slipped 0.2% to £13,601.

Demand for plug-in electric vehicles grew by 13.6%, however, thanks to a bumper first two months when more zero-emission vehicles came onto the used car market.

The number of hybrids changing hand also rose, by 11.5%, taking the total number of used alternatively fuelled vehicles to 36,493 – still a tiny proportion of the overall market.

Superminis remained the most popular second-hand model, making up 33% of sales, and black remained the most popular colour choice.

The SMMT said that while showrooms remain closed consumers are still browsing used cars online, and hopes that demand will pick up when people return to work, with the government asking them to avoid public transport and drive, cycle or walk instead.

Mike Hawes, the SMMT’s chief executive, said:

“This subdued activity is likely to continue into the second quarter. While it is tricky to predict future demand, the impact of social distancing requirements on public transport means that, for many people, the car will play an even more important role in helping them travel safely to work.

Reopening new and used car outlets will support this, enabling more of the latest, cleanest vehicles to filter through to second owners and help support the UK’s green growth agenda.”

Last week the SMMT reported that new car sales tumbled by 97% in April

Sales at DIY firm Kingfisher were hit hard by the lockdown, but it now sees signs of improvement.

Kingfisher, which owns B&Q and Screwfix, has reported that sales tumbled by 24% in the February-April quarter.

UK sales fell by 14%, after the company closed all its stores when the lockdown began on 23 March. It’s been slowly reopening since, and selling stock online in the meantime - with e-commerce sales up four-fold since mid-March.

Thierry Garnier, chief executive officer, says:

“Having initially closed our stores in France and the UK, we have rapidly adapted how we operate to meet the essential needs of our customers safely during lockdown.

We started by transforming our operations to meet a material increase in online transactions through our click & collect and home delivery services.

Those new in-store measures include:

  • · The provision of gloves, visors and masks to colleagues
  • · Limiting the number of customers in store
  • · Safe queuing before entering the store
  • · Sanitiser stations throughout the store
  • · Floor navigational markers to help enforce social distancing
  • · Perspex screens at checkouts
  • · Contactless or card payments only

Sales are now rebounding as customers venture back to stores, it says:

The fourth week of April reflected a significant improvement in the UK at both B&Q and Screwfix, largely due to increasing demand via contactless click & collect, and the reopening of some B&Q stores towards the end of the week.

Travel firms are among the fallers in the City today, despite Ryanair’s optimism that it can resume flights in July.

Cruise operator Carnival and British Airways owner IAG are both down around 2%, as City traders try to judge when people will be booking holidays again.

Health Secretary Matt Hancock has cautioned that it could be a while.

Asked on ITV’s This Morning show if people should accept that the normal summer holiday season for travelling abroad was cancelled, he replied: “I think that’s likely to be the case.”

Given the need for social distancing, Hancock explained, “it is unlikely that big, lavish international holidays are going to possible for this summer.”

Bank of England policymaker on further easing

Could the Bank of England be forced to cut UK interest rates below zero, to help the economy handle the Covid-19 slump?

In the past, the BoE has played this idea down -- but the prospect of the deepest recession in centuries means everything may be on the table.

Deputy governor Ben Broadbent was asked about the issue of easing monetary policy again on CNBC, and he suggested it was a possibility [updated].

Broadbent said:

“The committee are certainly prepared to do what is necessary to meet our remit with risks still to the downside.

“Yes, it is quite possible that more monetary easing will be needed at the time.

Last week, the Bank left rates at their current record low of 0.1%.

In contrast, the European Central Bank’s headline rate is 0%, with eurozone banks hit with negative rates to encourage them to lend.

Broadbent cautions that cutting borrowing costs below zero would have damaging consequences. Reuters has the details:

“We keep under review all our potential policy tools and this is a question that’s been thought about on and off since the financial crisis and it’s a balanced judgment,” Broadbent told CNBC television.

While cutting rates further could stimulate demand, they could but also have side effects for banks whose lending is vital for the economy, he said.

“These are the balanced questions that the committee has to think about,” Broadbent said.

Instead of cutting rates, the Bank could ease monetary policy by expanding its £645bn QE programme and buying even more government debt.

Updated

Vodafone rules out challenging Virgin-O2 mega-merger

A Vodafone store

The chief executive of Vodafone has ruled out making a rival offer to challenge the £31bn mega-merger of Virgin Media and O2 in the UK, citing issues including the rising threat of Netflix in the TV space.

Vodafone had previously been thought to be the most likely player to combine its UK business with Virgin Media, having done previous deals with parent Liberty Global. Last year, Liberty Global sold its German and Eastern European cable TV assets to Vodafone for €18bn.

The two companies struck a joint venture deal in the Netherlands in 2016, combining cable and mobile networks in the same model as the Virgin Media/O2 merger.

Nick Read, the chief executive of Vodafone, said that the company would not look to disrupt the deal between Telefonica and Liberty Global, which will create a joint venture to challenge BT and Sky in the UK.

“We remain very focused on our organic strength and we believe the market remains structurally favourable to us,” said Read, in a call with media as Vodafone published results for the year to the end of March.

“I feel that the appropriate strategy is our organic strategy to drive value for all stakeholders.”

Read raised issues including the longer-term outlook for owners of traditional TV players such as Virgin Media citing the rise of Netflix, which has more than 12m UK subscribers, and the risk of consumers “cord-cutting” from expensive TV packages.

He also added that the national roll-out of next-generation full fibre broadband will overlap with Virgin Media’s cable household network, which will mean increased competition to retain customers.

As flagged earlier, Vodafone also paid out its €2.4bn dividend, despite many companies opting to save the cash outlay to weather the impact of the coronavirus, pointing to the company’s resilient business model and strong balance sheet.

“We are supporting our many shareholders who rely on the dividend as an essential part of their income,” he said.

“We have a progressive dividend policy and when you look at our free cash flow generation this year…. We have good headroom.”

Vodafone also gave insight into the impact of working from home and government lockdowns across Europe.

In April, Vodafone said that in Europe customer data usage rose by 15%, voice traffic increased by 40% and fixed broadband usage was up as much as 70% in some markets. However, travel restrictions meant that mobile roaming traffic has fallen by 65% to 75%.

My colleague Richard Partington has outlined the government’s new guidance to UK companies, here.

Office workers should consider holding meetings outside, shop changing rooms should be cleaned after every user and takeaway customers should wait in their cars, under sweeping new back-to-work guidelines issued by the government on Monday.

Companies across Britain will have to consult with their staff and union officials about how they will keep employees safe as they return to work amid the gradual lifting of lockdown measures.

Under pressure from Labour and trades unions to impose safeguarding measures as the economy gradually reopens after more than a month of lockdown, the guidelines give limited time to some firms as they plan to reopen as soon as this week.

They range from urging office workers to sit back-to-back, rather than face-to-face, to limiting numbers in lifts and closing down canteen...

Construction industry busier, but it is safer?

Construction work in Manchester city centre yesterday, May 11, 2020.
Construction work in Manchester city centre yesterday, May 11, 2020. Photograph: Anthony Devlin/Getty Images

Ben Hancock, MD of Oscar Acoustics - an acoustics insulation firm -- reports that the construction industry is busier this week.

He has employees working onsite at various building sites, who say activity has picked up notably.

This follows Boris Johnson’s speech on Sunday night, in which he said those who can’t work from home (ie, in construction or manufacturing) should be “actively encouraged” to get back to work.

But is it really safe? Hancock is worried that some workers may not properly understand the new ways of working:

With regards to the PM’s speech, I do have real concerns over our ‘safe operating procedures’ being affected by those who have not been properly briefed on them.

It took us the three weeks following the last big Boris speech to formulate and action the changes. If people return this morning having not consulted site management and are not aware of the new rules and systems, there are going to be issues.

Our teams have reported that there are far more people on site this morning. Where it was taking them 50 mins to drive to the sites last week, it took 1h 50m to get there this morning and on arrival, the car parks were full. So far, people seem to be sticking to the rules, e.g following one way systems, and 2 metre distancing.

It is something we are very closely monitoring.

Updated

Markets 'in a muddle'

The 6% jump in Vodafone’s shares this morning following its results has helped to lift the FTSE 100 by 25 points, or 0.4%.

France and Germany are becalmed, though, as traders worry about a second wave of Covid-19 infections scuppering plans to reopen economies.

European stock markets, 12 May 2020
European stock markets, 12 May 2020 Photograph: Refinitiv

At 5969 points, the FTSE 100 is up roughly 20% from its lows in March, but still down 20% this year.

Neil Wilson of Markets.com says investors are somewhat flummoxed:

Stock markets are in a bit of a muddle right now. On the one hand there are signs of economies emerging from stasis. New York governor Cuomo says three regions of the state will reopen this weekend. Britain has moved from ‘stay home’ to ‘stay alert’, Europe is reopening: there is light at the end of the tunnel, and markets are always first to move. Massive stimulus from central banks and governments helps, too.

But on the other hand, stimulus government stimulus can’t go on forever. Businesses will need to get back to a new normal of reduced earnings in the main. House Democrats are said to be plotting a 4th massive stimulus bill this week, but it’s not clear whether this will pass. Signs of second-wave outbreaks across South Korea, China and even Germany stoke fears among investors that economies will, if not shut down again at scale, look very different to before as countries take sustainable steps to reopen.

Supermarket group Morrisons has updated the City on its measures to keep running through the lockdown.

Morrisons posted a 5.7% rise in group like-for-like sales for the last quarter - with stockpiling more than making up for a weak Easter.

Britain’s fourth largest supermarket group said the first quarter to 10 May had been “highly volatile”, during an “unprecedented” period of trading.

While sales are up, costs are up too. Morrisons says it hopes the current business rates holiday will cover its extra expenses, but....

At this stage, our best estimate is that the 2020/21 costs relating directly to COVID-19 are likely to be broadly offset by the in-year business rates cost saving, but the actual net effect is highly dependent on the length of the crisis and how customers respond as lockdown eases

It’s also been taking various measures to protect staff and customers, including:

  • Protective screens introduced around the till area of almost 6,500 main bank checkouts in ten days, plus further screens introduced in front of checkouts, pharmacy counters and customer service desks
  • Social distancing measures at all Morrisons sites, including marshal-controlled entry and reconfigured customer flow at all our stores
  • Hand sanitiser, gloves, and masks available for all store colleagues
  • Increased cleaning and other health and safety initiatives at all our sites
  • Temporarily closed all our in-store cafés, food-to-go and service counters

Land Securities slashes property valuations amid lockdown

The Westgate Shopping Centre in Oxford.
The Westgate Shopping Centre in Oxford. Photograph: Greg Blatchford/REX/Shutterstock

Shares in property company Land Securities have slumped by 10% this morning, after the coronavirus crisis hit its operations.

With some tenants struggling to pay their rent in the lockdown, Land Securities has been forced to slash the value of its property assets by 8.8% or £1,179m.

One recently completed development, Westgate Oxford, has reduced in value by 28.1%.

This revaluations means Land Securities made a pre-tax loss of £837m for the 12 months to 31 March, up from a £123m loss in the previous year.

The Covid-19 crisis came on top of the problems in the UK retail sector, the company explains:

The majority of the valuation deficit is attributable to our Retail segment, which suffered a 20.5% decline over the 12 months as a result of the challenging environment and ongoing structural changes, exacerbated at the year end by the early effects of Covid-19.

Telecoms giant Vodafone has cautioned shareholders that it isn’t immune from the coronavirus -- despite maintaining its dividend today.

Although demand for data services has risen in the lockdown, roaming fees have been predictably reduced.

Vodafone says:

The economic impact of the COVID-19 pandemic in our markets, whilst uncertain, is likely to be significant. Whilst our business model is more resilient than many others, we are not immune to the challenges.

We are experiencing a direct impact on our roaming revenues from lower international travel and we also expect economic pressures to impact our customer revenues over time.

This means Vodafone isn’t actually able to give profit guidance for the coming year.

Shares have jumped almost 5%, though, after it reported an operating profit of over €4bn for last year, up from an operating loss of €951m. It’s sticking with its dividend of €0.09 per share too - some relief for the City.

Updated

A Moss Bros Group plc employee measures a customer for a suit jacket at a store in London.

High street suit maker Moss Bros is also outlining plans to resume operations, following the UK government’s moves to ease the lockdown.

Moss Bros told shareholders it will restart its online operations on May 13, with a “reduced workforce”.

The company, which had closed its stores in March, says it has made some redundancies “where necessary and unavoidable”. It has also used the government’s Job Retention scheme to furlough some workers.

Moss Bros is also getting ready to reopen its high street shops saying:

The Board also notes the Government’s recent update regarding the potential phased reopening of shops from 1 June and is developing plans to reopen its stores in an orderly manner in light of this.

Ryanair’s CEO Eddie Wilson says its “time to get Europe flying again”, as he outlines plans to resume flights from 1st July:

Now that Europe’s States are allowing some gradual return to normal life, we expect this will evolve over the coming weeks and months.

With more than 6 weeks to go to 1st July, Ryanair believes this is the most practical date to resume normal flight schedules, so that we can allow friends and families to reunite, commuters to go back to work, and allow those tourism based economies such as Spain, Portugal, Italy, Greece, France and others, to recover what is left of this year’s tourism season.

Ryanair aims to restart 40% of flights in July

Budget airline Ryanair has announced plans to restart two-fifths of its flights from the start of July -- with restrictions to address Covid-19 fears.
Ryanair aims to operate nearly 1,000 flights from 1 July -- “subject to Government restrictions on intra-EU flights being lifted, and effective public health measures being put in place at airports.”

It plans to restore 90% of its pre-Covid-19 route network by operating some flights to most of its 80 bases in Europe.

But how will passengers be safe? Ryanair says staff and passengers will wear face masks, and take temperature tests at the airport. There’ll be no queuing for the toilets in the aisle either.
It says:

“On board its aircraft, Ryanair cabin crew will wear face masks/coverings and a limited inflight service will be offered of pre-packaged snacks and drinks, but no cash sales. All onboard transactions will be cashless.

Queuing for toilets will also be prohibited on board although toilet access will be made available to individual passengers upon request. Ryanair encourages passengers to regularly hand wash and use hand sanitizers in airport terminals.”

An interesting example of how companies are striving to maintain operations, with little certainty over when normal service will be restored.

My colleague Julia Kollewe has all the details:

Introduction: Anxiety grows over second coronavirus wave

The foreign exchange dealing room in Seoul, South Korea.
The foreign exchange dealing room in Seoul, South Korea. Photograph: Lee Jin-man/AP

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There’s an edgy mood in the markets this morning, amid concerns that reopening the global economy after the Covid-19 lockdown will be harder than hoped.

As Associated Press puts it:

Optimism over plans for reopening in many countries after shutdowns aimed at battling the pandemic has taken some hits from reports of new waves of infections in states and countries that are further ahead in lifting lockdown measures.

Investors pointed to small but disconcerting increases of infections in South Korea, China and elsewhere.

In Germany, infections rose late last week, while Wuhan also reported its first case since lifting its lockdown in April. And in South Korea, a growing cluster of cases have been linked to a single patient who visited a series of nightclubs in Seoul.

Such incidents highlight just how hard it will be to return to normality.

This has weighed on Asia-Pacific stocks today, where the Australian S&P/ASX 200 index lost 1% and Hong Kong’s Hang Seng shed 1.45%.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:

The Hang Seng led losses in Asia as a renewed coronavirus panic would mean a longer period of grounded planes and less retail activity in the city, as the housing bubble starts to burst.

European markets (which had such a strong run in April) have dipped back in early trading:

On the corporate front, supermarket chain Morrisons, DIY chain Kingfisher, property firm Land Securities and mobile network giant Vodafone are all reporting results.

The agenda

  • 1.30pm BST: US inflation rate: expected to drop to just 0.4% in April, from 1.5%

Updated

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