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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

US jobless claims fall to lowest since March; UK factory slump abates – as it happened

People dining in plastic tents for social distancing at a restaurant in Manhattan last week.
People dining in plastic tents for social distancing at a restaurant in Manhattan last week. Photograph: Angela Weiss/AFP/Getty Images

Closing summary

US jobless claims have hit their lowest level since the Covid-19 pandemic hit America - but remain worryingly high.

Around 787,000 Americans filed fresh initial claims for unemployment support last week, with another 345,000 freelancers and self-employed workers applying for help through the pandemic assistance programme.

Although this is the smallest rise since March, over 23m Americans are now relying on some form of unemployment support.

Economists warned that the US jobs recovery seems to have lost momentum - intensifying the need for a new stimulus package.

Richard Flynn, UK managing director at Charles Schwab, says:

“While today’s decrease in initial jobless claims is a positive sign for markets, companies are announcing major layoffs due to lack of demand, so claims are likely to remain at historically elevated levels in absence of further fiscal stimulus.

“As we enter the final quarter of the year, economic momentum has slowed from its summer peak. Some pockets of the economy have continued to hold up well—such as housing and retail sales, boosted by persistently-low rates and government aid, respectively. Yet other areas, such as restaurants and travel, have not given any indication yet of a pickup in growth.

“We are optimistic that the recovery will remain intact, and some form of additional fiscal aid is likely eventually, but we worry that the road ahead is filled with potholes, specifically on the timing of any relief. If it’s delayed until January or beyond, there’s a risk that the economy will lose momentum, causing growth to slow.”

Negotiations on Capitol Hill remain ongoing, though, with Nancy Pelosi reporting good progress (but still no deal yet...)

Meanwhile in the UK, the slump in factory orders has bottomed out over the last quarter. Manufacturers reported a pick-up in domestic demand, and a slowing in job cuts.

But the CBI, which compiled the survey, warned that conditions remain tough.

Angst about the Covid-19 pandemic pushed the UK’s FTSE 100 index to a five-month low this morning.

But shares then rebounded, following a report that AstraZeneca’s Oxford COVID-19 vaccine accurately follows the genetic instructions programmed into it by its developers to successfully provoke a strong immune response.

UK chancellor Rishi Sunak has expanded the government’s wage subsidy scheme, following warnings that his original plan was flawed and would cause a spike in unemployment:

The Bank of England’s chief economist, Andy Haldane, has dismissed talk that the UK could move towards negative interest rates imminently.

The latest ONS healthcheck shows that over one in six hospitality firms are at severe risk of insolvency, while estate agents are feeling very secure.

The crisis has also forced British Airways owner IAG to slash its flight schedules this winter....

..while London landlord Shaftesbury has announced emergency plans to raise almost £300m to help it survive the coronavirus crisis as tourists and workers stay away from the West End.

And...sales of thermal clothing have surged in the UK, as Brits prepare for a winter of socialising outdoors.

Goodnight. GW

FTSE 100 avoids five-month closing low

After a very weak start, Britain’s stock market has ended the day slightly higher.

The FTSE 100 index has closed 9 points higher at 5785, a gain of 0.16%, having earlier hit its lowest level since mid-May.

Some Covid-sensitive stocks led the rally, with IAG gaining 4.3% despite posting a £1.2bn loss this morning and slashing its winter flight plans. Lloyds Bank (+2.7%), hotel group Whitbread (+2.7%) and housebuilder Persimmon (+2.1%) were also in the risers.

But as feared, the Europe-wide Stoxx 600 sunk to a four-week closing low (down 0.18% at the close)

With half an hour of trading to go, European stock markets are on track for their lowest closing point almost four weeks.

The Stoxx 600 index is currently down 0.5% at 358.8, which would be the weakest close since 25th September.

The FTSE 100, though, is clinging onto positive territory, up 6 points at 5780. Sterling is still down half a cent at $1.309, which is providing a little lift.

Professor Costas Milas of Liverpool University is pleased to hear the Bank of England chief economist’s coolness towards negative interest rates (see earlier post on Andy Haldane).

He reports that students on his economic/finance courses can find the concept tricky -- so how can the public grasp it?

These very students can use fairly well positive interest rates within a standard mathematical formula to value correctly government or corporate bonds. On the other hand, a significant number of the very same students fails to use negative interest rates correctly in the very same formula of bond valuation!

Which raises the following unpleasant question: If students, with a reasonable good knowledge of economics, cannot always grasp the functioning of negative interest rates how on earth can we be confident that these negative numbers will be understood by the public and therefore find their way in reviving the economy?

The Wall Street sign at the New York Stock exchange (NYSE) in the Manhattan borough of New York City.
The Wall Street sign at the New York Stock exchange (NYSE) in the Manhattan borough of New York City. Photograph: Carlo Allegri/Reuters

Markets have now taken a turn south, with the Dow now down 123 points or 0.4% to 28,087.

Coca-Cola is the top riser on the Dow, up 1.7% after beating Wall Street forecasts.

But the fizzy drinks maker is still suffering from the pandemic, with net sales falling 9% to $8.65bn (ahead of expectations of $8.36bn).

Clearly the restrictions imposed on bars, restaurants, cinemas and clubs across the globe are denting sales, although “at home demand” is still strong.

Financial stocks are also higher today, with JP Morgan up 1.2%. But tech stocks are now falling, with Salesforce.com losing 1.9% and IBM off 1.4%.

Wall Street trading has begun without much fanfare.

The Dow Jones industrial average has risen by 0.05%, or 15 points, to 28,225, while rising tech stocks have pushed the Nasdaq up by 0.35%.

While the fall in US initial jobless claims is encouraging, investors really want to see progress on the stimulus talks.

The latest word from House speaker Nancy Pelosi is that a package could be agreed ‘pretty soon’. She told MSNBC that the talks between her Democrats and the Republican side, led by Treasury secretary Steven Mnuchin, are making progress.

“We’re on a good path..... We’re coming closer.”

Washington Post’s Erica Werner has tweeted the details:

Glassdoor senior economist Daniel Zhao is concerned that the US labor market is weak, as the economy enters the winter months:

The latest unemployment claims show signals that the economic recovery is skating on thin ice. Despite a swift rebound this summer in hiring as businesses and the economy reopened, that progress has now stalled heading into the cooler fall and winter months. UI claims have remained unchanged over the last three months, languishing near the same level since early August. On Glassdoor, job openings were 16% lower in September, from a year earlier.

The sluggish decline in UI claims is a stark reminder of what is at stake as stimulus negotiations drag on. Seven months into this crisis, millions of Americans still rely on unemployment benefits and millions more are exhausting benefits without another safety net. As millions are left treading water, all eyes are on Congress.”

Shawn Donnan of Bloomberg puts the latest jobless figures into context:

Reminder, that 1.1m figure comes from adding the initial jobless claims (787k) and the latest applications for pandemic unemployment support (345k). Like this:

The big picture is that there are currently over 23 million Americans receiving some level of unemployment support.

That includes nearly 9m on the regular unemployment programme, 10m on the PUA support, and over 3m on the Pandemic Emergency Unemployment Compensation package (for those who have already received the maximum regular unemployment support).

Kathy Bostjancic of Oxford Economics has tweeted the details:

US jobless claims: snap reaction

Neil Birrell, Chief Investment Officer at Premier Miton, agrees that today’s US jobless report is encouraging...but there’s still a lot of work to do.

He points out that California has begun filing initial claims data again - after sitting out for several weeks with a data problem:

“Initial jobless claims were quite a bit better than the median expectation, in fact they were better than the best expectation as California is back in.

However, the continuing claims were also good. But it is worth remembering that unemployment is way above any normal level for an expanding economy, four times higher than it was at the start of the year and well above the worst of the global financial crisis. That is a bit more sobering.”

As well as the 787,000 fresh ‘initial claims’ for jobless support, another 345,000 Americans applied for help through the Pandemic Unemployment Assistance (PUA) plan.

That’s around 8,000 more than last week.

PUA helps self-employed workers, freelancers, independent contractors and part-time workers who don’t qualify for regular unemployment support.

So, the total number of new jobless support claimants was actually over a million (787k + 345k).

Updated

This chart from Bloomberg shows how the number of new weekly US jobless claims is at a pandemic-era low....

US weekly jobless claims
US weekly jobless claims Photograph: Bloomberg

..but still MUCH higher than before Covid-19 (when around 210,000 people were filing initial claims each week)

Updated

US jobless claims fall to 787k

Newsflash: The number of Americans filing new claims for unemployment benefit has fallen to its lowest level since the Covid-19 crisis began.

Around 787,000 new ‘initial claims’ for jobless support were filed last week. That’s the smallest increase since March, when the US economy began to lock down.

The previous week’s total has been revised down too, to 842,000 from 898,000 (these are the seasonally-adjusted numbers).

Now, this is still an awful lot of people losing their jobs in a week - showing that the US labor market is still weak. But after months of elevated initial claims, the total has moved in the right direction.

The continuing claim total (those who have received at least two weeks of support), fell to 8.373m from 9.397m a week earlier. That could be due to people returning to the jobs market, or finding that their entitlement has now run out.

More details and reaction to follow...

The Nags Head Pub in Covent Garden, London, this week.
The Nags Head Pub in Covent Garden, London, this week. Photograph: Dave Rushen/SOPA Images/REX/Shutterstock

Sales of thermal clothing have boomed in recent weeks, as Britons gear up for a winter of socialising outdoors.

The women’s clothing brand, ACAI Outdoorwear, is reporting a 2,400% increase in orders for its winter thermals since the latest round of lockdowns were announced.

In the seven days following the Prime Minister’s introduction of a tiered lockdown system, the womenswear company based in North Wales said it had processed over 4,000 orders for its Thermal Skinny Outdoor Trousers. It has had to stop advertising of its winter warming clothing whilst it fulfils existing orders.

The company says women aged 25-34 are driving the new growth in sales. In previous years most of its thermal-buying customers were aged 45 and over.

ACAI Outdoorwear’s Kasia Bromley said:

“Whilst we would expect to see an increase in demand for our thermal products at this time of year, last week’s figures far exceeded that of which we have ever before seen, with customers telling us they’re investing in order to be able to spend more time outdoors, not just walking and enjoying the countryside but, where restrictions allow, socialising alfresco with family and friends.”

Expect Damart sales to rocket in the next few weeks…

Markets shake off losses

After that shaky start, European stock markets have now clawed back their earlier losses.

The FTSE 100 is now flat on the day, having lurched to a five-month low in early trading. European markets have bounced back from their one-month low.

The smaller FTSE 250 index, which has a higher concentration of UK firms, is now up 0.6%.

Rishi Sunak’s latest package of support for workers and businesses worst hit by the pandemic may be helping -- it’s likely to encourage firms to keep staff on.

Investors may also be feeling more optimistic, after a study found that AstraZeneca’s Covid-19 vaccine is following the genetic instructions laid down by its Oxford University developers.

Reuters has the details:

AstraZeneca’s Oxford COVID-19 vaccine accurately follows the genetic instructions programmed into it by its developers to successfully provoke a strong immune response, according to a detailed analysis carried out by independent UK scientists.

“The vaccine is doing everything we expected and that is only good news in our fight against the illness,” said David Matthews, an expert in virology from Bristol University, who led the research.

AstraZeneca, which is developing the vaccine with Oxford University researchers, is seen as a frontrunner in the race to produce a vaccine to protect against COVID-19.

Over in parliament, chancellor Rishi Sunak has unveiled his new Covid-19 support package (the latest in a series of multi-billion schemes).

The key measures are

  • Grants for businesses affected by tier 2 rules - worth up to £2,100 per month, and backdateable to when local restrictions came in. This could benefit up to 150,000 businesses in England, including hotels, restaurants, B&Bs, says the Treasury .

  • A more generous job support scheme (JSS), which will encourage companies to bring employees back part-time. Originally, staff had to work at least 33% of their hours, with the employer paying a third of the unworked time. Now, they only need to do 20% of their usual shift, and bosses need only pay 5% of the unworked time.

  • Extra help for the self-employed. The profits covered by the two forthcoming self-employed grants will rise 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750.

Our Politics/UK Covid-19 liveblog has all the details:

A BA 747 jumbo jet.
A BA 747 jumbo jet. Photograph: Brad Wakefield/REX/Shutterstock

Many of us may have imagined escaping the daily grind for a new life in the movies.

But while it will remain just a dream for most, one of British Airways’ recently retired 747s is jetting off today to become a TV and film set.

BA pensioned off its fleet of 747-400 this year, as the pandemic hit demand for travel (as we saw again this morning). But one lucky jet, registration G-CIVW, is dodging the scrapheap. It will depart from Cardiff Airport this lunchtime for Dunsfold Aerodrome, where it will be used in film productions, plus training and special events.

BA explains:

On landing it will be handed over to the airport which will preserve the aircraft for use as a commercial film set and training facility. The aircraft which will keep its Chatham Dockyard livery will be stored in public view on the airfield.

In time the aircraft will be opened up as an exhibition for visitors to experience up close the size and scale of the Queen of the Skies.

CBI senior Martin Sartorius tweets that UK manufacturers are less downbeat than in July:

Rain Newton-Smith, CBI Chief Economist, warns that conditions remain tough in the manufacturing sector, even though output and orders are improving.

The government must stay on the front foot when it comes to providing support for the sector and wider economy.

“It is more crucial than ever for the government to listen to the experiences and concerns of businesses and ensure support matches the tightness of local lockdowns. Additionally, signing a trade deal with the EU would help create some clarity that firms so badly need during this fraught period.”

UK factory slump abates as domestic orders pick up

Just in: The slump in UK manufacturing appears to be bottoming out.

The CBI’s latest healthcheck on Britain’s factories found that total new orders were broadly flat in the three months to October.

That doesn’t sound too impressive, but it’s rather better than the previous five successive quarters of decline - and follows a worrying slump in July.

UK manufacturing orders

UK manufacturers reported that domestic demand picked up, lifting business confidence a little, while export orders fell at a much slower pace than the previous quarter.

But despite this, they still kept cutting jobs - showing the need for the government’s latest wage protection scheme.

Output still dropped in 10 out of 17 sub-sectors, with the headline decline driven by the aerospace sector. Overall, output volumes in the quarter to October fell at their slowest pace since March 2020.

Here are the details:

  • Total new orders in the quarter to October were broadly flat (+3%) following their sharp drop in July (-60%). Domestic orders picked up slightly (+5 from -64% in July) while export orders fell at a much slower pace than in July (-14% from -62%).

  • Headcount in the quarter to October fell at a slower pace than in July (when it declined at the fastest rate since April 2009).

  • Business sentiment in the quarter to October was stable for a second quarter, while export sentiment fell at a slightly quicker pace than in July.

  • Looking ahead to the coming quarter, manufacturers expect output to grow at a moderate pace. However, total new orders are anticipated to remain unchanged, reflecting steady growth in domestic orders and a slower fall in export orders.
UK factory orders

Updated

Rishi Sunak prepares to unveil Covid wage rescue package

My colleague Richard Partington has the latest details of the government’s new support package for UK firms struggling in the pandemic:

Rishi Sunak is expected to announce a significant expansion of the furlough replacement scheme with the government paying a larger share of workers’ wages to protect companies struggling with Covid-19 restrictions.

Sources in business and industry said the chancellor would cut the level of employer contribution companies must make to receive wage subsidies for their workers on the job support scheme (JSS).

In an intervention just over one week before the launch of the JSS, which replaces the multibillion-pound furlough programme from the start of November, the expansion in government funding comes as pressure mounts on the chancellor to act amid the second wave in Covid-19.

In a bid to assuage growing unrest over the government’s handling of the pandemic, the chancellor held a “hybrid” briefing with business leaders and trade unions in a London restaurant, with executives also attending online, early on Thursday before a set-piece Commons economic update.

Sources at the meeting indicated the expansion in the JSS was likely to be applied nationwide, regardless of whether a business is subject to a higher tier of coronavirus restrictions. A reduction in the number of hours an employee must work could also be included

The Bank of England’s chief economist has poured some chilly water of the idea that UK interest rates could be cut below zero imminently.

Andy Haldane said the Bank has been working on the possibility of negative rates, but that didn’t mean they were close.

Haldane told a conference hosted by the National Institute of Economic and Social Research that:

“We at the Bank are doing work to ensure that that tool is in the toolbox.

That is not remotely the same as saying that we are about to deploy that tool. That will depend on the balance of costs and benefits,”

(thanks to Reuters for the quote).

Yesterday, BoE deputy governor Sir Dave Ramsden insisted this isn’t the time to introduce negative interest rates, while MPC member Gertjan Vlieghe sounded more positive on Monday:

Pound weakens, dragging FTSE 100 back

After surging yesterday, sterling is losing some ground this morning.

The pound had dipped by half a cent against the US dollar to $1.3098, down from Wednesday’s six-week high.

Traders are anxious to hear progress on the Brexit negotiations, with the UK and Brussels beginning intensified daily talks in a bid to reach a trade deal.

Joe Tuckey, analyst at Argentex, explains:

“News that post-Brexit trade talks between the UK and European Union will resume is likely to encourage a continuation of the volatile Sterling trading patterns we have seen on the back of recent news headline flow.

Over the past weeks Sterling buying has emerged on the merest hint of progress as traders keep their ear to the ground for any signs of a breakthrough. With a sense of optimism in the air, the market does not want to miss out on the anticipated Sterling rally on a last minute deal.”

The weaker pound is helping the FTSE 100 to recover some of its early drop. It’s now down 26 points, or 0.5%, at 5,749, which would be its lowest close since mid-May.

Here’s AJ Bell investment director Russ Mould on this morning’s market moves:

“The chances of a stimulus plan being approved in the US ahead of the Presidential election looks increasingly slim and this is putting pressure on equity markets.

“A fall in the US was matched in Asia, which was also hit by a downgrade from the International Monetary Fund, and Europe has also opened in the red,”

“The FTSE 100 is now trading around its lowest levels since the spring amid a second wave of coronavirus, and all the economic hardship it could involve, and political uncertainty on both sides of the Atlantic.

“British Airways owner International Consolidated Airlines continued to descend as it announced a €1.3 billion loss, revealed big cuts to capacity and admitted it will likely miss a target of breaking even on a free cash flow basis.

“West End property investor Shaftesbury was another big loser in London, down by double-digits as it was forced into a discounted cash call.”

The Seven Dials intersection in London.
The Seven Dials intersection in London. Photograph: Bloomberg/Getty Images

The Covid-19 crisis has forced Shaftesbury, the West End landlord, to launch an emergency £300m fundraising plan.

Shaftesbury, which owns hundreds of pubs, restaurants and shops in Chinatown, Covent Garden, Soho and Seven Dials, is tapping shareholders for fresh funds to help it through the pandemic

The lockdown restrictions, and the move towards home working, has hurt Shaftsbury’s tenants badly.

The firm owns 16 acres of prime real estate, which are usually buzzing with workers, shoppers and tourists. But with footfall so low, many tenants are struggling to pay their rent, and Shaftsbury is struggling to find new customers itself.

Announcing today’s share placing, Shaftesbury told the City:

In common with many city centres across the world, the Covid-19 pandemic and the measures to contain it have had a significant impact on London and the West End. The continuing restrictions implemented by the Government, and the uncertainty regarding their duration and extent, has had, and continues to have, a material adverse effect on normal patterns of activity and business in the West End.

The Group has seen a material deterioration in domestic and international footfall and trading conditions faced by its food, beverage and retail occupiers. Office occupiers, particularly those with direct or indirect exposure to consumer-facing businesses, and residential tenants have also been affected, but to a lesser extent.

In turn, this has affected occupiers’ ability to meet both rental and other lease obligations and occupancy levels across the portfolio.

Shares in Shaftesbury have slumped 15% to the bottom of the FTSE 250 index, hitting their lowest level in a decade.

Shaftsbury’s share price over the last 20 years
Shaftsbury’s share price over the last 20 years Photograph: Refinitiv

ONS: 17% of hospitality firms at 'severe risk' of insolvency

Newsflash: One in six UK hospitality companies face a ‘severe risk of insolvency’ as the Covid-19 crisis hammers the sector.

That’s according to the latest survey of the UK economy from the Office for National Statistics.

It found that 7% of accommodation and food service firms have no cash reserves, leaving them very vulnerable. Over 17% said they face a high risk of insolvency, with another 21% facing a ‘moderate risk’ of collapse.

Across all industries, of businesses not permanently stopped trading:

  • 5% had a severe risk of insolvency
  • 13% had a moderate risk of insolvency
  • 46% had a low risk of insolvency
  • 25% had no risk of insolvency

Conversely, estate agents are much more confident -- with 70% saying they have ‘no risk’ of insolvency.

Office for National Statistics survey of UK businesses

Unilever boosted by demand for hand washing and ice cream

The logo for Unilever at the New York Stock Exchange.

Consumer goods giant Unilever continues to perform well through the pandemic, thanks to strong demand for hand cleaners, home hygiene products and ice-cream.

Unilever posted a 4.4% increase in underlying sales growth for the last quarter, telling shareholders that:

In North America, market growth continued to be driven by elevated demand for foods consumed at home. European markets saw a mixed picture on growth and a challenging pricing environment. In China, growth improved slightly compared to the second quarter.

After a strict lock-down earlier in the year, India saw a pick-up in economic activity, even though cases of Covid-19 continued to increase. In Indonesia and Latin America markets contracted in the third quarter.

Sales of Unilever’s skin cleansing products surged by 19%, as the public continued to do their bit with regular handwashing. But sales of skin care and deodorants continued to fall (suggesting the millions of people still working from home are letting standards slip...).

While we may be washing less, we’re also eating at home more -- with many consumers understandably turning to the ice-cream compartment to keep spirits up.

Our retail foods business grew double digit and tea saw mid-single digit growth as in home eating occasions continued at elevated levels. Hellmann’s grew mid-teens, with Hellmann’s Vegan now available in 30 markets.

Sales of ice cream grew, driven by both volume and price. Mid-teens growth of in home ice cream, led by brands including Ben & Jerry’s and Magnum , more than offset the decline in out of home ice cream sales.

Unilever, which makes Domestos, also reported that germ-killing and antibacterial cleaning products were “particularly sought after” in the battle to keep homes safe.

Updated

The FTSE 100 has now fallen by almost 5% over the last five weeks, as fears of a second wave of Covid-19 cases have risen.

As the chart below shows, it fell sharply back on September 21. That was the day that the UK’s Covid-19 alert level was raised, and the government’s chief scientific and medical advisers warned that the country had “turned a corner” for the worse.

Stocks then recovered - as global markets were lifted by hopes of a US stimulus package (and predictions of a Blue Wave in November’s election). But things have soured in recent days, as more local restrictions have been imposed in parts of the UK.

The FTSE 100 over the last quarter
The FTSE 100 over the last quarter. Hollow candlesticks show gains, and solid candlesticks show losses. Photograph: Refinitiv

There’s a rather gloomy mood in the City today, as investors watch the FTSE 100 fall to levels not seen since the UK economy was emerging from lockdown.

Fiona Cincotta of City Index points out that the economic pain of the pandemic is rising, as new restrictions are imposed.

Covid cases in the UK and across Europe continue to surge. More areas of the UK are moving into the strictest Tier 3 lockdown, in a move to stem the spread of the virus but will also derail the fragile economic recovery of those areas and potentially the UK as a whole.

The tighter restrictions come as the FCA warns that around 12 million Britain’s are likely to struggle with bills and in repayments as the covid pandemic continues.

Stephen Innes of AXI says the US election race is also hitting equities:

With the pandemic firmly in everybody’s life again and the major macro event of the year just weeks away from its final decision, markets will probably trend more volatile and tack in a defensive manner.

Updated

European markets hit one-month low

The latest rise in Covid-19 cases, and the lack of a US stimulus breakthrough, are both weighing on markets across Europe.

The Stoxx 600 index, which tracks the largest European companies, has fallen by 1% to its lowest level since late September.

Germany’s DAX has slumped by 1.6%, with France’s CAC 1.4% lower.

Every sector is down, led by technology, consumer cyclicals, healthcare and industrial stocks.

European stock markets this morning
Lots of red on the boards this morning.... Photograph: Refinitiv

FTSE 100 hits five-month low

Newsflash: Britain’s FTSE 100 index has slumped to its lowest level since early May, hit by worries over the economic cost of Covid-19.

The blue-chip index has fallen by 50 points, or nearly 1%, to 5723 points - a five-month low.

Stocks most badly hit by the pandemic are among the top fallers. IAG has lost 4%, with office developers British Land and Land Securities both losing 3.1%.

Jet engine maker (and servicer) Rolls-Royce has shed 2.5%, following BA’s decision to cut capacity in the next few months.

The FTSE 100 this year
The FTSE 100 this year Photograph: Refinitiv

The Footsie is also suffering from the pound’s strength this week. Sterling jumped two cents yesterday to $1.313, on reports that negotiations on a trade deal would restart. That pulls down the value of multinationals with large overseas earnings.

Updated

IAG to cut capacity after posting £1.2bn loss

British Airways passenger aircraft at Heathrow Airport Terminal Five.
British Airways passenger aircraft at Heathrow Airport Terminal Five. Photograph: Andy Rain/EPA

The Covid-19 crisis has dragged airline group IAG, the owner of British Airways, deep into the red - and forced the group to cut capacity over the next few months.
IAG told the City this morning that it made a £1.2bn loss in the last quarter - worse than expected - as the pandemic continues to hammer the air travel industry.

IAG’s third-quarter revenues were 83% lower than a year ago, with passenger numbers down 88%.

And in a sign that conditions remain very weak, IAG now plans to run just 30% as many planes as a year ago for the rest of 2020 [the previous goal was 60% capacity].

It told shareholders:

Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of COVID-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travellers from an increasing number of countries.

At the same time, initiatives designed to replace quarantine periods and increase customer confidence to book and travel, such as pre-departure testing and air corridor arrangements, have not been adopted by governments as quickly as anticipated.

Introduction: Covid-19 fears and stimulus angst abounds

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

Stop me if you’ve heard this one before, but fears over the Covid-19 pandemic and anxiety over the economic recovery are weighing on the markets today.

Yes, the same old themes are jostling for attention today.

Overnight, France has hit the one-million Covid-19 case mark, Germany has racked up 10,000 cases in a single day, and India’s Covid-19 tally has passed 7.7m.

Meanwhile in Washington, Democrats and Republicans are still wrangling about a possible stimulus package to help businesses and households through the crisis.

White House economic adviser Larry Kudlow - often an upbeat voice on these occasions - told CNBC that “There’s a sense of optimism.”

Negotiations were moving in “a favourable direction,” Kudlow insisted.

But while talks are continuing, hopes of a quick breakthrough are fading with less than a fortnight to the US election.

This is all pushing European stock markets down today, adding to chunky losses yesterday.

With more restrictions being imposed across Europe to curb the virus, investors are losing confidence that growth and corporate earnings will show a sustainable recovery .

As analysts at Deutsche Bank told clients:

On the coronavirus, new records in cases were set across Europe yesterday as governments continue to re-impose restrictions on their citizens.

Here in the UK, a record 26,707 cases were confirmed, while the number of hospitalisations in England rose above 6k for the first time since late May. Elsewhere, both Italy (15,199) and the Netherlands (8,789) also reported new highs, and Spain has become the first nation in Western Europe to record 1 million coronavirus cases in total.

It should be noted however that testing today is much more widespread than it was during the first wave back in March, so countries are much better at picking up the extent of the virus than they were before

Later today, US giants Intel and Coca-Cola will release their latest results. We also get a new healthcheck on UK factories, and the latest US weekly unemployment stats.

The agenda

  • 9.30am BST: Bank of England chief economist Andy Haldane speaks at the Understanding Social Macroeconomics conference
  • 10.25am BST: Bank of England governor Andrew Bailey speaks at The Waterline summit 2020
  • 11am BST: CBI industrial trends survey
  • 1.30pm BST: US weekly jobless report

Updated

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A Hazmat Situation Unfolded At Disneyland, And Several Cast Members Were Affected
This wasn't a "2319."
Cinemablend
Cinemablend
Does A$AP Rocky Know Ivanna Ortiz? Rihanna's Attempted Shooter Allegedly Had an Affair With Rapper
The alleged motive behind the shooting of Rihanna's home has just been released, and it involves allegations of cheating by A$AP Rocky.
International Business Times UK
International Business Times UK
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