Closing summary
After initial gains, European stock markets headed lower today amid fears over a second wave of coronavirus infections in some countries that have relaxed their lockdowns, such as South Korea, China, Germany and Lebanon.
In London, airline and energy stocks have been worst hit, with easyJet the biggest faller, after the UK government announced a new measure to quarantine passengers arriving from abroad by air. Meanwhile, Halfords shares and sales have surged during the lockdown, with Boris Johnson urging people to walk or cycle instead of using public transport.
- UK’s FTSE 100 index down 0.16% at 5,924
- Germany’s Dax down 0.92% at 10,803
- France’s CAC down 1.35% at 4,488
- Italy’s FTSE MiB down 0.2% at 17,404
Wall Street is also down.
- Dow Jones down 0.82% at 24,131
- Nasdq down 0.05% at 9,116
- S&P 500 down 0.63% at 2,911
Oil prices have tumbled, with Brent crude now down 0.77% at $30.73 a barrel.
Good-bye and thank you for all your comments. We’ll be back tomorrow.
Updated
BOE's Haldane: sees long-term spending hit
The Bank of England’s chief economist Andy Haldane said there is a risk that the coronavirus pandemic will cause a long-term hit to spending by businesses struggling with higher debts, and households worried about their job security.
He said on a Royal Economic Society webcast:
All crises leave scars and this crisis assuredly will be no exception.
Last week, the central bank said Britain’s economy could shrink by 14% this year, which would be the worst slump since the early 1700s, due to the government’s coronavirus shutdown, before bouncing back with 15% growth in 2021. The Bank warned that it could be even worse.
On a brighter note, Haldane said he had seen signs of stabilisation in some spending measures recently, although they remained at very low levels. He added:
Apparently Spotify downloads of the REM song “It’s the end of the world as we know it” peaked two weeks after the lockdown began and have been declining since. So perhaps, perhaps, we are seeing some stabilisation.
On Wall Street, the Dow Jones fell more than 200 points at the open, or 0.87%, while the S&P 500 lost more than 20 points, or 0.8% and the Nasdaq opened 60 points lower, or 0.65%.
Mologic antibody test expected to be available in June
In other news, a home coronavirus antibody test developed by the UK biotech Mologic is expected to be mass produced from June. It will allow people to test themselves at home using a drop of blood, within just 10 minutes.
The home testing kit will be manufactured by BioSure (which created the first self-test for HIV). Mologic is seeking fast-track approval from UK regulators, including the Medicines and Healthcare Products Regulatory Agency (MHRA). Approval by the MHRA would mean that the test can be procured for the NHS.
The test checks for antibodies in the blood to determine whether that person has previously had Covid-19, rather than whether they have it at the moment. It is still unclear whether someone who has had the virus in the past can be reinfected.
Mologic, based in Bedford, received a £1m grant from the UK government to develop the test.
Unite calls for inquiry into deaths of low-paid workers
Unite, Britain’s largest union, is calling for a full public inquiry into why low-paid workers appear to be most at risk of dying from Covid-19, after new figures were released by the Office for National Statistics.
The highest number of deaths (131) were recorded in the social care sector with a total of 131 deaths recorded, followed by taxi drivers (77). The ONS also found that 30 bus drivers died of Covid-19, 29 lorry drivers and 33 van drivers.
Male workers had a notably increased mortality rates in a number of professions such as security guards, of whom 64 workers had died. Chefs also had a very high rate of death, with 37 having died of coronavirus.
Unite assistant general secretary Diana Holland said:
These figures are alarming and it is imperative that we learn all the lessons possible now and when this pandemic is over that there is a full public inquiry into these deaths.
We must never forget this is not about statistics, but each and every death is an individual tragedy where a loved one has died.
While lessons need to be learned for the future, it is immediately imperative that all workplaces examine these figures and urgently revisit how more effective measures can be taken to protect workers who have remained in work or who are returning to the workplace. Thorough risk assessments are vital and government needs to make sure they happen.
This is only an early snapshot of this dreadful disease but it is clear that lower paid workers often from a BAME background have been at the greatest risk of dying during the pandemic.
After gains in early trading, European shares are heading lower again as optimism on the latest easing of coronavirus lockdowns in several countries faded, and gave way to fears over a second wave of infections.
- UK’s FTSE 100 index down some 33 points, or 0.55%, at 5,903
- Germany’s Dax down 1.2% at 10,770
- France’s CAC down 1.78% at 4,468
- Italy’s FTSE MiB down 0.54% at 17,344
Travel and energy stocks are among the biggest fallers. Wall Street is expected to open lower after Friday’s rally, with the S&P 500 futures falling nearly 1%.
Guy Miller, chief market strategist at Zurich Insurance Company, told Thomson Reuters:
If we do have a second wave and lockdowns, that’s almost the worst outcome from an economic perspective.
He said that would “postpone business investment indefinitely” and keep consumer spending weak.
Updated
Burger King UK will reopen more than two thirds of its restaurants by the end of June, reports my colleague Rebecca Smithers.
The fast food chain intends to reopen a further 35 restaurants from today, and 72 restaurants from 18 May, across England, Wales and Scotland, as part of its continued phased reopening plan. It started reopening outlets in mid-April.
In just over a month, the fast food chain will have reopened 350 locations for delivery and drive thru -- 68% of the restaurants it has in the UK.
Oil down on fears of second Covid-19 wave
Oil prices are heading lower amid fears of a fresh wave of coronavirus infections in some countries -- China, South Korea and German. Traders worry that this could lead to restrictions being introduced, which would translate into lower demand for oil.
Brent crude, the global benchmark, has lost 89 cents to $30.08 a barrel, a fall of 2.87%, while US crude fell 65 cents, or 2.6%, to $24.09.
UBS analyst Giovanni Staunovo says:
Concern over a second wave, the nearly 50% year-on-year drop in Indian oil demand in April and likely further oil inventory builds this week are likely weighing on oil prices at the start of the week.
Only 374 oil rigs are now operating in America, the lowest number since 1940, Thomson Reuters reported, citing data from energy services company Baker Hughes. By another count, the number fell below 300.
U.S. OIL RIG COUNT fell by another -33 to just 292 last week. The rig count has fallen by a total of -391 (-57%) over the last seven weeks. There are now even fewer rigs drilling than at the low-point of the last oil price slump in 2016: pic.twitter.com/ZrfJzZC7aN
— John Kemp (@JKempEnergy) May 11, 2020
TfL: Passenger numbers to be cut by 85%
The commute in London is going to be very different in coming weeks as people return to work, according to Transport for London. It said the number of pepole travelling on its network will cut by at least 85%, as it unveiled a series of new measures. On Sunday night, Boris Johnson urged construction and manufacturing workers to return to work, along with people who cannot work from home.
TfL stressed that Londoners must continue working from home wherever possible to limit numbers on public transport; people should walk or cycle and shop local. It urged employers to help their staff avoid travelling at the busiest times of day. Passengers should cover their faces, carry a hand sanitiser and wash their hands before and after travelling.
Hand sanitiser points will be installed over the coming weeks at every tube, bus and rail station. TfL has already introduced more frequent deep cleaning of its transport network using hospital-grade cleaning substances that kill viruses.
Passengers should maintain a 2m distance “wherever possible”. This means that TfL will only be able to carry 13% to 15% of the normal number of passengers on the tube and buses. It will put up new social-distancing posters at bus stops, stations and in shelters, and create two-metre floor markings on platforms at stations.
The London mayor, Sadiq Khan, said all TfL frontline staff will be offered basic face masks from today.
I urge all Londoners to rethink the way they travel. Please avoid peak times, wear a non-medical covering over your nose and mouth and carry a hand sanitiser. By rapidly rolling out more space for walking and cycling through our London Streetspace plan we are enabling many more journeys to be made through these sustainable means which is crucial to our city’s recovery.
Updated
TheCityUK, a lobby group for the financial services sector, has written to the Bank of England governor, Andrew Bailey, to warn that UK businesses are racking up an “unsustainable” debt mountain of £90bn to £105bn because of the Covid-19 pandemic.
Loans issued under the coronavirus business interruption loan scheme (CBILS) could contribute £10bn to £20bn. To address the debt pile, firms will need to issue new equity and/or restructure their borrowings, TheCityUK says.
The group says:
If left unresolved, these levels of unsustainable debt could inhibit employment, research and development, investment and ultimately a smooth economic recovery back to growth.
Updated
Here is some reaction to the 28% slump in Italian industrial production, reported earlier. It was worse than expected and means that the fall in first-quarter GDP could be bigger than initially estimated. Nicola Nobile, economist at Oxford Economics, says:
The Italian industry recorded a historically weak March, with output dropping by 28% over the month. The decline was common across all sectors, but the 50% drop in transport equipment was just astonishing. In April, we expect a similar collapse in industrial activity, with the level at half of that of 2019.
Moreover, after today’s number we do not rule out a downward revision to Q1 GDP, which was reported at -4.7% q/q in the flash estimate two weeks ago.
Willie Walsh: IAG to review plans to restart flights in July
Walsh said the airline group will have to review its plans to restart a significant number of flights in July if travellers are quarantined upon arrival in the UK, my colleague Jasper Jolly reports.
Last week, IAG said British Airways and its other airlines, Aer Lingus, Iberia and Vueling, planned to run about 1,000 flights a day between July and September, a significant increase from April and May.
Walsh told the transport committee:
There’s nothing positive in anything I heard the prime minister say yesterday. We had been planning to resume on a pretty significant basis of flying in July. I think we’ll have to review that based on what the prime minister said yesterday.
Updated
Walsh has questioned why the UK plans to impose a lengthy quarantine period for travellers arriving by air.
The introduction of a 14-day quarantine period for air travel is a surprise because it appears that the government is not going to apply a quarantine period for people who come into the UK by other means of transport.
I don’t understand that but maybe the prime minister will be able to clarify the science behind that. It seems strange to me.
But we will have to review the impact of that and make an assessment in terms of the capacity that we’re likely to operate if a quarantine period applies. At this stage, I would imagine that our capacity into and out of the UK would be pretty minimal in that event.
Walsh added that the UK’s job retention scheme will buy it just 10 extra days of liquidity (rather than months), and said the company needs a big restructuring in the long run.
We are embarking on a restructuring and I’ve made it clear that this is group-wide restructuring. It’s not specific to British Airways. It’s group-wide restructuring in the face of the greatest crisis that the airline industry and the airlines within IAG have faced.
Updated
The FTSE 100 is now trading some 20 points lower at 5,915, a drop of 0.35%, after rising earlier in early trading to close to 6,000. Optimism over the UK government’s lockdown easing has dissipated, especially as the latest measures were somewhat vague. We are still awaiting clarity on the quarantine period for travellers arriving in Britain from abroad, for example.
The boss of IAG, which owns British Airways and Iberia, said this morning that the company is burning through cash quickly and is struggling to raise more funds, as its planes remain grounded because of the coronavirus pandemic.
Willie Walsh told MPs on the transport committee:
We’ve probably exhausted every avenue that I can think of at this stage to shore up our liquidity. The cash has been reducing significantly and that will be the case as we go through May, June and July. We’re not taking in any revenue.
Updated
Tui unveils 10-point plan for reopening hotels
Tui, the world’s biggest travel firm, has laid out a 10-point plan for reopening its hotels - which could mean the end of the self-service buffet and football tournaments at holiday destinations.
1) Online check-in: Holidaymakers check in in online via the hotel’s website or via their smartphone.
2) Distance rule: In public areas such as in the restaurants, corridors or gyms, all employees are required to keep a distance of 1.5 to 2m between them and the guests. For example, tables in restaurants will only be cleaned when guests have vacated them.
3) Personnel planning: Staff will work together in fixed teams in order to reconstruct possible infection chains.
4) Restaurant: To limit the number of guests in restaurants, capacities will be significantly reduced. Tables will be set up at a minimum distance of 1.5m apart.
5) Extension of opening hours: In order to provide sufficient space for all guests, the opening hours of restaurants and other hotel facilities will be extended.
6) Entertainment and activities: Only events, sports and entertainments involving a small number of participants and without close contact will be made available. Golf or tennis, for example, can take place, but football tournaments cannot. The spa offer will be adapted and childcare will be organised according to new standards.
7) Expansion of disinfectant dispensers: The number of dispensers will be significantly increased so that guests and employees can disinfect their hands at all important contact points. For example, all locations where food and drink is offered, sports facilities and in the lobby area.
8) Room cleaning: Extensive new cleaning practices will be put in place. All rooms will be thoroughly deep cleaned before the arrival of guests. The most frequently used areas, such as bathrooms, and most used devices and appliances like TV remote controls will receive particular attention.
9) Restriction of self-service: Self-service offers such as buffets will be reduced to a minimum. Wherever possible, food and beverages will be served to guests by staff wearing protective masks.
10) Training by independent auditors: Tui will train all employees in its own hotels. The first training documents will be made available this week.
Sebastian Ebel, the member of the Tui’s executive board responsible for Holiday Experiences, says:
Customer surveys clearly indicate that safety and hygiene will be of paramount importance for holidaymakers after the lockdown.
With our group-wide, integrated health and safety management system, we can ensure that our hotels meet guests’ high expectations and offer the best possible protection against infections during these unusual times. We are laying the foundations for an agile and safe return to business so we can be ready to offer our unique holiday experiences again as soon as possible.
Updated
Mid-morning summary
Time for a mid-morning summary.
Many Asian stock markets pushed higher, as investors were cheered by more countries starting to re-open their economies. Chinese car sales rose for the first time in almost two years in April, up 4.4% from a year ago to 2.07m vehicles, although car sales are still expected to be down 15% this year. Markets were also lifted by comments from the People’s Bank of China over the weekend that it would take “more powerful policies” to support the economy, and the US and China restarting trade talks. Also, Disneyland Shanghai has reopened.
European markets also got off to a positive start, but are now down again, as optimism over the easing of lockdown restrictions in France, Belgium, Greece and the UK faded.
In London, airline stocks easyJet and British Airways owner IAG have fallen, after Boris Johnson confirmed that travellers arriving in Britain by air will have to self-isolate. EasyJet has tumbled more than 8% while IAG is down 3.3%. Shares in Halfords, Britain’s biggest bike and e-scooter retailer, on the other hand, have surged because the government is encouraging people to cycle to work.
French stocks took a hit as Airbus dropped 3.6%, after Australia’s Qantas Airways said it dit not expect to take delivery of any new planes in the near term.
Even so, European shares have recovered by more than a quarter since their mid-March lows.
Some European stock markets are also trading lower now. Germany’s Dax is down 0.1% and France’s CAC has lost 0.56% while Italy’s FTSE MiB is still up 0.39%.
The FTSE 100 index has just dipped into negative territory, as optimism over a cautious easing of the UK’s Covid-19 lockdown starts to fade. It is trading 5.5 points lower at 5930, a drop of 0.09%.
Updated
Here is our full story on Heathrow calling for the government to urgently lay out a road map for airports to restart more flights.
Updated
EasyJet, IAG shares down due to quarantine
EasyJet is the biggest faller on the FTSE 100 index, with the shares tumbling about 7%. Analysts at Citi reckon the budget airline may have to raise between £700m and £1bn, after Boris Johnson said the UK government would impose a quarantine on travellers arriving in Britain. The quarantine period is expected to be 14 days and could be imposed as soon as the end of May.
British Airways owner IAG may also have to raise funds, the analysts said. IAG shares initially fell more than 4% and were later down 2.5%.
The analysts said:
Last night’s initiative by the government will have two significant consequences for the UK airline industry: The sizeable monthly cash burn rates will persist through summer [and] a number of customers and industry bodies will increase the volume on their demands for immediate cash refunds to consumers.
Back in the UK, shares in Halfords have been boosted by the government’s announcement that people should cycle to work, if possible, to avoid close contact on public transport.
Shares in Halfords jumped as much as 24%, and were later up 18% at 178.7p. It is Britain’s biggest cycling retailer and runs 450 repair centres, and is also the market leader in electric scooters.
On Saturday, the transport secretary Grant Shapps said roads would be changed to accommodate more cyclists. He also said e-scooter trials would be brought forward, and rental e-scooters could hit UK roads as early as June. Electric scooters – which can travel at up to 15.5mph – are currently banned on roads and pavements in the UK.
Updated
In Italy, industrial production plummeted by 28.4% in March from the previous month, worse than expected, as factories shut because of the coronavirus pandemic.
Italy's industrial output in March was less than a third of what it was in February. https://t.co/5EiBisSbHa
— Thomas D. Williams, PhD (@tdwilliamsrome) May 11, 2020
Updated
Connor Campbell, analyst at trading platform Spreadex, says:
Given the market’s utter lack of interest in the recent job losses in the US, it shouldn’t be a surprise that a purely positive view was taken of what was announced by Johnson in his faux-Churchillian manner on Sunday, allowing the FTSE to bound out of the gates.
An element of catch-up is also involved, the UK index making up for missing last Friday, a session that saw the Dow Jones surge higher on a marginally better than forecast nonfarm jobs report. Better than forecast in this case meaning only 20.5 million jobs were lost in April, sending the unemployment rate to 14.7%, not the 16.0% expected. Still feeling the effects of this, the Dow is looking for another 150 points when trading starts stateside this afternoon.
European stock markets enjoy good start to week
Let’s take another look at the stock markets.
- UK’s FTSE 100 index up 0.7% at 5,980
- Germany’s Dax up 0.66% at 10,976
- France’s CAC up 0.26% at 4,562
- Italy’s FTSE MiB up 1% at 17,626
- Spain’s Ibex up 0.79% at 6,837
More people are choosing simpler funerals in coronavirus times, according to the funeral services firm Dignity. It says:
In April … the proportion of clients choosing a simple funeral compared to a full service funeral has increased dramatically to approximately 60% compared to the 20% seen in the first quarter.
The company says the number of deaths rose 1% to 161,000 from 159,000 in the first three months of the year. Since then, the UK recorded more than 20,000 deaths in a single week, the highest since the beginning of 2000.
But Dignity’s profits have fallen, as it conducted more simple funerals and stopped providing church services and limousines because of the Covid-19 pandemic. Its underlying profits fell to £19.4m in the first quarter from £21.7m a year earlier.
The firm adds that the number of deaths could fall back in the next couple of years:
Should 2020 witness a large number of incremental deaths, beyond the 600,000 originally anticipated by the Office for National Statistics, then it is possible that 2021 and 2022 could experience a lower number of deaths than in 2019. The group will not speculate on the most likely outcome.
Heathrow has called for the government to set out a plan to re-open borders, so airports and airlines can restart more flights, after Boris Johnson confirmed travellers will have to self-isolate upon arrival in the UK. It is not clear how long the quarantine will last or when it will be brought in, but airlines have been told that it will be a 14-day quarantine period.
The London airport, the busiest in Europe in normal times, said in a statement that the quarantine plan would effectively close the UK’s borders, resulting in even lower passenger numbers than the 200,000 seen in April.
The budget carrier easyJet urged the government to keep the quarantine only for a short period. A spokesperson says:
Quarantine requirements for passengers should only be in place for a short period, while the UK remains in lockdown.
Aviation and tourism bosses have already warned that the 14-day quarantine plan would be a “nightmare” for the travel industry.
Updated
European shares are also pushing higher: Germany’s Dax has gained 0.4%, France’s CAC is up 0.2% and Spain’s Ibex has opened 0.77% higher.
Updated
And we’re off. The FTSE 100 index in London has opened higher, rising some 45 points, or 077%, to 5982.
We are still waiting for more details on the lockdown easing in the UK. Boris Johnson’s television address was quickly condemned as divisive and confusing from across the political spectrum.
Meanwhile, there is a new cluster of coronavirus cases in Wuhan, prompting fears of a fresh wave of infections in China. And South Korea is battling to contain a fresh outbreak at night clubs and bars.
You can read more on our coronavirus live news blog.
Cafes and restaurants in the UK will start to reopen from July – but pubs were notably excluded from the plans to reopen some of the hospitality industry, fuelling worries that nearly half could be driven out of business. The UK’s “stay at home” slogan has changed to “stay alert”.
YouGov snap polling on Boris Johnson’s speech reveals a mixed reception to PM changes
— Sam Coates Sky (@SamCoatesSky) May 11, 2020
* 44% support, 43% oppose exercise/work changes
* 46% say changes go too far, 35% not far enough
* 63% say “stay at home” slogan clear but “stay alert” slogan not
Poll for GMB on @itvnews pic.twitter.com/SM8N5b2OwN
In the UK, people will be allowed to spend unlimited time outdoors from Wednesday, and can drive to beauty spots across the country. Holiday resorts across the country are now cautiously preparing to open at the end of May.
However, the wider travel industry will be hit by Johnson’s announcement of a quarantine period for (nearly) all people arriving in the UK by air (French passengers will be exempt, Downing Street later clarified). The Institute of Travel and Tourism warned that a lengthy quarantine would be a “nightmare” that would badly hurt a sector already in meltdown due to the Covid-19 pandemic.
Updated
Investors hopeful as economies reopen
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Investors have been cheered by news of more countries reopening their economies, shrugging off fears of a second wave of Covid-19 after a pickup in new infections in South Korea and Germany.
Asian stocks pushed higher, with Japan’s Nikkei rising 1.4% and Hong Kong’s Hang Seng up 1.7%. Wall Street rallied on Friday as the latest jobless data were not quite as bad as feared.
In France, millions of people will emerge from the country’s lockdown today, when shops, hair salons, primary schools and nurseries reopen. New Zealand announced further relaxation measures: it will open malls, cafes, cinemas and gyms from Thursday, and schools from next Monday. Belgium and Greece will also ease their lockdowns today.
In the UK, Boris Johnson presented the government’s plans for a gradual easing of the Covid-19 lockdown last night, which means primary schools in England will partially reopen from 1 June, along with some shops. Manufacturers and construction workers have been urged to return to work, and all others who cannot work from home (but they shouldn’t use public transport).
We could see a bounce in the FTSE 100 index today, after UK markets were closed for VE Day last Friday. It is tipped to open 55 points higher. European markets are also expected to rise at the open, with Germany’s Dax being called more than 100 points higher.
David Madden, market analyst at CMC Markets UK, says:
The shocking moves that were seen in global equity markets in February and March reflected the views that economies were to be severely hit by the Covid-19 crisis, but in recent weeks a number of countries have taken steps to reopen aspects of their economies and that progress has fuelled the bullish sentiment in equities. Yesterday, prime minister Johnson mapped out plans to loosen the UK’s lockdown restrictions. Workers in construction and manufacturing could potentially recommence work in the near term, so that is likely to boost investment confidence in London-listed stocks.
Equity markets in Asia gained ground overnight on the back of optimism in relation to countries loosening their lockdown restrictions, and in turn European indices are tipped to open higher. South Korea and Germany reported an increase in new infections in the wake of their restrictions being eased. This is something that traders should be mindful of as it might curtail the reopening of other economies for fear of a second wave of cases.
The agenda
9am BST: Italy - Industrial production (forecast: -20% month on month)
Updated
