Euro hits four-month high on Covid-19 recovery fund hopes - as it happened
Rolling coverage of the latest economic and financial news
- Introduction: Euro highest against US dollar since March
- Full story: Bitter clash over recovery fund
- European stocks rally, but FTSE ends lower
- M&S to cut 950 jobs
- Coronavirus - latest updates
- See all our coronavirus coverage
4.45pm BST
Time for a quick recap
Things are moving. Despite French push, seems like 390bn will be the figure for the grants. Now Michel will need to straighten out other outstanding parts of negotiation - including climate taeget and rule of law - to produce new negotiating draft
Roughly half of the roughly 25% fall in activity during March and April has been clawed back over the period since.
We have seen a bounceback. So far, it has been a V'. That of course doesn't tell us about where we might go next.
Related: Marks & Spencer to cut 950 jobs in latest Covid-19 blow to high street
Related: Oxford coronavirus vaccine triggers immune response, trial shows
Related: Macron seeks to end acrimony as EU summit enters fourth day
4.28pm BST
A little more from Andy Haldane:
Chief economist of Bank of England, Andy Haldane, thinks UK economy has been growing by 1% a week since it hit its floor" in April and had clawed back" around half the ground lost since lockdown began in March. Says big short-term danger to the recovery is rising unemployment.
4.14pm BST
Back on Wall Street, the S&P 500 has now returned to its level on 31 December 2019, meaning it has recovered much of its Covid-19 losses.
The S&P 500 is up .03% right now YTD and for the first time since Feb 24.
4.11pm BST
Two Bank of England policymakers have updated MPs about the impact of Covid-19 on the UK economy, at their reappointment hearings today.
Chief economist Andy Haldane told the Treasury committee that there will inevitably" be some long-term scarring of the economy as a result of the Covid crisis, including a hit to employment.
The two key channels through which scarring of the economy's longer-term potential might arise is through reduced business investment and dynamism, hitting the stock of physical capital, and through high unemployment depleting the skills of the workforce and shrinking the stock of human capital.
In the MPC's illustrative scenario published in May, it was assumed that scarring of businesses resulted in the productive capacity of the UK economy being persistently lower by around 11/4%. There was little assumed scarring of the labour market. In practice, there is the potential for scarring effects in the labour market - for example, if sectoral or skills mismatches between workers and companies make it difficult for people to find new jobs, raising the economy's equilibrium rate of unemployment and lowering its productive potential. Whether the economy experiences scarring, through businesses or workers, will depend on the actions taken by firms, as well as on policy actions taken by Government.
Rather than a radical change, I think this shock could accelerate pre-existing technological trends; for example, more remote working, a switch to online retail, distance learning and more investment in artificial intelligence. Added to pre-existing climate change concerns, there may be a permanent shift away from long-distance air travel. These changes may have knock-on macroeconomic impacts. More remote work, e-commerce and distance learning could weight on the demand for and the rental price of commercial real estate.
The switch to online retail and greater AI could have implications for aggregate productivity, as well as driving changes in the share of income accruing to workers versus capital. Changes are also likely to depend on the success of policies put in place - countries have the opportunity to shape the nature of any turning point coming from the crisis.
4.04pm BST
The music monthly Q is to be shut after more than three decades after its publisher was unable to find a buyer as the coronavirus pandemic accelerates the shift of readers and advertisers to online media.
The German-owned Bauer Media, which owns magazines in the UK including Grazia and Empire, said that the 34-yea- old magazine would cease publishing immediately.
We thank those teams for their work on these iconic titles."
There tough decisions were made to help us recover and rebuild through the COvid-19 crisis. We will continue that process with our remaining portfolio of world class titles."
The final issue of Q. On sale Tuesday 28 July. pic.twitter.com/STYJ2snH5m
3.44pm BST
Meanwhile in Brussels.....
EU summit, day 4:
Viktor #Orban arrives at the EU Council for the possible showdown: He has loosened his tie and rolled up his sleeves. Looks ready for a fight#RuleOfLaw #EUCO pic.twitter.com/48BYRMtn73
3.44pm BST
Amid all the optimism about the promising" Oxford vaccine, biotech investor Peter Kolchinsky is recommending caution:
Oxford data consistent w/ past results... uncomfortable & fairly weak neutralizing antibody titers compared to other vaccines (until we get outcomes from large studies, we can't know if good enough). Touted t cells aren't well understood w/o strong nAbs. https://t.co/FqydI93VvZ
But vaccines like Oxford's, which also generate immunity against adenoviral vector (coating delivering the vaccine instructions) probably won't be as good for seasonal reboosting. Our immune system shuts them down better after each dose, preventing delivery of instructions.
So Oxford vaccine has to do all it can with the initial course of vaccination. After that, boosting of SARS2 immunity will likely need other vaccines. Same redosing limitations apply to all adenoviral vaccines (e.g. JNJ, Cansino)
3.19pm BST
AstraZeneca's shares have now dipped back from that record high, but still up around 1% today.
The company has told shareholders that the latest trial results from Oxford won't impact" its financial guidance this year, as the cost of developing the vaccine will be offset by funding by governments and international organisations.
2.58pm BST
AstraZeneca has also updated the City about the Oxford Covid-19 vaccine, which it is producing.
It highlights that interim results from the trials show that AZD1222 induced a T-Cell response (a key part of the body's immune response), as well as antibodies (which bind to, and neutralise, the virus).
The interim Phase I/II data for our coronavirus vaccine shows that the vaccine did not lead to any unexpected reactions and had a similar safety profile to previous vaccines of this type. The immune responses observed following vaccination are in line with what we expect will be associated with protection against the SARS-CoV-2 virus, although we must continue with our rigorous clinical trial programme to confirm this. We saw the strongest immune response in participants who received two doses of the vaccine, indicating that this might be a good strategy for vaccination."
We are encouraged by the Phase I/II interim data showing AZD1222 was capable of generating a rapid antibody and T-cell response against SARS-CoV-2. While there is more work to be done, today's data increases our confidence that the vaccine will work and allows us to continue our plans to manufacture the vaccine at scale for broad and equitable access around the world."
2.45pm BST
Speaking of vaccines... medical journal The Lancet has just reported that preliminary results show that Oxford's Covid-19 vaccine is safe and generates an immune response.
Trial data also shows that it led to neutralising antibodies in trial subjects who received a second dose.
NEW-UK's #COVID19 vaccine is safe and induces an immune reaction, according to preliminary results https://t.co/rDPlB9fDKr pic.twitter.com/z2t9Aubjim
2.39pm BST
The US stock market has started the new week with small gains.
The Nasdaq index is up 28 points, or 0.3% at 10,532, as it continued to outperform the rest of Wall Street.
2.27pm BST
Any readers with a spare 5.5m may be interested to know that Mark Carney's old house is on the market.
The former Bank of England governor has left the UK, and the Victorian house rented by the Carney family in South Hampstead is now on the market.
2.00pm BST
More encouraging Covid-19 treatment news, this time from Pfizer:
*PFIZER, BIONTECH EARLY POSITIVE UPDATE FROM PHASE 1/2 COVID-19
*PFIZER - BNT162B1 INDUCED ANTIBODIES HAD BROADLY NEUTRALIZING ACTIVITY IN PSEUDOVIRUS NEUTRALIZATION ASSAYS ACROSS PANEL OF 16 SARS-COV-2 RBD VARIANTS
German biotech firm BioNTech and U.S. drugmaker Pfizer on Monday reported additional data from their experimental coronavirus vaccine that showed the vaccine was safe and induced an immune response in patients.
The results were disclosed from a trial in Germany testing 60 healthy volunteers, and come after the companies earlier this month reported data from a corresponding early-stage trial in the United State
1.39pm BST
Boris Johnson's spokesman has told reporters that the government stands ready' to help Marks & Spencer staff, with 950 facing redundancy.
We know that this will be worrying news for M&S employees and their families and we stand ready to support them. Affected employees will be able to access a wide-range of support including universal credit and the job seekers' allowance."
As we all slowly adjust to the new normal' we can see that retailers are making changes internally to ensure a better future for all. Marks & Spencer are just the latest retailer to come out and announce job cuts, they're not the first by any means - and we must remember that the never the same again' programme to restructure the brand was announced earlier this year.
And while it's never nice to hear about job losses, especially in the current climate, the brand is right to say that some consumer shopping habits will never be the same again. Online shopping was making waves long before Coronavirus, but lockdown has only further boosted this. We hope that by making these kinds of cuts now, hopefully retailers will be better off for it the future.
1.24pm BST
Some new photos from Brussels:
1.01pm BST
The euro is just about holding onto its earlier gains, trading at $1.146 against the US dollar (still the highest since March).
Some European markets have shaken off their earlier losses, with Germany's DAX now up 0.5% today (while the FTSE 100 is still down 0.5%).
The euro was leading the gains after European leaders made progress in negotiating a historic stimulus package, according to media reports. This also explains why the DAX has also been outperforming, and why Italy's borrowing costs fell to their lowest since early March today as the rally in riskier eurozone government debt saw the spread between Italian 10-year and German bund yields, an important gauge of risk in the region, tighten....
The 750 billion stimulus is going to help speed up the recovery in the euro area, where the virus situation also appears to be under control compared to the US. Investors are therefore anticipating the eurozone to perform relatively better than the US economy, driving the exchange rate higher. However, this is a global issue and if the vaccines prove not to be very effective and coronavirus does not go away, then we may well see haven demand come back for the US dollar and undermine risk assets, including the EUR/USD. But that's a worry for another day and right now the path of least resistance is to the upside.
12.26pm BST
After a brief sleep, European leaders are returning to their Brussels summit to keep thrashing out the details of the Covid19 recovery fund.
German chancellor Angela Merkel told reporters that she hopes they can reach agreement despite the difficult negotiations in recent days.
#Germany Chancellor Merkel: We've worked out yesterday a framework for a potential agreement. That's real progress and provides us with optimism that maybe today we can have an agreement, or at least that an agreement is possible.#EUCO pic.twitter.com/bagEXT7L3Y
#Euco Day 4 begins with von der Leyen saying she is hopeful of chances of an agreement: "we're not there yet but things are moving in the right direction" pic.twitter.com/HQECe1IQSD
Macron enters summit building saying there is a "spirit of compromise" this morning."Things have moved forward, we need to go into more detail". #euco pic.twitter.com/zYwkqHwZug
12.12pm BST
Newsflash: Marks & Spencer has just announced that 950 jobs are at risk, as it shakes up its retail management structure.
The retailer says that it is creating a new structure fit for the future", and removing various duplicated functions.
Another blow for high street jobs with 950 to go at M&S - in property, store management and other head office roles. Not a fun time to be working in retail.. or casual dining.
11.47am BST
Shares in UK biotech firm Synairgen have absolutely rocketed this morning, after it reported a potential major breakthrough" in treatment of Covid-19 patients.
Synairgen, which is based in Southampton, told the City that its protein-based treatment had shown significant success when administered to those suffering from the virus.
We are all delighted with the trial results announced today, which showed that SNG001 greatly reduced the number of hospitalised COVID-19 patients who progressed from requiring oxygen' to requiring ventilation'.
It also showed that patients who received SNG001 were at least twice as likely to recover to the point where their everyday activities were not compromised through having been infected by SARS-CoV-2. In addition, SNG001 has significantly reduced breathlessness, one of the main symptoms of severe COVID-19.
10.49am BST
Just in: UK shoppers trickled back to the high street last week as the lockdown was eased.
Week on week footfall rose 4.5% last week, acc to @Springboard_. That's less than half the 10.6% increase in the first week after the reopening of hospitality/leisure businesses.
Last week demonstrated that the longed for flood of shoppers returning to bricks and mortar destinations and retail stores once again became a trickle, with a week on week rise in footfall that was less than half that in the previous week.
Despite the limited rise in footfall, the year on year result is at its most modest yet, which does provide a glimmer of hope for the struggling retail industry."
10.24am BST
In another gloomy sign, many UK manufacturers are planning to cut jobs due to the financial cost of Covid-19.
And companies across the board are cutting back on investment, meaning a long-term hit to growth and productivity. More here:
Related: Most UK firms plan to invest less in next three years, finds survey
10.05am BST
Just in: UK household finances continue to be squeezed by the coronavirus pandemic, as more families fret about job insecurity.
IHS Markit's monthly Household Finance Index (HFI) has risen to 41.5 in July, up from 40.7, a level showing that purse strings remain tight as many households continue to cut back on credit.
Almost four times as many survey respondents reported a decline in job security as those that saw an improvement in July.
Large numbers of households are therefore maintaining the cautious spending habits adopted during the early stages of the pandemic and are now focussed on paying down debt and saving where possible."
9.56am BST
Back in the City, shares in UK housebuilders are rallying amid signs of a post-lockdown mini boom'.
Online estate agent Rightmove has reported a surge in inquiries in recent weeks as the market emerges from its Covid-19 lockdown.
Related: Britain's housing market sees post-lockdown mini-boom
9.40am BST
Former Finnish prime minister Alexander Stubb is confident that European leaders are close to a compromise deal.
Stubb, a veteran of EU summits during the eurozone crisis, reckons the EU is actually showing uncommon speed and force", although the end result will still be sub-optimal:
Having followed #EUCO from a distance, it seems clear that a deal is imminent. Next phase: interpretations of the result in 28 different press confs. Spinning on steroids. Everyone claiming victory in front of their home crowd. Not difficult because of the size of deal...1/3
...The phase after is then to sort out what was actually decided. This will entail intense talks between the institutions, mainly the Commissiona and the Council Secretariat, long discussions among EU Ambassadors in Coreper and when necessary, interventions by Sherpas...2/3
...All in all, if and when a deal is struck, no matter what the exact final ratios of size, division and distribution, it should be welcomed. The result will, as always, be sub-optimal. Nevertheless, the EU has never ever before reacted to a crisis with such speed and force...3/3
9.29am BST
A peek at the FTSE 100 leaderboard shows that Covid-19 are moving shares today.
Pharmaceuticals firm Astrazeneca hit a record high this morning, over 96 for the first time, as traders anticipate upbeat data from its early stage human vaccine trials later today.
Markets had a shaky start to the new week with mixed progress in Asia and declines across Europe including a 1% decline in the FTSE 100 to 6,224.
One of the select few stocks to rise on the FTSE 100 was AstraZeneca, extending a rally that's been in motion since mid-June.
9.14am BST
European stock markets have started the new week with a bit of a bump.
All the main indices are in the red, with equities failing to benefit from optimism of a recovery deal.
The leaders of the EU have failed to come to an agreement on the recovery fund, and are still talking. This really should not be a surprise. Every EU summit of any importance always drags on longer than scheduled. It seems that EU leaders are only capable of agreeing anything when massively sleep-deprived. The anti-fund/frugal faction has agreed to the principle of grants being part of the recovery fund.
US fiscal policy is in focus, with US President Trump to meet Republican leaders to discuss the fifth fiscal package of the pandemic. There is some urgency, as the additional unemployment benefit payments are due to expire at the end of this month. The economy would not respond well to an abrupt ending of these payments.
9.01am BST
Back in the UK, Marks & Spencer may soon add to the torrent of retail jobs cuts triggered by the coronavirus recession.
My colleague Jasper Jolly explains:
Marks & Spencer is reportedly planning to cut hundreds of jobs this week in the latest blow to high street retailers hit hard by the coronavirus pandemic.
An announcement about job losses could come within days, Sky News reported, with total redundancies potentially reaching several thousand when existing restructuring plans are taken into account.
Related: Marks & Spencer 'to cut hundreds of jobs' as coronavirus hits sales
8.51am BST
Mohit Kumar of Jefferies is encouraged that EU leaders are now considering the compromise proposal of 390bn of grants for Covid-19 relief.
The size of grants is lower than the initial proposal of 500bn, but the fact that the Frugal Four have dropped their opposition to any grants and agreed to 390bn is a positive.
There are still a number of issues to be agreed on, including the conditionality of funds, the rule of law, terms of loans and the veto of aid disbursements.
With the euro marking a 4-month high it looks like traders are expecting some kind of deal is done, even if it falls short of the original plan. As noted last week, this not an ordinary summit - what's being talked about is mutual debt issuance for the first time.
A deal would mark a breakthrough for the EU and show that the bloc can respond to an era-defining crisis with one voice. Failure today is not the end of the road by any means, but it could produce a negative reaction in Euro-area sovereign debt, European equities and the euro.
After 3 days and long nights of the extended EU recovery fund summit, the diplomatic lake in Brussels remains frozen over even if there does seem to be signs that we'll see a thaw today.
The very latest reports this morning (although this could be out of date by the time you read) are pointing towards a possible compromise for 390bn in grants in the recovery fund. It seems much depends on whether Macron believes this to be ambitious enough. The wires have just quoted a French official as saying France now see a path to a recovery fund deal".
8.37am BST
Failure to agree a rescue package would be a heavy blow for the EU - both politically and economically.
Our Brussels correspondent Jenniter Rankin writes:
The hardest-hit countries already have access to a 540bn financial cushion, but France, Germany, Italy and Spain see this as inadequate to the scale of the looming recession.
Leaving Brussels empty-handed would also be a damaging political blow, tarnishing the EU's prestige and raising questions about its ability to act in a crisis. It would also undermine the newish leaders of the EU institutions, European commission president Ursula von der Leyen, the architect of the recovery plan, as well the European Council president, Charles Michel, the main deal broker.
Related: Bitter coronavirus summit exposes trust deficit among EU leaders
8.35am BST
In another sign of the tension in Brussels, French President Emmanuel Macron reportedly banged his hand on the table and threatened to walk out of the discussions.
Macron's target - the frugal four', who he accused of undermining the European Union by trying to shrink the stimulus plan.
French officials tell me President Macron banged his fists" on the table in the early hours of Monday morning, as he told the frugal four" that he thought they were putting the European project in danger.
An Italian diplomat said Prime Minister Giuseppe Conte told Mr Rutte: You might be a hero in your home country for a few days. But after a few weeks you will be held responsible for blocking an effective European response to Covid-19."
8.31am BST
European unity was in short supply at the summit, as leaders bickered over the details of the desperately needed recovery fund.
At one point, Hungary's prime minister, Viktor Orban, accused Dutch PM Mark Rutte of acting like a oppressive communist ruler, for demanding oversight of how the money would be used.
Rutte has insisted he cannot be expected to take on extra national debt in order for the EU to make cash payments to member states without his parliament having a say.
In response, Orban, the nationalist prime minister of Hungary, who was an anti-communist dissident in his youth, accused Rutte of aping Soviet methods to crush dissent by failing to properly set out the terms on which funds would be blocked.
Related: EU leaders in bitter clash over Covid-19 recovery package
8.26am BST
Italian government bonds are also rallying this morning - suggesting that investors expect a deal on the recovery fund (eventually).
The interest rate, or yield, on Italy's 10-year debt has fallen to 1.14%, the lowest since early March.
8.16am BST
The euro has also nudged a three-week high against the pound this morning, at 91.38p.
8.02am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
At a late evening dinner, the European council president, Charles Michel, who is chairing the summit, asked the leaders whether they were capable of building European unity and trust. Or, through a tear, will we present the face of a weak Europe, undermined by mistrust?"
Dutch prime Minister Mark Rutte said on Monday EU leaders were making progress but warned discussions could still fall apart. At times it didn't look good last night, but I feel that on the whole we are making progress," Rutte told reporters in Brussels.
Summit resumed and ended after just 7 minutes at 5.52am. Leaders were told by Charles Michel that new basis for an agreement is 390bn in grants. Meeting due to resume at 1400 on Monday afternoon with expectation of new negotiating draft after everyone gets some sleep
Rutte also leaving to get some sleep says negotiations are "back on track" after the 5am breakthrough tonight #euco
As for the EU summit, the market seems to prefer that a deal is not rushed through for the sake of appearances An agreement delay - perhaps until later in the summer - is preferable to markets than a weak agreement.
I think there is a high probability of a deal and would push EURUSD to around the 1.16 level, fuel further equity re-allocation towards Europe and provide another boost to peripheral bond markets. #forex #EURUSD long EURO could be a keeper https://t.co/2egVXIYtm3 pic.twitter.com/iFghhVdUSg
European Opening Calls:#FTSE 6283 -0.11%#DAX 12929 +0.07%#CAC 5067 -0.04%#AEX 573 -0.13%#MIB 20339 -0.39%#IBEX 7436 -0.06%#OMX 1768 -0.11%#STOXX 3364 -0.06%#IGOpeningCall
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