Markets fall back as Covid-19 fears mount and US jobless claims rise – as it happened

Graeme Wearden

from on 2020-11-19 17:25 (#5AJWF)

Rolling coverage of the latest economic and financial news

5.16pm GMT

Time for a recap

Concerns over rising Covid-19 cases, particularly in the US, have weighed on markets.

The Next Generation EU package must become operational without delay.

The package's additional resources can facilitate expansionary fiscal policies, most notably in those euro area countries with limited fiscal space.

5.03pm GMT

Today has been a difficult one for some UK gamers, and retailers who have been overwhelmed by demand for PlayStation's latest console.

Sarah Butler has the story....

Web pages dedicated to the launch of the PlayStation 5 at John Lewis, Tesco and Game had all crashed on Thursday morning. Currys had introduced a queuing system that had tens of thousands of customers on hold on Thursday morning.

With much of their stock already sold via orders placed before the launch, Game, Currys, John Lewis and Argos all said they had sold out of the 449 console by 10.10am on Thursday.

4.50pm GMT

European stock markets have closed, with small losses across the main exchanges.

The FTSE 100 index of blue-chip shares ended 50 points lower, down 0.8% at 6334.

This time it was the turn of AstraZeneca to inform as to how its covid -19 vaccine is performing in recent trials. The vaccine was found to provoke a robust immune response, particularly in older adults in Phase 2 trials.

Whilst this is great news, after the big hitting data from Pfizer and Moderna this week, AstraZeneca's was insufficient to overshadow fears of rising covid cases, tighter lockdowns and the impact on the economy.

3.53pm GMT

Britain's retail crisis has deepened this evening, with the news that the fashion chains Peacocks and Jaeger have fallen into administration.

The move puts more than 4,700 jobs at risk, after the troubled businesses were unable to find a buyer during rescue talks over the last couple of weeks.

Fashion chains Peacocks and Jaeger have called in administrators putting nearly 4,800 jobs at risk.

The businesses are part of entrepreneur Philip Day's retail Edinburgh Woollen Mill Group empire which issued a warning last month that it was on the brink of collapse.

Jaeger and Peacocks are attractive brands that have suffered the well-known challenges that many retailers face at present. We are in advanced discussions with a number of parties and working hard to secure a future for both businesses."

#Breaking Fashion chains Peacocks and Jaeger said they have fallen into administration, putting more than 4,700 jobs and almost 500 shops at risk

No immediate job losses at Peacocks and Jaeger as they fall into admin - two weeks after sister businesses EWM and Ponden Home - as they continue to trade for now, but thousands still at risk if advisors don't find a buyer. I suspect some / all brands will be bought from admin.

3.39pm GMT

The US housing market continues to shrug off the pandemic.

Sales of existing homes (ie, not new builds) increased for a fifth straight month in October, rising 4.3% month-on-month, as record low interest rates continue to support demand.

Whatever threats lurk for the US economy (& there are several), the red-hot housing market shows no signs of slowing. Latest clue: existing home sales for Oct--sales shot up, well above expectations, rising to annlz'd 6.85mm units--highest since 2006: https://t.co/PqRzKEjMnk pic.twitter.com/qV67ZgePnY

Existing home sales, which account for the bulk of U.S. home sales, jumped 26.6% on a year-on-year basis in October. Sales increased in all four regions last month and continued to be concentrated in the upper price end of the market.

The housing market is being driven by record low mortgage rates. The COVID-19 pandemic, which has seen at least 21% of the labor force working from home, has led to a migration from city centers to suburbs and other low-density areas as Americans seek out spacious accommodation for home offices and schools.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.3% from September to a seasonally-adjusted annual rate of 6.85 million in October. #NAREHS pic.twitter.com/E7GA640E5H

3.27pm GMT

3.18pm GMT

Back in Europe, the markets remain subdued with just over an hour's trading to go:

3.09pm GMT

Mark Warner, Democratic Senator from Virginia, sums up the need to extend America's pandemic support packages before they expire next month:

There are now twice as many people receiving PUA & PEUC as those receiving regular unemployment insurance. These programs did not exist before the CARES Act. They need to be extended... and our social safety net system badly needs to be reformed moving forward. https://t.co/dLdtmVYWrY

3.03pm GMT

Richard Flynn, UK managing director at Charles Schwab, says the jobs recovery in the US seems to be stalling, as the pandemic intensifies:

This week's significant increase in US jobless claims indicates the U.S. labour market's slow, but steady, recovery may have stalled due to a second wave of COVID-19.

While temporary layoffs have been falling, permanent job losses have been rising recently, and there is yet to be sign of a definitive reversal of this trend.

2.42pm GMT

Wall Street has opened a little lower, with today's rise in unemployment claims fuelling concerns over the labor market.

Worries over the escalating Covid-19 crisis are also weighing on traders' minds, with the US death toll now over 250,000.

Stocks opened with losses Thursday, under pressure as COVID-19 cases continue to rise. https://t.co/sNgam3lV1K pic.twitter.com/ab2QE78Y4r

2.31pm GMT

The number of unemployed Americans applying for help through the Pandemic Emergency Unemployment Compensation (PEUC) scheme has also risen, to nearly 4.4m.

PEUC gives another 13 weeks of jobless support once the standard state assistance has been exhausted.

PEUC points to that some of the continuing claims decline is from claimants exhausting benefits. The PEUC rise has been swift and is concerning given both PUA and PEUC are set to expire at end of year. pic.twitter.com/w4Zo47lm7Y

If the programs expire, that'd mean millions losing benefits right when virus cases will likely still be out of control + the holiday hiring season is done + temps are frigid (ie even less outdoor business than right now).

About 12 million jobless workers around the U.S. will lose their unemployment benefits the day after Christmas, according to a new analysis.

The benefits cutoff could push many households into poverty while creating headwinds for the economic recovery, experts say.

Chart that should keep Congress up at night...

"Looming expiry of #unemployment benefits"

> Regular benefits claimants: down from peak of 22 million to 6 million

> PUA and PEUC claimants: up from zero to 13 million, but they expire at the end of the year! pic.twitter.com/SgEnrbeQsy

2.04pm GMT

Daniel Zhao, senior economist at Glassdoor Senior Economist, says the number of Americans filing new jobless support claims are unhealthily high, having jumped to 742,000 last week.

He also warns of benefit exhaustion', as the programmes approved earlier this year to support the economy run out.

Initial unemployment insurance (UI) claims rose, maintaining unhealthy levels at a time when COVID-19 cases are reaching alarming rates around the country.

Continuing claims dropped below their pre-pandemic record set during the Great Recession, but it's mostly driven by benefit exhaustion for 9 million claimants.

One superlative from todays' report: 35 weeks into the crisis, continuing UI claims have dropped below their pre-pandemic record, set during the Great Recession.

Unfortunately, this is in large part due to benefit exhaustion rather than solid progress.#joblessclaims 3/ pic.twitter.com/857fgOD1We

The U.S. faces a potentially long winter as millions of Americans have had their unemployment benefits expire and 12 million more face a looming benefits cliff in December.

Congressional failure to act would be an extraordinary blow to unemployed Americans and would affect over half of the 20 million current UI claimants. The summer's steady recovery is now well in the distance as health experts raise the alarm about a tough pandemic winter.

Benefit exhaustion has already affected just under 9 million UI and 1.6 million PEUC & EB claimants.

Another 12 million (!) out of the 20 million current claimants face expiration at EOY if Congress doesn't extend PUA & PEUC. See: https://t.co/4AScaWHw61 #joblessclaims 4/ pic.twitter.com/nUarq1aJaZ

1.50pm GMT

Here's Bloomberg's take on the rise in US jobless claims:

Applications for U.S. state unemployment benefits rose for the first time in five weeks, suggesting the labor-market recovery is slowing amid a surging pandemic and fresh business restrictions.

Initial jobless claims in regular state programs totaled 742,000 in the week ended Nov. 14, up 31,000 from the prior week, Labor Department data showed Thursday.

Initial jobless claims rise to 742,000, the first increase in five weeks https://t.co/yxEgeXTjUn pic.twitter.com/vp7TiMfSt6

1.46pm GMT

The number of Americans filing new claims for unemployment benefit has jumped, in a sign that the US economy is struggling.

Some 742,000 new claims for jobless support were filed last week, up from 711,000 in the previous seven days.

At 742k, Initial Jobless Claims came in above the 700k estimate, and above last week's 711k level. Claims have leveled off but are still averaging 742k for the past 4 weeks. https://t.co/maIeV4Rfa2 pic.twitter.com/HUaoSMCnsS

UI claims rose to 1.06 million (743K UI initial claims NSA + 320K PUA claims) last wk.

The rebound from last wk's surprise dip signals the recovery is struggling to get under 1 million weekly claims. This is the 35th straight wk over 1M.#joblessclaims 1/ pic.twitter.com/KGHLVEn9n2

The bump in PUA claims (+24K WoW) appears largely driven by an unusual surge in Louisiana (jumped from 10K to 40K). 40K would be the highest level for LA in months, seems more likely a data issue given known problems w/ PUA#joblessclaims 2/ pic.twitter.com/m2aktUfy3u

Jobless claims up to 742K above last week and expectations. Continuing claims down but not clear if that's due to dropping out or getting jobs?

Continuing claims are trending down. That could be claimants finding jobs OR claimants exhausting benefits. pic.twitter.com/b0UrDFXgyV

1.28pm GMT

The head of the IMF, managing director Kristalina Georgieva, has written a blog post ahead of the G20 meeting -- hailing the recent progress on vaccines, but warning of more economic pain ahead as Covid-19 cases surge in many countries.

She writes:

As G20 leaders meet virtually this week, the global economy faces a critical juncture. Countries have started to climb back from the depths of the COVID-19 crisis. But the resurgence in infections in many economies shows just how difficult and uncertain this ascent will be.

The good news is the significant progress on vaccine development. While there are many caveats, this raises hopes of vanquishing the virus that has taken more than a million lives and caused tens of millions of job losses.

High-frequency data "point to a slowing momentum in economies where the pandemic is resurging....The economic path ahead remains difficult and prone to setbacks:" IMF https://t.co/brxKMz3G6b

1.25pm GMT

The International Monetary Fund has warned the recovery from the economic slump earlier this year may be losing momentum".

In a new surveillance note, or report, ahead of the G20 Leaders' Summit this weekend, the IMF also warns that the Covid-19 crisis will leave behind a dire legacy of higher inequality and weaker potential output".

While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars.

The virus has killed more than a million people and left tens of millions unemployed, especially among low-skilled workers, women, and youth. With infection rates still high in many parts of the world, social distancing continues to hold back momentum in the service sector. Global GDP is now projected to contract 4.4 percent in 2020 and stage an uneven and partial recovery next year.

While global economic activity has picked up, there are signs that the recovery may be losing momentum and the crisis is likely to leave deep scars. Policies should focus on ending the crisis quickly & supporting a strong recovery. New #G20 Note: https://t.co/cXQKb0pVSf pic.twitter.com/CtWjqWsD3U

12.51pm GMT

Ouch. Sales at US department chain Macy's have fallen by a fifth in the last quarter, as the pandemic continues to hurt retailers badly.

The company, which runs the Macy's, Bloomingdale's and Bluemercury chains, has reported net sales of $3.99bn in the three months to 31 October, down from $5.17bn a year ago.

Customers have shifted their spending to casual apparel and categories they can enjoy as they stay at home. Several of these categories, including home furnishings, jewelry and fragrance, have generated double-digit sales growth compared to last year."

Looking to Holiday 2020, we know this year is different. We are committed to bringing the joy of the season to America as we do every year. From next week's Thanksgiving Day Parade to reimagined family gatherings, we will help our customers and their families celebrate in style.

This will be one of the first times during the coronavirus pandemic that Broadway performers will put on a show, after the iconic section of Manhattan was left darkened and desolate due to forced closures.

Other performers on Thanksgiving Day will include the Big Apple Circus, the NYPD Police Band, and the West Point Marching Band with musical appearances from Patti LaBelle, Dolly Parton, Jordin Sparks, Santa Clause and dozens more.

Macy's same-store sales fall 20%, as department stores out of favor with shoppers during the pandemic https://t.co/8ngSbLvUoA

11.50am GMT

And here's Reuters take:

The resurgence of the coronavirus pandemic prompted a sharper fall in new orders for British factories this month, a survey showed on Thursday.

The Confederation of British Industry's monthly manufacturing order book balance fell to -40 from October's seven-month high of -34, despite the strongest reading for output since September 2019.

11.47am GMT

The CBI's industrial trends report also shows that order books at UK factories have been weaker than normal all year:

11.32am GMT

Here's CBI deputy chief economist Anna Leach on the drop in factory order books in November*

Output volumes have declined at their slowest pace in over a year in our November survey. But order books have softened again as global demand has been hit by intensified lockdowns, and manufacturers have trimmed their expectations,"

Key to stabilising trading conditions for manufacturing firms will be getting the pandemic under control through further investment in mass testing, ensuring a seamless test and trace system, and an efficient vaccine roll out."

UK #manufacturing output volumes in the 3 months to November fell at their slowest pace since Sep 2019.

Firms anticipate that output will decline at a slightly faster pace over the next 3 months, marking a worsening in expectations compared to last month's survey #ITS pic.twitter.com/5UpSHnmtbF

Manufacturing total and export order books both weakened on October, remaining substantially weaker than their long-run averages #ITS pic.twitter.com/RFiaM8tqsk

11.14am GMT

Tom Crotty, Group Director at chemicals firm INEOS, says the drop in UK factory orders shows that manufacturers face a very challenging time:

These results show what we already know - that manufacturers up and down the country are continuing to face very difficult circumstances as we move into the winter.

Looking ahead, manufacturers have a crucial role to play in working with the government to build its green industrial revolution, improve productivity and level-up regions. Government support for the sector has therefore been - and will continue to be - vital in keeping firms going through the crisis."

11.12am GMT

Just in: UK manufacturers have been hit by a new slump in orders, as the pandemic hits demand for goods.

The CBI's latest health check on British industry found that the pipeline for activity" - including output expectations and order books - has weakened this month amidst a second wave of COVID-19 both domestically and abroad".

10.59am GMT

The pandemic has left one in seven UK companies fearing that they will not last until next spring, new research shows, with hospitality firms particularly worried.

The Office for National Statistics has reported that 14% of UK businesses said they had low or no confidence that their business would survive the next three months.

Some pretty grim findings from the @ONS latest Business Impact Survey:
- 1 in 7 UK companies at risk of collapse
- 34% of hospitalist sector fear their businesses will collapse within 3 months

Across all industries, of businesses that have not permanently ceased trading, 40% had moderate confidence that their business would survive the next three months, and 14% had low or no confidence of the same. Conversely, 40% said that they had high confidence.

The accommodation and food service activities industry had the highest percentage of businesses that had no or low confidence that their business would survive the next three months, at 34%. This was followed by the administrative and support service activities industry, at 18%.

10.50am GMT

European stock markets are still skulking in the red.

The FTSE 100 remains down around 1%, or 63 points, at 6321. Aerospace engineering firm Melrose (-5%) and jet engine maker Rolls-Royce (-3%), have joined the top fallers, which usually indicates anxiety over the pandemic, alongside the oil companies and property firms.

The report on the AstraZeneca and University of Oxford vaccine was less likely to move the dial as, unlike the other major vaccine updates so far, there was no detail on its efficacy.

And while the prospects for the second half of 2021 are looking more encouraging thanks to advances made by science, the here and now is increasingly difficult with New York announcing more severe restrictions amid a surge in Covid-19 cases across America.

10.28am GMT

The eurozone's construction sector has gone into reverse again, as the second wave of Covid-19 cases hit Europe's economy.

Construction output across the eurozone shrank by 2.9% in September, compared with August, new figures from Eurostat show.

In the euro area in September 2020, compared with August 2020, building construction decreased by 3.2% and civil engineering by 0.4%. In the EU, building construction decreased by 2.7% and civil engineering by 0.8%.

Among Member States for which data are available, the largest decreases in production in construction were recorded in France (-8.4%), Italy (-8.1%) and Slovakia (-3.0%). The highest increases were observed in Slovenia (+2.6%), Romania (+1.7%), Bulgaria and Germany (both +1.5%).

Euro area #construction -2.9% in September over August; -2.5% over September 2019 https://t.co/WzYLN1Y987 pic.twitter.com/7ZKApWxrvf

10.07am GMT

We do have some encouraging vaccine news this morning, but it doesn't seem to be lifting the markets.

The latest trial results from the Oxford/AstraZeneca candidate show it produces a strong immune response in older adults, and was better tolerated than by younger triallists.

This is promising but it doesn't tell us whether the vaccine protects against the disease. Those results should come within weeks https://t.co/QzVivmpG7T

The ChAdOx1 nCov-2019 vaccine has been shown to trigger a robust immune response in healthy adults aged 56-69 and over 70.

Phase 2 data published in the Lancet suggests one of the groups most vulnerable to serious illness and death from Covid-19 could build immunity, researchers say.

10.07am GMT

Naked Wines have certainly contributed to the boom in parcel deliveries this year.

Ultimately the most significant impact of COVID-19 on Naked Wines is not found in these interim results, but in the way it has accelerated the growth of the online wine category and increased consumer willingness to trial a new and better way to buy wine.

9.41am GMT

The pandemic has pushed Britain's Royal Mail to a significant milestone -- it is now making more revenue from parcels than letters.

Revenue from parcels is greater than that from letters at Royal Mail for the first time ever - that nugget from Royal Mail's half-year report, just out @BBCr4today #R4Today

increased parcel volumes and manual sortation of much of this additional volume through our network, costs related to COVID-19 such as protective equipment, overtime and agency staff, as well as social distancing measures, along with management restructuring costs."

Royal Mail swung to a 20m operating loss in the first half, compared with a 61m profit in the same period the previous year, blaming increased costs. At the pre-tax level, the company made a profit of 18m, a fall of almost 90% on the previous year's 146m.

The shift towards handling fewer letters and more parcels pushed up the company's costs by 95m, as parcels require more manual sorting by workers. The company also faced an extra 85m in costs related to doing business during the pandemic, including the purchase of protective equipment, social distancing requirements and more worker absences.

As parcel volumes at both Royal Mail and GLS have continued to be robust year to date, revenue performance in the scenario has improved.

It remains difficult to give precise guidance but parcel growth is expected to remain robust in Q3, with more uncertainty over trends in Q4 due to the development of the COVID-19 pandemic, further recessionary impacts and trends in international volumes

9.14am GMT

The meerkats are in the doghouse this morning.

Britain's competition watchdog has hit price comparison site Comparethemarket.com with a 17.9m fine, after ruling that clauses in its contracts with home insurers broke competition law.

"Sergei, we've just been fined 17.9m by the Competition and Markets Authority." #ComparetheMeerkat pic.twitter.com/x4MrsXcdYR

Today's action should come as a warning - when we find evidence that the law has been broken, we will not hesitate to step in and protect consumers.

9.06am GMT

The president of the European Central Bank has warned EU lawmakers that the second wave of Covid-19 cases is causing significant damage to the eurozone economy.

Testifying to the European Parliament's committee on economic and monetary affairs, Christine Lagarde said the surge in infections, and new restrictions, were a serious challenge to the euro area and the global economy.

Overall, the euro area economy is expected to be severely affected by the fallout from the rapid increase in infections and the reinstatement of containment measures, posing a clear downside risk to the near-term economic outlook.

Public investment and reforms, especially if geared towards medium and longer-term challenges such as environmental sustainability and digitalisation, can build a bridge towards a successful and inclusive recovery....

For these two reasons, the Next Generation EU package must become operational without delay.

So far, government support measures, particularly short-time work schemes, have protected households against job losses and a drop in incomes. But this has not prevented unemployment from spiking in some countries.

In addition, consumers are expected to remain very cautious in the current highly uncertain environment as the ramifications of the pandemic are threatening people's employment and income prospects.

Introductory statement by President Christine @Lagarde at a hearing of the Committee on Economic and Monetary Affairs of the European Parliament https://t.co/S8zqKf2s5p

8.28am GMT

All Europe's stock markets have dropped in early trading - by around 0.75%, following the sell-off on Wall Street last night.

Clearly that's not a major move, but it does illustrate that fear has the upper hand over hope this morning.

8.21am GMT

The decision to shut New York's schools and move to remote learning again has given markets a jolt, says Stephen Innes, chief global markets strategist at axi.

Lockdown fears were ignited once again with New York City's seven-day rolling average of the test positivity rate reaching the 3% safety threshold that triggers a school system shutdown.

New York City has reached the 3% testing positivity 7-day average threshold. Unfortunately, this means public school buildings will be closed as of tomorrow, Thursday Nov. 19, out an abundance of caution.

We must fight back the second wave of COVID-19.

Investors are becoming more fearful of the economic damage already done and what will be exerted while waiting for the vaccine rollout.....

While the vaccine does offer bright green lights at the end of the tunnel, the tunnel just got more cavernous and lengthier.

8.16am GMT

Covid-19 anxiety has pushed the UK FTSE 100 index down at the start of trading.

The blue-chip index has dipped by 47 points, or 0.75%, to 6337 points.

8.03am GMT

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

Whether it be outlooks or markets it's all about vaccines and the virus at the moment. Risk assets actually slipped late in the US session, and closed at the lows (S&P 500 -1.16%), largely due to NYC school closures coming into force again today after the city's positivity rate of first time Covid-19 tests rose over 3%.

In terms of the sectoral moves, every industry group in the US ended lower except for Autos (+1.14%), while the losses were led by Energy (-2.88%) and Utilities (-1.94%).

European Opening Calls:#FTSE 6336 -0.77%#DAX 13110 -0.69%#CAC 5480 -0.57%#AEX 597 -0.60%#MIB 21535 -0.41%#IBEX 7919 -0.79%#OMX 1912 -0.53%#STOXX 3458 -0.70%#IGOpeningCall

Global markets drop as shutdown fears due to a rise in new Corona cases outweigh positive vaccine news. US Coronavirus deaths top 250k. Bonds gain in Risk-Off environment w/US 10y at 0.85%. Dollar Index holds near 2y low w/Euro at $1.1847. Gold at $1860. Bitcoin steady at $17.8k. pic.twitter.com/NREf4gT03q

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