UK retailers pessimistic as economy reopens; Covid-19 worries markets - as it happened

Graeme Wearden

from on 2020-06-25 15:57 (#550HR)

Rolling coverage of the latest economic and financial news

4.57pm BST

And finally, the London stock market has ended the day with small gains - after a choppy days trading.

The FTSE 100 has closed 23 points higher at 6147 points, a gain of 0.4%. That's a small rebound after yesterday's 3% slide.

4.16pm BST

Disney has moved to axe its kids TV channels in the UK after more than two decades on air and move them to its Disney+ streaming service.

From 1 October, Disney+ will become the exclusive home for content from Disney Channel, DisneyXD and Disney Junior in the UK."

4.01pm BST

Shares in US banks have jumped, after banking regulators unveiled a pair of rules that will make life easier for large banks with complex trading and investment portfolios.

Reuters has the details:

One rule wraps up a long-running effort by Republicans to overhaul the so-called Volcker Rule," clearing the way for banks to make larger investments in riskier funds like venture capital funds.

The second relieves banks from having to set aside cash to safeguard derivatives trades between affiliates within the same firm. The move hands a win to big global banks that had lobbied for the relief, as industry estimates it could free up as much as $40 billion in previously reserved cash.

3.54pm BST

One of Donald Trump's top advisors has insisted that the US economy won't lock down again, even if Covid-19 cases keep rising.

Larry Kudlow, director of the United States National Economic Council, told Fox Business that there may be individual spikes and hot spots" in certain places, but not another national shutdown.

NEC Chair Larry Kudlow maintains the White House doesn't see a second wave of coronavirus coming. Asked if they're concerned about highest daily total of new cases, he said: "We're gonna have hotspots, no question" but "we just have to live with that" and "we will not shut down"

3.35pm BST

Huawei has said it will spend 1bn on a new chip research and development centre outside Cambridge, after receiving planning permission from the local council.

It has been suggested that our 1bn investment has been timed to coincide with the debate over Huawei's future in the UK's 5G infrastructure.

In January the government said Huawei can continue to work with customers on 5G in the UK. The Cambridge investment began more than three years ago in 2017, well before the subject of Huawei and 5G was raised in the UK. Huawei did not pick the timing of the approval... by South Cambridge council."

3.28pm BST

The International Monetary Fund has warned that the recent stock market rally may have run too far - and is vulnerable to a correction.

In its latest global financial stability report, the IMF said the surge in stocks since late March suggested an optimism that was not matched by the economic data.

Markets appear to be expecting a quick V-shaped' rebound in activity.

This has created a divergence between the pricing of risk in financial markets and economic prospects."

2.55pm BST

After 20 minutes, the Dow Jones industrial average is now down 199 points, or 0.8%, at 25,245.

That's its lowest level since Monday 15 June, leaving the index flat for the month and 11% down this year.

2.34pm BST

Ding ding! US stock traders have returned to the fray after yesterday's rout, with anxiety over the coronavirus pandemic still swirling.

The Dow has dipped at the start of trading, losing 95 points or 0.4% to 25,350 (on top of the 710 point tumble on Wednesday).

The #Covid19 surge leads page one in Kansas City, Miami, San Francisco, Houston ...

(via @ukpapers) pic.twitter.com/NwHOOeg4AP

2.18pm BST

This is the 14th week in a row in which new US jobless claims exceed one million - a previously unprecedented level (and indeed scarcely believable before the lockdown).

Glassdoor senior economist Daniel Zhao says the US jobs market remains fragile.

The labor market continues its lethargic recovery as we see another week of only modest declines in the tens of millions of Americans continuing to claim UI benefits amid an ongoing pandemic. While recent economic indicators like the May jobs report stoked optimism for a swift recovery earlier this month, the slow improvement in continuing claims puts a damper on those high hopes.

Looking ahead to the June jobs report next week, we're likely to see more signs of a labor market only modestly improving, balancing precariously between a speedy V-shaped and a much slower recovery."

2. Continuing UI claims have fallen, but continuing PUA claims have risen by more.

Overall continuing claims (inc other programs not shown in the chart) increased to 29M for week ending Jun 6.

This data is on a longer lag, but further evidence of a slower/stalling recovery. pic.twitter.com/aNu5br3TcP

1.58pm BST

1.46pm BST

Some snap reaction to the latest US jobless figures:

At 1.480M, Initial Jobless Claims came in above the 1.320M estimate, and just below last week's 1.540M level; this was the 12th weekly decline. Claims peaked on 3/28 but remain VERY high. https://t.co/maIeV4Rfa2 pic.twitter.com/kDdvZabgho

Weekly Initial Unemployment Claims decrease to 1,480,000 https://t.co/SoUg91b4vk pic.twitter.com/Q1pmXDIVvz

UI claims continue to slowly recede but levels still recessionary. We're entering the start/stop, slog part of the crisis. We'll get some good and bad numbers, trends will mostly be in the right direction, but as long as virus control is so badly managed from the top... pic.twitter.com/N18o6Mn5FF

1.38pm BST

Slightly more encouragingly, the number of Americans who have been claiming unemployment benefit for at least a fortnight has dropped.

This continued claims' total has dropped from 20.289m to 19.522m - still alarmingly high.

Continuing jobless claims fell below 20M for the first time since mid-April, suggesting that more workers being reabsorbed into the labor force. Still a long way to go. pic.twitter.com/H8zkcxHa3z

1.36pm BST

Newsflash: Nearly 1.5 million Americans filed new claims for unemployment benefit last week.

That's worse than expected -- economists had expected 1.3m fresh job losses. It's barely lower than the previous week, when 1.54m initial jobless claims were filed.

#Jobless claims continue to mount with another 1.48 million first time claims, down just slightly from the prior week. That's around 48-million initial claims over the past fourteen weeks. And #Macy's is adding to the long line announcing its cutting 3900 corporate jobs

1.27pm BST

US department store Macy's has just announced it is cutting 3,900 corporate jobs.

The move will save around $364m, Macy's says, as it tries to cut costs to ride out the coronavirus pandemic.

Macy's to slash 3,900 corporate jobs in restructuring https://t.co/uXLyFT7oU1

12.58pm BST

UK retailers are right to be concerned about their sales prospects, says Howard Archer of the EY Item Club.

He suspects demand for big-ticket items will remain weak, especially among workers who are currently furloughed....

While there may well be a significant initial element of pent-up' demand for some retailers following their re-opening, further out the upside for may well be capped by cautious consumers.

Consumer spending has clearly taken a substantial downturn as a result of COVID-19and is likely to remain under pressure for the near term, at least. Many people have lost their jobs, despite the supportive government measures. while others may be worried about job security once the furlough scheme ends in October.

12.25pm BST

There's still two hours to go, but Wall Street isn't expected to bounce back when trading starts.

The Dow, which plunged 710 points (-2.7%) on Wednesday, is down another hundred in pre-market trading.

*Looks like we're set for a lower open on Wall Street this morning.

*Dow Futures are down 100 points due to worries over a spike in #Covid_19 cases across the U.S.

*Thursday's #Top5ThingsToKnowToday will be out soon.$DIA $SPY $QQQ pic.twitter.com/bY8XYuZVtY

12.18pm BST

A reminder of the scale of the Wirecard scandal:

#Wirecard files for insolvency proceedings after a massive accounting scandal brought the payments company to its knees. Once a 25bn company is now "only" worth 350mln. https://t.co/fsWzKawMwr pic.twitter.com/ZUlJPzOZtU

12.12pm BST

Cinema-goers will be barred from visiting the pick-n-mix stall when they're allowed back to the screens next month.

11.55am BST

Although the FTSE 100 has recovered its earlier losses, there are twice as many fallers as risers on the blue-chip index today.

Technology stocks, consumer cyclicals and industrial groups are down, suggesting there is still concern about the impact of rising Covid-19 cases on the economy.

Any gains made by equities over the last week or so are being wiped out as concern builds over the increase in coronavirus infections in the US.

Selling which started in Europe on Wednesday spread to the US overnight, not helped by sickly looking US manufacturing numbers.

11.12am BST

Just in: UK retailers remain very gloomy about their prospects this summer, despite the government's efforts to reopen the economy.

The vast majority" of retailers expect sales to be lower in July than a year ago, after suffering slumping sales under the lockdown, according to the latest survey from the CBI.

Retail sales volumes fell at a slower pace in the year to June compared to last month, reflecting stronger growth for grocers and a stabilisation in sales for specialist food and drink. #DTS pic.twitter.com/A0msLK32Ki

10.56am BST

Shares in Wirecard have, predictably, plunged after it applied for insolvency protection (which will presumably wipe investors out).

They're changing hands at just 2.50 each this morning, down from 140 back in January.

A sorry sight for #Wirecard holders. Shares plunged as low as 2.50 after resuming trading. Company filed for insolvency, and Germany wonders what went wrong...https://t.co/5EtCjzP9FA pic.twitter.com/7N4bNs3rcY

10.19am BST

The crisis in the airlines industry also deepened overnight, with Australia's Qantas announcing 6,000 job cuts.

10.16am BST

The 2,000 job cuts announced at Royal Mail today will hit managers, not posties on the streets.

But frontline jobs are also under threat, as my colleague Kalyeena Makortoff explains:

CEO Keith Williams described the job cuts as regrettable", adding: We are committed to conducting the upcoming consultation process carefully and sensitively. We will work closely with our managers and their representatives during this difficult period, including supporting them as they transition into the next stage in their careers."

While delivery staff were not targeted by the cuts, Royal Mail confirmed there would be a gradual decline in frontline workers as it started to automate the processing of letters and parcels.

9.48am BST

Newsflash: German payments company Wirecard has applied to open insolvency proceedings, a week after admitting that 1.9bn is missing from its accounts.

In a brief statement, Wirecard says:

The management board of Wirecard AG has decided today to file an application for the opening of insolvency proceedings for Wirecard AG with the competent district court of Munich (Amtsgericht Munchen) due to impending insolvency and over-indebtedness.

It is currently evaluated whether insolvency applications have to be filed for subsidiaries of Wirecard Group.

What happens when a payments company goes bust? We're about to find out. Wirecard is filing for insolvency.https://t.co/b3wood3iP9

Catch up on the Wirecard story here with @fd's comprehensive timeline: https://t.co/haVDxfvRDk pic.twitter.com/GlWWL6WzMS

9.39am BST

Britain's stock market has now shrugged off its early losses, driving the FTSE 100 back up towards last night's close.

Investors seem to be cheered by the ECB's new offer of euro loans to non-eurozone central banks (see previous post).

9.32am BST

The European Central Bank has launched a new facility to protect the financial system from the impact of Covid-19.

In response to the coronavirus (COVID-19) crisis, the Governing Council of the European Central Bank (ECB) decided to set up a new backstop facility, called the Eurosystem repo facility for central banks (EUREP), to provide precautionary euro repo lines to central banks outside the euro area.

EUREP addresses possible euro liquidity needs in case of market dysfunction resulting from the COVID-19 shock that might adversely impact the smooth transmission of ECB monetary policy.

That ECB repo facility announcement has seen risk assets rebound a touch, with stocks in Europe, and US futures, paring earlier losses; and the USD a touch weaker across the board

9.17am BST

We have an interest rate thriller in Manila.

The Philippine central bank has unexpectedly cuts interest rates by 50 basis points today, to a new record low of 2.25%.

8.49am BST

European stock markets are all being dragged down by coronavirus jitters.

8.32am BST

Today's sell-off means the FTSE 100 index is now flat for June, and down almost 20% this year.

It's still up almost 6% in the last quarter, though, having clawed back some of the huge losses after the pandemic struck.

8.28am BST

The smaller FTSE 250 index, which contains many UK-focused firms, has slumped by 1.8% in early trading.

Companies who suffer badly from Covid-19 lockdowns are among the top fallers.

8.18am BST

As feared, Britain's stock market has dropped in early trading as anxiety over the pandemic swirls.

The FTSE 100 has fallen by 81 points, or 1.3%, to 6041. That's the lowest level since Monday 15th June, adding to Wednesday's 3% slide.

New quarantine rules for travellers from some US states was the tipping point for investor doubts about the impact of rising coronavirus cases. New York, New Jersey and Connecticut will make travellers from California, Florida and Texas quarantine for 14 days.

Global stocks drop as virus worries knock recovery hopes and mounting trade tensions battered market mood. Risk-off moves followed daily records for new cases in Florida and California, w/Texas also suffering. Bonds gain w/US 10y yields at 0.67%. Gold 1762. Bitcoin drop to 9.2k. pic.twitter.com/GIIVHgeYnQ

8.09am BST

The unemployment crisis in Britain has just deepened, with the Royal Mail announcing plans to cut 2,000 jobs.

It is blaming the move, in part, on the Covid-19 pandemic.

In recent years, our UK business has not adapted quickly enough to the changes in our marketplace of more parcels and fewer letters. COVID-19 has accelerated those trends, presenting additional challenges.

7.57am BST

Coronavirus fears are also weighing on the oil price today.

US crude has dropped by 0.8% today to $37.70 per barrel, with Brent crude dipping below the $40 mark.

7.54am BST

The Australian and South Korean stock markets bore the brunt of today's selloff, both falling by around 2.5%.

Japan's Nikkei also came under pressure, down 1.2%. China, though, was closed for the Dragon Boat Festival.

7.41am BST

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

Yeesh, that US curve https://t.co/E2hTCvULxr

A coronavirus resurgence is wiping out two months of progress in the US and sending infections to dire new levels in southern and western states. Administrators and health experts warned on Wednesday that politicians and a public that, in many cases, is tired of being cooped up are letting a disaster unfold.

While newly-confirmed infections have been declining steadily in early hot spots such as New York and New Jersey, several other states set single-day records this week, including Arizona, California, Mississippi, Nevada, Texas and Oklahoma.

A plethora of bad news about the virus led to a major sell-off in risk assets yesterday as volatility returned to financial markets once again.

It wasn't a single bad headline that led to the plunge, but a drip-feed of negative stories that all combined to show increasing signs of a deteriorating situation on the virus, most obviously in the US. In terms of the news there, Florida (the 3rd most populous US state) saw its number of Covid-19 cases rise by 5.3% yesterday, some way above the previous 7-day average of 3.7%, and the number of hospitalisations rose by 256 in the state, the largest increase in a month.

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