Markets tumble as virus death toll surges

Well, that's all from us this week, we'll be back again on Monday!

Stay safe everyone!

Wall Street stocks sank Friday, plunging after three positive sessions despite the House of Representatives approving a $2 trillion package to address the coronavirus crisis.

At the closing bell, the Dow Jones Industrial Average stood at 21,612.93, down 4.1pc or around 930 points.

The broad-based S&P 500 dropped 3.4pc to 2,541.45, while the tech-rich Nasdaq Composite Index tumbled 3.8 percent to 7,502.38.

Despite Friday's rout, all three indices finished the week with solid gains as the giant stimulus moved through Washington towards the desk of the president.

Housing sales are forecast to plunge, with mortgage approvals sinking by more than two thirds as the coronavirus lockdown hammers the residential property sector.

The housing market was effectively halted on Thursday by the Government after banks called for all sales to be frozen because they cannot get valuers out to properties.

Hansen Lu, property economist at Capital Economics, expected mortgage approvals for house purchases to drop by 70pc between April and June compared with the first three months of the year.

Howard Archer, chief economic adviser at consultancy EY Item Club, said the suspension will hit the wider economy as the world plunges into recession.

“Obviously, all the players involved in a house purchase – estate agents, surveyors, removal companies – will not be generating any business, while banks will not be generating any income from new mortgages," he said. 

Stocks across the pond are in their final moments of trade, with the Dow Jones, S&P and Nasdaq all around 4pc lower.

Our personal finance reporter Melissa Lawford writes:

The coronavirus outbreak and the government lockdown have brought property transactions almost to a halt.

The government has advised buyers and renters to delay moves and transactions during the lockdown, even if you have exchanged contracts.

Mortgage lenders are working to extend mortgage offers for up to three months for buyers who have exchanged. If moving is unavoidable for contractual reasons and an agreement to delay can't be reached, however, moves must be conducted in line with social distancing guidelines.

The sales that are still proceeding now come with new and painful risks. For sellers, the biggest is potentially no longer having a home to move to.

If your home is currently for sale, these are the factors that you need to consider.

The European Central Bank on Friday asked eurozone banks not to pay dividends "until at least October 2020" to preserve liquidity that can be used to help households and companies through the coronavirus crisis.

The Frankfurt institution also asked banks to "refrain from share buy-backs aimed at remunerating shareholders" at a time when countries and central banks are taking unprecedented steps to support the global economy.

"The ECB expects banks' shareholders to join this collective effort," it said in a surprise statement.

Tourism giant Tui is to receive a €1.8bn (£1.6bn) emergency loan from the German federal government as it battles to stay afloat amid the coronavirus pandemic.

The bridging loan, subject to final approval byTui’s banks, will be one of the biggest issued so far through German public lender KfW as the health crisis tears up the travel sector.

It will be used to increase the company’s credit line with its banks, providing access “to financial resources and credit lines totalling 3.1 billion".

Fritz Joussen, chief executive of Tui, said: “We are currently facing unprecedented international travel restrictions. As a result, we are temporarily a company with no product and no revenue. This situation must be bridged.”

To receive the lifeline, the Hannover-based firm said one of its conditions is to waive dividend payments for the duration of the bridge loan.

Currency exchange business Travelex has shut all of its UK bureaux for eight weeks following the Government’s order that most retailers should close to help halt the spread of coronavirus.

Travelex, which is owned by troubled fintech firm Finablr, said it was in discussions with banks and senior bondholders in an effort to find a “long term solution”, suggesting the company may be seeking to restructure some of its debts.

The firm said it was also in talks with key lenders to ensure it can continue to access the funds it needs. 

The firm has been beset by a series of difficulties this year, beginning with a devastating cyber attack on Dec 31 that took its systems offline for weeks.

Tony D'Souza, chief executive of Travelex, said: "The Travelex group has a rich heritage and systemic role in the foreign exchange market, with a solid reputation and a recognised brand. We remain committed to tackling the tough challenges ahead of us and are absolutely dedicated to ensuring the long-term success of the business." Trading of shares in Travelex’s owner, Finablr, was suspended earlier this month after the embattled firm discovered $100m (£81m) of undisclosed financing deals and warned it could go bust.  

It's all happening today! Here's some more corporate news from my colleague Simon Foy...

Aviation services group John Menzies has cut more than half of its global workforce due to the coronavirus-induced slump in air travel, and is trying to get aid from an emergency Government fund for which it does not currently qualify.

Menzies, one of the world’s biggest providers of fuelling, ground handling, lounge services and maintenance at airports, said cargo volumes had declined by 20pc in the last two weeks due to the “unprecedented scale” of grounded flights.

Giles Wilson, the company’s chief executive, said: “John Menzies Plc has existed since 1833 and been listed since 1962, but never have we faced such difficult and unpredictable times.”

The company warned the disruption would have a “very significant adverse impact” on results. Menzies employs over 32,000 workers at more than 200 airports worldwide, and is cutting global headcount by over 17,500.

It came as Gatwick Airport said its North Terminal will close from the end of the month due to the collapse in demand for air travel.  

Company bosses are set to avoid the scrutiny of shareholders after City lawyers issued guidance that this year’s annual general meetings (AGMs) should go ahead with just two people attending, my colleague Michael O'Dwyer writes. He adds:

The coronavirus lockdown, which bans gatherings of more than two people unless they live together, is causing headaches for the 41 FTSE 100 companies scheduled to hold their AGMs in April and May.

Companies should still hold their meetings but with only two people attending, according to new guidance issued on Friday by the Chartered Governance institute and four Magic Circle law firms.

Companies are eager to proceed with their meetings because certain authorities for directors to conduct share buybacks usually expire within 12 to 15 months of the previous AGM.

Most companies’ articles of association allow AGMs to take place with just two people attending, offering a workaround during the coronavirus crisis.

Shareholders will be able to vote in advance but  in most cases will not be able to ask questions on the dayif they are not physically present.

A corporate lawyer at one City law firm said the absence of shareholders meant this year’s would be the “easiest AGM a lot of companies have ever had”. 

London's benchmark index closed 5.45pc lower today while the more domestically-focused FTSE 250 ended 4.16pc down as health concerns mounted.

The fall in oil hit giants such as BP and Royal Dutch Shell which tumbled around 9pc. Weaker copper prices also hit mining firms while all the banks closed in the red.

David Madden of CMC Markets said: "The rising number cases in countries like the UK, Spain and Italy has chipped away at market confidence."

"The lack of a coordinated and robust response from the EU has left some traders worried too. Individual governments have revealed recuse plans recently, but without an overarching programme from the EU, there is a feeling there isn’t a huge amount of solidarity doing the rounds.

Analysts at Capital Economics have said:

This coronavirus recession isn’t anything like a “normal” one. The fall in output will be sudden and vast. The huge policy response means the recovery should be much quicker than normal too. But the scale of the economic dislocation and the risk that the virus lingers mean a swift recovery is not guaranteed.

The unprecedented nature of the economic shock means the size of the hit is very hard to estimate. We have pencilled in a 15pc fall in GDP in Q2.

That would eclipse the peak-to-trough fall in GDP in both the Global Financial Crisis (6pc over five quarters) and the Great Depression (7pc over ten quarters).

And quite frankly, the coronavirus collapse could be a 20-40pc fall in GDP.

The Carluccio’s restaurant chain is reportedly preparing for administration, putting as many as 2,000 jobs at risk.

Sky News first reported that it is lining up FRP Advisory to carry out the administration.

It comes as like-for-like sales across Britain's managed pub, bar and restaurant groups dropped 71pc in the week that the Government ordered licensed premises to close, according to figures from the Coffer Peach Business Tracker.

Rent-to-own giant BrightHouse is on the verge of collapse after investors withdrew support for a proposed restructuring, putting 2,400 jobs at risk.

The company is expected to fall into administration as soon as Monday, according to Sky News, as it suffered an influx of compensation claims for selling to people who could not repay.

BrightHouse, which has around 200,000 customers and is the largest operator in the rent-to-own sector, had been put under pressure due to stricter lending rules. It provides loans to consumers to purchase electrical items such as televisions, fridges and washing machines from 240 of its stores.

It is to appoint accountancy firm Grant Thornton as administrator.

A spokesman told Sky News on Friday: "The national response to the COVID-19 pandemic has required us to prioritise the health and wellbeing of our staff and customers, in particular by closing all stores in the last few days.

Donald Trump is up and tweeting, this time about ventilators.

He has called on General Motors and Ford to start making ventilators immediately.

Read more on ventilators here:

• Ministers must invoke spirit of war by supervising rush for ventilators
• Manufacturers told to start making thousands of ventilators
• Dyson receives Government order for 10,000 ventilators

Russia is seeking talks with Saudi Arabia after a weeks-long oil price war between the two sides plunged the market into chaos.

Moscow is understood to have sought a way forward with other oil producing countries as it eyes cuts to production that could boost prices following a collapse in Brent crude, which has month than halved in value to $27 a barrel. 

The world was left awash with oil after an alliance between Russia and Saudi collapsed earlier this month. The pair have worked together since 2017 to boost oil prices by reducing their output in unison. This means less oil is available to buy, forcing customers to bid prices up.

But that joint effort crumbled when Russia declined to make further cuts three weeks ago, triggering a price war in which both countries ramped up production.

Read Ed Clowes' full article here

Oil pries have slumped today as global stock tumble into the red.

Here's a quick energy update...

• US Crude 2216 -5.15%
• Oil - Brent Crude 2700 -4.89%
• Natural Gas 1671 -1.36%
• Heating Oil 10578 +0.69%
• Gasoline 5660 -4.42%
• London Gas Oil 302 +0.7%

Investors’ first port of call is often the VIX index, a gauge of equity market (S&P 500 index) volatility. It has very recently spiked higher than it was during the 2007/8 Global Financial Crisis.

Today it is more than 7pc higher...

• Engineers at the Royal Mint have created an approved medical design in 48 hours
• The first visors are already in use in hospitals in South Wales

The Royal Mint is to begin mass manufacturing medical visors for the NHS next week to provide critical protection for frontline staff.

Dr Sharon Hopkins, chief executive of Cwm Taf Morgannwg UHB, said: “We are incredibly grateful to the Royal Mint for this work. This equipment will be vitally important for our frontline staff to protect themselves and others as they work to respond to the COVID19 pandemic.

"It is also an excellent example of teams working collaboratively to provide safer environments for our staff and patients.

“The generosity of organisations such as the Royal Mint as well as our communities has been humbling and I would like to thank everyone for their continued support for our staff and the NHS.”

That's all from me for today. LaToya Harding will be with you for the rest of the evening and Louis Ashworth will be back on Monday to steer you through the market turbulence. 

Thanks for following and have a good weekend. 

With just over two hours of trading left this week, European indices are continuing to fall. However, they remain comfortably in the green for the week.

Here is how things currently look:

 

There appears to have been some confusion about where people can get tested for Covid-19. 

Boots has narrowed that list for those who are still unsure..

Lufthansa is seeking to put around 31,000 cabin crew and ground staff on a German work program that involves the government offsetting wages lost when companies are forced to temporarily halt activities. 

Kurzarbeit, or shorter work-time, is a policy that has been in place in Germany since the early 1900s and offers temporarily laid-off workers 60pc of their pre-crisis salary. Its goal is to prevent mass unemployment during a downturn. 

The scheme is very similar to the one Rishi Sunak announced last week for furloughed workers in the UK. 

The Kurzarbeit period for Lufthansa staff would last until the end of August, Bloomberg reported. 

The Bank of Canada issued its third interest rate cut in a matter of weeks, and announced what appears to be a large scale asset purchase program to help shield the nation’s economy from coronavirus fallout.

The central bank lowered its policy rate by another half a percentage point on Friday to 0.25pc, adding in a statement that the unscheduled rate decision brings the rate down to its effective lower bound.

The Bank of Canada also announced plans a new commercial paper purchase program as well as a minimum of C$5bn (£2.9bn) a week in government securities.

The move came after jobless claims soared last week, suggesting the economy is poised to produce one of the sharpest drops in economic activity in history.

The energy-heavy Canadian economy is also having to contend with the crash in oil prices.

Coming off the S&P 500's best three-day gain since the Great Depression era, Wall Street turns lower:

 

Rolls-Royce Holdings said it will wind down its jet engine production in the UK as it spends a week implementing cleanup and safety measures to deal with the Covid-19 pandemic.

The company, which makes turbines for wide-body planes, will “significantly reduce” all but essential activities within its UK civil aerospace facilities from midnight, it said. 

Rolls said: “This move will enable us to confirm the effectiveness of the measures taken to date and enhance our processes in order to sustain modified operations and activities over a longer period”

The company’s main production sites are located in Derby.

After a three-day rally – and with the Dow Jones weirdly entering a technical bull market yesterday – Wall Street is set to open comfortably in the red:

Here is how futures currently look: 

• S&P 500 -3.2pc
• Dow Jones -3.1pc
• Nasdaq -2.9pc

Volkswagen move to halt output on both sides of the Atlantic is costing the world’s largest automaker a colossal €2bn (£1.8bn) per week.

However, its chief executive Herbert Diess said the action is critical to overcome the Covid-19 crisis.

The carmaker's sales outside China have effectively come to a standstill, while demand in the country – Volkswagen's largest single market – has clawed back to about 50pc of pre-crisis levels, Diess told German broadcaster ZDF. 

Provident Financial has axed its dividend, reduced lending and accelerated the rollout of online debt collection as it follows rival doorstep lenders in reducing lending to customers. 

My colleague Michael O'Dwyer writes:

Provident, which offers high interest credit cards and loans to customers deemed too risky by banks, said it had suspended face-to-face debt collection at customers’ homes because of the Government’s stay at home order. 

Prior to the social distancing measures put in place to tackle the Covid-19 outbreak, about 75pc of the Provvy’s home credit customers used cash to make repayments. Debt collection is expected to suffer, particularly if customers’ incomes fall. 

Provident said it was too early to put a number on the final cost of Covid-19 to its business but joined the wave of companies that have suspended market guidance on expected financial performance due to the uncertainty facing business. Withdrawing the dividend will save £40m.  

Despite the challenges, the current turmoil could be to the Provvy’s advantage if it reduces rivals’ capacity to lend. 

Analysts at Peel Hunt said: “Ultimately, Provident is used to dealing with customers in difficulty, and could be a beneficiary, as the supply of credit contracts, going forward.”

Johnson says he is well enough to lead the Government at present. However, if his condition was to deteriorate and he became incapacitated, Foreign Secretary Dominic Raab, who is also first secretary of state, would temporarily takeover the PM's duties. 

Johnson says he has "mild symptoms", including a temperature and a persistent cough and took the test on the advice of the chief medical officer Chris Witty. 

The Prime Minister said he has mild symptoms and will self-isolate in Downing Street, but he will still be in charge of the Government's handling of the crisis.

The Government will announce plans to cover employer national insurance and pension contributions for businesses furloughing staff during the coronavirus outbreak. 

A statement from Prime Minister Boris Johnson's office said: 

The Chancellor will announce that the government will cover the costs of employer national insurance and pension contributions for businesses furloughing staff during the coronavirus outbreak.

Last week, Chancellor Rishi Sunak announced that the government will step in and pay up to 80pc of wages, up to £2,500 a month, to protect the jobs of staff who are put on leave due to the pandemic. 

The boss of Iceland said "healthy people" should still go to stores to buy groceries to free up delivery slots for the elderly, contradicting government advice. 

Prime Minister Boris Johnson this week urged the public to only shop for essentials and to use food delivery services "where you can". 

However, Iceland managing director Richard Walker said: "I would urge the opposite of the PM. If you are healthy, not in a vulnerable category and adhere to social distancing guidelines, please do shop in-store."

He told BBC Radio 4's Today programme that Iceland "will enhance priority online for those who need it most". 

• Read the full story here: Keep going to shops and don't order online, says Iceland boss

Royal Mail has delayed its turnaround plan, suspended its dividend and scrapped its guidance for next year due the "significant uncertainty" caused by the Covid-19 crisis, sending its shares plunging.

The group said the outbreak will negatively impact profits in its UK and international businesses this year, with "key markets" such as Italy, France and Spain being hit particularly hard. 

Royal Mail continues to expect underlying operating profits of £300 to £340m for the current financial year,  however the group has suspended guidance for 2020-2021 and all future periods, with delays to its turnaround "Journey 2024" plan.

The former monopoly and one of the world’s oldest postal companies last May pledged to invest £1.8bn to transform itself into a sustainable, profitable operation by 2024. 

The company said it will now take longer than expected to achieve the targets laid out in its Journey 2024 plan. 

The group has access to over £800m in cash plus £925m in credit facilities.

Rico Back, Royal Mail's chief executive, said:

We are putting the health and wellbeing of colleagues and customers first. At the same time, we are delivering the parcels and letters that are a lifeline for those who cannot leave their homes.

We are entering a period of significant uncertainty in a good financial position. We have a strong balance sheet. We have substantial levels of liquidity and low levels of debt. We are taking immediate steps to further reduce our costs and protect our cash flow.

Nicholas Hyett, an analyst at Hargreaves Lansdown, said: 

Royal Mail is in a better position than some companies, in that its core letters and parcels business does at least continue to operate. The increase in online shopping is even providing a boost to some parts of the business.

However, the significant falls in overall postal volumes both in the UK and internationally are expected to decimate profits this year and the group is nursing cash flow through the lean times, with the result that the full year dividend has been scrapped.

Shares fell 14.1pc to 139p. The stock has lost almost a quarter of its value in the last month. 

Outsourcer Capita is the latest private sector firm looking to use its expertise to help in the national effort against Covid-19. 

The FTSE 250 company is working with the Government to set up coronavirus testing sites and is looking at contributing resources to healthcare call centres. 

Capita chief executive Jon Lewis said the company's partnership with the government had intensified in recent days.

Capita said: 

We are currently exploring more than 100 situations to support the UK government Covid-19 response with additional services. 

This includes contributing resource to healthcare call centres as well as being part of an initiative to set up health testing centres.

 

Deutsche Bank became the latest big lender to halt plans for widescale layoffs, joining rival banks including HSBC and Lloyd's. 

The company, which aims to eliminate 18,000 jobs by the end of 2022, said it wanted to avoid additional emotional distress for employees amid the pandemic, Bloomberg reported. 

“To avoid additional emotional distress in the current environment, we will defer new communications of individual restructuring actions to potentially affected employees,” the Frankfurt-based bank said in a memo to staff.

“The pause will be in place until we see a return to greater stability in the world around us.”

Last summer, chief executive Christian Sewing announced announced a major job cuts programme over the next three years as part of a huge restructuring to restore the bank to profitability after half a decade of losses.

Shares fell 4.1pc to €6.08 in early trading in Frankfurt. 

The Co-op has filled all 5,000 temporary store jobs in just seven days following an "unprecedented" response to the retailer's recruitment drive.

All 5,000 new recruits will be working across the grocer's network of stores this weekend, as the retailer looks to keep its shelves replenished.

The company said it had hired many people who found themselves unexpectedly out of work due to the pandemic.

Jo Whitfield, chief executive of Co-op Food, said:

Just one week ago we asked members of the British public who needed jobs to come forward and join forces with us.

The response has been overwhelming as people pull together to feed the nation. All of our colleagues are heroes and are doing an amazing job under huge pressure.

Tracksuit tycoon Mike Ashley has issued a grovelling apology to the Government, the public and his employees over how he handled the coronavirus crisis in recent days.

The Sports Direct boss said he was "deeply apologetic about the misunderstandings of the last few days", adding that recent emails to the Government were "ill-judged and poorly timed, when they clearly had much greater than ours to deal with".

On Tuesday, Mr Ashley reversed plans to keep his stores open, but came under further criticism after it was revealed that Sports Direct was hiking the price of some goods by 50pc.

On Monday night, the retailer said all stores would remain open because there is a greater demand for its products due to gym closures. It claimed to be "uniquely well placed" to keep the UK healthy during a national lockdown. 

The decision prompted criticism from officials who are struggling to prevent tens of thousands of deaths. Cabinet Office minister Michael Gove said: "I can't see any justification for Sports Direct remaining open".

Last night, EU leaders failed to agree a joint strategy for a stimulus package during a six-hour video conference, giving themselves two more weeks to work out details.

Highlighting how the pandemic is testing the bloc’s cohesion, Germany and the Netherlands blocked a call from France, Italy and Spain to issue joint bonds to help finance a recovery.

The 27 EU leaders also wrangled over setting up a credit line worth some 2pc of their economic output from the European Stability Mechanism bailout fund of the 19-member single-currency zone.

In the end, they tasked their finance ministers to work out the details in the next two weeks.

However, they were keen to emphasise the things they did agree on.

These included ensuring that border closures don't obstruct the flow of vital goods and services throughout the single market, preventing restrictions on the supply of medical equipment between member states and calling for a plan to return EU economies to normal once the Covid-19 crisis is over.

After its recent rout, the Dow Jones Industrial Average has already climbed out of bear market territory and into a technical bull market – a 20pc gain from its recent trough. 

The S&P 500 recorded its quickest three-day advance in nine decades but has yet to reach the 20pc yardstick.

However, analysts are warning that investors should take stock before attaching bull market titles to indices. 

Jaiganesh Balasubramaniam, a market technician at Cashthechaos.com, told Bloomberg: 

The 20pc yardstick does not matter unless we start seeing higher highs and sustainable buying at lows. We need higher highs and higher lows on different time frames before we can say that we are out of bear markets.

The competition watchdog has cleared the Daily Mail publisher's £50m acquisition of the i newspaper. 

The Competition and Markets Authority said it has decided not to refer the tie-up to a phase two investigation.

In November, DMGT agreed to buy the i for £49.6m from JPI Media – more than double its price tag just three years ago.

The purchase ended months of speculation over bidders for the paper, which was considered to be the crown jewel in JPI’s stable. 

Similarly to Thursday, European stocks start the day well in the red. 

 

Next will stop taking online orders after it closed its online, warehousing and distribution operations. 

The group said it took the "difficult decision" after listening to staff who "increasingly feel they should be at home in the current climate".

Last week, the retailer warned the Covid-19 pandemic will lead to a "very significant" drop in sales of as much as £1bn this year.

It said online sales will perform better than retail during the disruption but will also suffer significant losses.

Lord Wolfson, the company's chief executive,  said: "People do not buy a new outfit to stay at home."

Asian stocks climbed after a third straight day of gains on Wall Street, in a tentative sign of optimism among investors encouraged by uprecedented stimulus actions.

Equity benchmarks climbed at least 3pc in Tokyo and Seoul, and about 2pc in Sydney. Hong Kong's Hang Send gained 3.6pc. 

It came after the S&P 500 recorded its quickest three-day advance in nine decades, despite US jobless claims spiking to a record 3.3m last week. 

Equities are now in the process of forming a bottom, according to Dan Skelly, head of equity model portfolios at Morgan Stanley Wealth Management.

China will also temporarily suspend the entry of foreigners holding valid visas and residence permits starting on Saturday.

Good morning. European stocks are set to fall after three consecutive days of gains, as investors took stock of stimulus efforts and the US overtook China for the most confirmed virus cases. 

Meanwhile, the pound surged to $1.23 overnight, its highest point in more than a week, as the dollar headed for its biggest weekly fall since 2009. 

5 things to start your day

1) Government suspends the housing market as banks withdraw hundreds of mortgages from sale: Ministers are discouraging buyers from going ahead with house sales and purchases unless they have ­already exchanged contracts as part of wider efforts to slow the spread of the coronavirus, saying no one should move unless absolutely necessary. ­

2) US unemployment will hit a post-war record high as the world’s biggest economy is ravaged by the coronavirus pandemic, economists warned after millions of Americans filed for benefits in the space of one week. A record 3.3 million people signed up for unemployment benefits last week, four times higher than the previous record-high.

3) Dire forecast UK car production will hit all-time low: A new forecast from trade body the Society of Motor Manufacturers and Traders (SMMT) warns that the number of cars to roll off UK production lines this year will drop by 200,000 to just below 1.1m because of shutdowns caused by the pandemic.

4) Sunak backtracks to help firms shut out of loans scheme: Under the Covid Corporate Lending Facility, announced last week by Chancellor Rishi Sunak, the Bank will lend to large businesses for up to 12 months by buying their commercial paper to help them through the cash crunch caused by the national lockdown. 

5) Banks under pressure to fast-track business loans: The British Chambers of Commerce (BCC) has written to bank chiefs urging them to publish data on how fast applications for the government-backed loans are being processed as well as the terms customers will be forced to sign to access the emergency cash. 

Coming up today

No FTSE 350 companies are set to report

Economics: Fitch to review UK sovereign debt rating (UK) personal consumption expenditures price index, personal income and spending (US)