Treasurer Josh Frydenberg warned GDP is expected to shrink more than 10 percent in the three months to June – wiping £26 billion of the country’s economy. This would be the biggest quarterly fall since records began. Unemployment is also expected to double to 1.4 million people, with a third of jobs lost in accommodation and food services, and a quarter lost in arts and recreation. Air travel has also plummeted by a massive 97 percent.
It is the latest hammer blow to the Australian economy, with the country’s stock market losing a third of its value in just four weeks.
Asian shares also tumbled on Tuesday amid growing fears about a second wave of coronavirus infections after the Chinese city where the pandemic originated reported its first new cases since its lockdown was lifted.
European markets were set to open lower with EUROSTOXX 50 futures STXEc1 off 0.52 percent and FTSE futures FFIc1 down 0.22 percent.
E-Mini futures ESc1 for the S&P 500 slipped 0.68% The central Chinese city of Wuhan reported five new cases on Monday, casting doubts over efforts to lower coronavirus-related restrictions across the country as businesses restart and individuals went back to work.
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FTSE 100 LIVE: Global stocks have faltered
4.20pm update: Shadow Chancellor warns of mass redundancies risk
Shadow Chancellor Anneliese Dodds has called for further clarification on employers’ contributions to furloughed workers’ wages from August following Rishi Sunak’s announcement.
She tweeted: “The furlough scheme is a lifeline for millions. The Government was right not to pull it away.
“It is welcome that the Chancellor has heeded the call by Labour, trade unions, and businesses for more flexibility in the scheme, to support employees to go back to work part-time.
“The government must clarify today when employers will be required to start making contributions and how much they’ll be asked to pay.
“If businesses are suddenly required to make a substantial contribution from the 1st August, there is a real risk that we’ll see mass redundancies.”
4pm update: Landsec property portfolio value drops nearly £1.2bn
One of the UK’s biggest property firms has taken a massive loss after it was forced to write down the value of its property portfolio by nearly £1.2 billion.
Land Securities said it lost £837 million before tax during the 2020 financial year, almost seven times higher than 2019.
It comes as the coronavirus crisis took strips out of an already struggling British high street, ripping a fifth of the value of Landsec’s retail portfolio.
Its retail parks and regional centres suffered worse than others, it said.
Although Landsec saw better performances elsewhere – its office space even grew in value by 1 percent – the overall portfolio is still 8.8 percent less valuable than this time last year. It is a drop of £1.18 billion.
The company could only blame the coronavirus pandemic for a third of this.
Landsec said: “Even before we saw the impact of Covid-19, it was clear that the retail market was having another tough year as it wrestled with structural challenges, and property values fell further as a result.”
3.45pm update: FTSE-100 index up 57.73 at 5997.46.
Shadow Chancellor Anneliese Dodds has called for further clarification on employers’ contributions to furloughed workers’ wages from August
3.15pm update: Wall Street opens higher
US stocks opened higher on Tuesday on hopes of economic recovery.
The Dow Jones Industrial Average rose 70.85 points, or 0.29 percent, at the open to 24,292.84.
The S&P 500 opened higher by 9.18 points, or 0.31 percent, at 2,939.50, while the Nasdaq Composite gained 32.80 points, or 0.36 percent, to 9,225.15 at the opening bell.
2.45pm update: FTSE 100 index up 52.73 at 5992.46.
2.30pm update: Treasury Select Committee chair offers mixed response to furlough scheme announcement
Mel Stride MP said: “The extension of the furlough scheme, allowing furloughed employees to work part time, and with employers asked to contribute are all welcome steps from the Chancellor.
“The devil though will be in the detail, which will be set out later this month when the Treasury Committee looks forward to carefully scrutinising these changes.
“The Chancellor also said that there will be no changes to the scheme until July.
“This will be worrying for those who continue to fall through the gaps of the Government’s support measures such as the lack of furlough support to help cover dividend income generated through self-employment.”
FTSE 100 LIVE: The London stock index has been on the front foot for most of today
1.51pm update: CBI welcomes extension to furlough scheme
Dame Carolyn Fairbairn, CBI Director-General, said: “Introducing much needed flexibility is extremely welcome. It will prepare the ground for firms that are reawakening, while helping those who remain in hibernation.
“That’s essential as the UK economy revives step-by-step, while supporting livelihoods.
“Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with Government to get this right.
“Above all, the path of the virus is unpredictable, and much change still lies ahead.
“The Government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving.
“The greater the number of good businesses saved now, the easier it will be for the economy to recover.”
1.45pm update: FTSE 100 index up 70.68 at 6010.41.
The furlough job retention scheme has been extended to October but the Chancellor Rishi Sunak has announced some major changes including workers going part-time.
Chancellor of the Exchequer Rishi Sunak addressed MPs in the House of Commons today, announcing he was extending the Coronavirus Job Retention Scheme until October.
During his announcement, he said that there would be no changes to the scheme until the end of July.
Mr Sunak said: “I can announce today that the Job Retention Scheme will be extended for four months, until the end of October.
“By that point we will have provided eight months of support to British people and businesses.
“Until the end of July, there will be no changes whatsoever.
“Then from August to October, the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work.”
FTSE 100 LIVE: Rishi Sunak has announced an extension to the furlough scheme
Sir richardN is trying to sell a huge stake in Virgin Galactic – worth more than £400 million – in a desperate bid to rescue his ailing Virgin Atlantic business that has been ravaged by the coronavirus crisis.
Around 25 million shares are being prepared for sale in the tycoon’s space tourism venture, which have a combined market value of $504 million (£405 million).
This represents nearly a quarter (22 percent) of Virgin Galactic, meaning the entire stake is worth more than $2 billion (£1.6 billion).
Virgin Group said in a statement: “Virgin intends to use any proceeds to support its portfolio of global leisure, holiday and travel businesses that have been affected by the unprecedented impact of COVID-19.”
12pm update: Transport for London expects to lose £4 billion this year
TfL is expecting to lose around £4 billion in 2020 as a result of the impact from the coronavirus pandemic.
London’s public transport network says it has lost 90 percent of its overall income during the UK lockdown, in which people have been advised to stay at home.
TfL is continuing to run most services, but this hasn’t prevented a huge 95 percent fall in people using the Tube compared to this time last year.
Bus passenger numbers have also plummeted 85 percent.
11.45am update: FTSE-100 index up 52.25 at 5991.98.
11.15am update: Bank of England deputy boss warns more monetary easing could be needed
Ben Broadbent has warned it is “quite possible” further monetary easing will be required as efforts continue to tackle the economic impact from the coronavirus crisis.
The deputy governor of the Bank of England said during an interview with CNBC the bank’s Monetary Policy Committee “is certainly prepared to do what’s necessary”.
Mr Broadbent also warned further interest rate cuts may do “more harm than good”.
10.30am update: French economy plunges 27 percent in April
Economic activity in France during last month was down by more than a quarter, compared with a decline of 32 percent in March, the Banque de France has estimated in its monthly business survey.
Industry was operating at below 50 percent of capacity – the lowest level on record, and significantly down from 77 percent in February and 56 percent in March.
Emmanuel Macron’s Government enforced a nationwide lockdown from March 17, with measures gradually eased from Monday.
FTSE 100 LIVE: Transport for London is expecting to lose around £4billion this year
9.50am update: Government has duty to support struggling businesses – Sir Mervyn King
The former Bank of England chief said wage subsidies should be extended as the downturn bites in the coming months.
He told the BBC’s Today programme: “If the Government decided for very good reasons to support the economy then it has an obligation to support businesses, so that they don’t go into insolvency and disappear before the economy recovers.”
Rishi Sunak has been urged to extend the furlough scheme at 80 percent of salaries for an indefinite period of time by former Bank of England chief Mervyn King.
The former governor of the Bank of England said the Chancellor should not wind back the coronavirus furlough scheme – paying 60 percent of wages rather than 80 percent, as is expected – until the economy has recovered further.
Lord King told BBC Radio 4’s Today programme: “Indeed, keep it at 80 percent. I don’t think it makes sense to regard this as the major cost of the Covid-19 crisis in economic terms.
“These payments under Government schemes are transfers from taxpayers in general to businesses, it will lead to an increase in national debt but we can finance that over a long period, particularly given the very low level of long-term real interest rates.
“The real cost of this shutdown is not measured by the impact on the public finances but by the lost incomes and outputs in the economy, a cost which is likely to end up as an order of magnitude, though no one can really know this, of several hundred billion pounds. That’s an enormous cost.”
8.52am update: FTSE 100 recovers to begin day on front foot
The London stock index was up half a percent this morning after an early dip into the red, rising above 5,950 points and outperforming its Eurozone peers once again.
But trading across Europe got off to a slow start overall, as the world reaches a crucial time in lifting coronavirus lockdown measures.
Spreadex financial analyst Connor Campbell said: “Europe was fairly reticent at the start of Tuesday’s trading, caught between the optimism of easing lockdown measures, and the fears of a second wave of coronavirus cases those said same measures could bring about.
“As it did on Monday, the FTSE had a bit more about it than its Eurozone peers. Rising half a percent after an initial dip in the red, the UK index found itself above 5950, struggling to quite break out towards the key 6000 level.
“As for the DAX and CAC, there weren’t up to much after the bell, at most moving a handful of points either side of flat.
“Investors may be dwelling on the threat of another wave of covid-19 cases in Germany (and what they could mean for the gradually reopening France).”
FTSE 100 LIVE: Ryanair will restore 40 percent of its flight schedule from July 1
8.45am update: Vodafone swings into full-year profit
The telecoms giant has bounced back from a multi-billion pound loss to post a profit in its most recent financial year.
The company’s chief executive Nick Read announced a pre-tax profit of £697 million for the 12 months until the end of March, compared to the £2.3 billion loss posted a year ago.
Revenue was up three percent to £39 billion.
Mr Read said: “Vodafone has delivered a good financial performance – growing revenue, adjusted Ebitda and free cash flow – whilst building strong commercial momentum through the year and executing at pace on our strategic priorities.”
8.23am update: Matt Hancock urges businesses and employees to work together
The Health Secretary has urged businesses and thir staff to work together to ensure they are comfortable returning to their workplace.
He told BBC Breakfast: “Workplaces need to follow the guidelines in making the workplace safe for COVID-19 and we will be setting out details on that later.”
When asked if employees could legally walk out if they were unhappy with safety measures, Mr Hancock replied: “Employment law has not changed, but that isn’t the point.
“Businesses and their employees should be working together.”
8.19am update: Ryanair to restore 40 percent of flight schedule from July
Europe’s largest low-cost airline will restore around 40 percent of its normal flight schedules from July 1 as it begins its recovery from the coronavirus pandemic.
The company has outlined plans to resume flights from most of its 80 bases across the continent.
Ryanair has been operating just 30 flights between Ireland, the UK and Europe since flight restrictions from the pandemic came into force in mid-March but from July, this will surge to almost 1,000 flights a day.
But the airline warned this will be dependent on government restrictions on intra-EU flights being lifted, as well as health measures being implemented at airports.
FTSE 100 LIVE: Toyota has warned of a huge profit drop
8.03am update: Allianz quarterly operating profit plummets by nearly a quarter
The German insurance giant saw first quarter operating profit drop 22 percent year-on-year with its property and casualty insurance business taking a huge blow from the economic fallout of the coronavirus pandemic.
Despite the fall in operating profit to €2.3bn earnings before interest and tax, this was still slightly ahead of analysts expectations.
But its the latest hammer blow for the business, which last month warned investors it will be unable to meet its full-year target of €11.5-12.5bn.
Allianz is now working on a revised profit target.
7.55am update: Toyota warns operating profit could collapse 80 percent in next financial year
The world’s second largest car maker has warned of an 80 per cent collapse in operating profits over the next 12 months, but is expecting sales in the US and Europe to fully recover by early 2021.
For the financial year until the end of March 2021, Toyota is forecasting an operating profit of ¥500bn compared to a profit of ¥2.4tn from a year earlier.
According to S&P Global Market Intelligence, this is well below analyst expectations for a profit of ¥1.8tn.
The company also expected global vehicle sales to fall to 8.9 million from 10.5 million.
Fourth quarter plunged 27 percent in the January to March quarter, as the firm struggled with supply chain disruptions from the coronavirus crisis, the shutdown of car plants around the world and falling consumer demand.
Toyota’s chief financial officer Kenta Kon said: “We are seeing the seeds of recovery as plant capacity in the US and Europe begin to recover.
“But the situation still does not allow us to have a clear outlook for a definite recovery.”
The International Monetary Fund is expecting the global economy to recover quickly next year
7.40am update: Australia GDP set to plummet by 10 percent with £26bn wipe-out
Australia is bracing for its biggest fall in GDP on record as the coronavirus lockdown continues to blow a huge hole in the country’s economy.
Treasurer Josh Frydenberg warned GDP is expected to shrink more than 10 percent in the three months to June – wiping £26 billion of the country’s economy.
Unemployment is also expected to double to 1.4 million people, with a third of jobs lost in accommodation and food services, and a quarter lost in arts and recreation.
Australia’s stock market has now lost a third of its value in the past month.
7am update: China factory prices plummet at fastest level in four years
The prices of good exiting factories in China have fallen at their fastest rate since April 2016, as the country’s producers continue to come under pressure from the coronavirus pandemic.
The National Bureau of Statistics said China’s producer index fell 3.1 percent year-on-year last month, compared to a 1.5 percent drop the month before.
The bureau said Chinese producers’ prices had been hit by the current pandemic and a fall in the international commodities markets.
China’s consumer price index, which is a measure of the prices of food, everyday goods and services, increased 3.3 percent – lower than the increases seen during the peak of the coronavirus outbreak in China.
In January, the CPI hit an eight-year high of 5.4 percent year-on-year, while the February and March increases were 5.2 and 4.3 per cent respectively.
6.19am update: Oil prices boosted by Saudi Arabia pledge to deepen output cut
Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June in a bid to help drain the glut in the global market that has built up as the coronavirus pandemic crushed fuel demand.
Brent crude LCOc1 futures advanced 0.5 percent, or 15 cents, to $29.78 at 0500 GMT, after hitting an intraday high of $30.11 a barrel.
US West Texas Intermediate (WTI) crude CLc1 futures were up 1 percent, or 26 cents, at $24.40 after touching an intraday high of $24.77.
Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40 percent from April.
Additional reporting by Paul Withers.