By Powerscourt on 31/10/2020
The United States hit a grim milestone yesterday with 100,233 cases of COVID-19 diagnosed in 24 hours. Reuters reports that that this was the highest daily number for any country during the pandemic. The death toll for October is about 22,000 but is forecast to increase by 72,000 in January. The General Election is on Tuesday next and the inauguration on January 20.
Concerns about the virus and the election combined to give a miserable week to US equity markets. The S&P 500 closed down 5.6% on the week, the worst performance since March. Tech stocks led the fall with prices correcting after huge gains in recent months.
In the UK, a nationwide lockdown is expected to be announced next week as government scientists review grim data. “Government sources” are reported to have said Boris Johnson is likely to announce new curbs as early as Wednesday. The projections show NHS beds will be overwhelmed with Covid-19 patients and that some hospitals may not have enough staff to cope with the extra patients on top of the normal winter strains on the NHS.
The news comes as the UK recorded 24,405 new cases of coronavirus, a 12 per cent rise on a fortnight ago, and 274 deaths.
The nationwide lockdown is believed to be a measure to help Britons have as normal a Christmas as possible. The move, which the UK Government does not want to call a “lockdown”, will bring further devastation to the leisure and hospitality sectors. According to a study commissioned by industry bodies, a quarter of Britain’s 47,000 pubs are unlikely to survive the Covid-19 pandemic, costing 290,000 jobs and causing substantial damage to the communities that supply and frequent them.
Economists have warned that families face a bleak winter with less generous state help as infection rates rise and lockdown measures intensify. The first support measure to go is the £40bn furlough scheme, which paid the wages of almost 10 million employees at its height. It ends today, replaced by the less generous job support scheme, which requires employees to work at least a fifth of their normal hours.
The good news? Lockdowns work. Ireland which went into effective lockdown ten days ago and has seen new cases fall already. In addition, opinion polls show the public is more optimistic already.
WHAT ARE COMPANIES SAYING?
The oil supermajor announced its third consecutive quarterly loss on Friday, posting a net loss of $680m in the three months to the end of September, down from a $3.2bn profit in the same period last year. The company said that it would cur capital expenditures by up to a third next year having already drastically reduced them this year. CEO Darren Woods said in the statement “We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend.” Overall revenues were down 30% compared with the same period last year.
Financials & Real Estate
The UK’s largest nightclub operator said yesterday that it was seeking a buyer for its business following the seven-month closure of its venues as a result of the pandemic. Nightclubs are one of the few businesses that have been unable to close at all since the government lockdown in March, and the company’s chief executive has criticised the government for failing to offer more support to the nightclub industry. The company had already cut 1000 staff and repurposed parts of its clubs as bars but is now bringing in only £80,000 a month compared to £1m of costs. CEO Peter Marks said that he was willing to “look at every option going” including a CVA and a sale.
The chairman of accounting firm PwC, Kevin Ellis, has said that auditors will find it “harder than ever” to judge that companies can continue to trade and that their accounts are free from fraud or errors. He told the Financial Times: “With so much uncertainty, the role of auditors has never been more important or more difficult. Judgment calls this year will be harder than ever.” This follows increased scrutiny on the audit profession following a series of scandals including Wirecard, Carillion and Thomas Cook. Mr Ellis said that the enhanced pressure will be keenly felt this winter as auditors prepare to check the books of hundreds of large companies whose financial year ends in December.
Retail & Consumer
Biotechnology company Regeneron has suspended testing of its Covid-19 antibody drug in the most seriously ill patients. This came after an independent data monitoring company observed that there was potentially a greater risk than benefit for those patients. The company has submitted an application for an emergency use authorisation to the US FDA for treating patients with mild-to-moderate Covid-19. The trial will continue in outpatients and in hospitalised patients on low or no oxygen, with any concerns limited to those who are most ill and on high levels of oxygen.
A German chauffer start-up specialising in airport transfers has said that it is looking to tap into demand for safe intercity travel in order to grow revenue that has been hit by Covid-19. Prior to the pandemic the company had been on track to IPO in 2022. “Our bread and butter business was the airport transfer, often at both destinations,” said Chief Executive Jens Wohltorf. “In April, revenues slumped to 1%, and since then we have started to reinvent ourselves, roll up our sleeves and fight our way out.” Revenue at the business is now back to between 30% and 50% of pre-crisis levels depending on the city.
IN THE NEWS
Lockdown fears drag markets to worst fall since March – THE TIMES
Johnson considers tougher Covid curbs as data exceed ‘worst-case’ scenario – FINANCIAL TIMES
Jobs disaster looms with long-term unemployment set to top 1.6m – THE TELEGRAPH