Powerscourt

By Powerscourt on 03/11/2020

Powerscourt Coronavirus Briefing – 03 November 2020

ANALYSIS

The US goes to the polls today in one of the most contentious and fraught elections in its history. The government’s handling of the coronavirus pandemic is Exhibit A to an angry and highly divided electorate, with President Donald Trump facing off against his Democrat challenger Joe Biden.

President Trump has throughout the pandemic been sceptical of its health impact, expressing borderline contempt for people who show concern or fear about the virus or who wear face-coverings, and has consistently resisted guidance on social distancing. In the last moments of the campaign he has again sought to project normalcy in his last rallies, flouting public health guidelines at every turn.

In rallies in Ohio and Pennsylvania, Biden by contrast argued that there could be no return to routine until the virus is under control. Biden has deliberately claimed that Trump is the weakest link in America’s approach to tackling COVID-19. “The first step to beating the virus is beating Donald Trump,” he declared, adding, “The power to change the country is in your hands.”

Many voters have already decided whose story they are buying, so the late rallies may mainly be cosmetic. And most scientists have nailed their colours to the Biden mast.

A report on Monday from Dr Deborah Birx, the coordinator of the White House virus task force, contradicted repeated claims by President Trump that the US is on the way to defeating the virus. Dr Birx’s report warned against the sorts of rallies that President Trump and his supporters have been holding across the US and suggested that the infection rate would remain over 100,000 new cases a day for several weeks.

Across the pond in Europe, renewed lockdowns and failing businesses are putting further pressure on the fraying social contract.

UK Prime Minister Boris Johnson was savaged in the Commons on Monday for his handling of the most recent national lockdown, which he had promised would not happen until days before its announcement on Saturday. Yesterday, he desperately tried to claw back some political capital and moral support, telling parliament that the failure to act now against the virus would lead to a “medical and moral disaster” with the NHS overwhelmed within weeks.

But members of Johnson’s own party who are concerned about the threat to business and civil liberties are furious about the impact of the new lockdown. On the other side of the house, Keir Starmer, leader of the opposition Labour Party, has accused him of a “catastrophic failure of judgement and leadership” by dithering and delaying the lockdown for several weeks despite clear warnings from his scientific advisers that an early lockdown could avoid pain.

Around Europe, restrictions imposed by governments to control the virus are now tipping over into political unrest. Amazon, the online retail giant, has become a target of new ire for French retailers, who have argued that the new restrictions in place in France will widen an already huge gulf between the fortunes of tech giants and the bricks and mortar retailers.

Complaints from small traders in France have prompted Amazon to withdraw publicity around its Black Friday sale, slated for November 27.

In Madrid, demonstrators set up makeshift barricades and set fire to rubbish bins in one of the city’s main streets. Demonstrators clashed with police in the Italian cities of Florence and Rome. Rome’s Campo de Fiori, one of its most iconic squares and previously a popular tourist destination, became an unlikely flashpoint, where supporters of a neo fascist organisation fought with police.

Liverpool is to become the new front-line in the UK government’s renewed attempt to revive its beleaguered £12 billion track and trace programme. Under the programme, which begins on Friday, the government plans to use the army for logistical support to test everyone living or working in the city, which has one of the UK’s highest virus caseloads. A number of different test types will be used in the programme.

The goal of the government is eventually to test other UK cities if the Liverpool pilot is successful.

Reuters reports that markets are braced for a wild ride as the US election campaign draws to a close. Hedge fund managers are girding their portfolios against post-election volatility. For now, though, the market is upbeat. US shares closed up on Monday, with Asian markets rallying into Tuesday.

 

WHAT ARE COMPANIES SAYING?

 

Industrials

Weir Group
The FTSE 250 engineering company announced a trading update for the third quarter ending 30 September 2020. Continuing orders were down 11% and mineral division orders were down 5%. Energy service orders were also down 24%. Jon Stanton, Chief Executive, commented: “Mining markets remained relatively robust in the third quarter and while Covid-19 continued to impact ore production levels and customer decision making, there was a strengthening in demand towards the end of the period.”

 

Financials & Real Estate 

Crest Nicholson
The housebuilding company today provided an update on trading for the 12-month period ending 31 October 2020. The release of pent-up demand, due to COVID-19 disruption, and the benefits of the Stamp Duty holiday, have supported near-term confidence levels in the housing market. The group FY20 Adjusted Profit Before Tax is expected to be at the upper end of the previously guided range of £35m – £45m. Peter Truscott, Chief Executive, commented: “This has been a challenging year for everyone involved with housebuilding. Despite the disruption caused by COVID-19 the Group has maintained a rigorous focus on delivering the plan we laid out in January 2020. We are pleased to report that we are now seeing this take effect.

IWG
The multinational provider of serviced offices, business lounges and conferencing facilities, announced their third quarter trading statement. In the three months to 30 September 2020, revenue across their open centres decreased 5.5% at constant currency. Total revenue for the Group (including closed centres) declined to £583.3m compared with £680.3m in the same period last year, a decrease of 10.2% at constant currency. As anticipated, the third quarter has been a challenging environment for the Group as a result of the COVID-19 pandemic. IWG have supported customers with measures worth approximately £80m so far this year, including rent deferrals. This support will continue during the fourth quarter and could rise to approximately £100m for the full year.

 

Retail & Consumer

Coats Group
The world’s largest manufacturer and distributor of sewing thread and supplies, and the second-largest manufacturer of zips and fasteners, provided an update on trading for the period 1 July 2020 to 31 October 2020. Group sales for the period declined 9% year-on-year. They initially saw an increase to Group net debt in July and August partly due to the impact of the deferral of $12 million indirect and direct tax payments (as part of government COVID schemes) from H1 into H2. The group are mindful that uncertainties related to Covid remain around the recovery profile of their various global end markets as they look into 2021.

Associated British Foods
The food processing and retailing company who announced an update with regard to the closure of their Primark stores yesterday, today provided their annual results. Statutory operating profit for the year reduced to £810m from £1,282m last year, driven by the reduction in adjusted operating profit and an increase in exceptional charges to £156m this year from £79m last year. George Weston, Chief Executive of Associated British Foods, said: “I am proud of how our people have responded to the many challenges presented by COVID-19. We have the people and the cash resources to meet the challenges ahead and we are investing for the future.”

 

IN THE NEWS

Liverpool launches tests for all in first phase of Moonshot – THE TIMES

Household restrictions in Wales to be relaxed – FINANCIAL TIMES

Boris Johnson announces extra support for self-employed during second lockdown THE TELEGRAPH




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