Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Anxiety over Covid-19 is stalking the markets again, as the pandemic continues to grip the global economy and the human toll keeps mounting.
Overnight, global deaths from the virus hit 500,000 with 10m cases now confirmed worldwide. The US outbreak shows no sign of fading, either, with Covid-19 cases there currently rising by 40,000 per day:
Texas, Florida and Arizona have all now reversed some of their plans to reopen their economies, after seeing a surge in new cases in recent days.
California governor Gavin Newsom has ordered bars in seven counties to close, while Florida governor Ron DeSantis says there’s been an “explosion” in new cases.
Last night, US health secretary Alex Azar warned that “the window is closing” on the country’s chance to take action to effectively curb the coronavirus, with 2.5 million people now known to be infected.
The deteriorating situation in the US south is alarming investors, and undermining hopes that the global economy can recover from the current slump.
As Jim Reid of Deutsche Bank told clients this morning:
While Texas, Florida and Arizona remain among the most worrying in terms of new cases, other southern US states have either slowed down reopening plans or indicated intentions to do so. The positive test rate for Texas has now soared to a record 14.3%. Arkansas, just northeast of Texas, announced they will pause their phased reopening until the current wave subsides, while other neighboring states have indicated similar intentions if case counts continue to rise.
In terms of the effective transmission rates (Rt), 33 US states now have Rt values over 1.0. In fact only 2 states, Connecticut and Massachusetts, have their entire confidence level under 1.0 at this point, compared to 7 over 1.0.
The process of ending the UK’s lockdown isn’t going too smoothly either. Leicester has seen a worrying rise in cases, prompting the government to consider imposing a local lockdown.
Asian markets have already taken a knock, with Japan’s Nikkei shedding 517 points, or 2.3%, to 21,995. Australia’s S&P/ASX 200 has dropped by 1.5%, with China’s CSI 300 losing almost 1%.
Also coming up
The Bank of England’s latest money and credit report will show whether lending to individuals and businesses rose in May. Economists expect a pick-up in mortgage lending, after sliding in April.
It could be a rough day for Facebook shareholders, as the advertising boycott against the social media firm intensifies. Facebook’s shares fell 8% on Friday after Unilever pulled advertising from the network (and also Instagram and Twitter), due to the “polarised atmosphere in the US”. They’ve now been joined by Diageo, Starbucks and Levi’s, as the backlash against Facebook’s failure to better tackle hate crime gathers pace.
And in the energy sector, US shale oil producer Chesapeake Energy has filed for bankruptcy (more on that shortly…).
- 9.30am BST: UK mortgage approvals for May – expected to rise to 25,000, from 15,800 in April
- 10am BST: Euro area consumer confidence index – expected to rise to -14.7, from -18.8
- 1pm BST: German inflation for June (flash estimate) – expected to be unchanged at 0.6%
- 1.30pm BST: Bank of England policymaker Gertjan Vlieghe gives a speech on research into macroeconomic tail risks in asset prices