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Businesses Make Deeper Cuts; Hong Kong Stimulus: Virus Update

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(Bloomberg) — Citigroup Inc., Qantas Airways Ltd. and Singapore’s United Overseas Bank Ltd. joined companies worldwide making deeper cost cuts, from property and equipment to staff and pay, as the pandemic persist. U.K. job losses during the crisis reached almost 700,000, fresh data showed.

In India, where infections trail only the U.S., total cases approached 5 million. Hong Kong reported no locally transmitted infections for the first time since early July. The city injected its struggling economy with fresh stimulus and lifted some social distancing measures, including temporarily reopening bars.

A vaccine may be available for “ordinary Chinese” as soon as November, the state-owned Global Times newspaper said. In the U.K., researchers are beginning the first study of whether two experimental vaccines can be inhaled.

Key Developments:

Global Tracker: Cases pass 29.2 million; deaths exceed 928,500Lockdowns halt Europe’s air-travel recovery, threaten jobsLagarde leverages virus to push for greener monetary policyThis year’s wine harvest may be the most troubled everThe Carnival cruise ship that spread the virus to the worldVaccine trials face their moment of truth

Subscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click CVID on the terminal for global data on coronavirus cases and deaths.

Russia’s Daily Deaths, Cases Highest Since July (4:31 p.m. HK)

Russia’s new cases and deaths rose the most since late July as the virus spread with the return of millions to school and work. The government reported 5,529 new cases and 150 deaths.

“Many people are coming back from vacations, schoolchildren and students started their studies — several risk factors coincided at once,” Prime Minister Mikhail Mishustin said Monday at a televised meeting of officials on the virus.

Moscow isn’t planning new restrictions to limit the spread in the city, according to Mayor Sergei Sobyanin. Russia has reported a total of 1.07 million cases, ranking it fourth in the world behind the U.S., India and Brazil.

U.K. Says ‘No Magic Solution’ for Struggling Test System (4:23 p.m. HK)

Boris Johnson’s government acknowledged its Covid-19 testing program is coming under strain.

“This is challenging,” Home Secretary Priti Patel told Times Radio on Tuesday. “There is no magic solution to say this is all going to be perfect.”

On Monday, LBC Radio reported there were no walk-in, drive-through or home tests accessible online in the worst-affected virus areas, including Bolton, Salford, Blackburn and Manchester.

Separately, the Office for National Statistics said fatalities in England and Wales fell 14% in the week ended Sept. 4, dropping below average for the first time in four weeks.

Mizuho Dials Back Return to London Office (3:03 p.m. HK)

Mizuho International Plc tempered a move to allow all of its staff back to the Japanese bank’s London office amid a new wave of U.K. coronavirus cases.

The firm told workers Friday in a memo that only employees performing “business critical” roles can return to its office near St. Paul’s Cathedral, which normally houses about 1,400 staff. Monday was the first day the policy applied at Mizuho, which had previously given all staff the choice to return as long as the building’s capacity didn’t exceed 50%.

Britain’s Job Losses (2:15 p.m. HK)

Britain has lost almost 700,000 jobs to the coronavirus crisis, a blow to the economy that will heap further pressure on the government to extend its wage-support programs.

The number of employees on payrolls in August is down 695,000 from March, the Office for National Statistics said Tuesday. The number of people claiming for jobless benefits has risen to 2.7 million, an increase of 121% since March.

Indian Economy Set to Shrink 9% (1:46 p.m. HK)

India is likely to see its economy contract 9% this year, the worst performance among major developing economies in Asia, according to the Asian Development Bank. The country added nearly 84,000 infections on Tuesday to take the total tally past 4.9 million. Deaths rose by 1,054 to cross 80,000.

The ADB estimates that developing Asia will shrink for the first time since the early 1960s. “The economic threat posed by the Covid-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures,” Yasuyuki Sawada, ADB’s chief economist, said in a live-streamed briefing.

Myanmar’s Growing Hotspot (1:22 p.m. HK)

Myanmar authorities are rushing to manage a growing number of infections in the country’s largest city, Yangon. Three government rapid-response teams arrived early Tuesday to support the treatment of patients in the city, where only one of 44 townships remains virus free.

The Thuwanna National Football Academy in Yangon has been turned into a 400-bed hospital tent, and some high schools have been temporarily transformed into quarantine centers. Myanmar reported 104 new cases Tuesday, taking the total to 3,299. The death toll was unchanged at 32.

Hong Kong Airlines Slashes Pilot Pay (11:25 a.m. HK)

Hong Kong Airlines will cut income and allowances for pilots by 60% from October to March, and extend an unpaid leave program.

Pilots will be rostered for one month of duty, followed by two months of unpaid leave, a spokesman for the airline said.

U.K. Eviction-Ban Extension: FT (11:10 a.m. HK)

The U.K. is preparing to extend a ban preventing commercial tenants from being evicted by landlords until the end of the year, the Financial Times reported, citing two unidentified people briefed on the situation.

Government officials are examining how to prolong the ban from its current deadline of Sept. 30, and an announcement could come as early as this week, the newspaper said.

Broad China Vaccine Flagged for November (8:50 a.m. HK)

A Covid-19 vaccine may be available for “ordinary Chinese” as soon as November or early December following a Phase III trial that “went very smoothly,” the Global Times said in a tweet, citing the Chinese CDC’s chief biosafety expert.

George Washington Enrollment Sinks (8:48 a.m. HK)

George Washington University’s enrollment is down about 17% from last year, an early indication of the impact of Covid-19 on U.S. higher education.

President Thomas LeBlanc told a faculty senate meeting that preliminary undergraduate enrollment is about 1,000 students below its target of 10,126, a spokeswoman said Monday.

Hong Kong Concludes Mass Test (8:40 a.m. HK)

Hong Kong concluded a Beijing-backed campaign to offer everyone in the city a free virus test. Health experts see the drive as an additional weapon against the disease and preparation for any flareups.

Close to 1.8 million residents — about a quarter of the city’s population — completed tests over the past two weeks, through which at least 32 new infections were identified, according to government data.

Participation trailed the 3 million turnout hoped for by the lab running the project.

Qantas Considers HQ Move (8:06 a.m. HK)

The Australian airline said it’s considering moving its headquarters from Sydney as part of an office and property review to cut costs.

“Like most airlines, the ongoing impact of Covid means we’ll be a much smaller company for a while,” Chief Financial Officer Vanessa Hudson said.

Singapore Bank UOB Freeze’s Pay and Hiring (7:52 a.m. HK)

United Overseas Bank Ltd. imposed a freeze on hiring, pay and promotions as the Singapore lender prepares for a further decline in earnings after the pandemic.

The city state’s third-largest bank told staff that it expects the situation to worsen before improving when the government cuts some of its support, according to an internal memo sent to senior staff. The hiring freeze will last until December 2021, and any exceptions will need senior approval.

Citigroup Resumes Job Cuts (7:20 a.m. HK)

Citigroup Inc. will resume job cuts this week, joining rivals such as Wells Fargo & Co. in ending an earlier pledge to pause staff reductions during the coronavirus pandemic.

The cuts will affect less than 1% of the bank’s global workforce, the bank said in a statement. With recent hiring, overall headcount probably won’t show any drops, the bank said.

Astra Trial on Hold Pending U.S. Scrutiny: Reuters (4:30 p.m. NY)

AstraZeneca Plc’s Covid-19 vaccine trial remains on hold in the U.S. as regulators examine a serious side effect suffered by a U.K. patient, Reuters reported.

The drugmaker and its partner, the University of Oxford, restarted the U.K. trial of the vaccine on Saturday after it was halted on Sept. 6. The U.K. Medicines Health Regulatory Authority recommended the study resume after an independent review of the safety data had triggered the pause.

However, enrollment of new study participants and other trial procedures remain stopped in the U.S. pending an investigation by the Food and Drug Administration and an independent safety panel, Reuters reported, citing unnamed sources.

Inhaled Versions of U.K. Vaccines to Be Studied (10 a.m. NY)

Researchers are beginning the first study of whether two of the U.K.’s experimental Covid-19 vaccines can be inhaled, a possible way of raising their ability to prevent the airborne infection.

The study will compare vaccine candidates from Imperial College London and the University of Oxford delivered by inhalation through the mouth, according to a statement Monday. The hope is that targeting cells in the lining of the lungs will induce a more effective immune response.

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Many small companies can borrow without Main Street

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WASHINGTON — Federal Reserve Chair Jerome Powell says that many mid-size U.S. businesses are now able to borrow from banks, suggesting that the need for a Fed lending program that was designed to serve struggling medium-size companies has waned.

In remarks prepared for delivery Tuesday to the House Financial Services Committee, Powell said there are 230 loans, accounting for a total of about $2 billion, that have been provided or are in the pipeline under the Fed’s Main Street Lending Program. Powell’s testimony was released Monday by the Fed.

Still, that sum is far short of the $600 billion that the Fed had initially set aside for the Main Street program. The Treasury Department and the Fed allocated $75 billion from congressionally approved taxpayer funds to support the Main Street program; any losses up to that amount would be covered by Treasury.

“Main Street loans may not be the right solution for some businesses, in part because…these loans cannot be forgiven,” Powell said. “The evidence suggests that most creditworthy small and medium-sized businesses can currently get loans from private-sector financial institutions.”

The Fed chair has said that Main Street was intended to help companies that were too large for the Paycheck Protection Program, which provided forgivable loans to small companies, and too small for the Fed’s corporate bond purchases, which are intended for businesses large enough to issue their own bonds.

The central bank has faced criticism for not making the Main Street program easier to use for banks, which evaluate and issue the loans. The Fed buys 95% of the loan from the banks, reducing their credit risk.

On Tuesday, Powell will testify to the House committee along with Treasury Secretary Steven Mnuchin in a hearing focused on the implementation by the Fed and Treasury of emergency programs that Congress established in its $2 trillion relief package approved in March.

Christopher Rugaber, The Associated Press

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Stocks sink as September gloom continues

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Stocks sank Monday, following global equities lower and setting the three major indices up to extend last week’s sharp declines. The extended drop came as concerns over stagnating coronavirus case improvement stoked fears of more lockdowns, and as political uncertainty nudged investors away from risk assets.

The Dow fell more than 700 points, or 2.7%, just after noon on Monday, adding to a cumulative more than 350-point slide in the index from Thursday to Friday last week. The S&P 500 dropped more than 2% after ending last week at its lowest level in six weeks last week. As of Friday’s closing level, the S&P 500 was down more than 7% from its recent record high from Sept. 2, and was on track to log a four-session losing streak, or its longest since February.

“So far, the market has over-shot our expectations for a 4% to 6% haircut from recent highs on near-term extended valuations, as well as economic and Covid-19 risks. That said, the declines through last Friday are not all that surprising,” John Stoltzfus, chief investment strategist for Oppenheimer Asset Management, said in a note Monday. “It is that September — traditionally but not always — can be tough month for stocks. The S&P 500 had delivered a massive rally rising 60% from the lows on March 23 through September 2. Markets tend to overshoot to the upside as well as to the downside.”

Other analysts pointed to developments – and in some cases, a lack of progress – in Washington, D.C. as contributors to the pullback.

“The root causes of the recent drawdown in US large caps are [first], recent weakness in real-time economic indicators, [second] the lack of movement on a fiscal stimulus package that could offset #1 and [third] the Fed’s lackluster forecasts in its Wednesday release of the Summary of Economic Projections,” Nicholas Colas, Co-founder of DataTrek Research, wrote in a note Monday morning.

Shares of major bank stocks including JPMorgan Chase (JPM), HSBC (HSBC) and Deutsche Bank (DB) slid following a report that they and other financial institutions for decades facilitated fund transactions used for allegedly criminal activities, and failed to report suspicious activity.

Meanwhile, heavily weighted big tech stocks extended the past several weeks’ worth of declines, with Apple (AAPL), Facebook (FB), Amazon (AMZN) and Microsoft (MSFT) shares each lower in intraday trading. Oracle (ORCL) was the exception among tech names, after the company announced Friday that it was chosen to become TikTok’s “secure cloud technology provider,” and in doing so take a 12.5% stake in the social media service. Shares rose more than 1%.

So-called “reopening stocks” also renewed their declines, as fears over coronavirus cases both in the US and abroad led to jitters over a second wave of the pandemic and more business re-closures. Covid-related deaths in the US neared 200,000, and new cases have risen significantly in Arkansas, Colorado, Idaho, Montana, Nebraska and North Dakota over the past week. Former FDA Commissioner Scott Gottlieb told CBS’s “Face the Nation” on Sunday that he thinks “we have at least one more cycle with this virus heading into the fall and winter.” In Europe, countries including France and Germany have been grappling with marches higher in daily cases, and the World Health Organization warned last week of a “very serious situation unfolding” in Europe over the virus.

Cruise stock Royal Caribbean Group (RCL) fell more than 7% in intraday trading, and airlines including United Airlines (UAL), Southwest (LUV) and Delta (DAL) were each down at least 6%.

12:04 p.m. ET: US household net worth rose by a record $7.6 trillion in Q2 after stimulus boost

The Federal Reserve said Monday that US household net worth surged by a record $7.6 trillion in the second quarter this year, following an influx of coronavirus-related government stimulus payments and run-up in the stock market. The increase brought household wealth to $118.9 trillion by the end of quarter ended in June.

10:26 a.m. ET: Stocks extend declines, Dow drops 700+ points

The three major indices extended declines Monday morning, adding to the last three weeks’ worth of drops. The Dow sank further, dropping more than 750 points, or 2.7%, to well below 27,000.

The S&P 500 also slid more than 2%, with the energy, materials and industrials sectors leading the declines.

Overseas equities also slumped. Germany’s DAX (^GDAXI) index slid 4.5% for its biggest drop since March.

9:33 a.m. ET: Stocks open sharply lower, Dow sheds 400+ points

Here were the main moves in markets as of 9:33 a.m. ET:

  • S&P 500 (^GSPC): -51.81 points (-1.56%) to 3,267.66

  • Dow (^DJI): -502.67 points (-1.82%) to 27,154.75

  • Nasdaq (^IXIC): -153.07 points (-1.37%) to 10,638.94

  • Crude (CL=F): -$0.97 (-2.36%) to $40.14 a barrel

  • Gold (GC=F): -$42.70 (-2.18%) to $1,919.40 per ounce

  • 10-year Treasury (^TNX): -3.3 bps to yield 0.661%

7:45 a.m. ET: Nikola shares plummet after founder Trevor Milton resigns as executive chairman

Shares of newly public electric truck-maker Nikola (NKLA) slumped in early trading after its executive chairman and founder Trevor Milton unexpectedly announced his resignation, after a short-seller released a scathing report alleging Milton had for years deceived investors about the company.

“I asked the Board of Directors to let me step aside from my roles as Executive Chairman and a member of Nikola Board of Directors. The focus should be on the Company and its world-changing mission, not me. I intend to defend myself against false allegations leveled against me by outside detractors,” Milton wrote in a statement posted on his Twitter account at 2:21 a.m. ET Monday morning. 

Nikola’s stock, which had risen to as high as $50.05 per share after announcing a partnership with General Motors (GM) earlier this month, saw shares slide to below $24 per share in early trading. GM shares were off 3.8% in pre-market trading.

7:36 a.m. ET Monday: Stock futures sell off in early trading

Here were the main moves in equity markets, as of 7:36 a.m. ET Monday:

  • S&P 500 futures (ES=F): 3,257.25, down 59 points or 1.78%

  • Dow futures (YM=F): 27,041.00, down 561 points or 2.03%

  • Nasdaq futures (NQ=F): 10,729.00, down 198 points, or 1.81%

  • Crude (CL=F): $40.32 per barrel, -$0.79 (-1.92%)

  • Gold (GC=F): $1,936.90, -$25.20 (-1.28%)

  • 10-year Treasury (^TNX): yielding 0.663%, or down 3.1 bps

NEW YORK, NEW YORK – MARCH 20: Traders work on the floor of the New York Stock Exchange (NYSE) on March 20, 2020 in New York City. Trading on the floor will temporarily become fully electronic starting on Monday to protect employees from spreading the coronavirus. The Dow fell over 500 points on Friday as investors continue to show concerns over COVID-19. (Photo by Spencer Platt/Getty Images)

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S. African Stocks at Three-Month Low as Risk Sentiment Sours

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(Bloomberg) — South Africa’s main stock benchmark drops as much as 2.9% to the lowest June 17 as rising virus cases hammer risk sentiment, dragging global markets lower.

“Investors are becoming increasingly worried about the momentum in the economic recovery given the resurgent numbers of global Covid-19 cases and lack of progress on a new U.S. stimulus package,” Hussein Sayed, chief market strategist at FXTM, said in an emailed note.

Monday’s weakness extends the FTSE/JSE Africa All Shares Index’s slide to a fifth consecutive day, the longest losing streak since May 2019. Some 121 of the 142 index members were trading lower at 1 p.m. local time.

Market behemoth Naspers Ltd. drops for a fourth session, down 1.9%, as partly owned Tencent Holdings Ltd. declines in Hong Kong. Naspers holds a 31% stake in Tencent.Gauge for mining stocks drops 1.6%.BHP -2.3%, Anglo American -3.1%, Sibanye Stillwater Ltd. -4.3%, Impala Platinum Holdings Ltd. -4.9%, Anglo American Platinum Ltd. -4.7%, Northam Platinum Ltd. -3%, Glencore Plc -4%.Sub-index for gold miners extends losing streak to a fourth day, down 2.9% to the lowest since July 7, as bullion prices retreat ahead of comments from Federal Reserve Chair Jerome Powell and insight from the mining industry at a conference this week.NOTE: PRECIOUS: Gold Declines as Powell’s Testimony and Forum in FocusGold Fields Ltd. -4%, AngloGold Ashanti Ltd. -1.7%, Harmony Gold Mining Co. Ltd. -2.8%, Pan African Resources Plc -3.9%, DRDGold Ltd. -3.2%.Index for bank stocks drops for a third day, down 3%, as the rand erases earlier gains and drops 1.8%.Standard Bank Group Ltd. -3.6%, FirstRand Ltd. -2.1%, Absa Group Ltd. -3.8%, Capitec Bank Holdings Ltd. -2.7%, Nedbank Group Ltd. -4.7%, Investec Plc -3.6%.Weak currency drags index for food and drug sellers down 3.4%, while general retailers fall 3.5%.Bid Corp Ltd. -4.8%, Shoprite Holdings Ltd. -2.2%, Clicks Group Ltd. -2.6%, Spar Group Ltd. -3.4%, Pick n Pay Stores Ltd. -2.9%, Dis-Chem Pharmacies Ltd. -3.3%.Woolworths Holdings Ltd. -6.3%, Mr Price Group Ltd. -3.4%, Truworths International Ltd. -6.5%, Foschini Group Ltd. -1.8%, Pepkor Holdings Ltd. -2.7%, Massmart Holdings Ltd. -4.1%.Foreigners were net sellers of South African stocks, disposing 815 million rand worth of shares Friday, according to index operator, JSE Ltd.

(Updates report with latest share prices)

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