Investors resumed their spending spree on Shopify stock on Thursday as the Canadian ecommerce group's sales doubled in the latest quarter.
Expectations were running high for Shopify as its share price has nearly tripled since mid-March, thanks to the pandemic-driven surge in online retail.
Shopify exceeded Wall Street’s forecasts again on Thursday, reporting revenues of $767.4m in its third quarter, up 96 per cent on the same period a year ago, compared with analysts' estimates of around $660m.
Net income was $191.1m, compared with a loss of $72.8m a year ago, with earnings per share of $1.59.
Shares in Shopify rose by around 5 per cent in pre-market trading to $1,070 and recouped Wednesday’s drop during the wider market sell-off, despite a guarded outlook from the Ottawa-based company.
Shopify said that unemployment, fiscal stimulus and rising Covid-19 infections made demand for its services from merchants “particularly fluid at present”, even as more retailers look to the internet to boost flagging high-street sales.
The report follows strong results from ecommerce groups eBay and Etsy on Wednesday. Amazon is set to report after the bell on Thursday.
Anna Nicolaou in New York
Spotify added 6m paying subscribers in the September quarter as listening recovered from the lockdowns during the pandemic, when fewer people were driving and commuting.
“All regions have fully recovered,” to normal usage, Spotify said in a letter to investors, including in-car listening hours which is now above the pre-Covid peak. Spotify noted albums such as Taylor Swift's Folklore and Dynamite by K-pop group BTS as key music releases in the quarter.
The company had reached 144m premium subscribers by the end of September, on the high end of its forecast and Wall Street estimates.
The music streaming leader had previously flagged some “notable” declines in daily use in Italy and Spain during late February, as well as a hit to advertising revenues amid an industry-wide slump in marketing spending during the spring months.
Spotify said advertising had also recovered during the third quarter. However total revenues climbed only 14 per cent year-over-year to €1.975bn, which Spotify partly blamed on the depreciation of the US dollar versus the euro. Wall Street analysts had been looking for €2bn.
Spotify shares have soared more than 80 per cent this year, as investors flocked to companies that were less disrupted by the pandemic. Shares were also boosted by Spotify’s push into podcasts, as Wall Street has cheered the company’s podcast deals with the likes of Joe Rogan and Michelle Obama. Spotify said it added some 400,000 podcasts to its app during the quarter, reaching 1.9m podcasts total.
The average price Spotify subscribers pay, a key metric watched by investors, fell to €4.19 in the quarter, down 10 per cent from a year ago. The company has long resisted price hikes, but did raise the cost of its “family plan” tier in countries such as Australia, Belgium and Switzerland in October.
Shares in Spotify were down 4 per cent in pre-market trade.
Anna Nicolaou in New York
Americans’ ravenous demand for internet during the stay-at-home era powered Comcast through the summer, softening the blow from coronavirus to the company’s media businesses.
Comcast, the $200bn conglomerate that controls NBCUniversal and Sky, added 633,000 high-speed internet customers in the three months ending in September, a company record, as many Americans continued working from home.
But the cable giant’s media units, pummeled by the pandemic, weighed on overall results. Adjusted net income fell 18 per cent from a year ago to $3bn, or 65 cents a share. Revenues slipped 5 per cent year-over-year to $25.5bn. The results eclipsed Wall Street forecasts for adjusted earnings of 51 cents a share on $24.7bn in revenue.
NBCUniversal has suffered during the pandemic as advertisers pulled back spending, sports events were cancelled, and theme parks and movie theatres were shut down.
NBCU’s revenues for the quarter fell to $6.7bn, down 19 per cent from a year ago, as its sales from theme parks and movies dried up. One bright spot has been Peacock, NBCU’s entrant to the streaming wars. The company said 22m people have signed up for the service, which ranges in price from free to $10 a month.
Last month it was revealed that Trian, the hedge fund run by activist investor Nelson Peltz, has purchased 20m shares in Comcast in a bet that the company is undervalued. Analysts and shareholders have questioned whether Comcast should split off its underperforming media divisions from its cable business, which makes up the bulk of profits.
Shares in Comcast rose more than 2 per cent in pre-market trade.
James Shotter in Warsaw
German president Frank-Walter Steinmeier has offered Poland help in dealing with the coronavirus pandemic, as the spread of infections has accelerated in the central European nation.
Countries should help each other when there is a risk of their medical capabilities being exhausted, Mr Steinmeier said in a letter to his counterpart Andrzej Duda, who is self-isolating after testing positive for coronavirus.
"If there is anything we can do for Poland in the current situation, let me know," he wrote, according to the German news agency, DPA.
Mr Steinmeier's offer comes as Poland struggles to deal with a record surge in Covid-19 cases that has put its underfunded health service under pressure.
Reports have emerged of hospitals turning away patients after reaching the limits of their capacity as the system grapples too with a lack of staff.
Poland's total Covid-19 cases have tripled since October 6, and reported on Thursday yet another record number of daily infections -- 20,156 -- and 301 deaths.
Since the beginning of the pandemic, the 38m-strong nation has reported 319,205 cases and 5,149 deaths.
Valentina Romei in London
Eurozone confidence in the dominant services sector weakened in October for the first time since the spring, bringing the recovery in business sentiment to a halt as pandemic restrictions tighten again to squeeze demand and limit economic activity.
The European Commission eurozone business sentiment index for the services sector weakened to minus 11.8 in October, from minus 11.2 in the previous month and marking the first deterioration since the end of the lockdown.
Business in the services sector, which accounts for more than two-thirds of economic output, became more pessimistic about future demand.
In contrast, sentiment in the industrial sector continued to improve with the index rising to minus 9.6 from minus 11.4 in the previous month, as the sector was supported by improved global trade, particularly growing imports from Asia.
The indices indicate the difference between the proportion of businesses reporting better than normal activity and those that say activity is worse.
Sentiment fell among consumers, pointing to a weakening demand that is likely to worry policymakers.
Overall, the eurozone consumer sentiment was stable at 90.9 in October, unchanged from the previous month and well below the long-time average of 100, which mark a stop to the steady improvements seen since April.
Christine Lagarde is expected to signal that more stimulus is likely in December at the European Central Bank’s latest monetary policy decision on Thursday.
Martin Arnold in Frankfurt
Unemployment in Germany continued to fall in October, but economists warned that the latest “lockdown light” measures to contain the recent spread of coronavirus would send the job market into reverse.
The number of unemployed in Germany fell 87,000 to 2.76m, reducing the jobless rate from 6.2 per cent in September to 6 per cent in October, the Federal employment agency said on Thursday.
There were 96,000 new applications for workers to join the country’s Kurzarbeit short-time work scheme in October, a slight increase from September. That meant there were 2.6m people relying on the furlough programme to cover lost wages, from a peak of 6m in April.
After German chancellor Angela Merkel outlined plans on Wednesday to close restaurants, bars and much of the leisure industry for November to contain the resurgence of the virus, economists predicted jobless numbers would start rising again.
“Even if the German government announced to pay companies hit by the second lockdown a grant of 75 per cent of their November 2019 turnover - around €10bn in total - renewed uncertainty, lockdown-fatigue, job losses and bankruptcy fears will dent confidence, spending and investment,” said Carsten Brzeski, economist at ING.
Deutsche Bank cut its economic forecast for the fourth quarter to a contraction of 0.5 per cent, but said it expected the third quarter to produce 6 per cent growth when those figures are released on Friday. It predicted the German economy would shrink 5.6 per cent this year.
Germany had one of the lowest unemployment rates in Europe before the pandemic sent the global economy into a deep recession. The Kurzarbeit scheme shielded the job market from the worst of the crisis. Still, Germany has more than 550,000 extra unemployed than last year.
Economists said that with German schools and factories staying open - unlike when the pandemic first hit in March - the economic impact of the new partial lockdowns was likely to be less severe.
“We expect the measures to significantly reduce economic activity, but the hit to GDP to be an order of magnitude smaller than in spring,” said Oliver Rakau, economist at Oxford Economics.
Valentina Romei in London
UK mortgage approval soared in September to the highest level since 2007 supported by the government’s stamp duty holiday and pent-up demand.
Mortgage approvals for house purchases increased to 91,500 in September, the highest since the same month in 2007, data from the Bank of England showed on Thursday.
The figure is well above the 76,000 forecast by economists polled by Reuters and points to a strong housing market despite weakening economic activity.
Mortgage approvals in September were 24 per cent higher than in February, before the pandemic. They were also 10 times higher than the trough of 9,300 approvals in May.
The strength of the housing market, despite a record fall in economic output in the second quarter, was the result of government support, including a stamp duty holiday which began in July and runs to the end of March 2021.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Given that the government currently has no plans to extend the stamp duty deadline...it is focusing buyers’ minds on getting deals done over the next four to five months”.
It also follows pent-up demand resulting from the lockdown, when the housing market was on freeze.
Analysts suggest that the buoyant housing market is supporting the construction sector and housing-related retail sales.
Amy Kazmin in New Delhi
India’s largest carmaker, Maruti Suzuki, sold 16 per cent more cars in the July-to-September quarter compared with last year, after prime minister Narendra Modi’s government eased its strict coronavirus lockdown.
Maruti, a big contributor to the profits of Japan’s carmaker Suzuki, reported net sales revenues of $2.4bn in the period, up 9.7 per cent over last year.
India’s slowing economy led the car market to slump in 2019, while sales were brought to a standstill from April to June this year, as a result of the coronavirus lockdown. However, demand for personal vehicles has begun to pick up, as more Indians seek to secure private transportation to avoid crowded public buses and metros.
Maruti’s domestic sales in Indian market were up 18 per cent in July to September over the quarter last year, while exports were down 12 per cent, the company reported.
However, the carmaker’s net profit of $184m for the quarter was up just 1 per cent over last year, despite a sharp 71 per cent surge in operating profit on account of higher sales, lower spending on sales promotion and cost-reduction efforts.
The recent sales pick-up was insufficient to outweigh the devastating impact of the first quarter. For the first half of India’s financial year from April to September, Maruti’s overall sales revenues were down 38.7 per cent from last year, while net profits were nearly 60 per cent lower.
Harry Dempsey in London
Companies in the telecoms industry experienced mixed fortunes in their earnings reports, with the solid recovery reported by BT and Orange contrasting with the grim outlook from Nokia. Resuming dividends lifted shares in oil company Shell but left investors in Credit Suisse questioning the timing after a poor set of results.
Raising the floor of its earnings outlook by £100m and hiking next year’s profit guidance sent shares in BT about 8 per cent higher in early London trading. The British telecoms company said the further improvement next year would underpin the reinstatement of its dividend.
Shares in Royal Dutch Shell jumped 5 per cent, after raising its dividend, six months after slashing it for the first time since the second world war. The oil major reported adjusted earnings of $955m in the third quarter, up from $638m in the previous quarter and far ahead of analysts’ expectations.
Orange added 4.4 per cent to its share price, after France’s biggest telecoms group reported a return to revenue growth despite a pandemic-induced drop in roaming and equipment sales. The group confirmed its outlook, as deals to co-finance French fibre networks with other operators helped soften the decline in earnings.
Stronger than expected results for the world’s largest brewer AB InBev helped its shares gain 2.6 per cent. The Belgian group scrapped its interim dividend but investors cheered revenue growth of 4 per cent for the third quarter against expectations of a 4.2 per cent fall as drinkers returned to bars.
Shares in Finland’s Nokia dived 14.2 per cent after warning that it would continue to struggle next year. Pekka Lundmark, who took over as chief executive of the telecoms equipment maker in August, ditched his predecessor’s strategy of providing “end-to-end” solutions of complete networks from mobile masts to software, instead placing its focus on four business areas.
Credit Suisse reported a slump in third-quarter performance across its business and uncertainty over the coronavirus pandemic, as the Swiss bank moved to resume its dividend and launch a buyback programme, triggering a 5.6 per cent decline in its shares.
Standard Chartered shares slipped 3.7 per cent despite forecast-beating results as it would only go so far as to consider the reinstatement of its dividend.
Adam Samson in London and Hudson Lockett in Hong Kong
European markets started Thursday on a firmer footing after concerns about the second wave of the pandemic sent global markets tumbling by the most since June in the previous session.
The continent’s main stock indices drifted higher in early dealings, leaving the benchmark Stoxx Europe 600 index up 0.5 per cent. London’s FTSE 100 rose 0.4 per cent.
Thursday’s calmer trading came after MSCI’s broad index of global developed and emerging market stocks dropped 2.9 per cent in the previous session. Wall Street’s S&P 500 dropped 3.5 per cent and in Europe Germany’s Dax fell 4 per cent.
Investors were bracing themselves for a big day on the economic front.
The European Central Bank is set to issue its latest monetary policy statement at 12.45pm London time. Economists broadly expect the central bank to refrain from changes to monetary policy after it this year launched a €1.35tn emergency bond-buying programme to help offset the massive blow dealt to the eurozone economy by coronavirus.
Investors will get their first look on Thursday at how the US economy performed during the third quarter. Economists expect the world’s biggest economy expanded around 7.2 per cent on a quarter on quarter basis, after shrinking 9 per cent in the second quarter.
Futures markets pointed to a rebound for US stocks when Wall Street opens. The S&P 500 was tipped to rise 1 per cent.
Shares in the Asia-Pacific region fell after the Wall Street slide. Japan’s benchmark Topix index fell 0.5 per cent, South Korea’s Kospi shed 1.4 per cent and Australia’s S&P/ASX 200 fell 1.3 per cent. In China, the CSI 300 index of Shanghai- and Shenzhen-listed shares fell 0.4 per cent, while Hong Kong’s Hang Seng index dropped 1.8 per cent.
Telefónica has written down nearly €800m in the value of its Argentinian operation, which pushed it to a loss in the third quarter.
The Spanish company booked a €160m net loss for the three-month period as a result of the write-off.
It reported “recovery” across its four core markets - Spain, Germany, UK and Brazil - as revenue declines were contained, but it continued to struggle as a group as currency movements in Latin America dragged down its performance.
Telefónica, one of the worst-performing telecoms stocks in the world in the past six months, has moved to split up and sell off its large Latin American presence to focus on its core markets in Europe and Brazil.
Its shares have fallen 51 per cent this year.
It has agreed to merge its UK mobile company O2 in the UK with Liberty Global’s Virgin Media to create a stronger competitor to BT.
Revenue for the third quarter fell 12 per cent to €10.4bn although the decline was a more modest 4.3 per cent on an organic basis, an improvement on the previous quarter. Free cashflow grew 13 per cent to €1.6bn.
The company said it expected to report organic revenue growth in 2022.
BT has narrowed its profit guidance for the year despite reporting a 7 per cent drop in revenues in the second quarter and said a further improvement next year would underpin the restatement of its dividend.
The British telecoms company raised the floor of its earnings outlook by £100m and now expects earnings before interest, tax, depreciation and amortisation before items such as restructuring costs to be between £7.3bn and £7.5bn for the year to March 2021. That is down from £7.9bn in the previous year and BT said it expected to match that level in the financial year to March 2022.
Jerry Dellis, an analyst with Jefferies, said the profit guidance for the next financial year of at least £7.9bn was higher than the £7.6bn consensus expectation.
BT suspended its dividend for the year in May to free up cash to invest in upgrading full fibre networks. The move, the first time it has not paid a dividend in 36 years, knocked 10 per cent off the company’s shares, which have traded at about a 10-year low since.
BT said revenues in the three months to September fell 7 per cent to £5.4bn due to reduced sport and enterprise sales during the Covid-19 lockdown. Adjusted ebitda dipped 3 per cent to £1.9bn slightly above expectations. First-half figures showed revenue down 8 per cent to £10.6bn and profit before tax down 20 per cent to £1.1bn.
Philip Jansen, chief executive of BT, said that its network investment, combined with its restructuring plan coming to fruition, had increased its confidence in its outlook.
“We continue to invest to make BT more competitive," Mr Jansen said. "We are firmly on track with the delivery of our modernisation programme and have delivered £352m in cost savings in the first half of the year."
Lloyds Banking Group has become the latest in a wave of lenders to strike an optimistic tone after returning to profit and comfortably beating analysts' forecasts in its third-quarter results.
Chief executive António Horta-Osório said “we are now seeing an encouraging business recovery”, as the bank benefited from a buoyant property market and reported a sharp drop in provisions for bad loans.
Lloyds, the UK’s largest retail bank by market share, set aside just £301m for expected defaults in the three months to September, less than half analyst expectations and more than 85 per cent less than the £2.4bn charge in the second quarter.
As a result, it said full-year provisions would be at the lower end of its previous guidance of between £4.5bn and £5.5bn.
Pre-tax profit of £1bn compared with a £676m loss in the three months to June and a £50m profit in the same period last year, when it was impacted by the payment protection insurance scandal.
The results follow similarly positive reports over the past week from peers including Santander, HSBC, Barclays, Deutsche Bank and Standard Chartered. Executives suggested the worst of the coronavirus crisis was over in terms of loan losses, despite rising fears about a second wave of the virus.
Anjli Raval in London
Royal Dutch Shell raised its dividend on Thursday as the oil and gas company sought to win back shareholders through new payouts and as it navigated energy market turmoil triggered by the pandemic.
The Anglo-Dutch company made the first cut to its payout since the second world war in April. Since, Shell’s share price has fallen to 25-year lows amid broader oil market malaise.
The company said its cash flows and performance gave it confidence to resume dividend growth and provide clarity on its future cash allocation, something that shareholders had criticised earlier this year.
Shell said it would increase its dividend by 4 per cent to 16.65 cents a share in the third quarter and annually from now on subject to approval by the board.
“Our sector-leading cash flows will enable us to grow our businesses of the future while increasing shareholder distributions, making us a compelling investment case,” said Ben van Beurden, chief executive.
Shell is pursuing a net-zero carbon dioxide emissions goal as pressure to tackle climate change mounts, but has been scrambling to produce an updated corporate strategy before February that satisfies shareholders.
The company, like the entire sector, is seeking to create a plan for the transition to a low carbon economy while in a brutal oil price environment as government measures to curb the spread of the virus hit crude demand.
Net income adjusted for cost of supply — Shell’s preferred profit measure — dropped to $955m in the three months to September 30. This compared with $4.8bn in the same period a year ago but far surpassed analysts’ estimates of $146m.
Alex Barker in London
WPP, the world’s biggest advertising agency group by revenues, struck a cautious note about the pace of global recovery on Thursday in spite of reporting an improving trend in revenues battered by the pandemic.
The London-based group beat expectations with a 7.6 per cent decline in like-for-like revenues in the third quarter to £2.4bn, with business in all regions experiencing a pick-up in activity compared with the lows of the second quarter.
But Mark Read, chief executive, was guarded about the prospects for the remainder of 2020, noting the fresh curbs on social contact imposed in France, Germany and other European countries.
“Given the tightening of Covid restrictions around the world and uncertainty in the global economic outlook, we remain cautious about the pace of recovery,” he said.
On the assumption there would be “no widespread lockdowns in any of our major markets”, WPP said it expected full-year revenues to fall within a range of 8.5 per cent to 10.7 per cent for the full year.
WPP noted it had at least matched the decline in revenues in the third quarter through cost savings. “It is important that we maintain our strong financial position and we are on track to achieve cost savings towards the upper end of our £700m-800m target,” Mr Read said.
Sam Jones in Zurich
Credit Suisse said it would renew dividend payments and begin a buyback programme in the coming months, despite a slump in third quarter performance across its business and ongoing uncertainty over the coronavirus pandemic.
The Swiss lender reported that net income in the third quarter dropped 38 per cent to SFr546m ($600m), hit by what the bank said were a range of exceptional charges.
Credit Suisse booked just SFr96m in loan loss provisions — largely relating to the effects of Covid-19 on the economy — over the third quarter, down from SFr296m in the second quarter.
The bank set aside SFr152m to cover major litigation expenses and a further SFr107m to cover restructuring expenses in the three months to the end of September.
Chief executive Thomas Gottstein said that excluding exceptional items, underlying performance across the bank’s key divisions had been healthy.
“We have once again proven the strength of our diversified business,” Mr Gottstein said, adding that the bank expected to disperse the second tranche of its 2019 dividend — withheld at the request of Swiss regulators — next month.
Judith Evans in London
The world’s largest brewer Anheuser-Busch InBev is to scrap its interim dividend because of the impact of the coronavirus pandemic, despite third-quarter results showing stronger growth than expected.
The brewer of Budweiser, Stella Artois and Corona said the decision not to make the payout “prioritises our deleveraging commitments” as it seeks to reduce debt that amounted to $87.4bn in June, the group said on Thursday.
The Belgium-based group's revenue rose 4 per cent in the third quarter, calculated on an organic basis, although analysts had expected a drop of 4.2 per cent.
Normalised profit for the quarter was $1.6bn, down 34.5 per cent from a year earlier.
The group performed strongly in the key market of Brazil, where beer volumes rose by a quarter.
The pandemic has hurt brewers after restaurants and bars in many countries were forced to close for parts of this year.
AB InBev said: “While we expect our performance in the second half of this year to be better than the first, the environment remains volatile and uncertain, especially as some governments are renewing restrictions in several markets.”
The group had already halved its final dividend for last year to €0.50 a share, while last year’s interim payout came in at €0.80 a share.
Joe Miller in Frankfurt
Volkswagen, the world’s largest carmaker by volume, managed to eke out a profit in the nine months to the end of September, thanks to a continued market recovery in Europe and China.
After posting a loss of €1.4bn for the first six months of the year, earnings before tax at the nine-month mark stood at €2.3bn, down from €14.6bn at the same point in 2019.
The Wolfsburg-based group said that while it expects annual earnings to be “severely lower” than last year, the improving global market would enable it to post a profit despite the pandemic.
“Depending on the future course of the pandemic, we are cautiously optimistic that we will be able to continue to stabilize our business in the remaining months of the year,” said Frank Witter, VW’s chief financial officer.
The German automaker’s sales in western Europe grew by more than 10 per cent in September, compared to the same month last year, and by almost 1 per cent in its single largest market, China.
Volkswagen’s results come after domestic rival Daimler reported that its net profits had increased by almost a fifth in the third quarter of the year, to almost €2.2bn, thanks to a remarkable rebound in Mercedes-Benz sales in China.
German premium brand BMW, which is due to report full quarterly figures next week, said it had more than €3bn in free cash flow in the period, vastly exceeding market expectations, thanks to “a faster recovery in several markets”.
On Wednesday, American carmaker Ford announced it had almost doubled its third quarter profits, compared with 2019, achieving $3.6bn in earnings before interest and taxes, thanks in part to rising demand.
Amy Kazmin in New Delhi
India’s total number of recorded coronavirus cases crossed the grim milestone of 8m, with nearly 43,000 new infections detected on Wednesday, as Indians head into their busy festival season.
The capital New Delhi is witnessing a surge in new cases, recording an all-time high of 5,673 new infections on Wednesday. The city government has ruled out the re-opening of local schools any time soon.
India is only the second country in the world to record 8m infections, after the United States. But epidemiologists say its true burden of infections is far higher, with the vast majority of cases never confirmed by tests.
India’s daily caseload has fallen sharply since mid-September, when it averaged around 93,000, raising hopes that the worst could be over in the large cities that were hit hardest by the virus. But experts say the sharp decline in reported figures could be down to increased use of the faster but less accurate antigen test.
Antigen tests are prone to give a higher number of false negatives compared to the laboratory-based polymerase chain reaction tests, which are accurate in 95 per cent of cases and are considered the “gold standard” of testing.
Most countries rely primarily on PCR tests, with antigen tests accounting for just 10 per cent globally. In India, however, around 60 per cent of tests are of the rapid antigen variety, which only detect the virus 80 to 90 per cent of the time.
In New Delhi, where authorities are scaling up PCR tests, the rising caseload comes as residents pack into crowded markets to shop for festive season gifts and step up their socialising with friends and family after many months of limited social contact.
Authorities have warned that new cases in the city could rise to around 15,000 a day in coming weeks unless residents take greater precautions to avoid infection.
Alice Woodhouse in Hong Kong
Property market sentiment remained volatile in Hong Kong in the third quarter as Covid-19 unsettled potential buyers, according to a survey.
The city’s residents became more pessimistic about the outlook for prices over the next 12 months, with 43 per cent expecting to see falls, up from 33 per cent in the second quarter, the Citi Residential Property Ownership survey showed.
Those surveyed expect a 5 per cent fall in property prices when comparing the end of 2020 with the start of the year. That would be below the 10 to 12 per cent drop seen during the Sars epidemic in 2003.
However, almost 400,000 people toured new developments during the quarter, up 50 per cent from the same time last year.
The city’s economy has been hit by both the pandemic and fallout from the 2019 social unrest, pushing unemployment to its highest in 16 years.
Sentiment has fluctuated in tandem with the pandemic, said Josephine Lee, head of retail for Citi Hong Kong.
Hong Kong experienced a “third wave” of coronavirus infections from July that forced the government to reimpose social distancing measures, but the city has never entered a full lockdown.
Hong Kong is ranked as the least affordable property market in the world by Demographia.
Clive Cookson in London
A coronavirus variant that originated in Spanish farm workers has spread rapidly through much of Europe since the summer, and now accounts for the majority of new Covid-19 cases in several countries — and more than 80 per cent in the UK.
An international team of scientists that has been tracking the virus through its genetic mutations has described the extraordinary spread of the variant, called 20A.EU1, in a research paper to be published on Thursday.
Their work suggests that people returning from holiday in Spain played a key role in transmitting the virus across Europe, raising questions about whether the second wave that is sweeping the continent could have been reduced by improved screening at airports and other transport hubs.
Read more here
Robin Harding in Tokyo
The Bank of Japan trimmed its growth forecasts for 2020 but expects a stronger economic rebound in 2021 as it kept monetary policy on hold at its October meeting.
Japan’s central bank predicted the economy will contract by 5.5 per cent in the fiscal year to March 2021, compared with its earlier forecast of 4.7 per cent. It now expects a rebound of 3.6 per cent the following year and 1.6 per cent the year after that.
The revised forecasts highlight the sluggish pace of recovery in Asia’s largest advanced economy, even though Covid-19 is largely under control, because of consumer caution and the shock to global demand.
“Overseas economies…have picked up from a state of significant depression. In this situation, exports and industrial production have increased,” said the BoJ in its quarterly outlook report.
“On the other hand, business fixed investment has been on a declining trend, against the background of deterioration in corporate profits.”
More than six months after becoming ill, Paul Garner’s out-of-office email message asked for patience due to recovery from “post-viral symptoms associated with a Covid-19 infection”.
The professor of infectious diseases at the Liverpool School of Tropical Medicine traces the start of his infection to March 19. In the first two months, he was “floored” by the aggressive illness.
Night sweats and “cyclical attacks” of the illness became less severe after about three months. Severe fatigue persisted for three more.
“I could talk for 15 or 20 minutes, but if I went on too long or spent too much time at the computer, my speech got muddled up, and I would not be able to find words," he says.
"This really went on up to month six. I had to be careful about judgments as the fatigue gave brain fog . . . You have to be gentle with yourself. I am used to driving through. If I have problems, then I just increase the effort to overcome them. This strategy does not work if you are ill with Covid.”
Read more here
Hannah Murphy in San Francisco
A group of US federal agencies warned that there has been a rise in cybercriminals targeting hospitals with ransomware, urging healthcare providers to bulk up their cyber protection to prevent disruption and extortion during the coronavirus pandemic.
The Cybersecurity and Infrastructure Security Agency, the Federal Bureau of Investigation and the Department of Health and Human Services said in a joint alert on Wednesday that they had “credible information of an increased and imminent cybercrime threat to US hospitals and healthcare providers”.
Hackers are using malicious software, the groups added, to steal hospitals’ data, disrupt their services, and launch ransomware attacks — whereby they disable a victims’ files or systems and only allow them to unlock the data once a ransom is paid. The attacks were not attributed to any one group of hackers.
“These issues will be particularly challenging for organizations within the COVID-19 pandemic; therefore, administrators will need to balance this risk when determining their cybersecurity investments,” the joint statement said.
In particular, the bad actors are using Ryuk, known to be one of the more devastating strains of ransomware.
The news comes amid a broader surge in ransomware attacks in 2020 as hackers seek to take advantage of the disruption caused by the pandemic. According to multiple US media reports, a wave of attacks has already hit US hospitals in several states in recent days.
John Reed in Bangkok
Laos will fast-track entry to travellers from China starting from Sunday and begin allowing visitors from Vietnam and other countries to enter in coming weeks, according to officials quoted by Radio Free Asia.
The south-east Asian country, whose economy relies heavily on borrowing and investment from China, will relax tight controls on its border and allow Chinese nationals from Covid-free Chinese provinces to begin entering via the crossing at the northern city of Boten, according to a Department of Civil Aviation official cited by RFA.
Chinese visitors will be allowed to enter if they have tested negative for the coronavirus and been quarantined for 14 days in China, according to the report. They will then only need to be quarantined in Laos for 48 hours.
China is Laos' biggest investor and trading partner, lending billions to its poor, communist-ruled southern neighbour for railway, electricity and other infrastructure projects.
Covid-19 has touched the country lightly, with just 24 cases and no deaths officially reported so far. However, the loss of income from tourists and other foreign visitors has caused a worsening liquidity squeeze, reflected in Laos' recent credit rating downgrades by Fitch Ratings and Moody's Investors Service.
Kiran Stacey in Washington and Peter Wells in New York
Donald Trump’s chances of winning next week’s election appeared to narrow on Wednesday, as a series of polls showed the US president losing ground in several critical swing states where coronavirus cases are surging.
With less than a week to go until the presidential election, Mr Trump continued his cross-country tour on Wednesday, visiting Nevada before a planned stop in Arizona. He made campaign stops in Wisconsin and Michigan on Tuesday, both key swing states where he has dropped in the polls as coronavirus cases rise.
In Wisconsin, a poll released on Wednesday by Langer Research for ABC News and The Washington Post showed Joe Biden, Mr Trump’s Democratic challenger, ahead by 17 points, helping to push his average lead as measured by Real Clear Politics to 6.4 points. In Michigan, the same pollster found a 7 point lead, and two other pollsters showed Mr Biden ahead by double digits.
In both states, Mr Biden’s lead has more than doubled since the end of August, when coronavirus cases started to surge in the lead-up to what some public health officials have described as the beginning of a winter wave.
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Alice Woodhouse in Hong Kong
Chinese health authorities reported 23 new coronavirus cases in Xinjiang as a cluster in the heavily surveilled western region of the country grew.
Authorities rolled out testing for almost 5m people in Kashgar prefecture after a woman recorded a positive coronavirus result over the weekend.
More than 180 asymptomatic cases were found, in efforts described as following the “early detection early reporting, early isolation and early treatment” policy deployed after discovering an outbreak.
China does not include asymptomatic cases in its official tally, but the outbreak is among the largest in the country since lockdowns were eased in the spring.
A further 24 Covid-19 cases were found at the border in returning travellers on Wednesday.
China’s infection tally stands at 80,943, with 4,693 deaths.
Song Jung-a in Seoul
Samsung Electronics expects earnings to fall in the fourth quarter on lower chip prices and stiffer competition in the mobile sector after reporting its biggest quarterly operating profit in two years.
The company reported a 49 per cent jump in third-quarter net profit to Won9.4tn ($8.2bn) in the July-September quarter as its smartphone and chip businesses benefited from tougher US sanctions on China’s Huawei.
Operating profit rose 59 per cent to Won12.4tn, with sales up 8 per cent at Won67tn.
But the company’s momentum is likely to weaken in the fourth quarter as chip prices are expected to fall further and after its arch rival Apple launched its much-anticipated 5G iPhone earlier this month.
“Looking ahead, Samsung Electronics expects profit to decline in the fourth quarter amid weakening memory chip demand from server customers and intensifying competition in mobile phones and consumer electronics,” the company said on Thursday.
However, the company is optimistic about next year’s business outlook although it still expressed concerns about uncertainties caused by the pandemic.
“For 2021, the company expects a recovery in overall global demand but uncertainties will remain over the possibility of recurring epidemic waves of Covid-19,” it said.
Operating profit at the semiconductor division surged 82 per cent to Won5.54tn in the third quarter thanks to emergency chip orders from Huawei. The Chinese company is believed to have stockpiled about six months’ worth of inventories prior to a US ban that began to choke off its access to mobile phone components from mid-September.
The mobile phone division posted an operating profit of Won4.45tn, up 52 per cent from a year earlier, as the South Korean group redoubled its efforts to regain its footing in the competitive smartphone market after ceding the top spot to Huawei in the second quarter.
Samsung launched new premium smartphones including a new flagship foldable phone in August.
The company expects its capital expenditure to reach Won35.2tn this year with more than 80 per cent of the spending going to semiconductors and the rest to electronic displays.
Shares of Samsung fell 1 per cent to Won58,400 early Thursday morning in line with a 1.2 per cent fall in the benchmark Kospi Composite Index.
Daniel Thomas in London
The number of companies in significant financial distress has risen at the fastest rate for three years as businesses face increasing difficulties given the end of many government Covid-19 business support schemes.
More than half a million companies were in “significant distress” in the three months to September, based on data from court orders to pay off debts, according to corporate restructuring firm Begbies Traynor. This was an increase of about 6 per cent compared to the previous three months.
The rise comes in spite of a backlog of court actions that have prevented legal orders being issued against companies to pay their debts and the ban on winding up petitions for Covid-related debts, according to Begbies.
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Sarah Neville in London
One of the largest studies into the prevalence of Covid-19 in England has shown a doubling of infections in a sample of volunteers, underlining the challenge the government faces as it seeks to stem the spread of the disease without resorting to a national lockdown.
More than 85,000 people were tested in England between October 16 and 25, as part of the study conducted by Imperial College London with Ipsos Mori and commissioned by the UK department of health.
The survey found that 128 people per 10,000 were infected in England, up from 60 per 10,000 in the previous version of the study, which ran from September 18 to October 5. The virus is doubling every nine days and the R rate — the average number of new cases generated by an infected individual — is estimated to be 1.6, despite the government’s goal to keep it below 1.
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Alice Woodhouse in Hong Kong
Asia-Pacific equities fell to multi-week lows on Thursday, tracking declines for global stocks as European governments reimposed lockdown measures.
Japan’s Topix shed 0.9 per cent to hit a seven-week low, the Kospi in South Korea was down 1.2 per cent and the S&P/ASX 200 dropped 1.7 per cent to its lowest in three weeks.
US and European stocks tumbled on Wednesday amid rising coronavirus cases in both regions, threatening economic recovery. Sentiment was further dented as Germany and France announced new measures to stem surges in infections.
The S&P 500 closed down 3.5 per cent and Europe’s Stoxx 600 ended the day down 3 per cent.
S&P 500 futures were up 0.7 per cent.
Peter Wells in New York
The US reported its third-biggest one-day jump in coronavirus cases, and more than 1,000 deaths, on Wednesday.
Adding to the worrying figures, a record number of states now have higher levels of patients hospitalised with coronavirus compared than four weeks ago.
A further 78,661 people tested positive, according to Covid Tracking Project data, up from 73,096 on Tuesday and compared with 60,712 on Wednesday last week.
That is the third-biggest one-day jump in cases since the start of the pandemic, ranking behind 83,057 last Friday and 82,925 the day after.
The US has tallied 518,670 cases over the past week, a record for a seven-day period, or an average of about 74,100 a day, which is the highest rate of the pandemic.
Nearly all states have experienced a rise in cases over recent weeks. As of Wednesday, 49 states and the District of Columbia had a seven-day average higher than seven days ago, according to FT analysis of Covid Tracking Project data, a proportion previously seen in early April. Louisiana, was the lone holdout.
Illinois reported the biggest single-day jump in cases among states, with 6,110 new infections that marked its second-biggest daily load of the pandemic. Texas (5,627 new and historical cases) and California (4,515) posted the next-largest jumps.
Kansas (3,369 but catching up for two days of data), Iowa (1,781) and South Dakota (1,270) were the three states to report record single-day increases, according to FT analysis of Covid Tracking Project data.
On Wednesday, 22 states had seven-day averages of cases that were at a record level, the highest proportion since mid-July, when Covid-19 was spreading quickly through sunbelt states.
Authorities attributed a further 1,025 deaths to coronavirus, up from 931 on Tuesday and compared with 1,024 last Wednesday. It was the third time so far in October the country has tallied more than 1,000 deaths in a single day.
Texas (105), California (75) and Florida (66) had the biggest one-day rises in fatalities, while Nebraska (17) was the only state to report a record jump.
The number of people currently in US hospitals with coronavirus climbed to 45,045 from 44,212 on Tuesday, the highest level since mid-August.
On Wednesday, 47 states and the District of Columbia, had a higher level of hospitalisations than four weeks ago, the highest proportion of the pandemic, according to FT analysis of Covid Tracking Project data.
Peter Wells in New York
Texas reported its biggest one-day jump in deaths in a week on Wednesday, with hospitalisations climbing again and to their highest level in almost two and a half months.
The state's health department attributed a further 105 fatalities to coronavirus, up from 81 and compared with 114 on Wednesday last week.
A further 5,175 people tested positive over the past 24 hours, down from a two-month high on Tuesday of 7,055 and compared with 4,991 on Wednesday last week.
Texas continues to add older cases stemming from backlogs of tests at commercial laboratories to its statewide total, although these are excluded from the daily figures. There were 452 such historical cases, revealed by authorities this afternoon, from six counties, including 239 from the region around El Paso and 175 from the area around Houston.
Hospitalisations rose to 5,650 from 5,512 yesterday and to the highest level since August 19.
Colby Smith in New York
Fitch Ratings revised down its outlook for Chicago, citing concerns about the economic damage caused by the coronavirus outbreak and the city's ability to narrow its budget shortfall.
On Wednesday, the ratings agency lowered its outlook for Illinois's largest city to "negative" from "stable", but affirmed its BBB- rating, which is one notch above junk territory.
"Economic implications of the pandemic and related public health measures remain significant for Chicago as is the case across many high-density U.S. cities," said Fitch. "The pandemic and related public health measures have significantly affected the city's economy, which had posted relatively modest job growth relative to the U.S. in the years preceding the outbreak."
Fitch raised specific concerns about Chicago's "significant" budget gap, which swelled to $798m during the 2020 fiscal year. While the city has considered raising property taxes and additional personnel reductions, among other measures, the ratings agency flagged "execution risk" in achieving a more balanced budget.
"The effectiveness of recurring budget measures is critical to the rating outlook and the city's prospects for returning to structural balance in the post-pandemic period," Fitch said.
It is not the first time Chicago has faced scrutiny over its financial standing. In 2015, Moody's stripped the city of its investment grade rating due to its pension plan deficit. Illinois more broadly has also struggled. In June, it became the first state to tap the Federal Reserve's municipal lending facility, which was rolled out after strains emerged in the $4tn market used by governments and public organisations to raise funds.
Hannah Kuchler in New York
Gilead generated almost $900m from sales of its Covid-19 drug in the third quarter, helping the biotech company beat expectations despite the pandemic weighing on sales of key products for HIV and Hepatitis C.
Remdesivir — now known by its brand name Veklury — generated $873m in sales, predominately in the US, where it became the first drug to receive full regulatory approval as a treatment for Covid-19 last week.
Gilead has been substantially expanding manufacturing capacity of the drug and is now signing deals with governments of other countries. But it warned that there was “significant volatility and uncertainty” around remdesivir sales in the pandemic environment.
Shares in Gilead rose 0.4 per cent to $58.95 in after hours trading in New York, even though the company reduced full forecasts to the lower end of its previous guidance. Gilead now expects product sales of between $23bn and $23.5bn, compared with a projection in July of between $23bn and $25bn. It predicts adjusted earnings of between $6.25 and $6.60 a share, rather than $6.25 to $7.65.
In the third quarter, Gilead reported revenue of $6.6bn, up 17 per cent year-on-year, and higher than the consensus forecast for $6.4bn. Diluted adjusted earnings per share soared 29 per cent to $2.11, higher than the average analyst estimate for $1.95. Net income was $360m.
Illinois reported its second-biggest one-day jump in coronavirus infections on Wednesday. A further 6,110 people tested positive over 24 hours, up from 4,000 on Tuesday.
French President Emmanuel Macron has announced a one-month nationwide lockdown to try to curb a rapid rise in infections that threatens to overwhelm intensive care units.
The county of Nottinghamshire is set to enter England’s toughest “tier 3” restrictions at midnight on Thursday night as infection rates continued to rise.
California reported a daily rise in coronavirus cases and fatalities above recent averages on Wednesday. A further 4,515 people tested positive over 24 hours, up from 3,188 on Tuesday.
Florida is closing in on the 800,000 confirmed-case mark after reporting more than 4,000 new cases on Wednesday.
New York became the fourth US state to confirm 500,000 infections, with a tick-up in cases over the past month helping accelerate its path toward the half-million threshold.
Mexico’s state oil company Pemex made it back into the black in the third quarter. With production nudging 1.7m barrels per day in September, it was on the road to increased output after 14 years of declines.
Germany's federal and state governments agreed on Wednesday to shut down parts of the economy and toughen restrictions on social contact, in a bid to stem a record rise in infection rates.
Italy reported a daily record increase of 24,991 cases in a rapidly spreading second wave.
Switzerland’s government agreed to limited new restrictions to public life on Wednesday – including mask-wearing outdoors – but ruled out harsher restrictions, including a lockdown.
Oil prices came under pressure after reports showed US inventories last week grew by a greater level than expected, adding to fears over demand. Crude stocks rose by 4.3m barrels in the week to October 23.
Canada's central bank has lowered its predictions for economic growth next year. The Bank of Canada projected real gross domestic product to expand 4.2 per cent, from the 5.1 per cent it modelled in July.
Spending on Mastercard’s payments network returned to growth in the third quarter, signalling a tentative recovery from the worst of the Covid-19 crisis. Spending volume rose 1 per cent from the year before after falling 10 per cent in the second quarter.
GlaxoSmithKline said overall vaccinations have returned to pre-pandemic levels, after warning this summer that a prolonged slump in uptake could hit earnings.
Boeing is planning additional lay-offs and voluntary departures to shrink its workforce nearly 19 per cent by the end of next year.
Brussels has unveiled plans to improve EU-wide coronavirus testing and tracing as part of a package of measures triggered by alarm at the pandemic’s resurgence in Europe.
United Parcel Service’s quarterly profit increased nearly 12 per cent during a surge in home deliveries, as more consumers shopped online during the coronavirus pandemic.