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FRIDAY, JUNE 26, 2020
World stocks skid as
new coronavirus cases
rattle markets
People walk by an electronic stock board of a securities irm in Tokyo. PHOTO: AP
BANGKOK (AP) — World shares
and United States (US) futures
slipped yesterday as investors fo-
cussed on surging new coronavi-
rus cases in the US that are dim-
ming hopes for a relatively quick
economic turnaround from the
pandemic downturn.
Germany’s DAX lost 0.9 per
cent to 11,985.92 while the CAC
40 in Paris tumbled 1.5 per cent
to 4,799.54. London’s FTSE gave
up 1.2 per cent to 6,050.02. The
future for the S&P 500 lost 1.3 per
cent to 3,008.20 while the future
for the Dow industrials was down
1.4 per cent at 25,037.00.
A rise in new infections is stok-
ing worries that reopenings of
businesses closed earlier to ight
the pandemic may have to be
curtailed, despite indications that
economies are recovering from
lockdowns that are being eased in
the US and other countries.
“Financial markets had the
chance to reassess some of the
great expectations that have un-
derlined the asset price rally since
Mid-March,” Jeffrey Halley of Oan-
da said in a report.
Talk of reimposing shutdowns
in the US has gotten investors’ at-
tention, he said. “More concern-
ing for the US, is that this is not
even the dreaded ‘second wave’
of infections, merely an ongoing
evolution of the irst one.”
Tokyo’s Nikkei 225 slipped 1.2
per cent to 22,259.79 and the Ko-
spi in Seoul lost 2.3 per cent to
2,112.37. India’s Sensex lost 0.8 per
cent to 34,591.33.
Markets in Hong Kong, Taiwan
and Shanghai were closed for
holidays. Markets fell in Southeast
Asia, with Bangkok’s SET index
losing 1.5 per cent.
Australia’s S&P/ASX 200 sank
2.5 per cent to 5,817.70 after its big-
gest airline, Qantas, announced it
plans to cut at least 6,000 jobs
and keep 15,000 more workers on
extended furloughs to survive the
coronavirus pandemic.
Overnight, the S&P 500 fell 2.6
per cent to 3,050.33, giving back
all of its gains for the month. The
selling accelerated on news that
New York, New Jersey and Con-
necticut will require visitors from
states with high infection rates to
quarantine for 14 days.
“A huge problem for investors
is that volatility is too expensive
to buy right now, so they are ind-
ing it easier just to cut and run
from their stock market positions,”
Stephen Innes of AxiCorp said in
a commentary.
On top of lingering concerns
over trade tensions between the
US and China, reports said the
White House is considering fresh
tariffs on USD3.1 billion worth of ex-
ports from France, Germany, Spain
and Britain. That helped send mar-
kets tumbling on worries that such
a move might spiral into another
trade war, said Jingyi Pan of IG.
Despite shedding its gains for
June, the S&P 500 still is on pace
for its best quarter since the fourth
quarter of 1998.
The market had been mostly in
rally mode since April as investors
focussed on the prospects for an
economic turnaround as broad ar-
eas of the economy reopened. But
the recent surge in new infections
undercut that optimism.
While early hot spots like New
York and New Jersey have seen
cases steadily decrease, the virus
is slamming the south and west,
with several states setting single-
day records, including Arizona,
California, Mississippi, Nevada
and Texas.
The yield on the 10-year Trea-
sury note fell to 0.67 per cent from
0.69 per cent on Wednesday. It
tends to move with investors’
expectations for the economy
and inlation.
In energy trading, bench-
mark US crude oil fell 55 cents to
USD37.46 per barrel in electronic
trading on the New York Mercan-
tile Exchange. It slid 5.8 per cent
to settle at USD38.01 a barrel
on Wednesday.
Brent crude, the international
standard, gave up 49 cents to
USD40.04 per barrel. It fell 5.4 per
cent to close at USD40.31.
In currency dealings, the dol-
lar bought JPY107.07, rising from
JPY107.05. The euro slipped to
USD1.1241 from USD1.1252.
Lufthansa shareholders to vote
on German rescue package
BERLIN (AP) — Germany’s Lufthansa
sought shareholders’ support at
an extraordinary general meeting
yesterday for a EUR9 billion rescue
package that would see a govern-
ment stabilisation fund take a 20
per cent stake.
The company, which also owns
other airlines including Austrian
Airlines and Swiss, appeared on
course to get the deal approved
after major shareholder Heinz-Her-
mann Thiele told the daily
Frank-
furter Allgemeine Zeitung
he would
vote for it.
Thiele previously raised ques-
tions over his approval, prompting
the company last week to warn that
the package could be in danger
and to plead with shareholders to
exercise their voting rights.
Hours before the meeting, Luf-
thansa and the UFO union, which
represents cabin crew, said they
had agreed on a deal that will al-
low the company to save more than
EUR500 million through the end of
2023. UFO said it includes a four-
year protection against layoffs for
cabin crew.
Meanwhile,
the
European
Union’s Executive Commission ap-
proved Germany’s plans to con-
tribute EUR6 billion to recapitalis-
ing Lufthansa as part of the rescue
package. It noted that Lufthansa
committed to freeing up some slots
at its Frankfurt and Munich hubs.
A Lufthansa aircraft approaches the airport in Frankfurt, Germany on
Tuesday. PHOTO: AP
UK’s Royal Mail to slash 2,000
jobs in pandemic cost-cutting
LONDON (AP) — Royal Mail, the
British postal service, is to slash
2,000 management jobs as part of
an overhaul of its operations due to
the coronavirus pandemic.
The group said yesterday se-
nior executive and non-operation-
al roles will be hardest hit in the
plan to save GBP330 million over
two years.
“In recent years, ourUnitedKing-
dom (UK) business has not adapted
quickly enough to the changes in
our marketplace of more parcels
and fewer letters,” said interim
Executive Chairman at Royal Mail
Group Keith Williams. “COVIDª19
accelerated those trends, present-
ing additional challenges.”
The assessment came after the
company was unable to take ad-
vantage of a massive spike in par-
cel deliveries during the lockdown
as the requirements of social dis-
tancing sent costs soaring.
“There has been a too-slow
investment in technology and fa-
cilities to keep abreast of the huge
growth in parcels,” said union ofi-
cial Mike Eatwell.
The company’s share price fell
6.3 per cent in the wake of the an-
nouncement and its warning that
it could face a revenue hit of up to
GBP600 million if the UK economy
contracts by 15 per cent across
2020ª21.
Royal Mail said executive direc-
tors and other executives will forgo
annual bonuses for 2019ª20 and
that no shareholder dividends will
be paid for the year ahead.
Royal Mail is the latest in a
long line of British companies to
announce hefty job losses. Oth-
ers include British Gas owner
Centrica, and airlines easyJet and
British Airways.
Unemployment in the UK has
not spiked as high as in some oth-
er countries, notably the United
States, largely because of the gov-
ernment’s Coronavirus Job Reten-
tion Scheme. It has been paying
up to 80 per cent of the salaries of
workers retained, up to GBP2,500
a month. Some 1.1 million employ-
ers so far have taken advantage
of the scheme to furlough 9.2
million people.
Thewage support scheme, how-
ever, is set to end this autumn. As a
result, there are growing fears that
job cuts will increase, raising the
unemployment rate from around
four per cent towards 10 per cent.