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Germany’s economic recovery likely started in May
Germany’s economic ministry says the country’s economic output will face a greater decline in the second quarter than in the first…but that the easing of lockdown restrictions and key indicators suggest the worst might be over.
According to the ministry’s monthly report, Germany’s economic revival likely started in May, Reuters said.
However, the report warned that the recovery in the second half of the year would be sluggish and that leading economic indicators did not point to a sustainable recovery in the job market over the coming months.
Both exports and imports are expected to suffer a significant decline over 2020 as a whole.
Updated
A quick note on one of the few economic data points being released today.
Italian consumer prices for May contracted -0.2%, both on a month-on-month and annual basis. That is worse than the previous readings of -0.1%.
The final reading for EU-harmonised consumer prices for Italy have also been revised lower from -0.2% to -0.3% on an annual basis.
It’s more than just shops re-starting this morning.
EasyJet has made its first scheduled flight since late March. That flight, pictured here, took off from Gatwick to Glasgow this morning.
As our transport correspondent Gwyn Topham writes, only 10 aircraft of the airline’s fleet of more than 300 will be in service on Monday, operating domestic flights between airports including Bristol, Liverpool, Belfast and Newcastle, as well as services within continental Europe around Switzerland, France, Italy and Portugal.
A total of 310 flights are scheduled this week.
Life on board will be, for now, very different. Face coverings are to become mandatory on planes and advisory throughout the airports, as on all UK public transport from Monday.
Trolley service is to be scrapped or reduced, distancing enforced where possible, toilet visits discouraged, and enough reminders plastered around to wash hands and not touch anything as to make the hardiest traveller a nervous germophobe.
While most will welcome the focus on safety, the experience is likely to become – more than ever – an endurance test rather than a pleasure.
You can read the full story here:
Not a lot of cheer across oil markets either, where Brent crude prices are down more than 3% and WTI is down around 4.2%.
Looks like fears of a second wave of infections is weighing on hopes of a recovery in fuel demand.
Investors are dropping BP stock after the oil giant revealed its planned write-offs on the back of revised oil price forecasts.
That sentiment is also weighing on energy provider Centrica.
Meanwhile, there is only one stock trading in positive territory this morning, and that’s Bunzl.
That’s after the packaging firm said that, thanks to better than expected trading, it plans to “repay employee-related government support packages and bring forward the settlement of tax deferrals where possible to do so.”
European stocks tumble at the open
It’s a sea of red across major European stock markets, extending losses seen across Asia:
- FTSE 100 falls 2.1%
- France’s CAC 40 falls 2.7%
- Spain’s IBEX falls 2.7%
- Germany’s DAX falls 2.4%
- Europe’s STOXX 600 is down 2%
BP cuts oil price forecasts by 30%, plans $17.5bn in write-offs
Julia Kollewe
BP has announced write-offs of up to $17.5bn as it expects the Covid-19 pandemic to have a lasting impact on the global economy and reduce demand for energy over a longer period, and to speed up the shift to a lower carbon economy.
The energy giant now expects Brent crude oil to average around $55 a barrel between 2021 and 2050, and $2.90 per million British thermal units for Henry Hub gas, the benchmark for natural gas. The new forecasts are 27% and 31% lower respectively than the average prices used in its latest annual report.
BP’s management also expects that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to make their economies more resilient in the future.
BP chief executive Bernard Looney said:
So, we have reset our price outlook to reflect that impact and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world. We are also reviewing our development plans.
All that will result in a significant charge in our upcoming results, but I am confident that these difficult decisions – rooted in our net zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition.
The full story will be up shortly.
Updated
Introduction: Stocks falls as second wave fears rise
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s the day that England’s shop owners have anxiously waited for since March.
Non-essential retailers are allowed to open their doors to customers for the first time in 12 weeks today, as the UK government continues to ease lockdown restrictions in an attempt jumpstart a spiralling economy. (A reminder that shops in Northern Ireland have been open since Friday)
But even if the predicted crowds of shoppers start to flock to the high street, few will recognise the new systems in place meant to keep consumers and workers safe. (Think no dressing rooms, quarantines for touched items, and loads of extra sanitising along the way.)
However, Westminster’s attempts to return to some semblance of economic normality come amid fears that a second coronavirus outbreak may be on the horizon.
Those concerns have hit equity markets, sending Hong Kong’s Hang Sang down more than 2%, the Shanghai Composite down 0.6% and Australia’s ASX down 2.7%. European shares are also called lower.
On Monday, Beijing authorities announced 49 new coronavirus cases leading to a lockdown of residential compounds and officials being sacked. Health officials have now warned the risk of the outbreak worsening is “very high.”
Meanwhile, the World Health Organisation has warned that England’s lockdown should stay in place until the government’s contract tracing system has been proven to be “robust and effective.”
Investors will be cautiously watching for any signs of a rise in infections.
Not much on the economic calendar today, but stay tuned for our rolling coverage of the latest financial and economic news.
The agenda
- 9am BST: Italian HICP for May (final reading)
- 3pm BST: US Empire State manufacturing survey (June)
Updated
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