22nd January 2020
Written by Javier Maquieira, Associate
Edited by Iain Gibson, Associate Partner
Good morning, They all share one thing in common: we didn’t see them coming. The 2003 mini pandemic involving severe acute respiratory syndrome (SARS) left around 800 dead after making its way from Southern China to Hong Kong and other countries. The 2009 swine flu affected between eleven and 21% of the global population, spreading rapidly from Mexico to the rest of the world. Now the Wuhan coronavirus is treading a similar path. What began as a pneumonia-like illness thought to be transmitted only from animals to humans has, in a matter of weeks, evolved into a highly contagious disease passed from person to person that could mutate and adapt, aiding its spread. In China, where the virus was first detected, at least nine people have died, while more than 440 others have been reported to be infected, including people in Japan, Taiwan, Thailand and South Korea. While global markets show their anxiety over the possibility of a new pandemic, and the World Health Organisation meets later today to decide whether to call it a global health emergency, China’s authorities have come under growing criticism at home and abroad for being too slow to acknowledge the severity of the outbreak. Although Chinese officials are working to contain the spread of the virus, the country’s top leaders have warned them against covering up new cases (as happened back in 2003), threatening them with being “nailed on the pillar of shame for eternity” if they do. Beyond Asia, a traveller was confirmed yesterday as the first infected person in the United States by the Center for Disease Control and Protection. A number of countries, including the US, have already activated screening and quarantine procedures at airports, while North Korea has opted for closing off its borders altogether. There’s indeed a lesson to be learned from this. No matter how hard we try to downplay the effects of a weak coordinated approach to global challenges, the next major pandemic might be waiting around the corner to remind us of the importance of acting together. Netflix’s new series Pandemic: How to Prevent an Outbreak couldn’t have come at a better time.
US president Donald Trump called for a rejection of “the perennial prophets of doom” during his intervention at the World Economic Forum in Davos yesterday. In a speech centred on America’s defence of its economy and his administration’s achievements, Trump said that it was time for optimism, speaking of climate activists as “the heirs of yesterday’s foolish fortune tellers”. Meanwhile, the US Senate has adopted rules for president Trump’s impeachment trial after nearly 13 hours of debate. The new resolution delays the question of whether the Senate should subpoena witnesses and documents until later in the trial, after Republicans defeated a series of amendments from Senate minority leader Chuck Schumer. The phone of Amazon’s boss Jeff Bezos was allegedly “hacked” in 2018 by the crown prince of Saudi Arabia. An encrypted message by Mohammed bin Salman is understood to have infected the billionaire’s device through a malicious video file, compromising large amounts of data. The fact that the crown prince may have had a personal involvement in the targeting could undermine his efforts to attract more western investors to his country. The Duke of Sussex has arrived on Vancouver Island, where he will begin his new life with Meghan Markle and their son Archie, after the family agreed with the Queen to step back as senior royals. The couple has already issued a legal warning to the media following the publication of photographs of the Duchess near their current base in British Columbia.
Business and economy
Figures published by the Office for National Statistics show a new high of 76.3% in the UK’s employment rate supported by a record number of women in full-time work. About 126,000 more women worked full-time in the three months to November 2019 compared with the previous quarter, in part because of the change in their retirement age. The data could affect the Bank of England’s decision to cut interest rates next week. The Organisation for Economic Cooperation and Development (OECD) has told the UK government to delay a new tax on big technology companies that is planned for April. The OECD hopes to reach a multilateral solution to avoid an uncoordinated approach and the threat of a transatlantic trade war. The warning came as France agreed to push off its own digital levy following an angry response from the US. Sainsbury’s has announced the reduction of hundreds of management jobs as a result of continued integration of Argos into its stores. The supermarket chain, which has cut its senior leadership team by more than 20% since the start of the financial year, said the decision comes as the business finalises new leadership structures and merges its store support centre teams.
Early this morning, Sainsbury's also announced that CEO Mike Coupe will step down after six years in the role. Simon Roberts, the supermarket chain's head of retail and operations, will succeed him in June, after which he will remain director before retiring following the company's general meeting in July. (£)
Columns of note
In the Financial Times, Andrew Edgecliffe-Johnson notes that, despite efforts presented by executives in Davos to shift corporate priorities away from shareholders and towards employees and other stakeholders, employees do not trust their companies to create cultures of lifelong learning. Edgecliffe-Johnson concludes that employers should put as much effort into measuring employee trust and hearing their voices as they do into engaging with investors. (£) Andy Silvester argues in City A.M. that if the UK wants to succeed in negotiating trade deals with the US and the EU, it needs to play both games at once: the American unorthodox way and the European more rules-based approach. On that front, Silvester welcomes the formation of a joined-up team to run the negotiations, which confirms the UK government’s intention to approach both polities.
What happened yesterday?
London stocks closed in the red on Tuesday with the FTSE 100 down 0.53% at 7,610.70 as concerns about the coronavirus increased. Sterling was higher both against the US dollar by 0.3% to 1.3044 and the euro by 0.25% at 1.1755 following the publication of new employment rate data by the Office for National Statistics. In corporate news, Evraz (-5.68%) was the standout loser, with miners Antofagasta (-2.68%), Rio Tinto (-1.46%), Glencore (-1.57%), BHP (-1.36%), and Anglo American (-1.81%) all down amid worries about China. Burberry (-0.61%) closed lower, along with the wider European luxury sector, amid fears about the impact of coronavirus. On the upside, easyJet (+4.65%) finished higher as the airline raised its first-half revenue guidance and said it expects a narrower first-half headline pre-tax loss compared with 2019. Dixons Carphone (+7.02%) was a high riser after reporting a mixed performance over the festive period, while SSP (+2.71%) closed in the green following a 7.5% rise in first-quarter revenue. In the US, Wall Street also finished lower as the first coronavirus case in the country was confirmed. The Dow Jones Industrial Average lost 0.52% to 29,196.04, the S&P 500 was 0.27% lower at 3,320.79, and the Nasdaq Composite ended the session down 0.19% at 9,370.81.
What's happening today?
Trading Announcements Close Bros Sage Group
Aj Bell Edin.wwide Inv Topps Tiles Tracsis UK Economic Announcements
(09:30) Public Sector Net Borrowing (11:00) CBI Industrial Trends Surveys
Int. Economic Announcements (12:00) MBA Mortgage Applications (US) (14:00) House Price Index (US) (15:00) Existing Home Sales (US)
Did you know?
A quarter of all the species on earth are beetles.