The Times - UK (2020-07-31)

the times | Friday July 31 2020 2GM 33

Business

man economy had endured its worst

quarter on record, with gross domestic

product down 10.1 per cent.

The latest signs of economic disrup-

tion as a result of the pandemic

knocked the FTSE 100, which closed

down 2.3 per cent, or 141 points, at

5,989.99 in London last night, its lowest

level in more than two months.

Wall Street also came under pres-

sure, with the Dow Jones industrial av-

erage initially falling 500 points before

paring some of its losses. The index

later closed down 225.92 points, or 0.85

per cent, at 26,313.65.

Germany’s Dax fell 3.5 per cent after

Europe’s largest economy revealed the

scale of a collapse in consumer spend-

ing, corporate investment and exports

in the second quarter. It performed

worse than economists had expected,

posting its biggest decline in GDP since

its Federal Statistics Office started

publishing quarterly figures in 1970.

America’s decline was led by con-

sumer spending, the powerhouse of its

economy, which slumped by 34.6 per

cent. Business investment was down 27

per cent. The speed and scale of the

collapse was unlike anything experi-

enced in modern history. In just two

months, GDP has collapsed two and a

half times faster than it did in the 18

months after the financial crisis hit a

decade ago.

Compared with the previous three

months, GDP contracted 9.5 per cent,

and the US economy is 10.6 per cent

smaller than it was before the crisis hit.

There are indications that activity

rebounded in May but Gregory Daco,

chief US economist at Oxford Econom-

ics, cautioned against settling into a

“false sense of comfort”, with signs of

the rebound stalling this month. The

recovery is being undermined by a re-

surgence in Covid-19 cases across

states. More than 150,000 Americans

have died from the disease and the

number of deaths has risen for the past

three consecutive weeks.

In a tweet yesterday, Mr Trump

floated the prospect of delaying the

presidential election “until people can

properly, securely and safely vote”.

The latest growth figures came as a

string of heavyweight companies out-

lined the stark effects of the crisis. Royal

Dutch Shell, the oil major, posted a

record $18.4 billion quarterly loss as it

lowered its oil price forecasts; Lloyds

Banking Group has taken a provision of

almost £4 billion for bad debts and

warned of a “highly uncertain” outlook;

and the food conglomerate Nestlé

downgraded annual sales guidance.

commodities currencies

$

Brent crude (6pm)

$42.84 (-0.83)

world markets (Change on the day)

$

Gold

$1,947.82 (-9.70)

2,000

1,900

1,800

1,700

6,500

6,000

5,500

5,000

FTSE 100

5,989.99 (-141.47)

1.350

1.300

1.250

1.200

$

1.150

1.100

1.050

1.000

¤

£/$

$1.3034 (+0.0055)

£/€

€1.1055 (+0.0032)

Dow Jones

26,313.65 (-225.92)

28,000

26,000

24,000

22,000

commodities currencies

50

45

40

35

Jul 2 10 20 28 Jul 1 10 20 28 Jul 2 10 20 28 Jul 2 10 20 28 Jul 2 10 20 28 Jul 2 10 20 28

Trump tweet on postponing election adds to investor jitters

Global markets in retreat

as US falls into recession

Callum Jones, Gurpreet Narwan

David Crossland Berlin

Global markets retreated yesterday

after America and Germany officially

entered recession and some of the

world’s largest companies revealed

huge losses as a result of Covid-19.

Investor concern was heightened by

President Trump’s suggestion that

November’s US presidential elections

be postponed moments after it was

revealed that the country’s economy

had suffered its worst quarter since

records began in 1947.

Growth in the US slumped by 32.9

per cent on an annualised basis

between April and June, having fallen

by 5 per cent in the first three months of

the year. Two consecutive quarters of

negative growth indicate a recession.

Official figures also showed the Ger-

Amazon’s

lockdown

revenues

soar 40%

Simon Duke Technology Business Editor

Amazon increased its revenues by 40

per cent in the second quarter after

consumers across the globe turned to

the online retail giant during the

coronavirus lockdown.

Sales rose from $63.4 billion to

$88.9 billion between April and June,

with net income doubling to $5.2 bil-

lion. The results were stronger than

Wall Street forecasts, pushing shares up

by as much as 6 per cent in after-hours

trading.

Analysts had pencilled in revenues of

$81.5 billion, while Amazon had previ-

ously signalled that a $4 billion

investment in making its warehouses

and distribution network Covid-secure

would cap profits at $1.5 billion.

Jeff Bezos, Amazon’s founder and

chief executive, said the company had

created more than 175,000 new jobs

since March to cope with demand.

Amazon said it was in the process of

making 125,000 of these permanent

full-time positions, suggesting the

company believes consumers will keep

increasing their spending.

Amazon, valued at $1.5 trillion, has

grown from an online bookseller into

the world’s largest ecommerce business

and has growing interests in groceries,

internet advertising and streaming

video and music. Through its Amazon

Web Services division it is also the

largest cloud computing company. It

was founded in 1994 by Mr Bezos, who

is the world’s richest person.

It has been one the US stock market’s

best performers in the pandemic, rising

more than 60 per cent since the start of

the year even before last night. Along

with the leaders of Apple, Google and

Facebook, Mr Bezos this week faced a

grilling in Washington, where con-

gressmen accused Amazon of using

data from third-party retailers on its

platform to launch copycat products.

Revenues from Amazon’s domestic

market rose from $39 billion to $55 bil-

lion, some $5 billion higher than expec-

tations. In its international division,

sales climbed from $16 billion to $23 bil-

lion, again beating forecasts.

Its AWS cloud computing arm re-

ported $11 billion in turnover, com-

pared with $8 billion in the same period

last year, with operating income up by

over a half to $3.3 billion. It benefited

from the boom in video conferencing

during lockdown, with Zoom one of the

many prominent companies that use

AWS servers to run their businesses.

Amazon forecast third-quarter sales

of between $87 billion and $93 billion,

up by between 24 per cent and 33 per

cent compared with last year.

Google sales fall for first time, page 36

Closed shops may bear fruit

Waitrose and John Lewis stores that have closed could be turned

into homes as Dame Sharon White, chairwoman of the John Lewis

Partnership, tries to revive the struggling retailer’s fortunes. Page 43

WAITROSE