U.S. SEC extends conditional relief for public companies hit by coronavirus

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission (SEC) said on Wednesday it would extend its prior conditional regulatory relief from disclosure requirements for public companies affected by the coronavirus outbreak.

The extension will apply to filings that would have been due on or by July 1, the SEC said in a statement. The agency said earlier this month it would provide 45-day extensions for filings that would have otherwise been due between March 1 and April 30.

The extension announced on Wednesday supersedes the initial disclosure relief, the agency said. It requires U.S.-listed companies seeking an additional delay to specifically explain why the relief is needed, the agency said. It would also consider providing additional extensions for any legally required disclosures for future periods.

SEC staff said companies should avoid “selective disclosures” related to material impacts of the coronavirus outbreak, but rather broadly disseminate such material information.

Companies should consider whether they may need to revisit, refresh, or update previous disclosures to the extent that the information becomes materially inaccurate, the agency added.

And while companies may have more time to make disclosures, directors and officers should refrain from buying and selling stock until investors have been appropriately informed about any relevant risks, the agency said.

“These actions provide temporary, targeted relief to issuers,” SEC Chairman Jay Clayton said in a statement.

“At the same time, we encourage public companies to provide current and forward-looking information to their investors.”

Also on Wednesday, the agency said it would grant certain investment funds and investment advisers additional time extensions to hold in-person board meetings and submitting other filing requirements, including annual and semi-annual reports.

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Senate bill set to give aviation sector up to $33 billion bailout: sources

WASHINGTON/CHICAGO (Reuters) – A compromise $2 trillion economic rescue package that will be voted on by the U.S. Senate on Wednesday is set to give passenger airlines about $25 billion in grants, and up to another $8 billion for cargo carriers and airport contractors like caterers, three people briefed on the negotiations said.

Reuters reported Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, a person briefed on call on Tuesday that lawmakers were nearing agreement on a deal for cash grants for payroll and other airline employee costs, after airlines made a last-minute effort to convince lawmakers they needed the cash to prevent the layoff of tens of thousands of workers.

The aid package is expected to include a further $29 billion in loans for airlines, and the government could receive equity, warrants or other compensation as part of the rescue package. U.S. airports are set to receive $10 billion in grants under the agreement.

The final text is still being drafted but will include restrictions on stock buybacks, dividends and executive compensation.

Senate Republicans on Sunday rejected any grants for airlines and instead proposed $58 billion in loans for airlines. Major airlines sounded the alarm and emphasized in recent days that without grants, they had short-term plans to quickly furlough tens of thousands of workers as travel demand collapses amid the coronavirus pandemic.

On Sunday, the carriers promised not to lay off workers through Aug. 31 if they won grants.

Sara Nelson, president of the Association of Flight Attendants said on Twitter it was a “HUGE fight but we WON on this – We got the deal structured around maintaining payroll, no (involuntary) furloughs.”

Airlines and airline unions won crucial support from U.S. Transportation Secretary Elaine Chao, who spoke to lawmakers and others in the administration about the crisis.

In a memo Chao had drafted that was seen by Reuters, she noted that airlines employ 750,000 U.S. workers. She was worried about a dramatic decline in the U.S. aviation sector that could reduce competition, and the potential loss of hundreds of thousands of jobs, people briefed on the matter said.

“Without grant assistance, U.S. airlines have warned that they may be forced to furlough employees or declare bankruptcy,” Chao’s memo warned. “Without grants, airlines may be forced to choose bankruptcy over federal loans, if loan conditions are too inflexible.”

Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, said a person briefed on call.

The government will also provide significant funding to Amtrak and U.S. transit systems that have both seen ridership fall dramatically as states order tens of millions of Americans to stay home and avoid non-essential travel.

Boeing Co (BA.N) could also receive government loans or loan guarantees under the bill, but it was not clear if they would tap $17 billion in loan funding set aside for national security-related loans that were part of the Republican bill released on Sunday. Boeing had sought at least $60 billion in government loan guarantees for itself and the entire aerospace manufacturing sector.

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Kia Motors may make face masks at China factory to fight coronavirus

SEOUL (Reuters) – South Korea’s Kia Motors Corp (000270.KS) is considering making face masks at its Chinese factory to help battle the spread of the coronavirus, a spokesman said on Wednesday.

The announcement follows a similar move by Fiat Chrysler (FCHA.MI), whose CEO Mike Manley said earlier this week that one of the group’s plants in Asia would be converted to produce face masks for healthcare workers and would reach a target of one million masks per month in coming weeks.

Kia could make masks at its Yancheng plant after the Chinese government encouraged carmakers to do so, the spokesman said. He declined to comment on possible timing or any manufacturing target.

Kia has suspended production at its Georgia plant in the United States, its Slovakia site and operations in India due to the coronavirus pandemic.

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Futures rise as Washington reaches deal on $2 trillion aid package

(Reuters) – U.S. stock index futures rose on Wednesday, putting Wall Street on course to extend its massive bounce from the previous session, as Washington reached a deal on a $2 trillion stimulus package to help ease some economic pain from the coronavirus pandemic.

The Senate will vote on the bill later on Wednesday and the House of Representatives is expected to follow soon after.

At 05:24 a.m. EDT, Dow e-minis 1YMcv1 were up 741 points, or 3.6%, S&P 500 e-minis EScv1 were up 54 points, or 2.21% and Nasdaq 100 e-minis NQcv1 were up 187 points, or 2.48%.

SPDR S&P 500 ETFs (SPY.P) were up 2.61%.

The S&P 500 index .SPX closed up 9.38% at 2,447.33​ on Tuesday.

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Two more NYSE floor traders test positive for coronavirus: memo

NEW YORK (Reuters) – At least two more New York Stock Exchange floor traders tested positive for the coronavirus on Tuesday despite measures taken to prevent people infected by the virus from entering the exchange while it remained physically open last week, according to a memo seen by Reuters.

“Given the possibility of exposure, and consistent with local, state, and federal government guidance, we recommend that all those who worked on the NYSE Trading Floor over the last 14 days should self-quarantine until a two week symptom-free period has elapsed,” Intercontinental Exchange Inc (ICE.N)-owned NYSE said in a memo to traders.

New York City, home to more than 8 million people, has become a hot spot in the coronavirus pandemic, with 157 deaths and some 15,000 cases of COVID-19 reported as of Tuesday.

The NYSE kept its trading floor open last week, screening everyone entering 11 Wall Street, but temporarily shuttered the iconic open outcry space after market close on Friday, two days after a floor trader and an ICE employee tested positive for the virus.

At the time, the NYSE said neither person who tested positive with the virus had entered the building thanks to strict screening efforts and that it felt comfortable remaining open until the shift to fully electronic trading for the first time the exchange’s 228-year history the following week.

But the traders who tested positive on Tuesday were working on the floor last week in close quarters with other traders, according to a person with direct knowledge of the situation who asked to remain anonymous given the sensitivity of the matter.

“Those previously tested whose results remain outstanding will be notified directly by the medical team when results become available,” the NYSE said in the memo.

NYSE has not publicly commented on the new cases.

While the NYSE trading floor is temporarily closed over the health concerns, U.S.-listed stocks continue to trade electronically across all 13 active U.S. stock exchanges.

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Walmart's Mexico unit says CFO to step down

MEXICO CITY (Reuters) – Walmart de Mexico said on Tuesday that its chief financial officer Olga Gonzalez has resigned for personal reasons and will leave her post by April 30.

Milton Brandt, currently chief financial officer for the retailer’s Central America operations, will become interim chief financial officer for Walmart de Mexico, known locally as Walmex.

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Coronavirus crisis rocks airlines and planemakers

DUBLIN/OSLO (Reuters) – The grounding of virtually all flights by Europe’s largest budget airline and European air traffic data on Tuesday highlighted the enormity of the shock to aviation industries from the coronavirus now emptying skies around the globe.

Ryanair (RYA.I) told customers it had virtually written off the next two months, while European air traffic management body Eurocontrol said volumes on Monday were down more than 75% from the same day last year.

“We do not expect to operate flights during the months of April and May at this time,” Ryanair boss Michael O’Leary said in a message to customers.

The coronavirus pandemic is also taking a heavy toll on aerospace manufacturing, with Boeing (BA.N) saying it would halt production of most widebody jets and European rival Airbus (AIR.PA) resuming only partial output on Monday after a four-day shutdown as suppliers cut jobs.

With flights grounded because of a collapse in demand over fears of contagion and reinforced by air travel restrictions, airlines, planemakers and their suppliers are under pressure to save cash to ride out the squeeze in liquidity.

Ratings agency Moody’s has cut its outlook for the aerospace and defence industry to negative from stable and warned that, the damaged balance sheets of most airlines would hurt demand for new aircraft even after the market begins a recovery.

Global passenger capacity fell 35% last week, the worst since the start of the crisis, according to data from airline schedules business OAG, which said deeper cuts are likely in the coming weeks.

More than 2,500 planes have been grounded this year, data from Cirium shows, with taxiways, maintenance hangars and even runways at major airports turning into giant parking lots.

Asian jet fuel refining margins – the difference in value between raw crude and the refined product – turned negative on Tuesday for the first time in more than a decade, suggesting there was no recovery timeframe in sight for the aviation industry.

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Large U.S. carriers have drafted plans for a possible halt in U.S. passenger air traffic, four officials said on condition of anonymity, though there is no plan in place and U.S. President Donald Trump said on Monday that he was not considering a domestic travel ban.

SHUTDOWNS

Boeing faces the shutdown of key assembly lines for the second time in a year after being forced to halt production of its grounded 737 MAX aircraft in January.

Production of long-haul jets such as the 787 and 777 in Washington state will pause for 14 days from Wednesday, plunging the world’s largest industrial building – Boeing’s wide-body plant at Everett north of Seattle – into silence for the first time in memory.

As the crisis deepens, Democratic U.S. lawmakers have proposed that some of the roughly $58 billion in proposed emergency aviation loans be changed to cash grants to cover payroll costs.

Embraer (EMBR3.SA), meanwhile, will furlough all non-essential workers in Brazil, where it makes regional jets, the world’s third-largest aircraft manufacturer said on Sunday.

Joining the list of temporary shutdowns is Bombardier (BBDb.TO), which is suspending Canadian production of business jets, said a source familiar with the matter.

Airbus called for strong government support for airlines and suppliers but stopped short of calling for direct aid for the company, which has secured an extra 15 billion euros ($16.14 billion) of commercial credit lines.

However, the planemaker has told officials privately that it may need European government help if the crisis lasts for several months, Reuters reported last week.

Struggling Norwegian Air (NWC.OL), which has grounded most of its aircraft and temporarily laid off 90% of staff, said on Tuesday that it had secured an initial cash infusion of 300 million Norwegian crowns ($26.6 million) from the government.

Industry executives said that a major source of alarm was the global chain of thousands of suppliers who would be severely hurt by abrupt stop-start movements in plane output. Many have already taken a hammering from the year-long 737 MAX grounding.

The International Association of Machinists and Aerospace Workers on Monday said that more than 500,000 U.S. aerospace production jobs could be in jeopardy and called for a relief package that included provisions to protect against layoffs.

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JD Sports delays results to May, cites ample cash resources

(Reuters) – Britain’s biggest sportswear retailer JD Sports (JD.L) said on Tuesday it has delayed the publication of its financial results to May and has enough cash resources to ride out the coronavirus crisis.

The company has shut all its stores in the UK, United States and Europe, while rival Sports Direct plans to keep its shops open, arguing that sports equipment should be considered essential, according to media reports.

“Along with everyone else, the Group is experiencing major disruption to our business operations as we seek to protect our colleagues and customers from the effects of COVID-19,” JD Sports Chairman Peter Cowgill said.

The company has so far successfully defied the retail sector gloom in the UK helped by global expansion and a growing demand for gym wear from youngsters.

JD Sports said it does not find it appropriate to provide outlook for the current fiscal year ending January 2021, adding the revised date of publication will allow it greater clarity on the outbreak’s effect on results for the period.

Separately, fashion retailer Mulberry Group (MUL.L) suspended all shareholder distributions and added it expects to make a small loss in the second half. The company also said it has additional liquidity.

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Asian stocks rebound, Fed soothes with boundless QE

SYDNEY/HONG KONG (Reuters) – Asian equities markets rallied on Tuesday as investors bet the U.S Federal Reserve’s promise of unlimited dollar funding would ease painful strains in financial markets even if it could not stop the economic hit of the coronavirus epidemic.

While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 by 4.2% and Japan’s Nikkei shot up 7.13%, its biggest daily rise since February 2016.

The prospects for Tuesday’s European session also looked brighter as EUROSTOXXX 50 futures and FTSE futures both rose 4.9%.

MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 4.9%, to more than halve Monday’s drop.

South Korea’s ravaged market climbed 8.6% after the government doubled a planned economic rescue package to 100 trillion won ($80 billion).

K2 Asset Management head of research George Boubouras said despite gains on Tuesday in Asian equities, financial market sentiment remained fragile even as the co-ordinated stimulus measures were implemented around the world.

“The biggest trigger for positive sentiment in these markets will be a flattening of the trajectory for the virus,’ he told Reuters by phone from Melbourne.

“Economies around the world are going offline and that is devastating for economic activity, it’s creating the most robust dislocation in financial markets in living memory.”

Central banks and governments, he said, needed to implement ‘bold and innovative’ monetary and fiscal policies to stave off the prospect of a damaging credit crunch hitting global financial systems.

“It is not a credit crunch yet and it liquidity measures are critical to stopping that,” he said.

Macquarie Wealth Management divisional director Martin Lakos said the speed of the equity market decline made the current sell-off arguably worse then the 2008 global financial crisis.

“The falls that we have seen have been breathtaking, and it is the speed of those declines that have caught people by surprise,” he said.

“If the number of cases start to stabilize, and that gives investors confidence then we could start to see them revert to fundamentals. Markets are not trading on fundamentals right now.”

In its latest mold-breaking step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and municipal bonds.

Analysts estimated the package could make $4 trillion or more in loans to non-financial firms.

“What they did, more than just starting up some new programs, was to drive home they are willing to do whatever it takes,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “We would not call into question their resolve.”

The plan helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest since 2013. Ten-year yields were at 0.8339%, from last week’s peak of 1.28%.

Still, analysts cautioned it would do little to offset the near-term economic damage done by mass lockdowns and layoffs.

Speculation is mounting data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.

Economists at JPMorgan expect claims to surge by a record 1.5 million and forecast a 14% annualized fall in U.S. gross domestic product for the second quarter. They see European GDP down almost 24% and Latin America 12%.

A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.

Surveys from Japan showed its services sector shrank at the fastest pace on record in March and factory activity at the quickest in about a decade.

DOLLAR OFF HIGHS

For now, the prospect of massive U.S. dollar funding from the Fed saw the currency ease back to 110.32 yen from Monday’s one-month top of 111.56.

The euro bounced 0.5% to $1.0797, up from a three-year trough of $1.0635. The dollar index slipped 0.4% to 101.720 and off a three-year peak of 102.99.

Commodity and emerging market currencies that suffered most during the recent asset rout also benefited from the Fed’s steadying hand. The Australian dollar climbed 1.8% to $0.5937 and away from a 17-year low of $0.5510.

Gold surged in the wake of the Fed’s pledge of yet more cheap money, and was last up 1% at $1,569.70 per ounce having rallied from a low of $1,484.65 on Monday.

There were also signs that gold metal itself was in short supply with the premium on exchange for physical blowing out.

Oil prices also bounced after recent savage losses, with U.S. crude up $1.08 cents at $24.44 barrel. Brent crude firmed $1.09 to $28.12.

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Asia stocks rebound, Fed pits endless QE against economic reality

SYDNEY (Reuters) – Asian stocks rebounded sharply on Tuesday as the U.S. Federal Reserve’s promise of bottomless dollar funding eased painful strains in financial markets, even if it could not soften the immediate economic hit of the coronavirus.

While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 by 3% and Japan’s Nikkei 6.2%. If sustained it would be the biggest daily rise for the Nikkei since late 2016.

MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 4.2%, to more than halve Monday’s drop. Shanghai blue chips gained 2.7%.

Europe also looked a shade brighter as EUROSTOXXX 50 futures climbed 3.3% and FTSE futures 3.1%.

In its latest drastic step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and muni bonds.

The numbers were certainly large, with analysts estimating the package could make $4 trillion or more in loans to non-financial firms.

“This open-ended and massively stepped-up program of QE is a very clear signal that the Fed will do all that is needed to maintain the integrity and liquidity of the Treasury market, key asset-backed markets and other core markets,” said David de Garis, a director of economics at NAB.

The Fed’s package helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest since 2013, while 10-year yields dropped back to 0.79%.

Analysts cautioned it would do little to offset the near-term economic damage done by mass lockdowns and layoffs.

Speculation is mounting data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.

Goldman Sachs warned the U.S. economic growth could contract by 24% in the second quarter, two-and-a-half times as large as the previous postwar record.

A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.

Surveys from Japan showed its services sector shrank at the fastest pace on record in March and factory activity at the quickest in about a decade.

DOLLAR OFF HIGHS

While governments around the globe are launching ever-larger fiscal stimulus packages, the latest U.S. effort remains stalled in the Senate as Democrats said it contained too little money for hospitals and not enough limits on funds for big business.

The logjam combined with the stimulus splash from the Fed to take a little of the shine off the U.S. dollar, though it remains in demand as a global store of liquidity.

“The special role of the USD in the world’s financial system – it is used globally in a range of transactions such as commodity pricing, bond issuance and international bank lending – means USD liquidity is at a premium,” said CBA economist Joseph Capurso.

“While liquidity is an issue, the USD will remain strong.”

For now, the prospect of massive U.S. dollar funding from the Fed saw the currency ease back to 110.38 yen from Monday’s one-month top of 111.56.

The euro bounced 0.8% to $1.0805, up from a three-year trough of $1.0635. The dollar index slipped 0.4% to 101.720 and off a three-year peak of 102.99.

Commodity and emerging market currencies that suffered most during the recent asset rout, also benefited from the Fed’s steadying hand. The Australian dollar climbed 1.5% to $0.5915 and away from a 17=year low of $0.5510.

Gold surged in the wake of the Fed’s promise of yet more cheap money, and was last up 1.7% at $1,578.45 per ounce having rallied from a low of $1,484.65 on Monday.

Oil prices also bounced after recent savage losses, with U.S. crude up $1.09 at $24.45 barrel. Brent crude firmed 97 cents to $28.00.

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