Stocks Sink as U.K. Travel Bans Follow New Covid Strain: Live Updates

By: Ella Koeze·Source: Refinitiv

Financial markets reeled on Monday, as a new, fast-spreading variant of the coronavirus led to the suspension of some trade and travel ties with Britain and a new lockdown in London.

Stocks in Europe were sharply lower, along with energy prices and the British pound. On Wall Street, the decline was tempered slightly by the news that lawmakers reached a deal on a $900 billion stimulus package, which is expected to include $600 stimulus payments to millions of Americans and strengthen unemployment benefits, and could pass both houses of Congress as soon as Monday.

The S&P 500 fell about 1 percent in early trading, with shares of cruise lines, airlines, and other companies whose businesses have been hardest hit by travel restrictions and virus-containment efforts faring particularly poorly.

The Stoxx Europe 600 index fell 2.7 percent, with economically sensitive financial and energy shares leading the decline. The FTSE 100 in Britain fell 2.7 percent, while the FTSE 250, which includes companies that are more oriented to the British economy, declined 3.6 percent. Energy prices fell, with crude oil futures down about 4 percent.

Over the weekend, nearby countries shut their borders to travelers from Britain — and some cases, British freight — as London and the surrounding area were put into a lockdown after the government’s health secretary said a new strain of the coronavirus was “out of control.”

The British pound fell against all other major currencies. It declined 1.8 percent against the dollar, the sharpest one-day fall in nine months. The Netherlands, Belgium, Italy and France were among countries to ban travelers from Britain. France also stopped freight imports from Britain, a move that will worsen border disruptions and has raised concerns about the supply of fresh food.

The more contagious variant of the virus is expected to mean social restrictions will last longer in Britain, possibly many months while the vaccine is being rolled out. Analysts at Berenberg, a private bank, cut their forecast for the British economy early next year, saying it was likely to grow only 3 percent in the first quarter, down from 5.5 percent.

Still, traders focused on the United States had some good news to consider. The congressional spending package is expected to include most of the elements that economists have long said were crucial to avoiding further calamity and aiding a recovery. It extends unemployment benefits for millions at risk of losing them, and adds money to their checks to help pay their bills. It revives the Paycheck Protection Program, which kept many small businesses afloat last spring.

A supermarket in London earlier this month. Britain relies on the European Union for about a quarter of its food, mainly fresh fruit and vegetables. 
Credit…Andy Rain/EPA, via Shutterstock

British shoppers were warned Monday of the possibility of a “serious disruption to U.K. Christmas fresh food supplies” stemming from France’s decision to suspend all trucks arriving from Britain.

Consumers were advised by trade groups not to panic shop in the days leading to Friday’s Christmas holiday.

France is trying to stop the spread of a more contagious strain of coronavirus that Britain’s health minister said had grown “out of control” in parts of England. Over the weekend, Prime Minister Boris Johnson announced tighter restrictions on people living in London and the surrounding area.

On Sunday night, France suspended the arrival of goods that are transported by truck and cross the English Channel either via ferry or through the Eurotunnel, over fears the drivers could carry the disease. The rules are to last 48 hours.

As a result, the Port of Dover, just 21 miles across the channel from France and one of Europe’s busiest ferry ports, with just two operators moving 10,000 trucks each day, was closed to outbound traffic on Monday. About 20 miles west, the transport hub at Folkestone, connected to France by the Eurotunnel, was also closed. Truck drivers bound for the continent parked along the roadways leading to Dover, in a procedure known as Operation Stack that was devised to deal with potential disruptions caused by Brexit.

Grant Shapps, Britain’s transport minister, said about 20 percent of the freight moving in and out of England was affected by the closures. Unaccompanied goods — such as those loaded in shipping containers, carried on vessels — will continue to be admitted into France and goods can still be driven to other countries, such as the Netherlands, from smaller ports.

Still, Britain relies on imported fresh fruit and vegetables trucked in from Europe, especially in the winter. Food can still be taken by truck from France into Britain, but there are concerns truck drivers won’t go if they risk getting marooned in Britain.

The travel ban has “the potential to cause serious disruption to U.K. Christmas fresh food supplies — and exports of U.K. food and drink,” Ian Wright, the chief executive of the Food and Drink Federation, said in a statement.

The closure of ports is also disrupting parcel deliveries. On Monday, Deutsche Post DHL said deliveries of parcels to Britain would also be stopped as more countries impose travel bans on Britain.

The impact is also being felt in France, where shipments of fresh fish and shellfish will not arrive. Britain sends more seafood to the European Union than it imports, especially stocks of salmon, lobster and langoustines. A Scottish salmon trade group warned that more than £1 million of fresh salmon would be caught up in the port closure during this peak season.

On Monday morning, the French transport minister said Europe was working on a plan to allow the flow of goods to resume.

The BBC reported that Sainsbury’s, one Britain’s largest supermarkets, said food for Christmas was already in hand, but if the travel suspension lasted longer, there would be “gaps over the coming days” in items such as lettuce, salad leaves, cauliflowers, broccoli and citrus fruit.

About a quarter of food consumed in Britain is imported from the European Union, Research from the London School of Economics estimated that more than half of the tomatoes, onions, cucumbers, mushrooms, peppers and lettuce Britain consumes are imported. And 75 percent to 100 percent of these were from the European Union last year.

Because Britain is set to end its transition period for leaving the European Union on Dec. 31, importers of many goods, including medicines, had already been stockpiling. London and Brussels haven’t reached a trade deal yet, and so importers have sought to get goods into the country ahead of customs checks and, potentially, new tariffs, actions that have caused delays and congestion at larger container ports.

People lining up for a meal delivery from a food bank in Rochester, N.H., this month. The agreement by Congress on a stimulus package is a welcome relief, though some worry it might not be enough.
Credit…Tristan Spinski for The New York Times

After congressional leaders struck a long-sought agreement on a $900 billion pandemic relief package, lawmakers in both chambers on Monday will race to finalize legislative text and send the measure to President Trump’s desk before government funding lapses.

An agreement in principle was reached late Sunday afternoon, hours before a midnight deadline to avoid a government shutdown. With additional time needed to transform their agreement into legislative text, both chambers had to approve a one-day stopgap spending bill, giving them an additional 24 hours to finalize the deal.

Lawmakers will have just a few hours to review the hundreds of pages of text that will encompass about $2.3 trillion in relief legislation and a catchall omnibus to keep the government funded for the remainder of the fiscal year. But after months of gridlock and debate, both chambers are expected to approve the spending measures on Monday and send them to the president for his signature.

The $900 billion agreement is set to provide $600 stimulus payments to millions of American adults earning up to $75,000. It would revive lapsed supplemental federal unemployment benefits at $300 a week for 11 weeks — setting both at half the amount provided by the first pandemic relief package in March.

The final proposal will also include $69 billion for the distribution of a Covid-19 vaccine and more than $22 billion for states to conduct testing, tracing and coronavirus mitigation programs.

The agreement is also expected to:

  • Continue and expand benefits for gig workers and freelancers, and extend federal payments for people whose regular benefits have expired.

  • Provide more than $284 billion for businesses and revive the Paycheck Protection Program, a popular federal loan program for small businesses that lapsed over the summer.

  • Expand eligibility under that program for nonprofit organizations, local newspapers and radio and TV broadcasters and allocate $15 billion for performance venues, independent movie theaters and other cultural institutions devastated by the restrictions imposed to stop the spread of the virus.

  • Provide $82 billion for colleges and schools, $13 billion in increased nutrition assistance, $7 billion for broadband access and $25 billion in rental assistance.

  • Extend an eviction moratorium set to expire at the end of the year.

Tesla shares had a huge rise this year, but the stock is volatile.
Credit…Aly Song/Reuters

On Monday, Tesla became the largest company ever added to the S&P 500, with a market capitalization of $650 billion. The company’s stock, up some 700 percent in 2020, was about 4 percent lower on Monday.

Companies worth a fraction of Tesla would have been included in the index long ago, but the approach that has made it such a valuable company has brought challenges.

Despite all its technological innovations, Elon Musk’s celebrity billionaire aura and a high-risk, high-reward approach to business, Tesla for the longest time was unable to meet the most humdrum requirement of corporate America: turning a profit. Criteria for inclusion require the sum of the company’s fully audited profits in the four most recent quarters to be positive. Tesla hit that mark only this year.

With a market capitalization of $650 billion, the sudden weight Tesla will throw into the market could have strange consequences.

“This is by far the biggest index inclusion that they’ve ever attempted,” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn. “The stock will immediately be a top 10 name in the S&P, which is nuts.”

Chris Mack, a stock portfolio manager at the investment adviser Harding Loevner in Bridgewater, N.J., has plenty of good things to say about Tesla as an innovative company. But he doesn’t own the shares in his funds, which is focused on buying large cap technology companies that have a proven track record of profitability, making them suitable for long-term holdings.

But many investors won’t actually have a choice about buying Tesla’s shares.

The S&P 500 is one of the most widely followed barometers of the American stock market, serving as the benchmark against which investors measure more than $11 trillion worth of investments. Of that, more than $4.5 trillion are in index funds that mirror the stocks in the S&P.

Those funds have been buying up shares of Tesla since mid-November in preparation for Tesla’s admission to the S&P 500, which has sent its shares up more than 60 percent since the announcement that the company would be included.

Dina Srinivasan’s research into Google and Facebook is at the heart of a wave of antitrust lawsuits against Big Tech.
Credit…Gabriela Hasbun for The New York Times

A former tech industry insider is now playing a key role in the wave of antitrust lawsuits against the giant tech companies.

Dina Srinivasan, who once worked as a digital advertising executive at WPP, the world’s largest advertising agency, quit her job three years ago after becoming disillusioned by the immense power large wielded by companies like Facebook and Google, Daisuke Wakabayashi reports in The New York Times.

“It just felt like, OK, Facebook and Google were going to win and everybody else is going to lose and that’s just the way the cards were stacked,” Ms. Srinivasan said. “I don’t think this was widely understood.”

She took up the case against them instead, writing academic papers with an insider’s perspective that reframed the antitrust thinking about the companies. And her timing was perfect.

Federal regulators and state attorneys general had expressed growing unease about Big Tech’s unchecked power. But many had struggled with how to bring a case because of the complexity of the companies and the markets they competed in. Arguing that these companies were harming consumers was also difficult because many of their products are free.

“Her papers are just very clearly on point about the actual conduct of the platforms and its competitive significance,” Marshall Steinbaum, an assistant professor at the University of Utah’s economics department, wrote on Twitter. “They’re helpful to enforcers and come from a perspective of someone who obviously knows the industry and the facts.”

In recent months, mounting concerns about the outsize influence of tech’s most powerful companies have set off a cascade of antitrust lawsuits, with three cases targeting Google and two suits against Facebook.

As the legal arguments take shape, there is evidence of Ms. Srinivasan’s fingerprints.

  • European regulators gave the green light to a merger of Fiat Chrysler Automobiles and PSA, the maker of Peugeot, Citroën and Opel cars, paving the way for shareholders of the two companies to vote on the deal at a special meeting on Jan. 4. The European Commission said the transaction can go ahead, but with conditions. To preserve competition in the market for commercial vehicles, PSA must continue to allow Toyota to build vans and light trucks at its factories in Europe, and PSA and FCA must share specialized tools so that outside firms can do repairs.

  • The Federal Reserve said on Friday that the financial system’s biggest banks had the wherewithal to withstand a severe economic shock from the pandemic, and that they would be able to return more money to shareholders early next year as long as they showed that they were profitable. In June, the Fed put temporary caps on shareholder payouts by the nation’s biggest banks. Minutes after the regulator’s announcement on Friday, JPMorgan Chase said it would buy back $30 billion of its shares during the first three months of 2021.

  • In a novel case, federal prosecutors on Friday brought criminal charges against an executive at Zoom, the videoconferencing company, accusing him of engaging in a conspiracy to disrupt and censor video meetings commemorating the Tiananmen Square massacre. He is accused of working with others to log into the video meetings under aliases using profile pictures that related to terrorism or child pornography. Afterward, Mr. Jin would report the meetings for violating terms of service, prosecutors said.

Cyberpunk 2077, an immersive role-playing game from CD Projekt Red, was released in December after nearly a decade of hype. Here, fans gather at the Tokyo Game Show in 2019.
Credit…Franck Robichon/EPA, via Shutterstock

Since the release of the highly anticipated Cyberpunk 2077 video game on Dec. 10, thousands of gamers have created viral videos featuring a multitude of glitches and bugs — many hilarious — that mar the game and render it virtually unplayable for many users.

So many gamers demanded refunds from distributors last week that they overwhelmed Sony’s customer service representatives and even briefly took down one of its corporate sites. In response, Sony and Microsoft said they would offer full refunds to anyone who bought Cyberpunk 2077 through their online stores; Sony even removed the title, Mike Isaac and Kellen Browning report in The New York Times.

Cyberpunk’s rollout is one of the most visible disasters in the history of video games — a high-profile flameout during the holiday shopping season by a studio widely considered an industry darling. It shows the pitfalls gaming studios can face when building so-called Triple-A games, titles backed by years of development and hundreds of millions of dollars.

“There was so much there, but they just didn’t pay attention to the details,” said Billy Marte, a gamer who bought into the high expectations around Cyberpunk, which was developed by the Polish studio CD Projekt Red. “It’s evident that this game was rushed.”

CD Projekt Red’s stock has dropped 41 percent since early December. Inside the studio, there has been infighting and finger-pointing. In a contentious meeting with board members on Thursday, CD Projekt Red employees pressed executives on the game’s unrealistic deadlines and false promises.

Insiders said they saw the problems coming for months, based on CD Projekt Red’s history of game development and warning signs that Cyberpunk 2077 might not live up to its sky-high expectations.

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