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Hong Kong reports first local COVID-19 cases in two weeks

HONG KONG (Reuters) – Hong Kong has confirmed its first locally transmitted coronavirus cases in more than two weeks, fuelling concerns over its spread as restrictions on movement are relaxed.

The Centre for Health Protection (CHP) said on Sunday it was investigating two confirmed cases of coronavirus, taking the number of cases so far to 1,085. Four people have died of the disease in Hong Kong.

The global financial hub last reported a locally transmitted case on May 14, when a 62-year-old man with no travel history was confirmed with coronavirus.

The two new cases involved a 34-year-old woman and a 56-year-old man. Neither had a travel history during the incubation or infectious period, CHP said. Contact tracing was under way, it added.

The woman is a night-shift worker at a Kerry Logistics warehouse in Kwai Chung district where she labels food items imported from the United Kingdom, broadcaster RTHK reported.

Two co-workers, who fell ill about a month ago, tested positive for COVID-19 and authorities are investigating if the warehouse where one of the patients works represents a new cluster of infections, RTHK reported, citing CHP.

About 25 staff in the warehouse and three medical staff who dealt with one of the patients are being quarantined for 14 days, RTHK reported.

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Rio Tinto apologises for blowing up 46,000-year-old Aboriginal site

MELBOURNE (Reuters) – Rio Tinto apologised for the destruction of a sacred Aboriginal cave in Western Australia that showed evidence of continual habitation dating back 46,000 years, and said it would urgently review its plans for other sites in the area.

Rio Tinto blew up the cave last week in Juukan Gorge, about 1,075 km (667 miles) north of Perth, as part of an expansion programme in the Pilbara iron ore region, provoking a local outcry and calls for reform of heritage protection laws.

Explosives destroyed two ancient rock shelters, where artefacts discovered included 4,000-year-old plaited human hair with genetic links to the present day traditional owners, the Puutu Kunti Kurrama and Pinikura (PKKP) people.

“That site, for us, that’s where our ancestors were occupying their traditional land,” PKKP director Burchell Hayes told Australian Broadcasting Corp, adding that the community felt sorrow and sadness over the loss of heritage.

The mining giant, which had been granted state government approval in 2013 to damage or destroy the site under a legal framework that is currently under review, apologised on Sunday.

“We pay our respects to the Puutu Kunti Kurrama and Pinikura people, and we are sorry for the distress we have caused,” Iron Ore chief executive Chris Salisbury said in a statement.

The miner said that it had performed archaeological work in 2014 to preserve significant cultural heritage artefacts, recovering approximately 7,000 objects.

Rio said that it would work with traditional owners to look at its approach to preserving heritage.

“As a matter of urgency, we are reviewing the plans of all other sites in the Juukan Gorge area,” Salisbury said.

Federal Indigenous Affairs Minister Ken Wyatt last week flagged a need to strengthen the protection of indigenous sites, while his state counterpart said Western Australia was moving to fix out-of-date legislation.

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Business

Oil prices slip as wary traders eye upcoming OPEC+ meeting

SINGAPORE (Reuters) – Oil prices fell nearly 1% on Monday as traders hedged bets with the Organization of the Petroleum Exporting Countries (OPEC) considering meeting as soon as this week to discuss whether to extend record production cuts beyond end-June.

Brent crude LCOc1 fell 34 cents to $37.50 a barrel, in the first day of trading in the contract with August as the front month.

West Texas Intermediate (WTI) crude futures CLc1 for July delivery were at $35.17 a barrel, down 32 cents, by 0123 GMT.

The price falls come after front-month Brent and WTI prices posted their strongest monthly gains in years in May. Gains were boosted by OPEC crude production dropping to its lowest in two decades with demand is expected to recover as more nations emerge from coronavirus lockdowns.

“The focus is very much on OPEC+,” OCBC economist Howie Lee said, referring to the grouping of OPEC and its allies including Russia. OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day (bpd) in May and June after the coronavirus pandemic ravaged demand.

“We might see a cautious pullback in (crude) prices given that downstream prices haven’t caught up … but if OPEC+ does come up with a three-month extension, there’s a possibility that prices may hit the $40 level,” Lee said.

Still, tensions between the United States and China weighed on global financial markets while traders are also keeping an eye on riots over the weekend that have engulfed major U.S. cities.

Saudi Arabia is proposing to extend record cuts from May and June until the end of the year, but has yet to win support from Russia, sources have told Reuters.

Algeria, which currently holds the OPEC presidency, has proposed an OPEC+ meeting planned for June 9-10 be brought forward to facilitate oil sales for countries such as Saudi Arabia, Iraq and Kuwait. Russia has no objection to the meeting being brought forward to June 4.

Meanwhile supply in North America is also falling as data from Baker Hughes Co showed that the U.S. and Canada oil and gas rigs count dropped to a record low in the week to May 29.

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Politics

Democrat Biden visits site of police brutality protest in Delaware

(Reuters) – Democratic presidential candidate Joe Biden on Sunday toured the site of one of the protests that ripped through U.S. cities overnight and called for protesters against police brutality not to turn to violence.

Biden, wearing a face mask, made his second appearance outside his Delaware home since the coronavirus crisis hit in March, visiting an area in Wilmington where demonstrators vented outrage at the death of a black man shown on video gasping for breath as a white Minneapolis policeman knelt on his neck.

A campaign post on Instagram showed Biden speaking with African American residents and inspecting buildings boarded up to prevent damage hours after he issued a statement that “we are a nation in pain, but we must not allow this pain to destroy us.”

“Protesting such brutality is right and necessary,” Biden said in the statement emailed shortly after midnight. “But burning down communities and needless destruction is not.”

Biden will face President Donald Trump in the Nov. 3 presidential election. Trump’s re-election campaign manager, Brad Parscale, had said on Saturday that Biden should deliver a more forceful condemnation of violence.

Biden’s remarks echoed a statement on Saturday by prominent black civil rights activist and U.S. Representative John Lewis of Georgia.

Lewis, who in 1965 was beaten unconscious by Alabama state troopers during a march for voting rights, called for protesters to “be constructive, not destructive,” though he said he knows their pain.

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World News

Tropical Storm Amanda kills at least seven people in El Salvador

SAN SALVADOR (Reuters) – Tropical Storm Amanda has killed at least seven people in El Salvador as heavy rains made rivers overflow, flooded city streets and produced landslides, Interior Minister Mario Duran said on Sunday.

“We’ve seen people asking for help, asking for the government. We haven’t deployed everywhere, the situation is overwhelming,” said Duran.

Among those killed was an eight-year-old boy, who died after the house he was in collapsed, while another person was killed by a falling wall and another drowned in a swollen river, Salvadoran civil protection authorities said.

The U.S. National Hurricane Center (NHC) said Amanda or its remnants are expected to produce rain totals of 10 to 15 inches over El Salvador, southern Guatemala, western Honduras, and the Mexican states of Tabasco and Veracruz.

The storm’s heavy rainfall could “cause life-threatening flash floods and mudslides across portions of Central America and southern Mexico, and these threats will continue over the next several days even after Amanda is no longer a tropical cyclone,” said the NHC.

Amanda was packing maximum sustained winds of nearly 40 miles per hour (65 kilometers per hour) with higher gusts and was expected to weaken “very soon” as its center moves farther inland, said the NHC.

It is forecast to degenerate into a remnant low or dissipate over the mountains of Central America later on Sunday.

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World News

No COVID-19 deaths reported in Sweden in 24 hours, but weekend figures typically delayed

STOCKHOLM (Reuters) – Sweden has not reported any coronavirus deaths in the last 24 hours, for the first time since March 13, the health authority said on Sunday, but there is typically a delay in reporting figures at weekends.

Sweden’s open approach to the virus, mostly based on voluntary social distancing and basic hygiene, has been criticized by some as a dangerous experiment, but also once touted as a future model by the World Health Organization.

Last week, Sweden had the highest number of COVID-19 deaths in Europe per capita over a seven-day-period, data showed.

There have been previous weekends where the death toll has increased by as little as two, only for a steeper rise to return in the following days when the reporting catches up, the health authority spokesman said.

The pandemic has killed 4,395 people in Sweden.

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Business

Wall Street Week Ahead: Investors eye consumer discretionary stocks as U.S. reopens

NEW YORK (Reuters) – Investors are taking a closer look at the market’s consumer discretionary companies as a reopening U.S. economy fuels hopes of a turnaround for some of the sector’s hardest-hit names.

Many companies in the sector have been battered by the country-wide coronavirus-fueled lockdowns that have weighed on growth and damaged retail spending over the last several months, though the stocks of a few, like Amazon, have soared.

A gradual lifting of lockdowns in some states has stirred hopes for a bounce back for the retailers that make up much of the sector.

Some investors, however, say it may be months before consumers return to their previous shopping habits, making it unlikely that the companies will see a pickup in revenues in the near term.

Firms ranging from middle-income retailers such as Gap Inc and American Eagle Outfitters Inc to high-end destinations like Tiffany & Co and Vail Resorts Inc are expected to report results in the week ahead.

“This particular group is full of landmines,” said Jamie Cox, managing partner for Harris Financial Group. “There is not going to be a lot of investor follow-through until we get some certainty with what future revenue prospects are going to be.”

Shares of the Gap, for instance, are down 43% for the year to date. A recession that persists through the fourth quarter of this year would reduce the company’s revenues by 40%, according to a note by research firm Trefis.

Next Friday’s U.S. jobs report is expected to show that the unemployment rate rose to 19.8% in May, smashing April’s record 14.7%, according to a Reuters poll. Non-farm payrolls are expected to drop by 7.4 million, adding to the 20.5 million jobs lost the previous month.

Cox is focusing on dominant players such as Amazon.com Inc, Walmart Inc and Target Corp, which have a mix of essential items such as groceries as well as electronics and games that can appeal to customers who may face extended lockdowns during a potential second wave of the virus.

Overall, retail companies in the S&P 500 are up 12.9% for the year to date, a gain powered largely by Amazon’s 31% rally. Apparel companies, by comparison, are down 16.2% over the same time.

Brian Jacobsen, senior investment strategist for the Wells Fargo Asset Management Multi-Asset Solutions team, says retail companies will likely show rising expenses over the next several quarters due to items like more frequent sanitation of stores and technology purchases aimed at increasing the productivity of employees working from home.

“It’s really going to be a challenge to get a clear read of the direction for quite a while,” he said.

Despite those headwinds, investors may still gravitate toward companies that are able either to tap the capital markets for funds or draw from their financial reserves, said Randy Frederick, vice president of trading and derivatives with the Schwab Center for Financial Research.

Retailers such as J. Crew and J.C. Penney have already filed for bankruptcy due in part to the coronavirus pandemic, leaving more opportunity for companies that are able to survive and grab market share, said Frederick.

“You’re getting set up for potential upside surprises,” he said. “You may take a step back and look at this and say, ‘No matter how awful these numbers may be, at least they’re still in business.’”

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England risks COVID-19 resurgence by ending lockdown too soon, scientific advisers say

LONDON (Reuters) – England risks losing control of the coronavirus pandemic again because it is starting to lift its lockdown without a fully operational track and trace programme in place, senior scientific advisers warned on Saturday.

One of the slowest countries to lock down, Britain is now one of the worst-hit. To allow some parts of the economy to reopen while curbing the virus spread, a test and trace system was introduced on Thursday that will ask the contacts of people who have been infected to isolate for 14 days.

Prime Minister Boris Johnson’s office said the cautious steps, which allow for up to six people to meet outside their homes in England and the resumption of some school classes, would ease the burden of lockdown while keeping the virus’ reproduction rate down.

“We have at all times been informed by the data and evidence,” it said.

But the scientific advisers said the system was untested, would not be fully operational until the end of June and risked being overwhelmed by the infection rate – currently around 8,000 new cases a day. A mobile tracing app is not yet ready.

John Edmunds, from the London School of Hygiene & Tropical Medicine and a member of Britain’s Scientific Advisory Group for Emergencies (SAGE), said the government was taking a risk.

“Track and trace was only launched the day before yesterday, so we can’t be sure that that is working effectively yet and yet we’re going ahead and making these changes anyway,” he told Sky News. “I think that that is rather dangerous.”

Three other SAGE members echoed this concern: Peter Horby, also the chairman of the New and Emerging Respiratory Virus Threats Advisory Group (NERVTAG), Jeremy Farrar, the director of the Wellcome Trust, and Calum Semple of the University of Liverpool.

London Mayor Sadiq Khan also said he was also deeply concerned and urged people to act with caution.

Britain has recorded more than 270,000 cases of coronavirus and says more than 38,000 have died after testing positive for the illness. The Office of National Statistics and other sources of data put the figure of fatalities from suspected and confirmed cases at 48,000.

Johnson’s government, which has been heavily criticised for its handling of the crisis, is now caught between the need to prevent a second wave and the need to reopen the economy and keep companies alive.

It says that while it may have made some mistakes it is grappling with the biggest public health crisis since the 1918 influenza outbreak and that it has prevented the health service from being overwhelmed.

Horby of the University of Oxford said there was still too much uncertainty about what would happen to the virus’ reproduction rate if schools reopen and other activities resume.

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  • Third British scientist warns over rush to lift lockdown

“Returning to a situation where we’ve lost control again is far worse than a week or two of social measures,” he told BBC Radio. SAGE includes more than 50 scientists, medics and academics who advise the government.

Government officials have repeatedly said they are following “the science” as they respond to the pandemic, but Edmunds said the decision to ease the lockdown from Monday was political.

“My frustration has been recently at least that they’re pretending that they’re not making a decision, that in fact it’s us who are making the decision, and that’s not really the case,” he said. “They have to make the decision and clearly they have.”

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Hong Kong leaders say Trump 'completely wrong' for curbing ties

HONG KONG (Reuters) – Senior Hong Kong government officials lashed out on Saturday at moves by U.S. President Donald Trump to strip the city of its special status in a bid to punish China for imposing national security laws on the global financial hub.

Speaking hours after Trump said the city no longer warranted economic privileges and some officials could face sanctions, security minister John Lee told reporters that Hong Kong’s government could not be threatened and would push ahead with the new laws.

“I don’t think they will succeed in using any means to threaten the (Hong Kong) government, because we believe what we are doing is right,” Lee said.

Justice minister Teresa Cheng said the basis for Trump’s actions was “completely false and wrong”, saying the need for national security laws were legal and necessary.

In some of his toughest rhetoric yet, Trump said Beijing had broken its word over Hong Kong’s high degree of autonomy from Beijing, by proposing the national security legislation and that the territory no longer warranted U.S. economic privileges.

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  • Timeline: Key dates in Hong Kong's anti-government protests

“We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China,” Trump said, adding that Washington would also impose sanctions on individuals seen as responsible for “smothering – absolutely smothering – Hong Kong’s freedom.”

Trump told reporters at the White House that China’s move on Hong Kong was a tragedy for the world, but he gave no timetable for the moves, leaving Hong Kong residents, businesses and officials to ponder just how far his administration will go.

The American Chamber of Commerce in Hong Kong said Saturday marked “a sad day” for China’s freest city.

“This is an emotional moment for Americans in Hong Kong and it will take companies and families a while to digest the ramifications,” AmCham President Tara Joseph said in a statement.

“Many of us … have deep ties to this city and with Hong Kong people. We love Hong Kong and it’s a sad day,” she said, adding the chamber would continue to work with its members to maintain Hong Kong’s status as a vital business centre.

(For an explainer on how important Hong Kong is to China as a free finance hub, please click.)

China’s parliament this week approved a decision to create laws for Hong Kong to curb sedition, secession, terrorism and foreign interference. Mainland security and intelligence agents may be stationed in the city for the first time – moves critics say put the city’s extensive freedoms at risk.

Authorities in Beijing and Hong Kong insist the legislation will target only a small number of “troublemakers” who threaten China’s national security. They say such action is urgently needed after months of sometimes violent anti-government protests rocked the city last year.

Protests are simmering again as Hong Kong emerges from its coronavirus shutdown. Demonstrators are expected to take to the streets on Sunday.

Trump did not name any sanctions targets but said the announcement would “affect the full range of agreements we have with Hong Kong”, including the U.S.-Hong Kong extradition treaty to export controls on dual-use technologies and more “with few exceptions”.

China’s Global Times, published by the People’s Daily, the official newspaper of China’s ruling Communist Party, said Trump’s decision was a “recklessly arbitrary” step.

The Hong Kong government has had a long history of working ties with U.S. counterparts, distinct from Beijing, with cooperation on counter-terrorism, trade and money laundering.

More than 1,300 U.S. firms have offices in Hong Kong and provide about 100,000 jobs. In the past decade, the U.S. trade surplus with Hong Kong has been the biggest among all its trading partners, totalling $297 billion from 2009 to 2018.

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Business

Stocks slip as investors await Trump's Hong Kong response

NEW YORK (Reuters) – Global stocks fell and safe havens such as bonds and the Japanese yen rallied on Friday as investors awaited Washington’s response to China’s national security law on Hong Kong amid rising tensions between the world’s two biggest economies.

China’s parliament on Thursday passed national security legislation for the city, throwing its freedoms and its function as a finance hub into doubt.

U.S. President Donald Trump said he would hold a news conference on China later on Friday. Trepidation about a further deterioration in Sino-U.S. relations, which have soured considerably through the COVID-19 pandemic, put investors on edge.

U.S. stocks followed European and Asian shares lower. The Dow Jones Industrial Average .DJI fell 180.15 points, or 0.71%, to 25,220.49, the S&P 500 .SPX lost 14.48 points, or 0.48%, to 3,015.25 and the Nasdaq Composite .IXIC dropped 4.66 points, or 0.05%, to 9,364.33.

In Europe, the pan-regional STOXX 600 index lost 1.30% and MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.59%.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.2%. Japan’s Nikkei .N225 retreated from a three-month high and the yen rose to a two-week high of 107.06 against the dollar, while bonds rose.

If the United States no longer thinks Hong Kong is sufficiently autonomous and no longer merits special treatment under U.S. law, the reaction would be a small downdraft, as the market should be expecting that, said Yousef Abbasi, global market strategist at INTL FCStone Financial Inc in New York.

“But if you get further sanctions and something akin to walking back the Phase 1 trade deal, the concern has to be graver because now we have to worry about retaliation from China,” Abbasi said.

The Chinese yuan CNY= weakened in offshore trade. [CNY/]

Hong Kong’s Hang Seng index .HSI declined 0.8% and has lost about 3% in the two weeks since news of China’s security legislation broke. [.HK]

The yield on benchmark 10-year U.S. Treasury notes US10YT=RR fell 4.6 basis points to 0.6624%.

U.S. Federal Reserve Chair Jerome Powell was scheduled to speak at 1100 a.m. EDT/1500 GMT. The market’s focus will be on the central bank’s long-term plans, including the likely restart of large-scale bond-buying.

MAY MARCHES ON

Massive amounts of government stimulus offset reams of grim economic data to prop up stocks in May. The S&P 500 .SPX is up around 4% for the month and on track for its best May since 2009.

A rally in the risk-sensitive Aussie dollar AUD=D3 is slowing, but the currency has gained nearly 2% for the month and sits 20% above March lows.

MSCI’s All Country World Index .MIWD00000PUS, which tracks stocks across 49 countries, is on track for a 3.5% gain this week – its best weekly performance since April.

(GRAPHIC: Recovery on course? – here)

Optimism has grown as countries have lifted lockdowns, spurring hopes for a speedy economic recovery.

The number of Americans seeking jobless benefits fell for an eighth straight week last week and New York has outlined plans for re-opening.

The euro EUR= was headed for its best month since December as the European Union’s 750 billion-euro coronavirus recovery fund fueled optimism about the EU’s political future. [FRX/] It hit a two-month high of $1.1114 and last traded at $1.1119.

The dollar fell 0.366% =USD against a basket of currencies.

Spot gold XAU= added 0.8% to $1,731.92 an ounce. [GOL/]

U.S. crude CLc1 recently fell 0.33% to $33.60 per barrel and Brent LCOc1 was at $34.95, down 0.96% on the day. [O/R]

Both contracts are headed for their biggest monthly gains in years as production cuts and optimism about demand recovery led by China supported prices.

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