News Archives - Page 6 of 300 - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

Employees’ ability to work from home could limit job losses – ESRI

More workers should be facilitated to work from home in order to improve their chances of retaining their jobs, according to the Economic and Social Research Institute. 

In their report “Who Can Work From Home in Ireland”, authors Paul Redmond and Seamus McGuinness note that 800,000 workers are currently unemployed or furloughed because of Covid-19.

But many others have been able to hold onto their jobs by working from home. 

The ESRI says it is important to understand the ability of employees to work from home because homeworking can limit job losses and the associated economic contraction. 

Ensuring that as many people as possible continue to work from home may also help to prevent a further spike in the incidence of the virus, it finds. 

Homeworking may also alleviate short-term childcare pressures as schools and creches remain closed, though the ESRI cautions that “combining working from home with childminding is not a sustainable long-term option.” 

Before the Covid-19 crisis, 14% of employees in Ireland formally worked from home either sometimes or usually. 

This puts Ireland just above the average for Europe, where homeworking ranges from fewer than 1% in Bulgaria, Italy and Romania, to over 30% in Sweden. 

The ESRI found that those who were more likely to be working from home were full-time employees in high paid, highly qualified occupations, male, Irish nationals and aged over 30. 

On a sectoral basis, the highest numbers of employees working from home are in education (37%), ICT (36%) and finance (26%). However, just 2% of workers in accommodation and food work from home.  

“Approximately 30% of managers and professionals work from home, compared to just 1% of employees in elementary occupations”, according to the ESRI. 

In addition, couples with children were more likely to work from home than lone parents. 

Around 6% of so-called “essential” employees work from home, though that figure rises to 16% for non-essential employees.

“With schools and creches closed, and a relatively high number of essential employees with caring responsibilities because they are disproportionately female and/or lone parents, the inability to work from home exacerbates childcare difficulties,” the ESRI said. 

“Given the high numbers of lone parents among essential employees, this underscores the need for adequate childcare provision for essential employees given the closure of schools and creches,” the report says. 

It also notes that many essential employees work in the lowest earning occupations, which constrains their ability to pay for private sector childcare, and leaves many “heavily reliant” on relatives. 

For “non-essential” workers, warns the ESRI, the inability to work from home will cost jobs.  

The authors say their research identifies a number of occupations and groups of workers – for example lower paid clerical jobs – where potential improvements could be made in respect of the incidence of home working.  

“While working from home is quite prevalent among higher paid occupations, increasing this capacity among lower paid occupations may be key to combating the potential unequal consequences of job losses and the economic contraction that will follow the Covid-19 crisis”, they state. 

“Increasing the capacity to work from home among women, non-Irish nationals, younger workers and lone parents may help to prevent certain groups from facing disproportionately bad outcomes,” the ESRI added.

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Almost 5,000 new homes built in first quarter – CSO

New figures from the Central Statistics Office show that a total of 4,986 new homes were completed in the first quarter of this year, an increase of 17.2% on the same time last year.

Construction sites were closed in the latter half of March due to Covid-19 restrictions and so the impact on completions will not have fed through into the first quarter completions. 

The CSO reported a 75.2% increase in apartments completed in the first three months of 2020 with apartment completions rising from 596 to 1,044. 

This brings the number of apartments completed close to the level of single dwelling completions with 1,094 once off houses finished in the first quarter.

Of the 1,044 apartments completed this quarter, over 80 were in Dublin with 59.7% in Dublin City alone. 

Of all home completions in Dublin, 50.5% were apartments. In Dublin City this proportion rises to 91.1%.

Meanwhile, the number of scheme dwellings (multi-unit developments with two or more houses) built rose from 2,570 at the start of 2019 to 2,848 in the first quarter of this year, an increase of 10.8%.

Single dwellings completed remained fairly static, raising just 0.6% from 1,088 to 1,094.

The CSO noted that scheme dwellings made up 57.1% of all new home completions in three months to March while 22% were single dwellings and 20.9% were apartments. This compares to 60.4% scheme, 25.6% single and 14.0% apartments the same time last years.

Taoiseach Leo Varadkar last week announced that lockdown restrictions will largely remain unchanged up to May 18, but after than construction sites will begin to reopen.

Goodbody economist Dermot O’Leary said that Ireland has lagged other countries in terms of the reopening of sites. 

“Data published by the European Construction Industry Federation states that 92% of activity in Ireland was completely stopped at mid-April. This compares to 90% of construction running in Sweden,” he said. 

“Ireland has definitely taken the cautious approach in its lockdown measures and we expect developers will have to meet stringent requirements before sites are reopened,” he added.

Dermot O’Leary said he expects home completions to fall substantially.

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Enterprise Ireland announces ‘repayable’ fund for SMEs

Enterprise Ireland has a Business Response Unit, and in these times, it has been busy.

Over 1,000 businesses have engaged with the unit since March, with 60% of those companies saying Covid-19 has had a very negative or critical impact on their business.

Financial planning was listed as one of the key priorities identified by client companies in responding to the crisis. 34% of firms have engaged with a financial institution, and one in three have put a financial plan in place.

As part of the Sustaining Enterprise Fund recently announced by the Government, Enterprise Ireland today announced that it will administer a specific Sustaining Enterprise Fund for Small Enterprises.

This fund will provide a €25k to €50k short term funding injection to eligible smaller companies to support business continuity and to strengthen their ability to return to growth. Eligible companies will have suffered, or be projected to suffer, a 15% or more reduction in actual or projected turnover or profit as a result of the Covid-19 outbreak.

Julie Sinnamon, CEO, Enterprise Ireland said many businesses are facing acute challenges particularly around cashflow, investment and holding onto the skills that they worked so hard to recruit. 

“Our focus is on supporting companies through this period, getting the right advice and access to funding that they may need,” she said. “Cash flow and business continuity are key at this point. To help in these critical areas, the €180 million Sustaining Enterprise Fund will provide repayable advances of up to €800K, while smaller businesses can access repayable funding of up to €50k to support business continuity. We are in constant contact with our clients about the range of Enterprise Ireland supports and wider Government supports available to them.”

Minister for Business, Enterprise and Innovation, Heather Humphreys said the Government last weekend announced an expansion of supports for all businesses impacted by Covid-19 by €6.5bn.

“We now have a comprehensive suite of supports for firms of all sizes, which includes grants, low-cost loans, write-off of commercial rates and deferred tax liabilities, all of which will help to improve cashflow amongst our SMEs.

Enterprise Ireland also said that its innovative High Potential Start-Up (HPSU) Fund, which provides up to €800k for innovative technology companies will help start-ups to maintain liquidity and sustain their businesses in the short to medium term.

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Economy forecast to contract by 8% in 2020

Ireland’s economy will contract by 8% in 2020 and expand again by 6% in 2021 as the coronavirus pandemic takes its toll, according to the European Commission’s latest economic forecast.

The economic uncertainty has been compounded by “specific” Irish factors, such as Brexit and changes in international taxation, the outlook says.

Overall, Ireland’s unemployment, deficit and debt levels will rise, but there are some consolations, such as the performance of the Irish pharmaceutical and medical sectors. 

Unemployment is expected to rise to 7.5% this year but recover to pre-crisis levels by the last quarter of 2021, the report says.

The Commission’s spring economic forecast predicts the pandemic will trigger ” very severe socio-economic” consequences for the global and EU economies, with the EU entering a recession of “historic” proportions in 2020.

The report says the euro area will contract by a record 7.75% this year and grow by 6.25% in 2021, while the EU as a whole will contract by 7.5% in 2020 and grow by around 6% in the same period.

The onset of the pandemic changed Ireland’s economic activity “dramatically”, from a 5.5% real GDP growth performance in 2019 and the country entered 2020 on “a strong economic footing”.

The health emergency disrupted global value chains and affected large information and telecommunications companies registered in Ireland, the report finds.

Domestic consumer activity slumped due to containment measures with people unable to access certain goods and services, while households postponed purchases of durable goods.

The report states that private consumption is due to shrink by 9% this year and recover by 4% next year.

“Ireland has banned construction works since late March, while investment in equipment and other areas is likely to be postponed or even lost,” the forecast says.

“The negative outlook is corroborated by confidence and other activity indicators, such as credit card use, which suggest a large contraction in economic activity since the lockdown.”

However, the negative outlook is offset by more positive predictions, such as strong export growth in the pharmaceutical and medical products sector.

“In addition, exports of information and communication goods and services may also prove resilient,” the Commission report says. 

However, the activity of multinationals remains difficult to predict, says the report, and “can affect GDP figures in either direction”.

Ireland is expected to experience negative inflation of -0.3% due to the sharp fall in oil prices, although food and necessities are expected to rise in price. The Commission predicts moderate inflation of 0.9% in 2021.

Despite the surge in unemployment, the Commission expects the Irish labour market to weather the storm.

In early 2020, the unemployment rate stood at 4.8%. The report notes that since the end of March the lockdown has prevented at least one fifth of the workforce, especially in the retail, accommodation and recreation sectors, from working.

However, the report says the increase in unemployment will be “relatively muted” thanks to the Government’s income support schemes.

As such, the unemployment rate is expected to rise to 7.5% amid losses in consumption and exports. 

“The rebound of the economy in 2021 is forecast to bring employment gradually back to pre-crisis levels by the last quarter of 2021, resulting in an average unemployment rate of 7% in that year,” the report says.

While the Government had managed a surplus of 0.4% of GDP in 2019, due to a “booming economy, which brought about strong increases in tax revenues and social security contributions and a continued fall in the interest burden”, the economic slump is expected to have a “strong negative impact on the general government balance in 2020,” the Commission stated.

This will be due to the Government’s fiscal measures since the pandemic struck, as well as declining revenues, lower tax receipts, and lower personal income and corporate tax receipts, and lower profits. 

The Commission suggests that wage subsidies to protect jobs, welfare payments and healthcare support will raise current expenditure costing the Exchequer around 2% of GDP. 

Overall, such pressures are projected to lead to a budget deficit of 5.5% in 2020, falling to around 3% in 2021. 

The Irish debt-to-GDP ratio is expected to reach 66.5% in 2020 and 66.75% in 2021. 

“Risks to the fiscal outlook are elevated and reflect various sources of uncertainty such as: the outlook for growth and jobs, the final cost of the fiscal expansion to counter the crisis and the changes in the international taxation environment,” the report concludes.  

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China exports see surprise 3.5% jump in April, imports fall

China’s exports saw a shock 3.5% rise in April despite the global impact of the coronavirus pandemic, official figures showed today, but analysts warned of weakness ahead as key markets suffer downturns. 

The brewing threat of a renewed trade war with the US could also pose a problem, observers said.

Imports fell 14.2% on-year, a steeper drop than last month, according to China’s Customs Administration. 

A forecast of analysts by Bloomberg had predicted an 11% dive in exports and a 10% plunge in imports. 

Beijing says it has been successful in largely curbing the spread of the virus in the country, and many businesses and factories are now back at work after months of closure to contain the outbreak. 

Louis Kuijs of Oxford Economics said that April shipments may have been boosted by exporters making up for shortfalls in the first quarter due to supply constraints then. 

In the two months from January to February – the height of the coronavirus outbreak in China – exports had plummeted 17.2%. 

Analysts also said that another potential boost was China’s exports of medical supplies as the rest of the world grappled with the pandemic. 

The manufacturing of parts for 5G infrastructure in Asian supply chains would have continued as well, and given that these are tied to government-planned projects, they are less affected by market demand, they said. 

But in spite of the bounceback this time – the first return to positive territory for exports this year – analysts do not expect the trend to last as China’s key trading partners fall into recession.

Julian Evans-Pritchard of Capital Economics said Chinese shipments are unlikely immune from the sharp slowdown in global activity for long, pointing to a recent plunge in South Korean exports and noting they are a “timely proxy for global demand”. 

Analysts have warned of an enormous impact on world trade from the coronavirus pandemic, which has killed more than 260,500 people worldwide. 

Oxford Economics expects global trade in goods and services could be cut by up to 15% in 2020, much larger than the 10% decline in 2009 during the global financial crisis. 

Evans-Pritchard added that “the threat of additional US tariffs on Chinese goods shouldn’t be ignored”. 

Recovery has been slow in the world’s second-largest economy, which was already tackling weak overseas demand and a bruising trade war with the US before the outbreak ground much of the country to a halt. 

“The Chinese government is still maintaining some social distancing measures, consumer confidence is clouded by elevated uncertainty, and plummeting exports dent household income and slash millions of jobs,” Nomura analysts said in a recent report. 

The daily average of domestic trips over the Labour Day holiday was half of last year’s total, while daily tourism revenues fell 68%.

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Grocery sales up by 17% amid coronavirus crisis

The latest retail data shows that 50% of households in Ireland bought baking supplies in recent weeks, with flour sales up 52% and sugar sales rising by 43%.

The data from Kantar also shows that home grocery sales grew by 17.2% in the 12 weeks to 19 April.

But Kantar said that sales of non-grocery items like clothes and food on the go are likely to have fallen, meaning it is still a challenging time for retailers.

Today’s figures show that shoppers put an average of four extra items in their trollies, which led to an increased monthly spend of around €118.  

10% of Irish households shopped online for groceries in the most recent four weeks, spending an extra €20.6m. 

Kantar noted that the number of retired people getting groceries delivered has doubled in the past 12 weeks, indicating the take up of delivery slots among more vulnerable groups.

While it is a boom time for supermarkets, today’s data showed that in the most recent four weeks, year-on-year grocery growth slowed slightly from March levels to 22.5%. 

During that period the average household visited the grocers 19 times, two times fewer than the same period last year. 

Today’s supermarket figures also show that Lidl was the fastest growing of all the retailers during the full 12-week period, boosting sales by 22.1% and increasing its market share to 12% while Aldi grew by 15.6% to hold an 11.8% share. 
SuperValu’s large store estate saw it benefit from shoppers choosing to visit outlets closer to home, and it was the only retailer not to experience reduced footfall during the past four weeks.

Kantar said that Dunnes is growing slightly behind the rest of the market as a result, but with extremely narrow margins, only 0.5 percentage points separates the three retailers at the top of the table.SuperValu is at the top of the supermarket rankings with a market share of 22.2%, while both Tesco and Dunnes have market shares of 21.7%.

SuperValu said the result is testament to the “remarkable effort and dedication of our independent retailers and their staff as well as the implementation of protective measures such as plexiglass at tills and increased contactless payment limits for staff and customers a very early stage during the Covid-19 crisis.”  

It added that its robust supply chain ensured shelves remained fully stocked from the outset of the crisis. 

David Berry, managing director-Ireland at Kantar, said that consumers are looking for ways to pass the time during lockdown.

“People are turning to cooking from scratch as a good way to keep their families entertained at home. Sales of ready meals are in decline but 50% of Irish households bought baking supplies in the past four weeks, with flour up 52% and sugar up 43%,” he said. 

Shoppers are also trying to recreate their favourite takeaway dishes have also boosted sales of ethnic ingredients by 41% and herbs and spices by 61%. 

David Berry also said that while beer gardens and wine bars remain off limits, people have been turning to the grocers for their favourite tipples and boosted sales of alcohol by 70%, an additional €47m. 

“Wine sales increased by 50% year on year, while beer, lager and cider sales benefited from the warmer weather and were double the levels in the same four weeks in 2019,” he added.

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Covid-19 unemployment payment recipients rises to nearly 600,000

There are now 598,000 people dependent on the Covid-19 Pandemic Unemployment Payment, which is up 7,000 in the last week, according to the latest figures from the Department of Employment Affairs and Social Protection.

This week’s Pandemic Unemployment Payments will cost €209.3m, with 11,000 recipients receiving the payment for the first time this week.

Workers aged under 35 account for over 43% of recipients of the payment.

Of those in receipt, 122,500 (20.5%)  are aged under 25, while 137,700 (23%) are aged between 25 and 34. 

144,100 recipients (24%) are aged between 35 and 44, and 113,100 (18.9%) are aged between 45 and 54.

80,600 (13.5%) are over 55 – but persons aged over 66 are not eligible for the payment. 

The figures also show 52,000 employers have now registered with the Revenue Commissioners for the Temporary Wage Subsidy Scheme (TWSS), with more than 427,000 workers having their wages subsidised under the scheme.

These figures come on top of around 205,000 people who were already on the Live Register at the end of March.

In total, around half the workforce are either partially or totally dependent on the State for income support.

Workers aged under 35 account for over 43% of recipients of the Pandemic Unemployment Payment.

Since the Pandemic Unemployment Payment was launched on 16 March, the department has processed 694,000 applications or a jobseeker’s payment.

However, 73,000 subsequently closed their payments, in many cases because they have been re-hired under the TWSS.

Unlike for Jobseeker’s Benefit, there is no requirement for claimants for the Pandemic Unemployment Payment to produce proof that they have been laid off by their employer.

However, the department insists that it conducts pre and post-payment checks to verify eligibility, including cross-checks against the Revenue Commissioners’ records for the Temporary Wage Subsidy Scheme.

It also notes that its inspection staff work with gardaí and customs staff in security checks on major transport routes and transport hubs, and advises that confidential reporting facilities are available for the public to report cases of suspected “mis-claiming”.

Minister for Employment Affairs and Social Protection Regina Doherty cited today’s report published by her department, which found that some sectors, including retail and hospitality, had suffered a severe impact.

The report – ‘The Initial Impacts of the COVID-19 Pandemic on Ireland’s Labour Market’ – states that tourism, hospitality, food services, retail and construction are the sectors have seen the worst job losses due to Covid-19.

It also notes that transitional measures will be required when recovery gets under way to re-establish employer/employee relationships, minimise disincentives to work, and assist the unemployed in finding new jobs.

“Working with the new Labour Market Advisory Council I recently appointed, my officials are now planning the necessary further supports and initiatives we will need to put in place to ensure that the thousands of workers who have been displaced can return to work as quickly as possible,” Ms Doherty said.

“We are determined that this short term health crisis will not be a long-term economic one for all those workers and families who have been affected,” she added.

The minister also cited the measures announced by the Government on Saturday to give further support to businesses to restart, reconnect and rehire staff who have been laid off or furloughed.

Overall, 39,100 people have now been medically certified to receive the Covid-19 Enhanced Illness Benefit of €350 per week.

The majority of these have been advised to self-isolate on a precautionary basis, with a minority actually contracting the virus.

The figures show 341,800 of those receiving the Pandemic Unemployment Payment are male, while 256,200 are female.

The sectors with the highest numbers of CPUP recipients are accommodation and food service activities (128,500), wholesale and retail trade (90,300) and construction (79,300). 

On a county-by-county basis, Dublin tops the league for Pandemic Unemployment Payment with 171,700 claims.

Cork is in second place with 61,200, with Galway coming in third with 32,000 claims.

Leitrim has the fewest claims with 4,100 applications.

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Challenging times ahead as mortgage market looks set to be impacted by Covid-19 crisis

New figures from Banking and Payments Federation Ireland show that a total of 8,728 new mortgages worth €1.996 billion were drawn down by borrowers during the first quarter of 2020.

BPFI said this represents an increase 1.8% in volume and 6% in value on the corresponding first quarter of 2019.  

Today’s figures show a fall of 28.8% in volume and 27.9% in value compared to the fourth quarter of 2019, but BPFI said noted that the first quarter is typically the weakest quarter in any year and the fourth quarter is the strongest.

Meanwhile, first-time buyers remained the single largest segment by volume (50.4%) and by value (50.8%). 

BPFI also published today the latest figures from its Mortgage Approvals Report for March, which showed that a total of 3,733 mortgages were approved during the month.

The number of mortgages approved rose by 6.2% month-on-month but fell by 9.9% compared with the same time last year.

BPFI said the number of mortgages approved rose by 6.2% month-on-month but fell by 9.9% compared with the same time last year.

Mortgages approved in March were valued at €879m, up by 6.5% on a monthly basis but down 4.5% year-on-year.

Brian Hayes, chief executive of BPFI, said today’s figures are broadly in line with what it would have expected to see in a pre-Covid landscape with the approvals figures in particular reflecting a tapering off in the mortgage market over the past 12 months due to the growing affordability challenge for buyers. 

“Looking ahead, there is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole, given the changing conditions in the economy and its direct impact on incomes and employment,” Mr Hayes said.

Mr Hayes said he expects to see the first effects of Covid-19 on the mortgage market coming through in April’s mortgage approvals figures which will be published at the end of May. 

“The change in individuals’ financial and employment circumstances will have an impact on mortgage approvals, with banks taking a pragmatic and responsible assessment of all applications from both a borrower and lender perspective,” he stated. 

“Taking out a mortgage is a major undertaking for borrowers, and no lender wants to see a borrower under distress or difficulty, especially in these highly uncertain times,” he added.

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23% of firms cease trading temporarily due to Covid-19 – CSO

New figures from the Central Statistics Office show that 23.3% of businesses have ceased trading temporarily since the outbreak of Covid-19, while 0.6% have ceased trading permanently and 76% continue to trade.

The CSO today published the first results of its Business Impact of Covid-19 Survey, the first of a temporary fortnightly snapshot of how the coronavris crisis is affecting business in Ireland.

The online survey was sent to a sample of 3,000 businesses and the information was collected between Monday 20 and Friday 24 April. The response rate to the survey was 26.4%. 

70.8% of construction enterprises that took part in the survey had ceased trading either temporarily or permanently, while 88.1% of accommodation and food services had ceased trading.

Of the Government supports available to businesses, 47.1% said they had utilised the Revenue Temporary Wage Subsidy Scheme, while 51.6% said they had not availed of any supports.

Over 54% of responding enterprises also said their turnover over the five-week period from March 16 to April 19 was significantly lower than normal due to Covid-19.

16.2% of responding enterprises said their turnover was slightly lower than normal. 

A total of 70.4% of companies responded that their turnover was lower than normal, the CSO added.

The new survey also shows about a third of companies have let staff go or have introduced reduced working hours, while 69% of businesses have implemented some form of remote working.  

Today’s CSO figures to a survey of manufacturing companies by AIB today which showed that new orders, exports and jobs all fell at record rates in April. 

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Markets drop on US-China trade war fears

European stock markets and oil prices fell this morning as a spat between top U.S. officials and China over the origin of the coronavirus fuelled fears of a new trade war, derailing a rebound in global markets.

European shares opened down 2.5% with U.S. stockfutures trading close to 1% in the red.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.5%, pulled down by Hong Kong where the Hang Seng returned from a two-session holiday with its biggest drop in six weeks.

U.S. Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the virus emerged from a laboratory in the central Chinese city of Wuhan.

Pompeo did not provide evidence or dispute an earlier U.S. intelligence conclusion that the virus was not man-made.

An editorial in China’s Global Times said he was “bluffing”and called on the United States to present its evidence.

“Concern on the potential for another flare up between theUS and China is dominating price action”, commented RBCstrategist Adam Cole in a morning note.

Simon Black, head of investment management at wealth management firm Dolfin said investors were also adjusting their forecasts over the depth of the economic damage inflicted by the pandemic.

“It’s also the economic reality sinking in”, he said, adding that the rebound of over 20% from lows hit in March by global equities was likely not sustainable.

Companies listed on the pan-European STOXX 600 are currently expected to report a 40% decline in earnings in the second quarter.

Manufacturing activity in the euro zone collapsed last month as government-imposed lockdowns to stop the spread of the new coronavirus forced factories to close and consumers to stay indoors, a survey showed.

“We’ve just come off a rally of hopes, not a rally on fundamentals”, Black said, pointing to the massive monetary and fiscal stimulus pledged by governments and central banks around the world.

Recent economic data paints a dire picture of the global economy after weeks of lockdowns.

In the United States, manufacturing plunged to an 11-year low last month, consumer spending collapsed, and some 30.3 million Americans have filed claims for unemployment.

Oil prices fell again, paring last week’s gains, on worries a global oil glut may persist even as coronavirus pandemic lockdowns start to ease.

U.S. West Texas Intermediate (WTI) crude futures fell to $18.66 a barrel while Brent crude futures were down 1.7% at $26, after touching a low of $25.50.

Brent rose about 23% last week following three consecutive weeks of losses.

In currency markets, the dollar rose 0.1% to 99.38 against a basket of currencies while the euro was down 0.48%at $1.0930.

The safe-haven yen fell 0.2% to 106.72 per dollar.

Global coronavirus cases have surpassed 3.5 million and deaths have neared a quarter of a million, according to a Reuters tally.

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