Squawk Box Europe Express

Hong Kong havoc…protests erupt in the territory after Beijing announces it will be imposing new security legislation at the beginning of the National People’s Congress. The tensions prompt the Hang Seng to fall nearly 5 per cent, weighing on other Asian markets. President Trump has vowed firm action if the law goes ahead. Also at the NPC, Premier Li Keqiang says the government has dropped its growth target for 2020, citing economic uncertainty due to the Coronavirus outbreak. Facebook founder Mark Zuckerberg has said that those working from home – up to 50 per cent of employees - will continue to do so permanently but those moving away from Silicon Valley would face pay cuts.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

The Federal Reserve discusses using forward guidance and longer-term measures to support the damage to the U.S. economy, such as capping interest rates. However, Dallas Federal Reserve President, Robert Kaplan, tells CNBC that consumer confidence and a sense of safety will drive the recovery rather than monetary policy. In the UK, Bank of England governor Andrew Bailey changes the BOE’s policy stance and considers negative interest rates, as the UK government issues bonds at a sub-zero level for the very first time. China’s delayed NPC gets under way with the focus on a potential slower growth rate in the wake of the pandemic. Brazil becomes the new epicentre of the outbreak, as the Latin American country posts a new record number of daily Coronavirus cases. And in aviation news, Lufthansa says it is in advanced talks with the German government over a €9bn state bailout.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Mixed messages…Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary give different assessments of the post-Coronavirus recovery in testimonies to Congress. But both defend their monetary and fiscal stimulus measures, as lawmakers challenge them on giving preference to Wall Street over Main Street. The U.S. Congressional Budget Office has forecast GDP will plunge 38 per cent in the second quarter on an annualized basis, while the Treasury revives the long-defunct 20-year bond in order to help make up the shortfall of a record deficit. U.S. stock markets snap a three-day winning streak following questions over drug firm Moderna’s trial of an early Covid-19 vaccine. Big retail is also hit on Wall Street, as Home Depot’s higher costs eat into its net income while Walmart’s early gains don’t hold despite unprecedented online sales. And in more retail news, Facebook’s Mark Zuckerberg hopes to vie for business with Amazon’s Jeff Bezos, as he unveils a new shopping feature on the social media giant’s pl

President Trump threatens to withdraw the U.S. from the WHO after accusing it of mis-handling the Coronavirus pandemic and being China-centric. However, Beijing pledges an additional $2bn in funding for the global health body. Asian stocks follow the Wall Street rally after the Dow soared more than 900 points on encouraging vaccine trial news from U.S. biotech firm Moderna. French President Emmanuel Macron and German Chancellor Angela Merkel have proposed a €500bn recovery pact to aid the hardest-hit EU members. China slaps Australia with 80 per cent tariffs on its barley following persistent demands for a probe into Beijing’s response to the virus outbreak. And in auto news, workers across Europe return to car plants ahead of the release of EU car registration numbers for April.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Pandemic problems… Japan slips into recession for the first time in nearly 5 years as the country’s Q1 GDP data shrinks by 3.4 per cent. In the U.S., Federal Reserve Chairman Jerome Powell says that a vaccine is key to economic recovery while Fitch downgrades France’s credit rating to negative due to depressed productivity and a widening deficit. FCA has been permitted to apply for a €6.3bn credit line from the Italian government in a bid to shore up its balance sheet ahead of the merger with PSA. Alibaba founder Jack Ma resigns from the board of Softbank after 13 years while Saudi Arabia’s sovereign wealth fund buys up almost $8bn of U.S. and European blue-chip companies.   See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Industrial improvement… Chinese output rises for the first time this year but retail sales and fixed asset investment continues to decline. Tensions between the U.S. and China escalate as President Trump warns he could completely cut ties with China, saying he has no reason to talk to President Xi Jinping right now. CNBC learns the President is set to sign an executive order to require key medicines to be manufactured in the U.S to reduce reliance on foreign supply chains. French pharmaceutical giant Sanofi is in hot water with the Élysée Palace after CEO Paul Hudson suggested that the U.S. could be first in line to receive its potential Covid-19 vaccine. And in telco news, BT has refused to comment on whether it will offload its OpenReach stake to fund the launch of its super-fast fibre.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Warnings on Wall Street… U.S. Federal Reserve Chairman Jerome Powell warns of prolonged economic damage, sending global stock markets into the red. Meanwhile, Cleveland Fed President Loretta Mester tells CNBC that the outlook for 2020 looks ‘dire’, adding that any recovery is likely to be slow, but shoots down expectations the central bank will lower rates into negative territory. President Trump says he disagrees on that point but calls Powell his “most improved player”, praising him for his recent actions to mitigate the fallout from the outbreak. Billionaire investor David Tepper issues a stark warning, telling this channel that the market is the second-most overvalued ever, sending the Dow to a session low. In autos news, FCA and Peugeot suspend their dividends for this year but jointly state that their merger is on track. We also speak to Zurich Insurance CFO George Quinn who says the company is bracing for up to $750m of virus-related claims this year.  See Privacy Policy at https://art19.com/

Wall Street suffers steep losses with the Dow Jones falling more than 400 points and the Nasdaq breaking a six-day rally. This comes on the back of Dr Anthony Fauci’s Coronavirus Senate hearing where the White House’s top virus adviser warned against reopening the U.S. economy too soon. The pandemic also weighs on Commerzbank. The German lender swings to a loss in the first quarter and warns that it is difficult to give concrete guidance. CNBC has learned that ride-hailing app Uber has made an offer for food delivery service Grubhub but the price has yet to be decided. And the UK awaits first-quarter GDP data, which is expected to show that the British economy has severely contracted, as retail sales fall by more than 19 per cent for April.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

China’s industrial deflation worsens as producer prices fall 3 per cent in April. It’s the largest slump in four years. New reports of Coronavirus clusters in Seoul and China weigh on Asian markets but on Wall Street the Nasdaq bucks the trend, posting a sixth consecutive day of gains for the first time since December. German steel giant ThyssenKrupp sees it net loss widen to nearly €1bn in the second quarter, as all parts of the business, from the elevator unit to the car parts division, see earnings decline. In further autos news, Toyota says it will post an 80 per cent drop in full-year operating profit in the wake of the pandemic – the car giant’s poorest result in almost a decade. Tesla founder Elon Musk is defying Californian lockdown orders by reopening his flagship Alameda County plant. He has dared authorities to arrest him over the move. As the UK economy begins to reopen, with manufacturing and construction sector workers being urged to return, opposition parties slam Prime Minister Boris Johnson o

From ‘Stay at Home’ to ‘Stay Alert’ - Prime Minister Boris Johnson lays out a conditional plan to lead parts of the UK population back to work but he refuses to lift the lockdown just yet. On the continent, France and Spain ease restrictions from today with just over half of Spaniards allowed to resume their normal lives as part of the first phase of the country’s exit. This comes after the country logs its lowest death toll in two months. Markets in Asia follow Wall Street into the green, buoyed by economic restarts around the world and shrugging off concerns over April’s U.S. unemployment figures. The PBOC promises to further bolster the Chinese economy, also helping sentiment. In Brussels, the EU threatens to sue the German government over its constitutional court ruling which challenges the ECB’s asset purchase programme.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Asian stocks rise on signs that relations between Washington and Beijing are warming after trade representatives from both countries agreed to stronger cooperation in implementing the first phase of the trade deal. U.S. non-farm payroll is expected to show that more than 20m jobs were lost last month. Siemens says it will hit the bottom in Q3 and see full-year revenue decline, after posting an 18 per cent drop in Q2 industrial profit. Uber sees shares spike in extended trade on news that bookings are up from April’s lows. CEO Dara Khosrowshahi assures the market that the ride-hailing app will be profitable in a matter of quarters.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

A surprise recovery…Chinese exports unexpectedly rise in April with a sharp uptick in overseas shipments since December. However, lower domestic demand provides softer-than-expected import numbers. AB Inbev withdraws its full-year guidance after beer volumes fall nearly 10 per cent in Q1. The brewing giant says it has reopened all of its sites in China. Air France-KLM forecasts significantly negative operating earnings this year as its net loss widens to €1.8bn in the first quarter. Credit Suisse says it can’t predict the extent to which the Coronavirus outbreak will impact its financial goals, striking a more pessimistic note than its earnings release a few weeks ago. Meanwhile, Telefonica and Liberty Global reach a deal to create a new UK mobile and broadband behemoth, while Telefonica reports net profit halved in the first quarter.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Media giant Disney cancels its 2020 dividend payout after suffering a $1.4bn hit to income due to the Covid-19 outbreak. It has announced plans to reopen its Shanghai theme park from next week. BMW lowers its margin outlook, saying that the negative impact of the virus is lasting longer than expected with second-quarter data being worse than the first. Unicredit suffers a bigger loss than anticipated as it sees trading income fall and is forced to take a large writedown on loans. In Germany, state heads agree a draft reopening plan that would see all shops and restaurants resume trading but with provisions for fresh lockdowns if cases rise.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Crunch time for the ECB…Germany’s constitutional court is set to rule on whether the ECB’s sovereign bond-buying programme is appropriate in a decision that could hinder its QE measures. BNP Paribas' first-quarter profit falls by 33 per cent as market turmoil weighs on its trading unit. CFO Lars Machenil tells CNBC the economic outlook is difficult. WeWork founder Adam Neumann is suing Softbank for abandoning a $3bn tender offer that was part of the office-sharing firm’s rescue package.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Chinese oil and airline stocks have dragged the Hang Seng down and U.S.-China tensions weighed on sentiment. U.S. officials reportedly believe China covered up the Coronavirus outbreak to hoard medical supplies. President Trump has blamed Beijing and warned that U.S. deaths could top 100,000.  Billionaire investor Warren Buffett has sold off all airline positions and warns of gloomy times ahead for the aviation sector. The FDA has granted Roche approval to carry out anti-body testing. The Swiss drug maker has vowed to double its production over the coming months.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

European Commission President Ursula Von Der Leyen tells CNBC exclusively that an investigation into the origins of Coronavirus is needed, with the cooperation of China. President Trump has threatened Beijing with fresh tariffs and says he has seen evidence that links the outbreak to a laboratory in Wuhan. The Dow Jones ends April on a high – its best monthly performance since 1987 – driven by gains in energy stocks, despite the recent historic sell-offs in oil. Amazon shares sink as founder Jeff Bezos warns the retail giant could post a loss in the second quarter after dedicating $4bn to virus response measures. Apple beats first-quarter expectations but shares dip in after-hours trading after CEO Tim Cook refuses to provide guidance amid the pandemic.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

A global rally…The S&P 500 is set for its best month in nearly 50 years following positive news on a Gilead drug trial. U.S. Federal Reserve chairman Jerome Powell says the American economy has suffered “an extraordinary shock” in the wake of the Coronavirus pandemic. He has warned of a severe economy contraction in the second quarter and says the central bank will maintain low rates for as long as needed. Hopes of a quick recovery in China have been dashed as export numbers fell at the fastest pace since the financial crisis. In tech news, Microsoft sees shares soar in extended trade on increased cloud revenues through remote working. Plus, Facebook’s shares jump in after-hours trading as it says advertising revenues made a comeback in April. Its CFO David Wehner has told CNBC it remains cautious.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Standard Chartered warns of severe market dislocation as its credit impairments jump sharply. Shares rise in Hong Kong as its CFO, Andy Halford, says the signals coming from Asia are positive. Airbus posts a net loss in Q1 and provides no guidance, blaming limited visibility. The French aerospace giant says the virus has prevented it from delivering 60 aircraft. Alphabet’s shares rise in extended trade after saying the slowdown in advertising revenue is easing, beating more pessimistic forecasts. Plus, we speak to Rainer Seele, CEO of Austrian oil company OMV, as it reveals an 8 per cent drop in core earnings.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

HSBC’s first quarter profit slumps 48 per cent as it warns the Coronavirus crisis will have a material impact on capital and liquidity. CFO Ewen Stevenson, however, says it is starting to see some signs of recovery in China. Swiss lender UBS has posted a 40 per cent rise in Q1 net profit thanks to lower loan loss provisions and higher trade revenue. CEO Sergio Ermotti says its clients have remained active. Santander creates a €1.6bn reserve pot to mitigate the virus fallout after it sees Q1 profit nosedive by 82 per cent. And in Switzerland, industrial giant ABB warns the group will be significantly challenged by a sharp drop in demand due to the lockdowns.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

The Bank of Japan launches an unprecedented expansion of its quantitative easing programme, pledging unlimited bond buying. The stimulus increase moves Asian equities higher. Chinese industrial profits fall 35 per cent in March but recover from the steepest drop in a decade as almost a quarter of sectors see an increase in activity. Deutsche Bank surprises by posting a profit in Q1 but the German lender warns that it will miss its capital target due to the recession caused by the Coronavirus pandemic. In the UK, Prime Minister Boris Johnson returns to work to lay out a plan to lift the nationwide lockdown. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.