Squawk Box Europe Express

Queen Elizabeth's coffin lies in rest in Edinburgh, after a six-hour journey from Balmoral Castle, with her funeral set to take place on Monday September 19. King Charles III is formally proclaimed sovereign, with the new monarch set to start a tour of the UK in Scotland, for a service marking the passing of his mother. Ukrainian forces reclaim large stretches of territory in the northeast of the country, as Russia makes a hasty retreat and launches a barrage of missiles into Kharkiv. Crude prices slip amid warnings China's fuel demands could contract for the first time since 2002 as Beijing continues to impose a zero-covid policy approach to covid cases.

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The UK begins a period of mourning after Her Majesty Queen Elizabeth the Second dies aged 96, ending the reign of the world's longest serving monarch. His Majesty, King Charles the Third ascends to the throne, and says the loss of his mother will be felt deeply. Condolences pour in from around the globe as world leaders praise her dignity and dedication, calling her passing a great loss to the international community. In other news, the ECB hikes rates by a record 75 basis points, to the highest level since 2011, pushing eurozone yields higher as Christine Lagarde pledges to keep up the inflation fight. US Federal Reserve Chair Jerome Powell echoes Christine Lagarde's comments, vowing to continue his battle with inflation stateside.

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ECB policy makers are expected to hike by a record-breaking 75bps to combat inflation amid sky-rocketing utility prices. U.S. equities are in the green and crude prices bounce back following the Fed’s Lael Brainard insisting the central bank must hold its nerve in containing inflation. The dollar is at a 24-year high against the yen. New UK leader Liz Truss attends her first Prime Minister’s Questions as sterling sinks to its lowest level since 1985. The EU is proposing a price cap on Russian gas in order to mitigate the energy crisis facing the bloc.

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Wall Street closes in the red yet again. The Nasdaq posts its longest daily losing streak since 2016. Richmond Federal Reserve President Thomas Barkin says that rates must stay high until inflation is contained. New UK Prime Minister Liz Truss is reportedly planning a £100bn package to help millions of households cut sky-rocketing energy bills this winter. Gazprom has signed a deal to permit Chinese customers pay for its gas in yuan or roubles in a bid to move away from the dollar. Goldman Sachs says that European household energy costs could soar by $2tn by next year. We hear from Uniper CEO Klaus-Dieter Maubach who says “the worst is still to come” for European gas consumers. And in China, August exports numbers slow with Covid restrictions, inflation and energy supply problems all weighing heavily.  

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Gazprom reportedly claims Siemens Energy must carry out maintenance work on the Nord Stream 1 pipeline before gas supply to Europe can resume. Brussels is suggesting an EU-wide gas price cap. Enagas CEO Arturo Gonzalo tells CNBC that Moscow’s behaviour will only serve to strengthen Europe’s resolve to stop dependence on Russian hydrocarbons. Liz Truss becomes the next UK prime minister and is due to receive the keys to 10 Downing Street later today. In Australia, the RBA raises interest rates by 50bps in a bid to rein in price pressures. And in energy news, Opec+ announces a ‘miniscule’ cut of 100,000bpd from October.

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Gazprom indefinitely cuts gas supplies to Europe via the Nord Stream 1 pipeline. We hear from EU Commissioner Paolo Gentiloni at the Ambrosetti Forum who says that the Kremlin is weaponising energy but insists the West will not flinch. Sweden, Finland and Germany have scrambled to announce energy support packages, warning of a Lehman Bros-moment for the sector. In the U.S., equities are in the red for the third straight week despite solid August jobs numbers. Republican senator Lindsey Graham tells CNBC that Donald Trump must focus on policy should he decide to run for President in 2024. In Italy, Giorgia Meloni’s Fratelli d’Italia party leads polls just weeks before the general election. We speak to Democratic Party leader Enrico Letta who believes his party offers a viable alternative vision for the country. We are also live in Downing Street ahead of the Conservative Party leadership contest result.

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We are live on the shores of Lake Como in Italy for the Ambrosetti Forum as Italy announces a multi-billion euro inflation-busting emergency programme. This as the 10-year yield hit 4 per cent for the first time since June. However, Ambrosetti CEO Valerio De Molli tells CNBC that the country is not about to slip into another debt crisis. Investors anticipate the U.S. August jobs report with the Dow breaking a four-day losing streak. Russia vows to stop selling crude to nations supporting an oil price cap. Brent and WTI gain in early trade. And in food and beverage news, Starbucks unveils Laxman Narasimhan as its new CEO in a bid to impose the coffee chain giant’s Reinvention plan.  

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U.S. equities are set to start the new month in the red following their worst monthly performance in seven years. Treasury yields continue to rise as Cleveland Fed President Loretta Mester pours cold water on hopes inflation has been tamed. In Covid-hit China, factory activity contracts for the first time in August. Growth concerns weigh on crude prices which have suffered their worst losing streak since April 2020. Shares in Nvidia and AMD slump after Washington curbs exports to Beijing. And in the UK, sterling posts its steepest monthly decline since Brexit as Conservative Party leadership hustings draw to a close.  

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U.S. equities continue their slide in the red with the S&P 500 dipping below its 50-day moving average. Richmond Fed President Thomas Barkin, however, says a recession is not inevitable. We hear from French Finance Minister Bruno Le Maire who says that he backs emergency measures to rein in rampant energy prices throughout Europe. Russia cites maintenance issues as it turns off gas supplies into Europe via the Nord Stream 1 pipeline, which had already been functioning at just 20 per cent capacity. In China, factory activity falls yet again in August, hamstrung by Covid outbreaks and power outages. World leaders pay tribute to the last Soviet leader, Mikhail Gorbachev, who has died aged 91.  

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Asian markets stage a rebound following more declines from U.S. markets overnight. Treasury yields also climb with the 2-year bill hitting its highest level since 2007 following Federal Reserve Chairman Jerome Powell’s Jackson Hole comments last week. ECB chief economist Philip Lane has said he backs incremental rate hikes, warning that bigger increases could have adverse effects on the bloc. The EU has set out emergency measures to decouple electricity and gas in a bid to rein in ‘skyrocketing’ energy costs. In China, tech firms continue their slump, logging their worst earnings quarter ever. There is one outlier – e-retailer Pinduoduo – which posts better=than-expected Q2 numbers.  

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