Squawk Box Europe Express

The U.S. 10-year Treasury yield spikes to its highest level since 2019 on Fed Chairman Jerome Powell’s recent hawkish comments. Asian equities, however, enjoy a three-week high with the Nikkei leading gains for the session. Billionaire investor Carl Icahn warns CNBC of a coming recession “or worse” as runaway U.S. inflation is compounded by the Ukraine invasion. CNBC learns that the EU is now unlikely to achieve unanimity on a Russian oil embargo with only a minority of member states supporting the move. The bloc will look for alternative methods to increase sanctions on Moscow. U.S. President Joe Biden heads to Brussels promising to target members of the Russian Duma with further restrictions and to offer refuge to fleeing Ukrainians. And in tech news, Elon Musk opens Tesla’s first European gigafactory near Berlin.

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U.S. Fed Chairman Jerome Powell issues a stark warning about rising inflation, saying he is prepared to ‘move more aggressively’ if necessary. U.S. markets tumble and 10-year Treasury yields hit their highest levels since 2019 as a result. U.S. President Joe Biden believes that as the Ukraine conflict continues, desperation may lead to President Putin to using chemical or biological weapons in the country. President Volodomyr Zelenskyy says that any resolution to end the war with Russia would require a referendum. The EU says it is ready to increase sanctions on Russia, with agreement on a full oil embargo looking increasingly likely.   

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Ukraine rejects Russian demands to surrender Mariupol as fighting intensifies in the besieged south-eastern city, while Russian forces cut the region off from the Sea of Azov amid a growing humanitarian crisis. China deflects criticism, insisting it is on the "right side of history" over the invasion of Ukraine, as President Biden warns of consequences if Beijing provides material support to Moscow, while China's Foreign Minister hits back at U.S. interference. U.S. and European stocks log their best week since 2020, but Asian equities start the week lower as the Fed-driven relief rally seems to fade. And, Germany agrees to a new long-term energy partnership with Qatar, as Europe's biggest economy looks to wean itself of its dependency on Russian energy.

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U.S. Secretary of State Antony Blinken dials up the pressure on China ahead of talks between Presidents Biden and Xi, slamming Beijing for refusing to condemn Russian aggression in Ukraine. Nato, meanwhile continues to reinforce its Eastern flank. We are live at an Estonian military base, where the Russian threat seems to have galvanised the alliance. Moscow avoids defaulting on its dollar- denominated interest bond repayments with JPMorgan reportedly processing the funds. In other market news, the VIX slumps to a one-month low which in turn helps U.S. markets turn positive for the week – their first in six – while crude prices surge past the $100-mark once again. Chinese President Xi vows to help ease the economic pain caused by his zero-Covid policy despite daily cases rising to their worst level since the start of the outbreak in the country. And in France, President Emmanuel Macron kicks off his re-election campaign by casting himself as a war-time leader.

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The U.S. Federal Reserve hikes rates for the first time since 2018 and indicates that there are six more to come in 2022. Wall Street jumps at the close on Chairman Jerome Powell’s assertion that the U.S. will likely avoid a recession. The central bank, however, downgrades growth forecasts while predicting core PCE will hit 4.1% at the end of the year. President Joe Biden calls Russia’s Vladimir Putin a “war criminal”, eliciting a sharp rebuke from the Kremlin. Washington approves up to $800m of military assistance to Kiev as Congress greets a video address by Ukrainian President Volodomyr Zelenskyy with a standing ovation. Zelenskyy tells NBC News that World War 3 may already be under way.

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Ukrainian President Volodomyr Zelenskyy says that talks with Moscow are becoming more realistic, admitting that NATO membership is unlikely. Zelenskyy hosted the prime ministers of Poland, the Czech Republic and Slovenia in Kiev. President Biden is to attend an extraordinary meeting with NATO leaders in Brussels next week. Meanwhile, Russia faces its first sovereign default on foreign currency debt in more than a century. Nickel trading will resume on the LSE which imposed a 5 per cent price move cap, after prices surged last week over continuing Russian supply fears. In Hong Kong, tech stocks rouse the Hang Seng after two days of huge declines while on Wall Street, the S&P 500 posts its first positive session in 4 days.

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U.S. and Chinese security officials hold seven-hour talks in Rome regarding the invasion of Ukraine but differing accounts of the meeting emerge. U.S. Deputy Treasury Secretary Wally Adeyemo tells CNBC there will be no let-up in sanctions pressure on Moscow. In Brussels, EU finance ministers agree to a fourth package of sanctions measures against Russia, including the removal of WTO ‘favoured nation’ status. We hear from German finance minister Christian Lindner who says Europe must be wary of risks to its own economy resulting from the conflict. Chinese tech stocks sell off for a second day after posting their worst session since 2008 amid a new Covid outbreak in several regions. However, retail sales and industrial output data help to beat expectations for January and February.  

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Washington and Beijing plan to hold high-level talks in Rome following reports that Russia has approached China for military equipment to support its Ukraine invasion. Moscow has also threatened to honour bond payments in rubles in retaliation to the freezing of more than half of its reserves. IMF Managing Director Kristalina Georgieva says that a Russian default is no longer “improbable”. Russian forces attack a military training base in western Ukraine, less than 30km from the Polish border, prompting Ukrainian President to once again call for NATO to close his country’s skies. Meanwhile, Asian markets are mixed. Australian and Japanese stocks surge but the Hang Seng plunges following renewed Covid cases and lockdowns in mainland China.  

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Russian forces near the Ukrainian capital, while conditions within the besieged southern port city of Mariupol worsen following unsuccessful talks between foreign ministers Dmytro Kuleba and Sergei Lavrov. Asian markets are in the red with Hong Kong’s Hang Seng leading the losses following a poor session by tech stocks on Wall Street. Oil is on course to complete its worst-performing week since November. ECB President Christine Lagarde announces an acceleration in tapering amid price pressures and geopolitical uncertainty. Stateside, inflation hits a new 40-year high with prices up by almost 8 per cent. U.S. Treasury Secretary Janet Yellen, however, is sanguine about the prospects of a recession. And we are live in Versailles where French President Emmanuel Macron hosts EU leaders to discuss energy independence and a unified response to Moscow’s aggression in Ukraine.

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Ukraine accuses Russia of genocide after its forces bombed a children’s hospital and maternity ward in the southern port city of Mariupol. Ukrainian President Volodomyr Zelenskyy suggested he has cooled on potential NATO membership ahead of talks between Foreign Minister Dmytro Kuleba and his Russian counterpart Sergei Lavrov in Antalya today. The S&P 500 posted its best day since June 2020 and the trading momentum pushed European equities to their biggest single-day gains for almost a year, with Asian stocks following suit. Oil has also recovered following a sharp decline. In corporate news, e-commerce giant Amazon has approved a 20-for-1 stock split as well as a $10bn share buyback.  

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