Squawk Box Europe Express

It’s a mixed scene in U.S. markets as the S&P 500 dips from a new intra-day record while the Dow posts its fifth straight positive session. New studies suggest that Omicron will displace the Delta variant of Covid as global cases top one million for a second day. In Hong Kong, police raid the offices of Stand News – one of the territory’s few remaining pro-democracy newspapers – for alleged “seditious publication”. Washington and Moscow are scheduled to hold talks early in the new year as Russian troops continue to mass on the Ukrainian border.

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The S&P closes at a record high as the rebound continues from the Omicron-induced sell-off, ahead of what’s expected to be thin trade in a reduced festive session here in Europe. A major U.K. study indicates Omicron is up to 70% less likely to send patients to hospital – but the Health Secretary says it’s too soon to know the next steps, as COVID cases hit record levels. Russia and the U.S. will hold talks over Ukraine within weeks, amid what Moscow claims are existential threats from NATO. And, Peter Parker saves the day for Hollywood, as Spiderman: No Way Home crosses $800 million at the global box office – while Dwayne ‘The Rock’ Johnson tells CNBC the pandemic has changed things.

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U.S. equities rally for a second day, propelling Asian stocks higher as investors continue to look past COVID risks and count down to Christmas. In the U.K., COVID cases top 100,000 for the first time – as Wales and Northern Ireland set out new rules to tackle the Omicron-infused surge. The World Health Organisation warns “no country can boost its way out of the pandemic,” with Director-General Tedros Ghebreyesus calling for greater vaccine equity. And Tesla shares rally as Elon Musk says he has almost completed his pledge to sell 10% of his stake in the EV-maker.

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Wall Street rebounds, breaking a three-day losing streak as investors set aside Omicron concerns – with airlines and energy companies leading the charge. It’s another volatile 24 hours for Turkey’s lira, but the currency holds on to gains as the President outlines plans to safeguard against price swings. In the U.S., President Joe Biden unveils his strategy for tackling the Omicron variant, and calls on Americans to get vaccinated this Christmas. And, Sweden, Portugal and Germany bring back some restrictions amid the Omicron surge, as German Chancellor Olaf Scholz warns it cannot be ignored.

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Its covid across the board today as the UK Prime Minister, Boris Johnson, holds off from tightening covid restrictions despite mounting pressure. There were more than 90,000 confirmed cases of covid in the UK on Monday with cases doubling every week. German federal and state leaders will meet today to discuss tougher covid restrictions as hospitals bear the strain of rising cases and emergency staff illness. Meanwhile, President Biden is set to unveil steps to combat an increase in covid cases in the U.S today as new data shows omicron now accounts for around 73% of new cases across the country.

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The Netherlands becomes the first country in Europe to impose strict lockdown measures as the omicron variant spreads across the world. In London, the city mayor, Sadiq Khan, declares a major incident due to rising cases in the capital while the health secretary calls for more caution over Christmas. This comes as the UK sees around 22,000 new cases over the weekend. Meanwhile, the resignation of Lord Frost delivers another blow to the UK Prime Minister, Boris Johnson. Germany follows France and bans travelers from the UK while anti-lock down protests break out across the country.

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Sterling rallies as the Bank of England hikes rates for the first time in 3 years, raising its benchmark rate to 0.25% in anticipation of inflation hitting 6% by April. Meanwhile, the ECB is set to exit its Pandemic Emergency Purchase Programme in March in order to stave off surging levels of inflation. The ECB also plans to raise its Asset Purchasing Programme from $20 billion to $40 billion in the second quarter, and to $30 billion in the third. As Hong Kong votes for its next legislative council this weekend, we speak to CNBC’s Emily Tan about the first Legco poll since China’s overhauling of the electoral process in the city earlier this year.

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The Federal Reserve slows the pace of its monthly bond purchases and signals three rate hikes next year. The FED says it will taper its bond purchasing programme by 30 billion dollars per month, putting it on pace to end its pandemic status by March. It intends to raise rates as many as 8 times by 2024 while keeping its fund rate at record lows. Meanwhile, the Bank of England’s Monetary Policy Committee will meet today to decide whether to increase interest rates and tighten conditions. This comes amid a recent inflation surge and deepening fears over the Omicron variant. We also look toward the ECB’s delivery of its latest policy decision amid challenges of soaring inflation and rising covid rates.

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Producer prices in the U.S see the sharpest rise on record and has unsettled Wall Street before today’s FED decision. The U.S hikes the government debt ceiling to $31.4 trillion thus avoiding an historic default. Meanwhile, American investors will be banned from investing in another eight Chinese companies, including the world’s largest manufacturer of commercial drones, DJI.

Chinese industrial output data beats expectations but Covid fears and restrictions mean sales still missed overall forecasts, slowing growth in October despite multiple headwinds from the PBOC. And, the IMF calls on the Bank of England to take action to curb inflation in its policy meeting tomorrow. This comes as the IMF anticipates inflation in Britain returning to its 2% target by 2024

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As China records its first case of the omicron Covid variant, Beijing comes under pressure to reconsider its zero-tolerance approach to covid transmission. Tech and travel stocks lead the losses on Wall Street while omicron unnerves investors in Asian equities. The UK health secretary, Sajid Javid says the omicron variant could account for 44% of cases in London and is expected to be the dominant strain later today. Meanwhile, The Federal Reserve’s Federal Open Market Committee is expected to accelerate its bond purchasing programme today which could mean an earlier hike in interest rates in the U.S.  

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