Squawk Box Europe Express

Countries around the world respond to the discovery of the Omicron Covid variant by imposing new restrictions. Asian equities dipped after Friday’s sell-off, but Wall Street looks set to claw back some of its heavy losses. In the UK, Prime Minister Boris Johnson reintroduces some restrictions to slow the spread of Omicron and Health Secretary Sajid Javid says societies must learn to live with Covid. Meanwhile in the Netherlands, more than a dozen people test positive for the new variant after having arrived on two flights from South Africa.

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Stocks sell off, and US futures plunge as the WHO calls an emergency meeting over a new covid variant discovered in southern Africa, and the EU renews vaccination calls. Travel bans return – as nations ban flights from the region. South Africa's Foreign Ministry says the UK's move to put six southern African nations back on the red list is rushed, and it's seeking a reversal. Crude prices also head deep into the red on renewed demand concerns and fears of a rising surplus in the first quarter. And French fishermen threaten to blockade the Channel Tunnel and the port of Calais today, in protest at UK fishing licenses.

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Germany’s new coalition is unveiled with the SPD’s Olaf Scholz set to be Chancellor. The Greens receive the foreign and economy ministries while the FDP is set to run the finance ministry. The coalition says it will consider vaccination mandates while Italy tightens restrictions on the unvaccinated. According to November’s FOMC minutes, Fed members are considering rate hikes should price pressures continue – as the central bank’s preferred inflation measure surges 4.1 per cent on the year in October. Meanwhile, a dozen Chinese companies are added to the U.S. trade blacklist due to national security and foreign policy concerns.  

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U.S. President Joe Biden announces the first emergency SPR release in a decade. More than 50mn barrels will be freed up in a bid to blunt spiking prices. In Germany, the new coalition government is expected to be unveiled today, after an impasse over who would lead the Bundesbank, and a last-minute intervention from acting Chancellor Angela Merkel. A massive sell-off of the Turkish lira sends it to historic lows against the dollar, with inflation in the country soaring to near-20 per cent and as President Erdogan vows to win an ‘economic war of independence.’

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U.S. President Joe Biden renominates Jay Powell for a second term as Federal Reserve Chair. Lael Brainard gets the nod for Vice-Chair, after weeks of speculation that as the Fed Board’s only Democrat she could have been chosen for the top job. Biden stressed the need for the central bank’s continued neutrality and independence. The S&P 500 and the Nasdaq hit fresh record highs but investors are now focused on the Fed’s schedule for rate hikes. In corporate news, video-conferencing firm Zoom beats quarterly expectations and issues a better-than-expected outlook. However, shares are down on slowing revenue growth due to workers returning to offices. And the U.S. is set to release crude from its strategic reserves today in a bid to lower petrol prices.  

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Anti-lockdown protests spread throughout Europe, with violent scenes rocking Brussels, Vienna and Amsterdam as cases continue to spike across the continent. A coalition government agreement in Germany is imminent with key roles for the FDP’s Christian Lindner and the Greens’ Annalena Baerbock and Robert Habeck. In corporate news, U.S. private equity giant KKR launches a €10.8 bn bid to take Telecom Italia private, while UBS says former Morgan Stanley president Colm Kelleher is to take over from outgoing chairman Axel Weber.

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Germany unveils new restrictions limiting movement for the unvaccinated in a bid to curb further Covid infections, amid a spike in Europe. The S&P 500 and the Nasdaq hit new record highs with investors awaiting the result of President Biden’s choice for Federal Reserve chair. Meanwhile, Chinese online retail giant Alibaba sees shares nosedive as it posts a quarterly miss and slashes its guidance. And Apple sets its sights on launching a fully autonomous EV as soon as 2025.  

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Crude prices dip after OPEC and the IEA warn that supplies are building up, and the U.S. investigates whether prices are being manipulated, with President Biden calling for major consuming nations to release their reserves. In tech news, Nvidia beats expectations on strong demand for its AI chips but Cisco misses, cutting its full year guidance. Acting German Chancellor Angela Merkel says her country is seeing a ‘dramatic’ fourth Covid wave, while Belgian Prime Minister Alexander De Croo tells CNBC that his country is battling a strong mutation of the virus. We also hear from U.S. Former National Security Adviser John Bolton, who insists that Vladimir Putin is engineering the migrant stand-off on the Polish-Belarussian border.

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Strong U.S. retail sales for October drive Wall Street gains as robust consumer spending continues despite rising prices. U.S. President Joe Biden is set to reveal the next Federal Reserve Chairman this week while CNBC hears from Deputy Treasury Secretary Wally Adeyemo, who says inflation will remain high all the while Covid is rampant. The fallout from Shell’s decision to quit the Netherlands continues, as an MP in The Hague threatens to slap it with an exit tax over its move to the UK. Meanwhile, shares in EV makers surge as Lucid overtakes Ford by market cap and Rivian becomes the word’s third most valuable auto maker.    

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U.S. President Joe Biden holds his first direct talks with his Chinese counterpart Xi Jinping, and warns relations between the two nations should not descend into conflict. Cryptocurrencies slide as the U.S. infrastructure bill is signed into law. The Dutch government launches a last-ditch effort to convince Shell not to shift its tax base to the UK. Tesla CEO Elon Musk continues his stock selling flurry, sending the EV maker’s market cap beneath $1tn.

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