Squawk Box Europe Express

Wall Street closes firmly to the downside. The 10-year Treasury note slumps to its lowest point for almost 5 months with continued Covid recovery fears weighing heavily. Investors look to safe havens like the Swiss franc and the Japanese yen while gold is set to post its third straight week in the green. The ECB sets out its first strategic policy review in nearly two decades, announcing a 2 per cent inflation target. Airbus enjoys a 52 per cent increase in H1 deliveries and is set to hit its 2021 targets. And in Tokyo, the Olympic flame arrives at an empty stadium as the city announces a state of emergency due to a Covid flare-up and will now ban all spectators from the Games. 

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Taper talks begin in earnest, but the latest Fed minutes reveal policy-makers the economic recovery is not strong enough yet to take an action. G20 finance ministers meet in Venice ahead of this weekend’s summit. Talks centre on endorsement of the global corporate tax deal. The ECB is set to announce the result of its first strategic review since 2003 where it is expected to redefine its inflation target. And in tech news, Google faces several anti-trust law suits as well as legal action from former U.S. President Trump for banning him from the search engine, as well as from Facebook and Twitter. 

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Chinese ride-hailing app Didi Chuxing has sparked a sell-off on its first trading day in New York after Beijing authorities ordered a cyber security review into the company. We hear from French Economy Minister Bruno Le Maire who voices confidence that the new global corporate tax deal will be endorsed and welcomed across both Europe and the U.S. The Pentagon annuls a deal with Microsoft secured during the Trump administration. The Jedi Cloud contract, worth $10bn, will now spark a bidding war with Amazon. In energy news, the Opec+ output policy stalemate forces oil prices to slide from their six-year high. Saudi Arabia’s Energy Minister Abdulaziz Bin Salman tells CNBC that the cartel remains united. And Chinese Tesla rival, Xpeng, has launched its Hong Kong IPO, raising $1.8bn. 

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Oil hits a three-year high as OPEC+ members fail to agree on output hikes. The U.S. has called for a “compromised solution”. Tech fears affect Asian markets after reports suggest that Beijing had asked ride-hailing app Did Chuxing to delay its NYSE IPO. In the UK, Prime Minister Boris Johnson announces plans his government will end nearly all Covid restrictions by July 19th but does warn that virus cases and hospitalisations continue to grow. 

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The UAE rebels against an Opec+ supply agreement. We hear from the country’s energy minister Suhail Al Mazrouei who says the current deal on the table “is not good for us.”. Markets in Asia are mixed despite Friday’s strong U.S. jobs data, while PMI numbers reveal a slowdown in Chinese services activity. Beijing suspends ride-hailing app Didi Chuxing over privacy concerns just 4 days after the company lists on the NYSE. In retail news, UK supermarket chain Morrisons agrees to a £6.3bn takeover by Fortress Investment Group.

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Up to 130 nations representing 90 per cent of global GDP have become signatories to a minimum corporate tax rate. The International Monetary Fund has hiked its growth forecast for the U.S. to 7 per cent but has warned that the recovery could be lopsided. Meanwhile, markets await U.S. jobs data with non-farm payrolls expected to rise by 700k and jobless claims set to hit a fresh pandemic low. The labour market could be in for more long-term changes according to U.S. Commerce Secretary Gina Raimondo, who tells this channel that certain jobs may not return post-Covid. In an IPO-heavy week, retail trading app Robinhood is set to file for its U.S. IPO with an expected valuation in excess of $40bn. And OPEC+ has pushed back a decision on output after the UAE reportedly rebels against the deal to increase production.  

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China celebrates the centenary of the Communist Party with President Xi Jinping offering a thinly veiled warning to foreign nations about Beijing’s positioning on the global stage. Meanwhile, Hong Kong marks the 24th anniversary of its handover from British to Chinese rule with strict measures in place to curb any potential protests across the city. In IPO news, Chinese ride-hailing app Didi Chuxing soars up to 30 per cent on its New York debut, but then wipes out nearly all those gains to end the session marginally in the green. Curevac shares sell off in extended trade after its final stage Covid vaccine trial shows only 48 per cent efficacy. And we hear exclusively from Credit Suisse CEO Thomas Gottstein who slams excess banking regulation, but admits that ‘green’ stress tests have become a reality in the sector.  

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It’s the end of a half that has seen numerous policy changes spurred by uncertainties surrounding the pandemic. We take a look at how the markets have fared during these turbulent times and look ahead to the second half as well. In the U.S., the S&P 500 is set to finish its fifth straight month of gains. Oil has also enjoyed it best H1 since 2009. We hear from the Bank of International Settlement’s Claudio Borio who says that transitory higher inflation should be welcomed. In IPO news, Chinese ride-hailing app Didi Chuxing has reportedly valued its listing at the top of its range - $70bn – ahead of its U.S. debut. However, Chinese grocery delivery tech firm Dingdong has wiped out its double-digit gains on its first day of trade on the NYSE. Meanwhile, Chinese manufacturing activity has slowed to a fourth-month low, while Japanese factory output falls by its largest amount in a year. Both have been severely affected by the global car production slowdown.

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Strong tech stocks push the Nasdaq to a fresh record high but Asian markets are in the red over Delta variant concerns in the region. In tech news, Facebook enters the trillion-dollar club, with shares soaring after a U.S. judge slaps down anti-trust suits from the FTC and 48 states against the social media company. Meanwhile, U.S. banks unveil around $2bn in quarterly dividends after passing the Fed stress test. We speak to ECB Vice-President Luis De Guindos who says the central bank will not suddenly end the PEPP as hawks have raised the prospect of winding down emergency measures. And an update on the IPO front as Softbank-backed Chinese grocery app Dingdong cuts its listing target by up to 70 per cent.  

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Marine Le Pen’s Rassemblement National party fails to win in French regional elections but President Macron’s La Republique En Marche party also struggles to gain a single council. In the UK, Sajid Javid replaces disgraced former Health Secretary Matt Hancock and pledges to end all Covid restrictions across the country as a priority. In autos news, Tesla recalls almost 300k vehicles in China due to an online safety issue affecting acceleration. The S&P 500 enjoys its best week in months hitting a new record high. This, as the U.S. Commerce Department’s inflation indicator surges at its fastest rate since the early 1990s.    

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