Squawk Box Europe Express

UK Prime Minister Boris Johnson and U.S. President Joe Biden meet for the first time in St Ives, Cornwall ahead of the G-7 summit and reaffirm the ‘special relationship’ between the two nations. This as G-7 nations pledge to donate 1 billion vaccines to the developing world. On Wall Street, the S&P 500 hits a new record high despite surging inflation. Chinese ride-hailing firm Didi Chuxing has filed for a U.S. listing which could be one of the biggest IPOs of 2021. And in Frankfurt, ECB President Christine Lagarde says it is still premature to wind up the euro zone’s PEPP.

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We are live in Falmouth, Cornwall for the G-7 summit where leaders are set to meet. U.S. President Biden and UK Prime Minister Johnson are to re-hash the Atlantic Charter - a WW2-era Churchillian pact between the two countries – to strengthen trade, travel and technology ties. G-7 nations are hoping to use the meeting to pledge a billion Covid vaccines to distribute globally with the U.S. to provide more than half of the doses. We hear exclusively from Goldman Sachs CFO Stephen Scherr who says markets may well feel the heat should rates rise to address inflation. In tech news, President Biden revokes a Trump-era executive order banning Chinese-owned social media apps. He has, however, ordered a security review of the software which could yet bolster the legislation.

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Chinese factory gate prices surge to their highest level in almost a decade on rising commodity prices. Concerns are now growing about a tide of inflation. The World Bank upgrades its global growth guidance on the fastest recession recovery seen in 80 years, but the group believes that emerging economies may fall behind due to asymmetrical vaccination rates. This, as France further eases travel restrictions and lockdown measures with indoor dining returning. And in autos news, Tesla’s Chinese sales last month almost double but still fall short of the 36k units delivered back in March.

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The G7’s planned 15 per cent minimum global corporate tax rate is rejected by several key U.S. Senate Republicans. We hear from EY CEO Carmine Di Sibio who says the agreement may provide a long-awaited framework for international cooperation on taxes, but warned the reality may be quite different. U.S. markets are mixed with investors eyeing Thursday’s inflation data. Meanwhile, Apple launches a new operating system as part of its Worldwide Developers Conference, putting user privacy front and centre. And in crypto news, Bitcoin weekly outflows top out at $140m. This, as American authorities manage to claw back almost all of the ransom attack money paid out by Colonial Pipeline.

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G7 finance ministers reach a historic agreement on a 15 per cent global minimum tax rate but there is already criticism that the deal isn’t comprehensive enough. Chinese export growth slows while imports soar by 50 per cent. In the U.S., jobs grew in May but the data fell short of expectations. And in Germany, Angela Merkel’s CDU avoids defeat to the far-right in a state election in Saxony-Anhalt, boosting Armin Laschet’s chances of becoming Chancellor later this year.

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U.S. President Joe Biden signs an executive order banning investment in 59 blacklisted Chinese tech and defence companies. Stateside, markets slide weighed down by tech stocks, with all eyes on today’s non-farm payroll report. We hear exclusively from Russian oil minister Alexander Novak who says Moscow could back out of dollar-denominated oil contracts should Washington persist in its sanctions. Meanwhile, UK travel is back in turmoil after the British government takes Portugal off its Covid travel green list while adding seven nations to its red list. The aviation and tourism sectors nosedive on the unexpected move. And a potential blockbuster deal looks to be in the works with billionaire Bill Ackman in talks to take a 10 per cent acquisition of Universal Music Group through his blank-cheque company. The valuation is estimated at $35bn-$40bn ahead of its listing on the Euronext Amsterdam later this year.

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Washington D.C. is ramping up the pressure on digital tax coming from six nations by slapping tariffs onto $2bn worth of goods. It has, however, immediately suspended the duties for 180 days in order to allow tech tax negotiations to continue. Entertainment giant AMC sees shares soar by 95 per cent as a buying frenzy gathered speed. Meanwhile, Chinese Caixin data for May shows growth slowing on weak foreign demand and rising prices. In Israel, opposition parties reach an eleventh-hour deal to potentially unseat Prime Minister Benjamin Netanyahu. We are also live at the first day of the St Petersburg International Economic Forum with a raft of CEO guests.  

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Demand optimism drives oil to a two-year high while Opec+ members agree to stick to the policy of gradually increasing production. U.S. markets come off a long weekend with stocks benefitting from pandemic reopening in June. However, Wall Street ended the session flat as investors anticipate this week’s U.S. jobs data. We speak exclusively to Russia’s central bank governor Elvira Nabiullina who says digital currencies represent the future of financial systems. Meanwhile, China’s Sinovac vaccine receives the green light from the WHO, boosting the COVAX program’s capacity to distribute jabs to poorer nations. And in Brussels, the EU signs off on a long-awaited tax transparency bill, but some MEPs remain unconvinced it will do enough to curb tax avoidance.  

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Asian markets are mixed today as regional manufacturing data is sub-par. Japanese and South Korean growth is moderating but privately owned Chinese factories are still ramping up production. In energy news, Brent breaks the $70-a-barrel marker on a surge in demand optimism ahead of the Opec+ meeting later today. Members are expected to gradually ease supply restrictions. G7 countries could be close to agreeing a global minimum tax rate but Japan’s finance minister Taro Asa warned no details would be revealed during this weekend’s bloc meeting. And EU member nations have agreed on the €750bn Covid recovery fund which is due to launch later this year.  

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Chinese services activity rises as holiday spending grows but factory activity slows. Asian markets trade broadly lower on the back of Chinese manufacturing data. Meanwhile, Bridgewater Associates founder Ray Dalio tells CNBC in an exclusive interview that the yuan will continue to grow as a dominant global currency, if Beijing pushes in that direction. This week, U.S. non-farm payrolls are in focus. The data is due on Friday after weekly jobless claims Stateside fell to their lowest level in more than a year. In France, all adults will become eligible for Covid vaccines starting today as the country aims to climb out of a Q1 double-dip recession. And Israeli Prime Minister Netanyahu may be ousted as opposition leaders reach a deal to oust him after 12 years at the helm.  

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