Squawk Box Europe Express

Wall Street rebounds after three straight days of losses with the Dow enjoying its best session since March but stocks are set to stay in negative territory for the week. Disney posts better-than-expected Q1 results on strong theme park revenues but a slowdown in streaming subscriptions weighs on the share price as economies emerge from lockdowns. Alibaba suffers its first quarterly loss since it went public in 2014. The Chinese e-commerce titan’s earnings were impacted by a massive anti-trust penalty levied by Beijing regulators. And in energy news, Colonial Pipeline is back and up and running but not before paying a $5m ransom to cyber criminals, according to NBC News sources. 

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U.S. markets are reeling from inflation hitting a near 13-year high. Nearly all sectors tumble into the red with the Dow reporting its single-worst session since the beginning of the year. The Nasdaq posts the biggest declines, with Apple losses leading the way. Meanwhile, Tesla CEO Elon Musk announces the electric car maker will no longer accept Bitcoin as payment due to environmental concerns related to electricity use in crypto-mining.

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A wild rollercoaster Wall Street session sparks inflation fears, pushing stocks lower across Asian markets. The Nasdaq ends up on the flatline while the Dow records its worst day since February, tumbling 500 points. St. Louis Fed Chairman James Bullard becomes the latest central banker forecasting higher inflation. Bullard tells CNBC that talk of tapering is premature while the effects of the pandemic still resonate in some parts of the economy. Last Friday’s Colonial Pipeline ransomware attack is being felt at the pumps with gasoline supplies tightening and forecourt queues forming across the U.S. east coast. A decision on fully reopening the facility is expected today. Meanwhile, violence flares in the Middle East as Hamas and Israeli forces exchange rocket fire. The UN warns the situation could spiral into full-blown war. And in autos news, Nissan has forecast a third consecutive year of losses, causing shares to nosedive into the red. The Japanese car giant’s operations have been hampered by the global semi-conductor shortage.  

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Inflation fears weigh on Asian markets and U.S. futures amid accelerated rotation out of high-growth tech stocks. Tesla shares have slumped more than 6 per cent. In Japan, Softbank and Tokyo Electron lead a steep decline in the Nikkei. China’s April manufacturing prices rise at the fastest pace in more than three years but consumer prices remain weak on the back of price rise fears related to the global semi-conductor shortage. Meanwhile, U.S. petrol prices soar to an 8-year high, as the Colonial Pipeline remains disabled following the weekend ransomware attack. The hacking group responsible - believed to be based in Russia - apologised for its actions, while American investigators continue their probe. And in pharma news, Pfizer-Biontech’s vaccine will soon become available to young teenagers in the United States following successful tests by the FDA.    

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A major U.S. fuel pipeline suffers a cyber attack, shutting down facilities serving up to 50 million people. NBC News sources learn Russian criminal groups may be responsible for the ransomware hacking on Colonial Pipeline. The U.S. government has issued an emergency declaration following the incident, with oil prices moving higher. In broader markets, Wall Street hits new highs on Friday despite the April U.S. jobs numbers coming in below expectations. Scottish First Minister Nicola Sturgeon has launched a renewed push for a second independence referendum following the SNP’s resounding victory in last Thursday’s elections. There is fresh discord between Brussels and Washington over Covid vaccine patents with EU leaders slamming President Biden’s IP waiver plan and calling for production to be ramped up to aid poorer nations.   

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The Dow hits an all-time high – jumping 300 points - as U.S. jobless claims beat expectations. Markets now turn to the Non-farm Payrolls due today. Central banks are in focus as the Federal Reserve believes that asset prices in stock markets are over-valued and pose a threat to the financial system. Meanwhile, the Bank of England hikes the UK GDP outlook for 2021 by 7.25 per cent. BoE Governor Andrew Bailey tells CNBC that inflation ahead could be ‘bumpy,’ but so far there was no cause for alarm in the medium term. Still in Britain, we are live in Edinburgh while awaiting crucial parliamentary, regional and local elections from across the country. China’s recovery continues with imports and exports seeing a strong rise in April. And pharmaceutical stocks are mixed after German Chancellor Angela Merkel denies waiving IP rights for Covid vaccines while U.S. President continues pushing in the opposite direction.

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Strong U.S. earnings help push the Dow to a new record but tech stocks suffer as Federal Reserve Vice-chairman Richard Clarida says talk of tapering is still some time off. Pharma shares also tumble after the White House backs a patent waiver for Covid vaccines. Meanwhile, Sino-Australian relations deteriorate further after China suspends all activities associated with the Strategic Economic Dialogue between the countries. Beijing has accused Canberra of having a ‘Cold War mindset’. And in banking news, French lender Société Générale posts a first-quarter profit of €814m on the back of solid global bank performances.

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U.S. Treasury Secretary Janet Yellen sends jitters through the markets, saying interest rates may have to rise eventually, but later admits that any hikes are neither predicted nor recommended. Tech stocks plunge following Yellen’s comments. The Nasdaq reacts by posting its worst day since March while Apple shares fall 3 per cent. In corporate news, U.S. ride-hailing app Lyft beats Q1 expectations with revenues up 7 per cent on the quarter. Canadian business jet giant Bombardier moves its positions out of French rail company Alstom, selling its 3.1 per cent stake for $663m. We also have first-quarter earnings from several European firms including Deutsche Post DHL and Virgin Money.   

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The Tri-State area moves to join Florida and Texas in reopening most businesses to full capacity following months of lockdown. The Dow and S&P surge on the news with retail stocks gaining strongly. President Biden aims to garner support for his recovery plan after GOP lawmakers call the plan an “economy and jobs killer”. Meanwhile, Biden’s Secretary of State Antony Blinken meets UK Foreign Minister Dominic Raab in London for the first in-person G7 summit in two years. The pair discussed how to counter geo-political threats posed by Russia and China. In media news, Vivendi is set to sell down its stake in Italian broadcaster Mediaset, in a bid to resolve a five-year legal wrangle. We also have a slew of earnings from around Europe, including Adecco, Infineon and S4 Capital.

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U.S. futures are up ahead of the first May trading day. Investors ready themselves for a new week of earnings and Treasury Secretary Janet Yellen says price pressures are not a concern following President Biden’s proposed $4.1tn stimulus package. Legendary investor Warren Buffett, however, warns that inflation is a risk as the ‘red hot’ U.S. economy recovery gathers pace. Meanwhile, the Covid pandemic rages on in India, which records more than 3,400 deaths - its highest daily death toll so far. And in M&A news, private equity titan Apollo is closing in on Verizon’s media assets in a deal believed to be worth up to $5bn.  

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