Squawk Box Europe Express

Amazon sees another $100bn quarter as it continues to prosper from lockdowns around the world. Sales surged 44 per cent and the online retail giant expects strong revenue ahead even as virus restrictions ease. But it’s not all good news for the tech giants. Twitter misses Q1 expectations with falling growth in active users, despite revenues rising. Shares nosedive by double digits in extended trading. The U.S. economy posted 6.4 per cent growth in the first quarter with the vaccine rollout and federal spending helping the country back on track to pre-pandemic levels. Meanwhile, China’s manufacturing rebound is hindered by supply chain disruptions. The nation’s private sector, however, sees activity rise by its fast pace since the beginning of the year. Also in China, tech stocks tumble after Beijing regulators laser in on so-called ‘risky’ lending and payments in a bid to rein in its powerful domestic tech sector. 

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President Biden touts progress on the U.S. vaccine rollout and a resurgent economy during his first joint address to Congress. He unveiled a new $1.8tn spending plan and urged lawmakers to raise corporate tax and levy the ultra-wealthy to foot the bill. Treasuries and stocks falter after Federal Reserve chairman Jerome Powell holds rates steady. Powell said the recovery remained uneven in places and ruled out tapering for the foreseeable future. In Big Tech earnings, Apple sales surge by more than 50 per cent after seeing double-digit growth in all its product categories. It also announced $90bn in share buybacks. Facebook also enjoys a 50 per cent revenue increase on higher priced advertising. In Europe, Airbus has warned that the aviation sector’s recovery is still incomplete. This, despite the French plane maker posting a 147 per cent hike in Q1 adjusted operating profit and maintaining 2021 guidance. And in banking news, Standard Chartered’s wealth management unit reports its best-ever quarter but the Asia-focused lender says the recovery ahead remains opaque.

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It’s another busy day of earnings on both sides of the Atlantic. Google’s parent company Alphabet posts its biggest earnings beat since it went public. The media giant has launched a $50bn share buyback. Microsoft shares are down despite its strongest Q1 revenue for three years on the back of booming cloud services and PC sales during global lockdowns. In Europe, Santander records a net profit of €1.6bn and says it is on track to hit its goals for the year and aims to drive down costs further. Earnings are also coming in from Deutsche Bank, Covestro, Carlsberg and Electrolux.

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HSBC leads a slew of earnings on both sides of the pond with the UK lender posting its best quarter since the start of the pandemic as profits surge 79 per cent. CFO Ewen Stevenson tells CNBC shareholders can expect dividend payouts once again. UBS also has a strong Q1 but results were dented by a CHF434m hit from exposure to the collapse of Archegos. Stateside, Tesla posts a record first quarter. Betting on Bitcoin has helped to add $100m to the electric car maker’s bottom line but CEO Elon Musk admits to ‘insane’ manufacturing difficulties due to the global chip shortage. And in shipping news, Maersk lifts its full-year outlook on strong demand and rising freight rates.

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Asian equities hit a six-week high to kick off a week when more than a third of companies listed on the S&P 500 are set to report Q1 earnings and markets await the Fed’s rate decision. Meanwhile, India continues to suffer from record Covid case and death levels over the weekend. Hospitals are overwhelmed and oxygen in short supply as the UK announces it is shipping urgent medical equipment to Delhi. In Italy, PM Mario Draghi eases lockdown restrictions while striking a recovery plan with Brussels reportedly worth €200bn. EU Commission President Ursula Von Der Leyen pledges to resume flights between the bloc and U.S. for fully vaccinated tourists this summer.  

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U.S. equities tumble with the Dow leading losses on the news that President Biden is set to hike capital gains tax to more than 40 per cent. Biden also held a virtual world leaders’ climate summit where he pledged the U.S. would slash its carbon emissions in half within a decade, reasserting the nation’s commitment to tackling climate change. Meanwhile, the pandemic rages on in India, which saw a record 300,000 new Covid infections for a second straight day. The country’s second wave is reportedly pushing the healthcare system to the brink of collapse, as it is already suffering regional oxygen shortages. In Europe, CNBC learns the EU is eyeing imminent legal proceedings against AstraZeneca’s shortfalls in vaccine deliveries to the bloc. And in earnings news, LafargeHolcim reports a record Q1 on rising sales. The world’s largest cement maker says it expects to reach its 2022 targets a year in advance.

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Credit Suisse slumps to a CHF252m Q1 loss with CEO Thomas Gottstein calling the Archegos and Greensill scandal-linked losses “unacceptable”. The Dow regains more than 300 points and the Nasdaq bounces back by 1 per cent on strong pandemic recovery stocks. Airbus reorganises aero-parts production lines in France and Germany in a bid to cut costs. President Biden’s environmental summit is set to begin on Earth Day with Treasury Secretary Janet Yellen pledging to tackle the “existential threat” of climate change. In Frankfurt, ECB President Christine Lagarde is expected to keep rates on hold with pressure growing for the central bank to taper bond-buying.

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Asian markets mirror losses Stateside. The Dow posts Wall Street’s biggest declines as virus-related pessimism overshadows strong corporate earnings. Netflix, however, is not among the positive performers. Its shares plunge in after-hours trading following faltering subscription numbers as lockdowns ease. Kering, however, tops Q1 sales expectations, spearheading the luxury sector’s revival. The French giant’s Asian performance offsets continuing weakness in Europe. And the breakaway European Super League collapses dramatically after just two days. All six English Premier League clubs withdraw from the project following a massive backlash from fans, clubs and footballing governing bodies.  

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Armin Laschet wins the CDU’s nomination for German Chancellor, moving one step closer to succeeding Angela Merkel. U.S. equities are lower as tech stocks stumble following a deadly driverless Tesla car crash in Houston. Meanwhile, Chinese President Xi Jinping addresses the Boao Forum, calling for global cooperation and equitable governance to avoid a new ‘Cold War’. In autos news, BMW releases a surprise set of Q1 results that show profits soaring by 370 per cent on strong demand in China and increasing prices. And the UK government says it will take all possible measures to halt the establishment of the breakaway European Super League. European football’s governing body, Uefa, has called the move “a spit in the face” of fans of the game.   

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The S&P 500 and Dow close the past week at new record highs following a strong start to the U.S. corporate earnings season, ahead of another week of key numbers. Meanwhile, pandemic deaths have reached the grim milestone of 3 million deaths worldwide. India alone has recorded up to 250,000 new infections in a single day. Research is ongoing to assess future risks from the virus, with Oxford University undertaking human Covid re-infection trials to assess the efficacy and longevity of vaccines and immune responses to the virus. In China, Shanghai plays host to two days of high-level climate talks between Washington and Beijing where environmental envoy John Kerry and his Chinese counterpart, Xie Zhenhua pledged cooperation on climate change ahead of President Biden’s virtual leaders’ summit this week. And, the PBOC says it does not intend to replace the dollar as the world’s reserve currency with its digital yuan.

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