Squawk Box Europe Express

Recovering global demand pushes Chinese factory activity to expand at its fastest rate in three months. On the other side of the Pacific, U.S. markets are jittery as the 10-year yield reaches a 14-month high and the fallout from the Archegos collapse continues. JPMorgan warns that the banking sector could be hit for up to $10bn as a result. President Biden is set to outline his multi-trillion-dollar infrastructure programme. The plan is already facing pushback over fears of a corporate tax raid to foot the bill. In vaccine news, there has been a fresh setback for Astrazeneca after Germany limited use of its vaccine to over 60-year-olds only over renewed safety fears. And Deliveroo begins conditional trading on the London Stock Exchange. Despite pricing at the lower end of its range, the food delivery titan’s listing is the LSE’s largest in a decade.  

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Billions of dollars of losses on Wall Street are exposed to the Archegos Capital fire sale fallout, with Nomura, Viacom and Discovery following Credit Suisse into the red. In Washington, President Biden aims to stave off CDC warnings of a late winter surge, saying 90 per cent of Americans will be eligible for Covid vaccines within the next month. Global sea trade resumes along the Suez Canal after the Ever Given super-container ship is finally refloated. Saudi Arabia calls for extended output cuts with markets turning their attention to upcoming OPEC+ talks. And in corporate news, Unicredit investors have been reportedly urged to protest against the €7.5m pay packet going to incoming chief executive Andrea Orcel.

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Almost a week after running aground, the giant container ship the Ever Given is at least partially refloated, but the backlog of vessels in the Suez Canal remains. Oil prices fall as a result with traders pricing in the re-opening of supply routes. In the U.S., futures dip after seeing a record high during Friday’s session, which was dominated by a fire sale from Archegos Capital. Meanwhile, fears the U.S. could delist Chinese tech companies weigh on Bilibili shares after the Chinese video streaming company’s Hong Kong debut. And in Europe, French doctors warn that hospitals could be overwhelmed by the third Covid wave hitting the continent. German Chancellor Angela Merkel urges local states to tighten their lockdown restrictions.   

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Asian equities are in the green, mirroring Wall Street gains after President Biden says his rescue plan is working and the U.S. recovery is burgeoning. The European Union backs down from a vaccine export ban but Commission President Ursula Von Der Leyen repeats calls for AstraZeneca to honour its delivery commitments to the bloc. The Ever Given container ship continues to block the Suez Canal, with the standstill costing an estimated $400m an hour in delayed goods. And social media CEOs testify on Capitol Hill on their roles in spreading online misinformation.   

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AstraZeneca has revised down vaccine efficacy data after doubts were raised over its U.S. trial results. The pharma giant is also at the centre of the ongoing vaccine export row between the UK and EU. But, London and Brussels are looking to ease tensions and ramp up supplies across the continent. In market news, U.S. equities fall with the Nasdaq leading declines, despite 10-year treasury yields also heading south in a sign that the recent trading trend could be slowing down. Chinese tech stocks fall as well after the U.S. Securities Exchange Commission rolls out a Trump-era law aimed at forcing de-listings over auditing irregularities. Beijing is also under pressure from U.S. Treasury Secretary Antony Blinken who urged NATO allies to collectively push China to uphold its trading commitments.   

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CNBC speaks exclusively to BIS general manager Agustin Carstens who says that clarity will come with rate normalisation but that investors should heed calls for patience. U.S. Treasury Secretary Janet Yellen and Federal Reserve chairman Jerome Powell testify jointly in a bid to reassure Congress over asset valuations and recovery jitters. On the one-year anniversary of the bull market, U.S. stocks slide amid continued concern over the recovery and rising cases on both sides of the Atlantic. The EU announces it will tighten vaccine export rules on the back of the bloc’s spat with AstraZeneca. The pharma company says it will publish further U.S. vaccine trial data following questions over efficacy. And in tech news, Intel is gearing up to challenge Asia’s chip-manufacturing dominance as it unveils plans to spend billions on U.S.-based factories.  

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On the anniversary of the ECB’s emergency bond-buying programme, we hear exclusively from the central bank’s chief economist Philip Lane who says Treasury volatility will not necessarily spill over to Europe. U.S. Treasury Secretary Janet Yellen and Federal Reserve chair Jerome Powell are set to testify before Congress over the $1.9tn pandemic rescue bill. Meanwhile, President Biden is reportedly considering tabling a two-part infrastructure bill worth $3tn to boost the nation’s recovery. Tensions rise between Beijing, Brussels and Washington after the U.S., UK and the European Union slap sanctions on China over the treatment of Uighur Muslims in Xinjiang province, while China retaliates with its own set of broader sanctions against EU officials. And the U.S. NIAID says AstraZeneca may have potentially used outdated figures during its American vaccine trial.    

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UK Prime Minister Boris Johnson is to confront EU leaders over threats to block AstraZeneca vaccine exports to Britain. Meanwhile the bloc’s two biggest economies face further Covid restrictions due to spiralling cases. Germany is set to extend the national lockdown for a fifth month and quarantine all arrivals into the country. The Turkish lira plunges to a record low against the greenback after President Erdogan fired the country’s central bank governor for raising interest rates. French lender Société Générale has withdrawn all long positions in the country as a result. In energy news, the world’s biggest oil exporter, Saudi Aramco, suffers a 44 per cent decline in earnings but maintains its dividend. And in a further blow to the struggling global semi-conductor industry, a major fire at Japan’s Renesas Group takes one its chip manufacturing facilities out of action.

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Yields soar, hitting tech stocks. Both the S&P 500 and Nasdaq retreat in the face of the U.S. 10-year bill reaching a 14-year high. U.S.-China relations under the Biden administration are off to a rocky start as the superpowers’ top diplomats meet for the first time in Anchorage. The scheduled short opening session descended into an hour-long exchange of insults and acrimony over internal and foreign policy interference. Meanwhile, the European Medicines Agency has ruled that the Oxford-AstraZeneca Covid vaccine is safe following reports of blood clot-related illnesses and deaths. Several EU nations have now resumed their vaccination rollouts as a result. And in energy news, oil prices could be in for a tumultuous day and are lower this week overall after new lockdowns were announced across Europe, including France, stoking demand concerns.

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Federal Reserve Chair Jerome Powell holds a dovish line. The central bank sees interest rates staying near zero until at least 2023, despite Fed members offering a more optimistic outlook for growth and inflation this year. Markets cheered Powell’s announcements with the Dow closing at over 33-thousand points for the first time while yields ease. However, U.S. futures point to a muted open on Wall Street today. In Europe, Dutch Prime Minister Mark Rutte is set to secure a fourth term in office, to become the country's longest serving leader. His VVD party are projected to win 35 of the 150 seats. Meanwhile the vaccine row on the continent heats up and the EU goes on the attack - warning it will hold back vaccine exports to nations it says are failing to deliver jabs to the bloc.

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