Squawk Box Europe Express

The S&P posted its strongest day of trade since June as U.S. stocks continue to rebound amid a pull-back in Treasury yields, with fears of higher interest rates easing. Apple jumps up to 5 per cent on the Nasdaq following a Warren Buffett endorsement in his annual letter to investors and after the reopening of its 270 U.S. stores. Video-calling firm Zoom is also in the green, going higher in late trading after it posts a near-370 per cent jump in Q4 revenues. In France, food giant Danone has succumbed to activist pressure to split its top management roles. Emmanuel Faber stays on as chairman but the CEO position is now vacant. And with the prospect of an increase in global energy demand, OPEC+ leaders are reportedly set to agree to hike supplies later this week, driving crude prices lower.   

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Last week’s U.S. Treasury yield highs recede with stock futures rising sharply. Sentiment has been partially boosted by higher prospects for stimulus with President Biden urging Senate to pass his $1.9tn Covid-19 stimulus bill after it was approved by the House of Representatives. Legendary investor Warren Buffett warns to “never bet against America” in his annual Berkshire Hathaway shareholder letter. Buffett announced he had bought close to $25bn of the company’s own shares in 2020. Meanwhile, weak export demand and continuing virus outbreaks have reduced Chinese factory activity to its slowest pace in nine months. And in tech news, Swiss-American computer software giant Logitech increases its full-year outlook on a predicted spike in pandemic-related sales.

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Equities sell off strongly across Asia with tech stocks being dumped hardest. On Wall Street, the Nasdaq suffers a fall of 3.5 percent - its worst session since October - as the 10-year bond yield rally gathers pace. EU leaders meet virtually to discuss the disorderly rollout of vaccines across the bloc. EC President Ursula Von Der Leyen remains bullish that targets will be met by summer however European Council leader Charles Michel criticises vaccine makers transparency and shaky supply chains. And Swiss construction giant LafargeHolcim says it expects a second-half rebound in demand as global stimulus programmes begin to kick in.

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Federal Reserve Chairman Jerome Powell allays U.S. inflation concerns in his testimony to the House, causing Asian markets to jump and Wall Street to pare back losses in another intra-day comeback. Berkshire Hathaway’s vice-chairman Charlie Munger slams “this new bunch of gamblers”, criticising SPACs, Tesla and cryptocurrencies for the increasingly frenzied speculation in the markets. This, as GameStop surges 100 percent in 90 minutes. Asia-focused lender Standard Chartered posts a full-year miss with a 57 per cent fall in profits and a doubling in impairment costs. In the U.S., Johnson & Johnson’s single-shot vaccination is due for FDA approval. Its dose reportedly offers an average efficacy rate of 66 per cent and near-total protection against hospitalisation and Covid-related fatalities.

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Whipsawing on Wall Street. The Dow manages to claw back a 360-point loss to end yesterday’s session in the green following Federal Reserve Chairman Jerome Powell’s attempts to ease concerns about higher rates and inflation during a Senate testimony. Bitcoin is also volatile, temporarily falling below the $50k-mark, but recouping some losses after payment company Square invested $170m in the cryptocurrency. In autos news, Tesla shares nosedive by up to 13 per cent on the markets’ rotation away from tech stocks. The electric car maker’s stock is now in negative territory for the year. And Hyundai suffers the world’s costliest EV recall after up to 82,000 cars are deemed susceptible to battery fires.  

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HSBC beats earnings expectations despite full-year profit falling by more than a third. Europe’s largest lender is promising to resume its dividend payout this year. Big tech companies weigh on the Nasdaq and S&P but the Dow moves to the upside on wider recovery optimism in the U.S. Tesla CEO Elon Musk is $15bn poorer, losing his title of world’s richest man to Amazon’s Jeff Bezos. The electric car maker shares post their biggest decline since September. British Prime Minister Boris Johnson outlines the country’s “one-way journey” out of national lockdown, citing the success of the UK vaccine rollout. And in Australia, the country ‘refriends’ Facebook after the social media titan reaches a deal with the government over media laws and journalistic content compensation.

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The UK is to ease lockdown restrictions with Prime Minister Boris Johnson set to detail his roadmap to recovery. All eyes are on the bond market with the U.S. 10-year Treasury yield hitting highs not seen since this time last year. Boeing grounds some of its 777 planes after a mid-air engine failure on a United Airlines flight causes debris to rain down on a Denver neighbourhood and prompts an emergency landing. HSBC steps up its pivot towards Asia by reportedly relocating a number of executive staff from London to Hong Kong. The UK lender is to announce it is withdrawing its commercial business from the U.S.

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U.S. Treasury Secretary Janet Yellen tells CNBC in an exclusive interview that only major stimulus will rouse the American economy following “the worst year for economic growth since WW2.” Yellen also said President Biden’s administration will maintain his predecessor’s trade pressure on China. The GameStop saga comes to Washington with Robinhood CEO Vlad Tenev going up against the House Financial Services Committee. Tenev defended the app’s decision to halt trading of the stock last month. However, he apologised for his company’s role in the market volatility during the retail trading frenzy. Meanwhile, carmakers continue to lament the effects of a chip shortage. We hear from Peter Schiefer, the auto sector chief at German chip-maker Infineon, who tells CNBC he believes the global semi-conductor squeeze is unlikely to be eased any time soon.

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It’s another busy day for earnings in Europe. Credit Suisse pre-tax Q4 profit slumps to a CHF88m loss as a slow post-virus recovery weighs on the lender. However, recent client activity is positively impacting its wealth management arm. Full-year revenue for 2020 at Airbus nose-dives by 30 per cent with an operating loss of €510m. The plane maker will also withhold its dividend this year. Meanwhile, digital discord Down Under after Facebook blocks news-sharing in Australia over a proposed law that will force social media platforms to pay for journalistic content. Australian Treasurer Josh Frydenberg says Facebook’s “heavy-handed” actions will damage its reputation in the country. In the U.S., retail sales spike as consumers spend their stimulus cheques, but the Fed warns economic recovery is far from complete.    

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The recent U.S. rally loses some steam. Meanwhile, the U.S. 10-year hits a 12-month high, with St. Louis Fed President James Bullard telling CNBC that investors are eyeing a “roaring” pick-up in post-pandemic U.S. economic activity. In energy news, the Gulf region’s cold snap is keeping refineries offline while millions suffer power blackouts. Robust commodity prices have led to Rio Tinto posting its best full-year profit in almost a decade. The UK miner plans to deliver a record dividend. In other corporate news, Nestlé sheds its North American mineral water brands to One Rock Capital Partners in a $4.3bn deal. And Berkshire Hathaway has disclosed a slew of new Q4 share positions including Verizon and Chevron.

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