Squawk Box Europe Express

A morbid milestone: global coronavirus cases pass the 10 million-mark with growing numbers across the U.S. Sun Belt states. The surge has prompted Florida to close beaches and California to shut down bars. The news sends Asian stocks lower despite some signs of recovery in China with May industrial profits rebounding, rising 6 per cent on the year. In advertising, a growing group of multinationals including Coca-Cola, Unilever and Starbucks are boycotting Facebook amid a backlash over hate speech control on the platform. And in energy news, fracking pioneer Chesapeake is forced to file for Chapter 11 bankruptcy as it collapses under spiralling debts and the oil price crash.

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The U.S. Federal Reserve has restricted banks from paying dividends, following the results of stress tests in the wake of the Coronavirus pandemic. Financials stocks fall in extended trading as a result. Disgraced German payments giant Wirecard has filed for insolvency prompting the country’s finance minister, Olaf Scholz, to call for an overhaul in financial regulation. In retail news, Nike sees shares fall after the sportswear giant missed sales forecasts with a 38 per cent fall in revenue. Online sales failed to offset the impact of store closures during the Covid-19 virus outbreak. U.S. secretary of state Mike Pompeo has agreed with EU foreign policy minister Josep Borrell to hold formal talks to tackle Beijing’s ‘predatory practices’.

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A surge in cases sparks a sharp sell-off. U.S. markets tumble with the Dow Jones falling by more than 700 points while the Nasdaq posted its first decline in nine sessions. This, as U.S. daily Coronavirus numbers soared to their highest peak since April with California logging a record 7,000 infections while cases in Florida spike above 5,500. Recession fears have also weighed on sentiment. The IMF has lowered its global growth forecast, warning that GDP will contract by nearly 5 per cent in 2020. The pandemic has pushed U.S. crude stockpiles to record highs and placed pressure on demand expectations, sending oil prices sharply lower. And in Germany, drug behemoth Bayer has announced it will spend up to $11bn to settle litigation cases over the alleged harmful effects of its weedkiller, Roundup, while Lufthansa receives some good news, with its biggest investor suggesting he will approve the airline’s bailout. 

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The spread of the outbreak quickens in the U.S., with Texas and Arizona seeing a spike in cases, in what top health official Anthony Fauci calls a “disturbing surge”. According to a document seen by the New York Times, the EU will reportedly prohibit American travellers from travelling to the bloc, listing the U.S. alongside Brazil and Russia for inadequate responses to the Coronavirus outbreak. In Munich, prosecutors have released Wirecard's former CEO on €5m bail. Markus Braun had been arrested over allegations he falsified accounts at the German payments company. And in tech news, Dell shares jump by more than 20 per cent on reports the computer company is exploring options for its $50bn stake in cloud services group VMWare, which include selling the holding or buying it outright.

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Mixed messages: White House trade advisor Peter Navarro is forced to backtrack, saying the US-China trade deal is not over after his earlier comments suggesting the agreement was “off” hit markets. Apple plans to switch to its own chips for Macs, ending a 15-year relationship with Intel. The tech giant's CEO Tim Cook tells developers it's a huge leap in how the company powers its products. Meanwhile in Japan, Softbank sheds its shares in T-Mobile, selling 21 billion dollars worth of stock, as it divests two-thirds of its stake in a bid to raise funds for its buyback and debt draw-down plans. And finally in Europe, another deal attracts another investigation. The European Commission launches a 4-month anti-trust probe into LSE's 27 billion dollar bid for Refinitiv, amid competition concerns over the exchange mega-merger.

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A record rise in global coronavirus cases keeps markets on edge, with the US logging its second-highest number ever, while Brazil's infections top 50,000 and Germany sees its rate spike because of an outbreak at a slaughterhouse. In the U.S., President Trump makes a lackluster return to the campaign stage, as his rally in Tulsa draws a smaller than expected crowd. The U.S. leader used the rally to attack Joe Biden and protesters, while spending little time addressing COVID. In Germany, Wirecard withdraws its first quarter and full year results, as the German payments company says the 1.9 billion euros missing from its accounts may never have existed. Meanwhile, sources tell CNBC Lufthansa bosses will meet with the ministry of finance and billionaire investor Heinz Herman Thiele today to try to reach a bailout resolution ahead of a shareholder meeting later this week.

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U.S equities head in different directions. The Dow closes slightly lower, as states like Arizona log record virus cases, diverging from the Nasdaq, which posts its first 5-day winning streak in a month. McDonalds plans to beef up its workforce this summer, with plans to hire 260-thousand people, as the fast food giant begins returning to normal operations in the US. Staying in America, the Supreme Court deals a blow to President Trump, declaring that his plan to end an Obama-era youth immigration protection plan is unlawful. Meanwhile in Germany, shares in Wirecard close down over 60 percent after the payments group admits 1 point 9 billion euros has gone missing, saying it believes a third party has tried to deceive its auditor.

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Trade tensions return after the US government pulls out of talks with European countries over their digital tax plans, dashing hopes of a global deal and reviving the prospect of tariffs. Brussels launches an anti-trust probe into Fiat Chrysler and PSA's 50 billion dollar mega merger, citing concerns over their dominant market share in the small vans market. In Asia, markets trade lower, but JD.com rallies on the e-commerce giant's 3 point 8 billion dollar Hong Kong debut. And in the U.K., the Bank of England is expected to expand its bond buying plan but steer clear of negative rates despite Governor Andrew Bailey saying they are QUOTE 'under active review'.

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A retail rebound …. U.S. retail sales jump a record 17.7 per cent in May, beating expectations and helping the Dow close more than 500 points higher. But Fed chair Jerome Powell warns of significant uncertainty surrounding the timing and the strength of the US recovery, as he testifies before the US Senate, but plays down the central bank's latest push into the corporate bond market. Meanwhile, President Trump signs an executive order that reforms police practices as he also calls for calm from protesters, saying 'America wants law and order. The U.K. claims a drug breakthrough, fast-tracking approval for the use of a common steroid that reduces the risk of death for critical COVID patients by a third.

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A big comeback for stocks, as US futures surge after Wall Street swings back from a negative session and the Nikkei gains more than 4 percent. The Fed says it will begin buying individual corporate bonds on top of ETF purchases, in what is seen as another shift to more active market intervention. Meanwhile the WHO calls for an investigation into new coronavirus clusters, as the outbreak in Beijing grows and hospitalizations in Texas hit an all-time high. In the UK, Prime Minister Boris Johnson says a Brexit deal by the end of July is possible, after talks with EU leaders end with a positive tone despite key sticking points.

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