Squawk Box Europe Express

China contracts…. The Chinese economy shrinks for the first time in nearly 30 years with Q1 GDP falling by 6.8 per cent as the Coronavirus outbreak weighs heavily on consumer spending and production. Retail sales in the mainland fall more than 15 per cent in March. U.S. futures, however, rise on the back of a positive report from a key drug trial, as Gilead Science says Covid-19 patients are recovering quickly after being treated with its Remdesivir medicine. President Trump publishes a three-point plan for re-opening the U.S., also pushing equities higher but U.S. bond yields fall for a third session running on the back of rising jobless claims. Luxury and cosmetics giants LVMH and L’Oréal are upbeat on a recovery in China despite both suffering falling sales amid global pandemic lockdowns in the first quarter. And car registrations in the EU plunge more than 50 per cent in March, with Italy the hardest-hit country.

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Record retail rut…U.S. sales plunge almost 9 per cent while manufacturing hits a 74-year low, prompting recession fears. We speak to IMF managing director Kristalina Georgieva, who says economic pain could yet intensify should the Coronavirus return for a second global circuit and cause Asian growth to grind to a halt. In the UK, the government is expected to extend the national shutdown until early May. This comes after Berlin announces a similar extension but Chancellor Merkel unveils plans for a cautious re-opening of the economy, beginning with some small businesses next week. Volkswagen will be restarting production in its German and Slovakian factories with other global plants to follow shortly after. In tech news, Alphabet CEO Sundar Pichai tells employees the company isn’t immune to the global pandemic and outlines plans to freeze certain investments, namely hiring new personnel.    

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No more cash…President Trump withdraws U.S. funding of the World Health Organisation, slamming the agency for fundamental failures in tackling the global Coronavirus pandemic and for having a pro-Chinese agenda. In response, Germany’s foreign minister says strengthening the WHO is the best investment. The IMF warns of the worst downturn since the Great Depression, but its chief economist tells CNBC that the global economy remains in far better shape to weather the storm than it did in the 1930s. In corporate news, bad-loan provisioning has weighed heavily on profits at U.S. lenders JPMorgan and Wells Fargo. JPMorgan CEO Jamie Dimon believes the U.S. economy won’t fully reopen until the summer. Plus, a $25bn aid package is agreed to help the U.S. aviation sector after the Coronavirus outbreak cripples the travel industry.  

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China trade…March import and export figures fall by far less than expected despite the impact of the pandemic shutdown. U.S. bank stocks slumped Monday – their first negative session in five days – with investors eagerly awaiting to see the impact of Coronavirus ahead of their Q1 results. The death toll from the virus in the UK tops 11,000 and there are fears that the country could be the worst affected in Europe. However France, Spain and Germany have begun to gradually consider their exit strategies from lockdown.

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Stocks end the week in the green, with the Dow and S&P 500 gaining more than 10 per cent during the period. The Dow crossed the 23,000-point mark late in the session following news that Democrat Presidential candidate Bernie Sanders has decided to drop out of the race clearing the way for Joe Biden. The latest FOMC minutes show Fed officials believe the U.S. economic outlook is ‘profoundly uncertain’ and plan to keep rates near zero until the Coronavirus impact is weathered. Crude prices jump on hopes of an Opec+ agreement on output cuts on Thursday. In corporate news, Disney is enjoying a jump of 50m subscribers to its streaming service as a direct effect of the outbreak while coffee giant Starbucks is warning it will see a 50 per cent slump in Q2 earnings. Across Europe, countries are bracing for lockdown extensions as health officials say the peak of the virus has not yet been reached.

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Trump slams WHO…President Trump threatens to withhold funding and criticises the World Health Organisation for its response to the Coronavirus, saying the agency is too China-centric. France becomes the fourth country to record more than 10,000 deaths from the pandemic with Parisian authorities intensifying the lockdown by banning citizens from all daytime outdoor exercise. In the UK fatalities continue to accelerate but health officials believe there are signs that the virus spread is slowing. Prime Minister Boris Johnson’s condition is described as stable following a second night in intensive care. After an all-night virtual conference euro zone finance ministers fail to reach agreement on the exact rescue measures of a virus rescue package for the bloc. And in energy news, crude rallies on hopes of an Opec+ output cut deal but the U.S. insists it won’t participate.  

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UK Prime Minister Boris Johnson has been moved to intensive care in hospital, after his Coronavirus symptoms worsen. Foreign minister Dominic Raab has stepped in to deputise. The Dow Jones rallied by 1,600 points on Monday with the retail sector leading the way following reports that infection numbers in the most stricken U.S. states have begun to level off. There are reports that Opec+ could agree on an output cut if the U.S. also slashes production. Euro zone finance ministers meet to discuss the EU’s financial rescue strategy but there are concerns that disagreement over Coronabonds could once again scupper any progress.

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UK Prime Minister Boris Johnson has been hospitalised after showing persistent Coronavirus symptoms for the past ten days. Downing Street has said the move is a precautionary step. The rift between Saudi Arabia and Russia widens, delaying make-or-break talks on an oil output deal, with both sides blaming each other. President Trump has upped the ante on oil prices, threatening tariffs on crude imports in an attempt to safeguard U.S. producers from the sell-off. However, U.S. futures and Asian shares seem to shrug off the tension amid signs the pandemic is slowing. Virus cases in Italy, France and Spain decline but EU leaders call for a new marshall plan to mitigate the fallout from the Covid-19 outbreak. NBC News hears exclusively from Italian Prime Minister Giuseppe Conte on his country’s struggle against the disease.

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Striking a deal…President Trump sparks the biggest crude oil rally on record, telling CNBC’s Joe Kernen that he has managed to negotiate a deal to get Saudi Arabia and Russia to make significant production cuts as producers demand an Opec+ meeting. U.S. weekly jobless claims reach a record 6.6m, worse than expected. In China, service sector jobs for March are slashed at their fastest rate ever as consumer activity rebounds from a record low despite remaining in contraction. European Commission president Ursula Von Der Leyen has launched a €100bn short-term work scheme to aid those countries hardest hit by the economic fallout of the pandemic, which has now reached one million cases of Covid-19.

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Hard times ahead…President Trump warns of a difficult few weeks to come as the U.S. death toll surges and up to 80 per cent of the country remains on lockdown. In energy news, oil bosses are set to meet with President Trump as Whiting Petroleum becomes the first oil major to file for bankruptcy. In the UK, British Airways will reportedly furlough up to 36,000 staff following talks with the airline union. Plus, Prime Minister Boris Johnson promises to boost Coronavirus testing after admitting only a fraction of frontline NHS staff have so far been checked.  

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