Squawk Box Europe Express

Chinese services activity hits a seven-month high on the back of strong domestic demand. The strength of the dollar pushes the yuan to a 16-month low. In autos news, Xpeng shares are up following the announcement of a Chinese EV charging network deal with Volkswagen. Tesla CEO Elon Musk intervenes further into UK politics arguing for a snap election and withdrawing his support for Reform leader Nigel Farage. Strong demand for A.I. helps Foxconn to record quarterly revenues and lifts the wider sector ahead of a key speech by Nvidia CEO Jensen Huang later today.

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The S&P 500 and the Nasdaq begin the year in the red - their fifth-straight negative session. However, the dollar extends its rally into 2025 with the index hitting a two-year high. President Biden is expected to officially announce he is blocking the proposed $15bn takeover of U.S. Steel by Japan’s Nippon Steel. Outnumbered by security forces, South Korean prosecutors abandon their attempt to execute an arrest warrant for impeached President Yoon Suk Yeol over last month’s imposition of martial law. And in autos news, Tesla shares fall more than one per cent on the year after the EV maker posted its first decline in annual deliveries. 

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The U.S. is on high alert as the new year begins with a terror attack involving a pick-up truck ramming into revellers in New Orleans, killing 15 people and injuring dozens more. Hours later, a Tesla Cybertruck explodes outside the Trump Tower hotel in Las Vegas, killing the driver. Asian markets are mostly in the red with investors looking forward to a second Donald Trump presidency and a potentially more hawkish Federal Reserve. New Chinese export orders are down once more ahead of expected U.S. tariffs later this month. And in energy news, Kyiv refuses to renew a gas transit deal for Russian gas flowing into Europe.  

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European equities are largely flat in the holiday-shortened session but the Stoxx 600 is set to deliver a second year in the green for the first time since 2015. The U.S. Treasury Department claims Chinese hackers have stolen documents in a major cyber breach. Beijing has said the allegations were smear tactics. Growth in China slows in December but President Xi Jinping said the country remains on track to hit its 5 per cent target for the year. And Chinese toy company Bloks Group is set to float on the Hong Kong Exchange in a listing that could be worth $188m. 

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The Jeju Air disaster becomes South Korea’s worst air disaster in history with Boeing shares opening lower on the Frankfurt bourse. European equities follow Wall Street with every sector opening in the red. The Stoxx 600, however is still on track to end the year positively for a second straight time. In Japan, the Nikkei rises almost 20 per cent on the year while South Korea’s KOSPI posts its longest monthly losing streak since 2008. Condolences flood in for former U.S. President Jimmy Carter who has passed away aged 100.

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Chinese stocks are up on reports that Beijing is due to launch a record amount of special Treasury bonds in a bid to stimulate the economy ahead of Donald Trump’s return to the White House. U.S. President Joe Biden opens a probe into Chinese chip makers in what is the latest salvo against the country’s trade practices. Honda, Nissan and Mitsubishi all see shares surge, with Honda issuing a $7bn share buy-back and confirming merger talks with Nissan. French Prime Minister François Bayrou picks the head of the state-backed financial group Caisse des Dépôts Éric Lombard as his new finance minister.

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Nissan and Honda officially begin merger talks which will create the world’s third largest automaker with ¥30tn in sales. Volkswagen shares are flat despite the German giant reaching an agreement with labour unions over annual cuts of €4bn and averting further strikes. In insurance news, Aviva is to buy up rival Direct Line in a deal worth £3.7bn. The deal will make it the largest home and car insurer in the UK. U.S. futures are up at the start of holiday-shortened week while President-elect Donald Trump threatens to seek American ownership of the Panama Canal over ‘ridiculous’ shipping fees.   

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The U.S. is on the brink of a government shutdown, after the House rejects an amended Republican bill hours from the deadline. The Dow ekes out a gain, snapping its longest losing streak since 1974, as investors count down to today’s PCE print. Japanese core inflation came hotter than expected, slowing the Yen’s decline and pressuring the BOJ to hike rates. Nike shares reverse its gains as CEO Elliot Hill says the sport’s giant’s turnaround plan will be an uphill battle, while blaming deep discounts for declining revenue.

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Markets were spooked after Fed Chair Powell delivers a hawkish cut and signals less easing in 2025 and beyond, with the dollar spiking, treasury yields climbing, and U.S. equities sinking. More fuel was added to fears over fewer rate cuts as President-elect Trump threatens to thwart a bipartisan funding bill, pushing the U.S. government closer to shutdown. Asian equities follow their Wall Street peers into the red, while the BOJ keeps rates on hold, as expected. Economists forecast a hold from the Bank of England as interest rates hit a three-decade premium against Germany amid higher inflation and weaker employment data.

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Wall Street retreats from record highs, with the Dow dipping for a 9th straight session as Nvidia sinks deeper into correction territory. The Federal Reserve is gearing up to deliver its third interest rate cut in a row despite stronger-than-expected retail sales, while the outlook for future cuts remains mixed. In Asia, the Bank of Japan is also gathering to make its final policy decision of the year, as Japanese exports surge in November. Meanwhile, Nissan and Honda mull a merger as Japanese carmakers grapple with slowing demand and tough competition in the EV sector.

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