Squawk Box Europe Express

Rate easing optimism pushes Wall Street to its second week in the green as Fed Chair Jerome Powell sets the scene for a September cut, with traders still pondering the possibility of a potential 50 basis point move. However Bank of England Governor Andrew Bailey and ECB Chief Economist Philip Lane are more cautious on the outlook. U.S. Vice President Kamala Harris’ presidential campaign says it has raised $540 million in little more than a month, as Republican vice-presidential candidate JD Vance endorses trade tariffs. In the Middle East, Israel declares a 48-hour state of emergency as fears grow of escalation between it and Hezbollah - in the biggest round of strikes between the two since 2006.

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In the U.S. Kamala Harris officially accepts the Democratic presidential nomination at the DNC in Chicago. She took aim at ‘unserious’ Republican rival Donald Trump during her historical address. U.S. Treasury yields are up and equities in the red as investors await Fed Chair Jerome Powell’s big Jackson Hole speech this afternoon with policy makers considering a rate cut in September. Meanwhile in Japan, inflation moves higher as BoJ governor Kazuo Ueda signals rates will be raised again should data stay on track. And Nestlé CEO Mark Schneider steps down from the helm of the world’s largest food and beverage producer following poor recent performance. The company is due to install insider Lauren Freixe as soon as next month.

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Dovish FOMC minutes and a shock revision to the jobless numbers reinforce expectations that the Federal Reserve will slash rates next month. The S&P 500 bounces back to record its highest level in 5 weeks ahead of Fed Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Symposium tomorrow. Retail giant Target’s shares are 11 per cent higher after the company beat expectations as U.S. consumers continue to experience price pressures. Minnesota governor Tim Walz officially accepts the Democrat nomination for vice-president on the third day of the DNC in Chicago.  

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The S&P 500 and Nasdaq both break an eight-day winning streak with the recent recovery stalling ahead of Fed Chair Jerome Powell’s widely anticipated speech at the Jackson Hole Symposium later this week. In Chicago, the DNC officially votes on the the presidential nomination of Kamala Harris and her running mate Tim Walz with former president Barack Obama endorsing the current vice-president. The EU adjusts its planned tariffs on Chinese EVs with Tesla catching the biggest break – now facing duties of only 9 per cent compared to the anticipated 20.8 per cent. In Germany, Taiwanese chip maker TSMC breaks ground on its first plant in Europe. Meanwhile shares in Chinese e-retail giant JD.Com plunge following Walmart’s confirmation it will sell its stake in the company. 

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The Democratic National Convention opens in Chicago with an emotional President Joe Biden speaking of leadership and legacy and urging support for the party’s presidential nominee, Kamala Harris. The S&P 500 notches a rare eighth consecutive day in the green with the momentum edging Wall Street towards new record highs. A new labour report reveals cracks ahead of Fed Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Symposium later this week. However, Goldman Sachs’ chief economist Jan Hatzius believes slowdown fears in the U.S. are exaggerated. And in the Middle East, U.S. Secretary of State Antony Blinken says Israel has accepted a ‘bridging proposal’ in ceasefire talks. 

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Wall Street enjoys its best week since winter 2023 and European equities also notch their best week in 3 months. Goldman Sachs pares back its odd of a U.S. recession to just 20 per cent after a run of positive data ahead of the Fed’s annual economic summit in Jackson Hole, Wyoming later this week. U.S. Vice-President Kamal Harris presents her economic policies to voters in the wake of criticism of her plans to ban price-gouging nationally. U.S. Secretary of State Antony Blinken flies into Tel Aviv as Washington renews efforts to broker a ceasefire agreement between Israel and Hamas. 

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The S&P 500 manages to claw back all its losses this month thanks to positive U.S. consumer and jobless data which calms investors about the health of the country’s economy. Japan’s Nikkei follows suit to record its best trading week in four years. Alibaba shares are up despite the e-commerce giant missing Q2 expectations while quarterly profits at JD.Com almost double. And the WHO declares a global public health emergency over the Mpox virus – the second time in two years.

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The S&P 500 enjoys a fifth consecutive day coming in higher on the back of U.S. CPI dipping to below 3 per cent for the first time since 2021. Investors Michael Burry and David Tepper move towards Chinese tech as several top hedge funds move away from Magnificent Seven stocks. Japanese Q2 GDP beats expectations, growing more than 3 per cent and nudging the Nikkei higher. This sets up the BoJ for another rate hike. Meanwhile, Chinese manufacturing numbers come in soft, prompting calls for more stimulus measures from Beijing. Retail sales, however, came in positive.

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Swiss banking giant UBS posts a second-quarter beat on both the top and bottom line with a net profit of $1.1bn. The lender’s global wealth management arm also notched $27bn of net new assets. Japanese PM Fumio Kishida has stepped down and will not contest next month’s election. U.S. stocks rally after softer-than-expected PPI numbers raise hopes the Fed will cut by 50 basis points next month. The U.S. CPI print will be released later today. And in tech news, the DoJ is reportedly seeking to break up Google after a court judges that the company has an illegal online search monopoly.

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Japanese stocks are up 3 per cent after the public holiday weekend as a less volatile yen helps to allay market jitters. GOP presidential nominee Donald Trump sits down with X owner Elon Musk for a wide-ranging conversation on the social media platform with topics such as immigration and the economy in focus. In energy news, crude prices fall back following a 4 per cent surge as tensions in the Middle East ramp up. Israel has put its military on high alert following threats from Iran. And Danish jewellery maker Pandora shrugs off weakness throughout the luxury sector to hike its growth guidance for the second time this year.  

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