Squawk Box Europe Express

Tech stocks u-turn on Wall Street but the Nasdaq is on course for its worst run since April. The Bank of England raised rates by 50bps but Governor Andrew Bailey played down fears of a looming UK recession. Siemens Energy shares fall sharply lower after it scrapped its FY outlook upon discovering further technical problems within its turbine unit Gamesa. The company warns it now faces costs of €1bn. The White House welcomes Indian Prime Minister Narendra Modi and unveils a slew of new partnership deals between Washington and New Delhi.

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The S&P 500 records its worst session this month while short positions on U.S. shares hit their highest level in more than a year. U.S. Federal Reserve Chairman Jerome Powell tells the House Financial Services Committee that efforts to rein in inflation are far from over. The Bank of England faces pressure do the same after a shock inflation print sends two-year gilts surging to a 15-year high. In the wake of the collapse of Credit Suisse, the SNB has called for more robust capital buffers and a framework to stabilise or wind down important lenders. And in retail news, the FTC sues Amazon, accusing it of duping customers into subscribing to its Prime service without their consent.

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The recent U.S. equities rally runs out of steam as investors lock in profits and mull the rates forecast before Fed Chair Jerome Powell testifies in front of Congress later this week. UK Chancellor of the Exchequer Jeremy Hunt rules out offering government mortgage relief as he meets with bank chiefs to discuss spiralling repayments. Softbank CEO Masayoshi Son makes bullish comments about potential A.I. benefits, shifting the company to an offensive position. Deutsche Post DHL CEO plays down concerns about de-globalisation, telling CNBC that reliance on China is very entrenched and hard to replace. And we are live in North Greenwich, London at the Ukraine Recovery Conference where Rishi Sunak is set to unveil a major new support package to Kyiv.

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China slashes two more key lending benchmarks for the first time in 10 months as the PBOC attempts to stimulate a stuttering economy. In a sign of potentially easing tensions between the U.S. and China, Secretary of State Antony Blinken meets with President Xi Jinping in Beijing and calls for further dialogue. In tech news, Intel signs off on a €30bn chip manufacturing factory in Germany, making it the largest FDI in the country. Chancellor Olaf Scholz has highlighted the need to de-risk from China. And Airbus inks the largest commercial aviation deal ever, selling 500 single-aisle planes to Indian budget airline Indigo.

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U.S. Secretary of State Antony Blinken arrives in China and holds “candid and constructive” talks with his counterpart Wang Yi. It’s the first visit of an American cabinet-level official for five years. Meanwhile, Goldman Sachs downgrades its FY GDP forecast for China. It quoted Beijing’s limited ability to boost stimulus. Asian equities start the week in the red as a result despite scoring their best weekly run in five months. AstraZeneca seeks to spin off its Chinese unit and to list separately in either Hong Kong or Shanghai as growing geo-political tensions pushes the pharma giant to seek a safe haven. And after a four-year pandemic hiatus, we are live at the Paris Airshow where Airbus and Boeing vie for new orders.

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All three major U.S. indices hit historically high averages ending the session more than 1 per cent in the green. The BoJ sticks to its guns and maintains negative rates despite inflation moving higher. The Nikkei is up in afternoon trade while the yen drops against the dollar. In Frankfurt, ECB President Christine Lagarde hikes euro zone rates to a 22-year high. Lagarde said there was no sign that the hiking cycle could be paused beyond the summer. European leaders attempt to woo the next Tesla gigafactory with CEO Elon Musk meeting with Italian Prime Minister Georgia Meloni before attending the Vivatech conference in Paris later today. And on Wall Street, restaurant chain Cava sees shares surge 100 per cent following its IPO.  

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The Fed makes a hawkish pause but Chairman Jerome Powell warns of two more rate rises later this year in a bid to balance market expectations. The rate decision pushes the S&P 500 and Nasdaq off 13-month highs while U.S. treasuries waver. Bond king Jeffrey Gundlach tells CNBC that the Fed strategy remains flawed and delayed. The PBOC cuts a key policy rate which sees the yuan fall to a six-month low. The ECB is now set to hike rates yet again as inflation hovers above 6 per cent. And we are live at Vivatech in Paris where French President Emmanuel Macron tells us that countries must work together to draft coordinated regulation regarding A.I.

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U.S. inflation drops to its lowest level since in 2021 with investors anticipating a pause in rate hikes from the Fed. The S&P 500 and the Nasdaq respond by hitting 13-month highs and U.S. Treasuries yields also rise on investor optimism the hiking cycle may be coming to a close. In the UK, stronger-than-expected jobs data push short-term gilt yields to levels not seen since last year’s chaotic mini-budget. BoE governor Andrew Bailey admits that inflation in Britain is more stubborn than first thought. In tech news, chip maker AMD makes inroads into A.I., creating a new semi-conductor while Nvidia closes the session with a $1tn valuation for the first time ever – the seventh U.S firm to do so. We are live at Vivatech in Paris which is President Emmanuel Macron’s annual pitch to increase tech investment in France.  

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The S&P 500 closes at its highest level since April 2022 as investors anticipate a Fed rate hike pause later this week. Bank of America CEO Brian Moynihan tells our U.S. colleagues that the central bank cannot yet signal the end of the tightening cycle. In China, the PBOC cuts a key short-term policy for the first time in 10 months as its post-Covid recovery stutters and crude prices are impacted as a result. Intel is reportedly set to be an anchor investor in Arm’s Wall Street listing. The chip designer aims to raise $8-10bn later this year. Also in tech news, Oracle shares reach a record high after the company beats Q4 estimates. The FTC seeks to block Microsoft’s proposed $68.7bn deal for Activision over fears it may withhold or degrade the company’s games on rival platforms.  

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The S&P 500 enjoys its fourth straight week in the green ahead of this week’s Fed rate decision. The FOMC is expected to pause its hikes in order to assess ten consecutive interest rate increases. UBS completes its takeover of Credit Suisse marking a new historic chapter for the banking behemoth. In oil news, WTI slides below the pivotal $70-mark as demand concerns continue to grow. Saudi Arabian energy minister, Abdulaziz Bin Salman tells CNBC he is working within a difficult environment. Spain’s left-wing parties strike a last-minute deal to merge in next month’s general elections which could prove to be a boon for Socialist Prime Minister Pedro Sanchez.

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