Squawk Box Europe Express

Industrial improvement… Chinese output rises for the first time this year but retail sales and fixed asset investment continues to decline. Tensions between the U.S. and China escalate as President Trump warns he could completely cut ties with China, saying he has no reason to talk to President Xi Jinping right now. CNBC learns the President is set to sign an executive order to require key medicines to be manufactured in the U.S to reduce reliance on foreign supply chains. French pharmaceutical giant Sanofi is in hot water with the Élysée Palace after CEO Paul Hudson suggested that the U.S. could be first in line to receive its potential Covid-19 vaccine. And in telco news, BT has refused to comment on whether it will offload its OpenReach stake to fund the launch of its super-fast fibre.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Warnings on Wall Street… U.S. Federal Reserve Chairman Jerome Powell warns of prolonged economic damage, sending global stock markets into the red. Meanwhile, Cleveland Fed President Loretta Mester tells CNBC that the outlook for 2020 looks ‘dire’, adding that any recovery is likely to be slow, but shoots down expectations the central bank will lower rates into negative territory. President Trump says he disagrees on that point but calls Powell his “most improved player”, praising him for his recent actions to mitigate the fallout from the outbreak. Billionaire investor David Tepper issues a stark warning, telling this channel that the market is the second-most overvalued ever, sending the Dow to a session low. In autos news, FCA and Peugeot suspend their dividends for this year but jointly state that their merger is on track. We also speak to Zurich Insurance CFO George Quinn who says the company is bracing for up to $750m of virus-related claims this year.  See Privacy Policy at https://art19.com/

Wall Street suffers steep losses with the Dow Jones falling more than 400 points and the Nasdaq breaking a six-day rally. This comes on the back of Dr Anthony Fauci’s Coronavirus Senate hearing where the White House’s top virus adviser warned against reopening the U.S. economy too soon. The pandemic also weighs on Commerzbank. The German lender swings to a loss in the first quarter and warns that it is difficult to give concrete guidance. CNBC has learned that ride-hailing app Uber has made an offer for food delivery service Grubhub but the price has yet to be decided. And the UK awaits first-quarter GDP data, which is expected to show that the British economy has severely contracted, as retail sales fall by more than 19 per cent for April.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

China’s industrial deflation worsens as producer prices fall 3 per cent in April. It’s the largest slump in four years. New reports of Coronavirus clusters in Seoul and China weigh on Asian markets but on Wall Street the Nasdaq bucks the trend, posting a sixth consecutive day of gains for the first time since December. German steel giant ThyssenKrupp sees it net loss widen to nearly €1bn in the second quarter, as all parts of the business, from the elevator unit to the car parts division, see earnings decline. In further autos news, Toyota says it will post an 80 per cent drop in full-year operating profit in the wake of the pandemic – the car giant’s poorest result in almost a decade. Tesla founder Elon Musk is defying Californian lockdown orders by reopening his flagship Alameda County plant. He has dared authorities to arrest him over the move. As the UK economy begins to reopen, with manufacturing and construction sector workers being urged to return, opposition parties slam Prime Minister Boris Johnson o

From ‘Stay at Home’ to ‘Stay Alert’ - Prime Minister Boris Johnson lays out a conditional plan to lead parts of the UK population back to work but he refuses to lift the lockdown just yet. On the continent, France and Spain ease restrictions from today with just over half of Spaniards allowed to resume their normal lives as part of the first phase of the country’s exit. This comes after the country logs its lowest death toll in two months. Markets in Asia follow Wall Street into the green, buoyed by economic restarts around the world and shrugging off concerns over April’s U.S. unemployment figures. The PBOC promises to further bolster the Chinese economy, also helping sentiment. In Brussels, the EU threatens to sue the German government over its constitutional court ruling which challenges the ECB’s asset purchase programme.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Asian stocks rise on signs that relations between Washington and Beijing are warming after trade representatives from both countries agreed to stronger cooperation in implementing the first phase of the trade deal. U.S. non-farm payroll is expected to show that more than 20m jobs were lost last month. Siemens says it will hit the bottom in Q3 and see full-year revenue decline, after posting an 18 per cent drop in Q2 industrial profit. Uber sees shares spike in extended trade on news that bookings are up from April’s lows. CEO Dara Khosrowshahi assures the market that the ride-hailing app will be profitable in a matter of quarters.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

A surprise recovery…Chinese exports unexpectedly rise in April with a sharp uptick in overseas shipments since December. However, lower domestic demand provides softer-than-expected import numbers. AB Inbev withdraws its full-year guidance after beer volumes fall nearly 10 per cent in Q1. The brewing giant says it has reopened all of its sites in China. Air France-KLM forecasts significantly negative operating earnings this year as its net loss widens to €1.8bn in the first quarter. Credit Suisse says it can’t predict the extent to which the Coronavirus outbreak will impact its financial goals, striking a more pessimistic note than its earnings release a few weeks ago. Meanwhile, Telefonica and Liberty Global reach a deal to create a new UK mobile and broadband behemoth, while Telefonica reports net profit halved in the first quarter.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Media giant Disney cancels its 2020 dividend payout after suffering a $1.4bn hit to income due to the Covid-19 outbreak. It has announced plans to reopen its Shanghai theme park from next week. BMW lowers its margin outlook, saying that the negative impact of the virus is lasting longer than expected with second-quarter data being worse than the first. Unicredit suffers a bigger loss than anticipated as it sees trading income fall and is forced to take a large writedown on loans. In Germany, state heads agree a draft reopening plan that would see all shops and restaurants resume trading but with provisions for fresh lockdowns if cases rise.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Crunch time for the ECB…Germany’s constitutional court is set to rule on whether the ECB’s sovereign bond-buying programme is appropriate in a decision that could hinder its QE measures. BNP Paribas' first-quarter profit falls by 33 per cent as market turmoil weighs on its trading unit. CFO Lars Machenil tells CNBC the economic outlook is difficult. WeWork founder Adam Neumann is suing Softbank for abandoning a $3bn tender offer that was part of the office-sharing firm’s rescue package.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Chinese oil and airline stocks have dragged the Hang Seng down and U.S.-China tensions weighed on sentiment. U.S. officials reportedly believe China covered up the Coronavirus outbreak to hoard medical supplies. President Trump has blamed Beijing and warned that U.S. deaths could top 100,000.  Billionaire investor Warren Buffett has sold off all airline positions and warns of gloomy times ahead for the aviation sector. The FDA has granted Roche approval to carry out anti-body testing. The Swiss drug maker has vowed to double its production over the coming months.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

European Commission President Ursula Von Der Leyen tells CNBC exclusively that an investigation into the origins of Coronavirus is needed, with the cooperation of China. President Trump has threatened Beijing with fresh tariffs and says he has seen evidence that links the outbreak to a laboratory in Wuhan. The Dow Jones ends April on a high – its best monthly performance since 1987 – driven by gains in energy stocks, despite the recent historic sell-offs in oil. Amazon shares sink as founder Jeff Bezos warns the retail giant could post a loss in the second quarter after dedicating $4bn to virus response measures. Apple beats first-quarter expectations but shares dip in after-hours trading after CEO Tim Cook refuses to provide guidance amid the pandemic.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

A global rally…The S&P 500 is set for its best month in nearly 50 years following positive news on a Gilead drug trial. U.S. Federal Reserve chairman Jerome Powell says the American economy has suffered “an extraordinary shock” in the wake of the Coronavirus pandemic. He has warned of a severe economy contraction in the second quarter and says the central bank will maintain low rates for as long as needed. Hopes of a quick recovery in China have been dashed as export numbers fell at the fastest pace since the financial crisis. In tech news, Microsoft sees shares soar in extended trade on increased cloud revenues through remote working. Plus, Facebook’s shares jump in after-hours trading as it says advertising revenues made a comeback in April. Its CFO David Wehner has told CNBC it remains cautious.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Standard Chartered warns of severe market dislocation as its credit impairments jump sharply. Shares rise in Hong Kong as its CFO, Andy Halford, says the signals coming from Asia are positive. Airbus posts a net loss in Q1 and provides no guidance, blaming limited visibility. The French aerospace giant says the virus has prevented it from delivering 60 aircraft. Alphabet’s shares rise in extended trade after saying the slowdown in advertising revenue is easing, beating more pessimistic forecasts. Plus, we speak to Rainer Seele, CEO of Austrian oil company OMV, as it reveals an 8 per cent drop in core earnings.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

HSBC’s first quarter profit slumps 48 per cent as it warns the Coronavirus crisis will have a material impact on capital and liquidity. CFO Ewen Stevenson, however, says it is starting to see some signs of recovery in China. Swiss lender UBS has posted a 40 per cent rise in Q1 net profit thanks to lower loan loss provisions and higher trade revenue. CEO Sergio Ermotti says its clients have remained active. Santander creates a €1.6bn reserve pot to mitigate the virus fallout after it sees Q1 profit nosedive by 82 per cent. And in Switzerland, industrial giant ABB warns the group will be significantly challenged by a sharp drop in demand due to the lockdowns.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

The Bank of Japan launches an unprecedented expansion of its quantitative easing programme, pledging unlimited bond buying. The stimulus increase moves Asian equities higher. Chinese industrial profits fall 35 per cent in March but recover from the steepest drop in a decade as almost a quarter of sectors see an increase in activity. Deutsche Bank surprises by posting a profit in Q1 but the German lender warns that it will miss its capital target due to the recession caused by the Coronavirus pandemic. In the UK, Prime Minister Boris Johnson returns to work to lay out a plan to lift the nationwide lockdown. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Germany commits…EU leaders have agreed on a huge rescue package to mitigate the economic damage wrought by the pandemic with Berlin set to provide a substantial contribution. A leaked WHO report shows disappointing results from trials of Gilead’s touted Coronavirus drug, Remdesivir. In the U.S., as 16 states release their formal re-opening plans following lockdowns, President Trump warns that social distancing measures may need to be extended into early summer or beyond. Tech giant Intel abandons its 2020 guidance, warning that a demand surge for microchips may yet turn into a slump. In the UK, retail sales fall by a record 5.1 per cent in March.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Coronavirus casts a shadow over Q1 earnings…Credit Suisse reports a 75 per cent rise in first-quarter net profit amid exceptional levels of client activity. However, the Swiss lender has set aside CHF568m for potential loan losses. Daimler is warning of a 70 per cent drop in earnings due to a collapse in demand amid the Coronavirus pandemic. French hotel giant Accor says it expects April and May to be its toughest months as it waits for government guidance on lockdowns. The company posted a 17 per cent drop in Q1 revenues. In energy news, both Brent and WTI bounce back after falling to historic lows this week. U.S. prices have soared by as much as 40 per cent overnight with renewed tensions with Iran and optimism that production cuts will help ease oversupply bolstering the uptick.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Subscribers soar…streaming giant Netflix blows away expectations in the first quarter by signing up more than 15m new customers, thanks to strong demand for franchises like ‘Tiger King’ amid the global lockdown. But, the stock pares gains in after-hours trading after the company warns the pandemic-related boost is unlikely to last later in the year. Luxury giant Kering reports a 23 per cent fall in Gucci sales in the first quarter and cautions that it is too early to judge the recovery in the Chinese market following the Covid-19 outbreak. The plunge in oil prices accelerates with Brent bearing the brunt of the selling, also pushing U.S. and Asian stock markets lower. And in the U.S, the Senate passes a $500bn rescue package aimed at aiding small firms, hospitals and ramping up testing for Coronavirus.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

A historic collapse…the price of a barrel of WTI for May turned negative, the first time ever levels have fallen below zero. U.S. President Trump has said he is considering blocking Saudi imports to build up state reserves and support the price of crude. President Trump has also moved to temporarily suspend all immigration into the U.S. to protect lives and jobs from the Coronavirus pandemic. In aviation news, the virus claims a major scalp as Virgin Australia goes into voluntary administration after failing to secure a government aid package. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Reopening Row…President Trump has played down accusations from U.S. governors who say they lack the Coronavirus testing equipment to re-open their states. The May WTI contract slumps to its lowest level since 1999 on fears the U.S. is approaching peak storage capacity. The ECB is reportedly considering a European bad bank to avoid subsequent NPL crises but it faces opposition from Brussels to stick to state aid rules. Around Europe there are signs of lockdowns easing, with Germany reopening parts of its economy. Spain is extending confinement but easing restrictions while the UK cabinet is reportedly showing signs of disagreement over an exit strategy.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.