Squawk Box Europe Express

There are extraordinary political developments afoot across Europe. The pound slides on news that the Queen approves Prime Minister Boris Johnson’s request to prorogue parliament for up to five weeks, greatly increasing the chance of a no-deal Brexit. The move leaves opposition parties and Remain supporters outraged with critics slamming the PM’s actions as anti-democratic. However, Johnson remains unfazed, saying that there will be ample time to debate Brexit before the October 31st deadline for EU withdrawal. Over in Italy, an end to the political stand-off is in sight, for now, with the PD and Five Star on track to lead a coalition government. Giuseppe Conte is expected to be reappointed as prime minister. Across the pond, energy stocks outperformed to leave markets in the green. The Dow Jones moves more than 250 points in a volatile session but investor sentiment is ultimately kept in check by further falls in the bond yield.

Tumbling yields weigh on U.S. markets with all three major indices finishing in the red and set to break a two-month winning streak. Recession fears remain with the 10-year yield versus the two-year rate dropping to its lowest level since before the financial crisis. In Rome, the 10-year yield falls to a new three-year low off the back of constructive coalition talks between PD and Five Star. There are, however, concerns that the country could still hold autumn elections if a government isn’t formed by the end of the day. And in corporate news, BP decides to call it a day in Alaska, shedding its assets in the U.S. state for $5.6bn in a bid to increase its balance sheet.

Global markets surge on fresh hopes of a resolution in the trade dispute between Washington and Beijing after President Trump says that China is ready to agree a deal, backing up his tough style of negotiation. We are live at the G7 in Biarritz, France where host President Emmanuel Macron has said he was willing to broker a pact between the U.S. and Iran over nuclear tensions following suggestions from both President Trump and President Hassan Rouhani that they were ready to talk. And in Italy, the Partito Democratico and Five Star inch towards forming a government as Prime Minister Giuseppe Conte meets with party heads.  

Markets dive first thing this morning as China ups the ante in the trade dispute with Washington, slapping tariffs onto $75bn worth of U.S. goods. President Trump has hit straight back, however, demanding that American manufacturers seek out alternatives to Chinese markets but he left observers confused by comments hinting that he may have regretted escalating the trade war. We are live at the G7 in Biarritz, France, for the latest. Investors looking for a safe haven have pushed gold prices up to a six-year high but oil prices fall on the back of recession fears. And Hong Kong is again rocked by violence for the 12th consecutive week with police drawing weapons and firing water cannons at pro-democracy protestors.

It’s all about the Fed. Investors around the world are on tenterhooks as they await a speech from Federal Reserve chairman Jerome Powell at the Jackson Hole symposium, which could send strong signals on the outlook for U.S. monetary policy. Two Fed presidents tell CNBC that they don’t see a case for further interest rate cuts in 2019. This side of the Atlantic, sterling enjoys its best day in almost 3 months following German chancellor Angela Merkel’s positive comments on finding an Irish backstop Brexit solution. However, French president Emmanuel Macron stands firm saying that the mechanism is indispensable to the withdrawal agreement. Italian President Sergio Mattarella gives political parties five days to ink a coalition deal, as the PD sets red lines for a partnership with Five-Star, raising the prospect of snap elections.

Divisions within the Federal Reserve are exposed in the latest minutes, as policy-makers suggest that July’s rate cut does not signal a pre-set easing cycle. The central bank cites the trade tensions with China as a ‘persistent headwind to growth’. Meanwhile, the U.S. yield curve inverts once more on nagging recession concerns but President Donald Trump deflects attention to Germany, hailing its negative yields despite the first 30-year zero-income bund auction receiving scant interest. German Chancellor Angela Merkel hosts new U.K. prime minister Boris Johnson and lays down a 30-day challenge to him to resolve the Irish backstop conundrum. France’s President Emmanuel Macron, who Johnson visits today, says blame for a no-deal Brexit will be laid squarely at Britain’s door. And in Italy, President Sergio Mattarella has begun party talks to form a new governing coalition. The opposition PD party is attempting to woo Five Star into an alliance, albeit with stringent conditions. The potential for fresh elections

Instability in Italy. We’re live in Rome where Prime Minister Giuseppe Conte resigns with a scathing attack on interior minister Matteo Salvini whom he accuses of political opportunism. We discuss the next steps to form a new government with an Italian senator and assess the bond market reaction, as investors take a sanguine view on the crisis. Over in the U.S., the Dow breaks its 3-day streak after President Trump shows no signs of backing down in his trade war with China. Trump also takes aim at the EU, saying he can get anything he wants from the bloc by threatening its car sector. British Prime Minister Boris Johnson has his request to drop the backstop roundly rejected by Brussels as he sets out to meet German chancellor Angela Merkel and French president Emmanuel Macron this week.

The Wall Street rebound is on. U.S. stocks nearly wipe out all of last week's major losses, with the Dow managing to reach an intra-day high just 5 per cent below its all-time record. In Asia, stocks edge higher as the PBOC sets its new lending reference slightly lower on its first day and Washington grants Huawei a 90-day extension of its sales permit but simultaneously adds more affiliate companies to its blacklist. Facebook and Twitter move to block accounts they say are being used in pro-Beijing propaganda aimed at stymieing the Hong Kong pro-democracy protests. Chery Kang reports from the territory as chief executive Carrie Lam says she hopes the peaceful rallies over the weekend mark a turning point for the city. And we’re on crisis-watch in Rome, where Italian Prime Minister Giuseppe Conte is due to address the Senate and a no-confidence vote could bring down the coalition government.

Wall Street gears up for more volatility after U.S. stocks close in the green but log their third negative week in a row, while the Trump administration seeks to calm recession fears, with top economic adviser Larry Kudlow saying he doesn’t see a major downturn on the horizon. In China, stocks surge following the PBOC’s announcement of business interest rate reforms. Investors also bet on fiscal stimulus out of Berlin as finance minister Olaf Scholz says Germany is ready to use the ‘full force’ of a €50bn stimulus package in the event of an economic crisis. And Hong Kong sees its 11th straight weekend of pro-democracy protests with a reported 1.7 million people turning out for a peaceful rally on Sunday.

The Dow Jones bounces back after its worst day of 2019 as Washington and Beijing soften their rhetoric in the trade war. Asian equities see green as fresh data shows that Japan has overtaken China in holding U.S. Treasuries. In Europe, euro zone bond yields sink to new lows after ECB board member Olli Rehn says the central bank is preparing a stimulus package for September. And the founder of the world’s largest hedge fund, Ray Dalio, tells CNBC there is a 40 per cent chance that the U.S. will fall into recession ahead of the 2020 presidential election.

The Dow suffers its worst day of the year, plunging 800 point in its fourth worst point drop in history. Investors are spooked after the US 2-10 yield curve inverts, sparking concerns a recession is on the way. President Trump takes aim at Jerome Powell, slamming the Fed for growing fears of a US slowdown, while the 30-year treasury yield falls to a new record low. Furthermore, the US President links protests in Hong Kong with the China trade tensions, and suggests a personal meeting with President Xi Jinping over the political crisis. In Asia, stock join the global sell-off. Recession fears also roil Asian bond markets, with the yield on Japan’s 10-year JGB falling to its lowest level in 3 years.  

The Trump administration seems to be the first to blink in the trade war, delaying tariffs against key Chinese imports including laptops, cellphones and clothing. The move sends Asian equities into the green after a rally on Wall Street, led by Apple shares which jumped 4 percent in its best day since May. In Hong Kong, the city’s airport re-opens despite another night of protests and more clashes with police. In Italy, the senate shoots down deputy leader Matteo Salvini’s push for a swift no-confidence vote, dealing a blow to the Lega leader’s drive to force a snap election.

In a volatile day for U.S. markets, the Dow drops nearly 400 points to close below 26,000. Global bond yields resume their decline sending a warning signal to investors of a possible recession. In Asia, the Hang Seng leads losses as Hong Kong protests add to the turmoil. Chief Executive Carrie Lam warns the city is on a path of no return as airport demonstrations extend into a fifth day causing airport shutdown. In Italy, the Italian senate is called back from their summer break to slate a no-confidence vote in the coalition government, as 5-star leader Luigi Di Maio accuses Lega's Matteo Salvini of "stabbing Italy in the back." And finally in Argentina, investment-friendly President Mauricio Macri experiences a re-election setback, sending Argentine assets into decline.

After a rocky week for Wall Street, Asian equities start the week cautiously higher as Goldman Sachs warns the trade war is raising the prospect of a U.S. recession. Meanwhile, China sets its yuan fix at weaker than 7 for the third straight day. In Italy, deputy Prime Minister Matteo Salvini denies reports he wants to withdraw the country from the euro area as he intensifies his call for a snap election. In corporate news, Sandvik CEO Bjorn Rosengren will assume the top job at engineering giant ABB, taking over from acting CEO Peter Voser in March. And finally, as US President Trump struggles to seal a deal for a 20 member global coalition to protect maritime shipping lanes, we take you aboard aircraft carrier USS Abraham Lincoln as the fleet looks to defend the Strait of Hormuz.

The U.S. market recovery continues with stocks jumping and bond yields rebounding, as the S&P 500 sits in positive territory at the end of a choppy week of trade. The picture is far more mixed in Asia with Chinese food inflation rising and the PBOC setting a higher-than-expected yuan mid-point, despite its record low level. In Italy, the government is teetering on the edge as Matteo Salvini pulls the plug on the fragile coalition with Five Star and calls for fresh elections in the autumn. Prime minister Giuseppe Conte, struggling to contain his anger, demands that the interior minister explains his move to voters. And in corporate news, Uber shares plunge in after-hours trade with the ride-hailing giant posts its biggest loss ever - more than 5 billion dollars in the second quarter.

Another day of wild market gyrations. Better-than-expected Chinese trade numbers drive Asian markets higher despite a drop in U.S. imports. China's central bank sets the yuan mid-point weaker than the key 7-per-dollar level for the first time since 2008. Over on Wall Street the Dow plunges by almost 600 points before clawing back most of the losses while the S&P 500 posts its biggest comeback in 18 months. Global bond yields fall as the flight to safety accelerates with the yield on the U.S. 10-year note touching its lowest level since October 2016. News that Saudi Arabia is collaborating with producers to arrest the price slide sees oil rallying following a near-5 per cent drop. And the earnings season continues with numbers due from Deutsche Telekom, ThyssenKrupp, Adidas and Zurich Insurance.

Wall Street recovers. The Dow jumps 300 points, rebounding from U.S. stocks’ worst day of 2019. The picture in Asia, however, is more mixed with China setting the yuan fix at a weaker-than-expected level. President Trump’s team has played down concerns over an entrenched trade war, with National Economic Council director Larry Kudlow telling CNBC he would like to continue negotiations. The New Zealand central bank shocks the market with a half-point rate cut. And banks dominate the earnings releases in Europe with Commerzbank warning its full-year income has become significantly more ambitious. The low-rate environment forces Unicredit to cut its full-year guidance. Finally, we speak to the CFO of retail giant Ahold Delhaize who tells the show he does not see a big impact from tariffs.

Markets in turmoil. Squawk Box anchors dissect all the dramatic action across asset classes. Wall Street logs its worst day of 2019 with the Dow plunging more than 750 points, as Washington labels Beijing a currency manipulator. Apple bears the brunt of the sell-off, having the most negative impact on the major indices. Asian equities remain very much in the red following the Chinese government’s decision to suspend purchases of American agricultural produce. However, U.S. futures recover after the PBOC eases some concerns, with Beijing setting the mid-point fix of the yuan at a stronger-than-expected level. Anxiety also moderates in safe havens, with gold coming off a fresh six-year high.

Asian stock markets plummet to six-month lows following the S&P 500’s worst week of the year. The latest trade tensions between the U.S. and China prompt investors to opt for safe havens. The yuan slides to its lowest level in more than a decade falling past 7 per dollar, with the Chinese central bank blaming ‘trade protectionist’ and ‘unilateral’ moves by the U.S. Hong Kong braces itself for more chaos and the Hang Seng slumps after pro-democracy protestors threaten to paralyse the territory with a general strike. And in corporate news, HSBC announces the surprise departure of CEO John Flint after only 18 months in the job.

The trade truce is off and has sent markets reeling. Squawk Box anchors digest the massive moves across asset classes after U.S. President Donald Trump loses patience with a lack of progress on trade talks with Beijing and slaps 10 per cent onto $300bn of Chinese goods. The Dow falls nearly 300 points and Asian equities follow Wall Street into the red as Chinese state media insists Trump’s move will backfire. The sudden increase in trade tensions also impacts bond yields with the U.S. ten-year slumping to its lowest level since 2016. And oil claws back some ground after falling 8 per cent amid renewed fears of a global economic slowdown. Elsewhere, U.K. Prime minister Boris Johnson’s majority in the House of Commons shrinks following a by-election in Wales. On the corporate front, we break earnings from Credit Agricole and Allianz.