Squawk Box Europe Express

The Saudi strikes lead to an oil shock for the global economy. Crude prices trim gains after Brent has its best day on record following the attacks on Saudi Aramco's facilities. President Trump says Iran looks to be the likely culprit but plays down the prospect of armed conflict, saying he is in no rush to respond. He also hinted that the move in energy assets is reason enough for the Federal Reserve to cut rates. The geopolitical risk weighs on Asian stocks, but there is a ray of hope for U.S.-China trade talks as Washington and Beijing confirm that deputy-level negotiations are set to resume later this week. In Europe, however, Brexit talks remain in deadlock following U.K. Prime Minister’s visit to Luxembourg while the Supreme Court in London is set to hear whether his proroguing of parliament is indeed lawful.

Strike on Saudi Arabia… Crude prices surge after attacks shut down two of Saudi Arabia’s largest energy facilities, slashing the kingdom’s output by half. Washington blames Iran for the incident but Tehran has denied any involvement. President Trump tweets the U.S. is ‘locked and loaded’ depending on the verification of the culprit, while also authorising the release of American petroleum reserves. We are live in Riyadh for the latest. Chinese industrial output growth slows to a 17-year low in August amid further signs that the trade war with Washington is hurting China’s economy. We are also live in Luxembourg ahead of U.K. Prime Minister Boris Johnson’s meeting with outgoing European Commission President Jean-Claude Juncker.

Draghi delivers…global stocks move into the green with the Dow hitting a record high after outgoing ECB President Mario Draghi offers the euro zone a sweeping stimulus package featuring a rate cut and a new bond-buying programme. EU commissioner Valdis Dombrovskis responds to Draghi’s call for fiscal action, telling CNBC it will be discussed by European finance ministers in Helsinki. Investors will now turn their attention to the Federal Reserve’s rate decision next week. Asian stocks receive a boost as President Trump delays tariffs on Chinese goods and hints at a possible interim trade agreement with Beijing. In Abu Dhabi, OPEC ministers demand that members accelerate agreed oil production cuts while Russian energy minister Alexander Novak tells CNBC exclusively that President Trump’s market-moving tweets ultimately have zero-impact on his forecasting considerations.

A gesture of goodwill…Asian equities are in the green after President Trump decides to delay tariffs on $250bn of Chinese goods as the People’s Republic celebrates its 70th anniversary. Beijing responds in kind by waiving levies on several American products. But the real action is in Frankfurt, where Mario Draghi is expected to fire his big parting shot. The ECB is widely expect to cut the deposit rate, revive quantitative easing and add a number of other easing measures to offset the slowdown in the euro zone. The Hong Kong Exchange launches a $37bn takeover bid for the London Stock Exchange but political concerns could still derail it. The former CEO of the LSE tells CNBC that the proposal is an ‘aggressive move’ that will attract close scrutiny from shareholders. And we are live at the Opec+ meeting in Abu Dhabi where the group is meeting to discuss oversupply concerns following its cut to the 2019 oil demand outlook.

The highly-charged ECB watch begins. Asian equity markets and bond yields rise with investors focused on what Mario Draghi will deliver in his final rate-setting meeting before leaving the presidency in Frankfurt. Expectations are high with analysts forecasting more QE, a cut to the deposit rate, tiering, fresh TLTRO loans and dovish forward guidance.Apple unveils its latest smartphone incarnation, the 11, while also slashing costs for its TV service, stirring up a streaming battle. President Trump fires his hawkish national security adviser John Bolton, sending oil prices lower, as investors cut bets on escalating tensions with Iran.  In Brussels, incoming European Commission President Ursula von der Leyen has unveiled a new team of commissioners while in the U.K., Prime Minister Boris Johnson has vowed he will continue to work for a Brexit deal as parliament begins its five-week suspension.

Swings and roundabouts… easing trade tensions help drive the Dow to a four-day winning streak but Chinese markets tick lower following last month’s producer data marking its steepest decline in three years. In Berlin, rumours of a shadow budget to circumvent national spending laws push Bund yields to a one-month high. In Brexit news, we hear exclusively from Irish finance minister Paschal Donohoe, who doubts much progress can be made in breaking the backstop impasse. Meanwhile, Prime Minister Boris Johnson loses a second vote to call a snap election as parliament is prorogued but he is adamant he will not ask Brussels for a withdrawal extension. We are also live at the Frankfurt Motor Show where Volkswagen CEO Herbert Diess tells CNBC that the U.S.- China trade war is being felt throughout the automotive industry.

Brexit bedlam…Prime Minister Boris Johnson suffers another cabinet resignation over his government’s no-deal stance but Brexit secretary Stephen Barclay tells CNBC exclusively that efforts to secure a deal with the EU are in progress. Asian stocks rally on the news that Beijing is stimulating the Chinese economy with a RRR-cut as export figures prove the trade war with Washington is beginning to bite. We are live at the World Energy Congress Forum in Abu Dhabi where U.S. Treasury official Sigal Mandelker exclusively tells this channel that the U.S. is finally making inroads into curbing illicit shipping in the Gulf. And Hong Kong suffers its 14th consecutive weekend of unrest with pro-democracy demonstrations showing no signs of abating despite the Legislative Council scrapping a controversial extradition deal.

It’s good to talk…the U.S. and China agree to resume trade negotiations, prompting the Dow to surge by more than 350 points – its best day in three weeks. The news also sparks hope across Asian markets ahead of U.S. jobs reports but Fitch downgrades the Hang Seng after months of violence across the Hong Kong Special Administrative Region. We are live in Westminster for the latest on Brexit where Prime Minister Boris Johnson is set to ratchet up his demands for an early election. In Rome, the new PD-Five Star coalition government is sworn in, but the challenge of delivering a budget to Brussels this autumn still lies ahead. We are live at the Ambrosetti Forum on the banks of Lake Como with in-depth analysis.

Boris blocked. Conservative Party rebels and opposition lawmakers deliver U.K. Prime Minister Johnson a double defeat in the House of Commons, taking a no-deal Brexit off the table and also refusing to allow him to call a snap general election. We are live from Westminster with the latest. In Asia, markets rally on confirmation from the Chinese commerce ministry that trade talks between Washington and Beijing are set to resume in October. The Hang Seng enjoys extended gains following Hong Kong Chief Executive Carrie Lam's withdrawal of the controversial extradition bill, which is hoped will stem the violent protests in the Special Administrative Region. Over in the U.S., two-year treasuries slump to their lowest point since 2017, while we hear exclusively from Goldman Sachs CFO Stephen Scherr who says anxieties over a recession are becoming increasingly apparent.

Chaos in the Commons. Conservative Party rebels aid opposition lawmakers to defeat the U.K. government in a vote to block a no-deal Brexit in October but a defiant Prime Minister Boris Johnson says he’ll seek an early election should he lose today’s vote on the bill. We are live in Westminster for the latest. In the U.S., markets close in the red after the first day of trading following the Labor Day weekend with manufacturing numbers shrinking for the first time in three years. It's a mixed session in Asia as the private Caixin survey reveals China's services activity hit a 3-month high in August. Plus, we speak exclusively with Lebanese Prime Minister Saad Hariri who tells CNBC he fears a war amid rising tensions between the U.S. and Iran.  

U.K. Prime Minister Boris Johnson lays down the gauntlet to his Brexit opponents, asking them to back the government or risk a snap general election in October if they block a no-deal Brexit in Parliament later today. We are live from Westminster as Sterling hovers around levels not seen in two-and-a-half years. Beijing launches a formal complaint against the U.S. at the WTO over its latest round of tariffs which now effect up to $300bn of Chinese goods. The south-eastern United States braces for Hurricane Dorian to make landfall after the slow-moving mega-storm killed 5 people and destroyed 13,000 homes in the Bahamas. And, we are live in Beirut where the Lebanese government is preparing to declare an economic state of emergency amid simmering tensions between Hezbollah and Israel.

A new phase in the trade war. Washington slaps a fresh 15 per cent levy onto a range of Chinese goods while Beijing retaliates by imposing a 5 per cent tariff on U.S. crude oil. President Trump, however, is upbeat about talks later this month. Hong Kong sees a 13th consecutive weekend of pro-democracy protests with many turning violent. Demonstrators clashed with police, blocking roads and disrupting airport transport links. In Italy, designated Prime Minister Giuseppe Conte voices confidence over upcoming coalition talks but Five Star leader Luigi Di Maio sounds a more lukewarm tone, telling CNBC exclusively that his party will only enter a new government if its demands are met. And in the UK, Prime Minister Boris Johnson threatens Conservative MPs with deselection if they choose to side with opposition lawmakers in an attempt to thwart his Brexit plans.

It’s the end of the month with stocks finishing in the green amid signs that U.S.-China trade tensions have cooled somewhat. This, despite fresh tariffs on Chinese goods coming into effect on 1st September. We are live in Rome where former Prime Minister and PD leader Matteo Renzi tells CNBC exclusively that he refuses to play a part in the new coalition government because of personal issues with Five Star but he urges international investors to bring their business to Italy. In the U.K., Prime Minister Boris Johnson says that he will ‘step up the tempo’ on EU withdrawal talks but he’ll face stiff opposition in parliament next week as lawmakers attempt to block a no-deal Brexit. And in Asia, Hong Kong braces for a 13th consecutive weekend of protests following the arrests of several prominent pro-democracy activists.

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.