, stocks andcovery futures sliding after unexpected uptick in u. S. Jobless claims. Delay to the stimulus plan means one thing for markets. This may get worse. , china to the u. S. To close its consulate in chen u du. Mike pompeo calls the chinese president a true believer into italian totalitarian ideology. Delay, thisuction follows big drops in microsoft earnings despite solid results. We are an hour from cash equity trading. You can look at drops of more than 1 acrosstheboard in european futures. You have got you are got u. S. Teachers that continue to fall after the slump we saw yesterday. Anna we have got numbers from vodafone out this morning. Lets get to that. 21 organic services revenue, this is the bread and butter of what they do. Down, but the estimate was something worse. There was another u. K. Giant, unilever, also yesterday. They are keeping the guidance for Free Cash Flow prespectrum. There have been questions around the ipo tower unit. The european tower unit is on track for an ipo in early 2021. The target unit is targeting a listing in frankfurt where we are looking out for any comments about huawei. We have seen the u. K. Decision recently and see if vodafone will comment on that. The increasing cost of doing business with other providers. Lets say thats talk about the asian session. Human to through the futures and they looked gloomy. You looked through the futures and they looked lonely. 2. 4 . Ng seng weaker down australia down 1. 3 which is also wrestling with the coronavirus as we know. The bloomberg dollar index showing dollar weakness around out of the week. To continue the trajectory of the week, we are dealing with in marketsncerns around the u. S. China tensions, u. S. Jobless numbers, the initial claims numbers. That was extra had a concern and concerns around u. S. Physical sport. Fiscal support. We will go to laura wright for the update. Laura china wants the u. S. To shut its consulate in southwest china. This comes after the u. S. Shuttered chinas consulate in houston, texas. Beijing says it is responsible for the current escalation in tensions and is calling on washington to change his decision. The u. S. Economic recovery is stalling. Initial jobless claims rose for the First Time Since march. Continuing claims dropped slightly. Of data comes as hundreds billions of dollars of federal aid is going to expire. The u. S. Economy could be at risk of a doubledip recession. The u. K. Has announced its biggest Flu Vaccination Program for the winter as it seeks to protect the National Health service from a second wave of coronavirus. They hope to vaccinate 30 million people. Free jabs usually available for over 65 and at risk groups will be available to everyone over 50. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt. Laura in london with your first word news. Ecuador reported a surprise profit in the second quarter. They saw a profit of 46 million compared with the expected loss or anticipated of 250 million. That was fueled by trading gains and tax change designed to support norways oil industry through the pandemic. We are joined by the ceo of ecuador equinor. We all were, or at least to the analysts showed a forecasted loss, but you reported profit thanks to gains in in volatile markets. Not volatile markets. What would you highlight as being successful . Good morning. Arst of all that has been very exceptional and extraordinary quarter for us and in many ways we have to be looking at a most dramatic quarter in the history of the order oil markets. Looking deep down on the liquidity environment. Is this situation with the capacity to utilize this, it has given us a strong trading performance in the quarter. Really good to see that and if you look at upstream it is on the negative side. See positive. Let me ask you about the value of your assets. You have not taken it down based on reassessment of lowering of esteemed oil prices. Others have done that. You have received 80 in 2030. Do you see approaches different and why the why do you take it . I cant comment on what others are doing. What we see in the situation is a lot of uncertainty may be in increasing uncertainty. We see the covid situation could impact the command demand side. We see a potential impact on the supply side that is not being discussed that much. Less Risk Appetite in the industry, it could have a bigger impact than we might see on the demand side. A lot of uncertainty and we are ready for our own analysis and independent analysts, we see scenarios. That have even higher, the same level we have longterm assumptions. And seet in that space no reason to change the assumptions in connection with this quarter. I wonder if you talk more in depth about the demand side because we are worried about the possibility of a doubledip recession in the u. S. Or a stalling of the economy. How do you see demand shaping up . Is, you know, underlying all of this, the covid uncertainties and the potential for lockdowns and continued negative impact on the industrial and demand. To us it is basically a very fragile situation. A lot of uncertainty on the demand side and it creates a unique situation. If you combine with the uncertainty of the supply side, we see record high storage levels have developed. With the time threat coming down significantly, there is less incentive to keep the volumes in stock and we see a lot of volumes that were back because of commodity environments. It is fragile and challenging situation in the markets for quite some time actually. And looking at the supply side and the stories issues, can the market absorb an increase in , set torom opec plus hit the markets next month . This situation, there is a lot of volumes that is prepared to come back into the equation from the supply side. And basically the only thing that can support a balanced Market Going Forward is demand side is picking up and eventually will. But the escape of what that will look like is highly uncertain. It goes back to the global recession. And when the Global Economy and more specifically a demand, what that starts to look like and the transportation sector. That will going to pick up and support the demand side. Very fragile and challenging and a lot of uncertainty ahead of us. It will include a lot of volatility. Uncertaintyis some for shareholders as well. You cut your dividends and halted your by brock buyback program. What kind of situation do you need to see before you are able payback . Hareholder eldar this is no specific individual trigger. This is referred to dividend policy, it is about the financial situation for the company, what it looks like, the outlooks, commodity outlooks and expectation for the future. We will have to look and make an adjustment call. One thing i can say is this quarter is that the guidance for this, it is adjustment we will have to make as long as we are and we willtuation have to make that call when we come to the next quarter. Ask you about the future of the business. You said the company will be so mueller in the future. What you mean will be smaller in the future . What do you mean . Eldar that was a comment i made on the need to become even more efficient. We see companies, we have indicated from some downsizing throughout the organization. We will simply have to continue to improve continuously and it will have an impact on the total workforce. I dont know how much and i have no indications of number of people and our percentages. But it will take us into becoming a tighter company in the second half of this year. It is something we will have to come back to but it is pushing efficiency and also including the impacts from new ways of working, seeing a lot of things we can do differently from the covid situation, working from home and traveling less and so on. That will support a more sufficient Company Going forward. That was the comment i made with efficiency. Anna efficiency in the cost space. Think you your time. The ceo of equinor. We will be back to the equity markets, chinese stocks tanking and u. S. And european futures pointing lower and concerns over escalating chinau. S. Tensions. We will discuss Market Reaction to that with our mliv currency and rates strategist. This is bloomberg. This is bloomberg. Go, it willutes to be way down by the same factors weighing down asian trade. China ordered the u. S. To shut a consulate in a titfortat retaliation. That is concerned of tensions and warnings of recovery in the largest economy could have stalled. Joining us is the market flight currency and rates strategist. What is behind the selling we youreeing in stocks, given focus and appreciation of how risk assets perform . Had the jobless claims, ongoing tensions between the u. S. And china. Is is it is that the latter that is weighing on stocks . It is a bit of both. If you look deeper into it, it is not surprising at all stocks are falling because in the past four weeks alone the s p has racked up gains of 7. 5 in the past four weeks but suggest some profit taking was due and if anything the current tensions giving an excuse to take money off the table especially going into the weekend. There are other reasons why i think the markets are not going faced the onto a particular point. Is the mind thee is no downside to dowler and the gains in u. S. Treasuries are quite mild by historical standards. That taken with the overdue correction in stocks, very interestingly, but i dont think this is a major storm brewing. Mliv i wanted to ask the question of the day. Juliette saly posted on the blog the question, are airlines a broader markets guideline . They have been an economic the weather. We what kind of responses are we hearing . Reasoning would seem so because the people begin to tremble again it is a sign economies are travel again, it is a sign economies are on the rebound. But the reality is quite different. Is more or less very important. But the Airline Industry index. S still down 51 why is the difference so stark . The airlines have suffered massive losses and even in the best of times they are anemic. And it only gets worse. Airlines i dont think are a good guide to the broader markets. Thank you so much. The mliv currency and rates aboutgist talking to us the markets coming up in 41 minutes is the open. Not as bad as 2017. We will get more on the escalating chinau. S. Tensions with state streets ben jones and asked why he doesnt think it is a big risk. This is bloomberg. Anna welcome back to the European Market open. European futures pointing to the downside. It could be weaker by a percent or so at the start of the trading day. A lot of geopolitical tensions to be concerned about. Between the u. S. And china and economy underlying u. S. And what kind of support will be forward coming from washington in terms of the fiscal stimulus. Think one of be i the most interesting battles we will watch over the next week, isnt really maybe it is in u. S. China. Maybe it is democrat, republican in terms of the stimulus bill. Speaking of the former, china is demanding the u. S. Close its consulate. Which the statement comes after forcedrican government china to leave its mission in houston earlier this week. A key u. S. Listening post for developments into past in tibet. Jinping ao called xi true believer in a bankrupt totalitarian ideology. President trump also said the trade deal means much less to him because of what he called chinas role in spreading the coronavirus. His allegation. By benned by a jones of state street. Doesnt that seem like it should be a real concern for investors . I think it is becoming a little bit more of a concern. I can see we are focused on the covid as the primary story and also investors have got quite used to these stats spats between the u. S. And china and they are willing to look through it. Carry on of thing will in the background. What does it really mean for Financial Markets . Will it impact chinese equities . Will it impact u. S. Tech firms in the answer is probably not really. Days like today where you get this spike in news flow and the risk off tone and some outflows from chinese equities when you look at the northbound flow but generally speaking the direction of travel is still pretty positive. The main reason i see that is because investors are not positioned for good news. They are pretty conservatively positioned particularly when it comes to Something Like china. It is not as if there is forced selling in the wake of this negative news. It will be in the background but is it going to be the Main Driving Force and is a going to sort of take the legs out of Risk Appetite . I am not sure it is. Anna i wanted to ask you about this trend of decoupling to start two distinct spheres of influence in the economy. Do think investors are mindful of that . Or do investors think this will be marginal or wont take effect for a long time and so minutes not to think about it . Manage not to think about it . Ben the bifurcation is real. We have seen it with u. S. And china and also european and other western economies with Chinese Technology firms. The 5g situation is it is a prime concern. Investors are aware there is going to be the bifurcation. Does that mean that these equity markets is an index that underperforms and falls as a result . There will be some nuance, there will be some occasions you need to make. In the u. K. Telecoms companies are going to come under pressure because they are going to have to spend a lot more to replace existing technology. There will be some of those impacts. In terms of a macro news story that takes out the legs of equities more broadly, i dont think that is the main story. It is more about the nuance and selectivity as the risk off, risk story risk on story. Very interesting insight. We will keep you with us for more. Benjamin jones stays with us. We will talk about the jobless claims increase since march. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. But what if you could stdo better than that . K. Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. Back, this is the european open. We have got 30 minutes to go until the start of cash trading. Futures are down 1 in europe and down in the u. S. On concern of the increased jobless claims and the possibility of a stalling or doubledip economic recession. Lets take a look at what you should be watching. The bank of russia likely to cut Interest Rates after 150 basis points of april and june. Bloomberg economics recommends they will go big with a half point move. The governor holds a News Conference at 1 00 p. M. Watch out for preliminary pmis from the Worlds Largest economy. Showing the u. S. Moved into growth territory with services and manufacturing readings expected to rise above 50 in july and more data from the u. S. With home sales for june. The post virus reopening late in the selling season will restrain the extent of improvement in the housing market. Anna u. S. Jobless claims rose unexpectedly last week for the First Time Since march. This could be a cause in the recovery pause in the recovery. Initial jobless claims rose to 1. 4 million from 1. 3 million when the consensus was for no change. The rollouts of further stimulus efforts have stalled because of lingering differences between Senate Republicans and the white house. The 1 trillion gop plan will not be ready until monday. Lawmakers expected mcconnell to begin releasing a series of bills as soon as thursday. Benjamin jones from state street is still with us. The underlying recovery story, set back by the reemergence or continued emergence of the coronavirus. It is the fight against the coronavirus in the u. S. Which until we get over, manage to get through somehow, it will dominate market sentiment. Ben i think as you mentioned at the top, the Economic Data in the u. S. Is starting to stutter a little bit. We have been looking at a faster moving, regional alternative data released in the u. S. As a result or in the wake of covid. That should have signaled some of these jobless claim numbers would creep higher. If you look at some states, we saw a rolling over in the number of hours worked. It is because of this we started to get fears coronavirus is not under control. There is local lockdowns being put into place and individuals not willing to travel and move around and go about normal business. In europe we have had more success in containing the virus and social distancing seems to be working. Individuals are happier to go to restaurants and visit retail areas and go back to work. It is interesting you have seen the european activity starting to overtake the u. S. That is not the phrase i would have been saying six months or so. I think it will be the thing the u. S. Economies will struggle with. It will be uneven and stuttered recovery from here. Europe looks to be in that are shape. You mentioned it is also to do with the fiscal spending plans. Europe has got is recovery van off the ground. Overis going to be support questions in the u. S. Matt we have got stronger social safety nets in europe as a permanent fixture where in the u. S. These had to be put in ad hoc. I wonder what you think of the possibility of a fiscal package in the u. S. The democrats have a 3. 5 trillion package that passed the house. The republicans are wrangling over a 1 trillion package. How quickly does the market need to see it . Ben something will happen. The market knows that. It is a question of size and where it is directed. In europe we have seen it directed at infrastructure and green initiatives similar in china. In the u. S. , does it become more directed at infrastructure or the consumer or individual, through tax cuts. Depending on how yo