World Markets Live - August 23 - CNBC Live Events
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CNBC Live Events

World Markets Live - August 23

We’ll be updating you throughout the day with essential breaking news, data alerts, earnings reports and all the major market movements.

  • Good morning everyone. Mid-week already!! Well, stocks in the US were in rally mode on renewed optimism around Trump's tax plan. But will Europe follow the optimism? Here's a look at European futures:
     
     
  • Here are your top stories at this hour:
     
    • Renewed hopes of US tax reform spark a global rally, with the Dow posting its strongest performance since April. But stocks falter and safe haven assets catch a bid, after President Trump threatens a government shutdown. 
    • The President also throws NAFTA in doubt, saying he will probably end up terminating the North American Free Trade Agreement, speaking at a rally in Arizona. 
    • Time to drop a hint? Attention now shifts to Mario Draghi, who is due to speak at the Lindau gathering in just over two hours, with investors wondering if today's speech will provide more policy clues than Jackson Hole.
    • Trading is halted in Hong Kong as category 10 Typhoon Hato shuts down much of the city, closing most businesses and cancelling flights. 
       
  • U.S. stocks rose -- logging their best day since April -- on optimism over the prospect for tax reform. Politco reported that Trump's top aides and Republican leaders have made significant progress in shaping a tax overhaul, and have "broad consensus" on ways to cut corporate and individual tax rates. 

    There were also reports that tax changes would allow for "repatriation" of corporate profits from overseas, which would fund a plan to rebuild infrastructure.
     
     
  • Trump defended his policy agenda at a rally in Phoenix, Arizona.
     
    In an 80-minute speech, the president took aim at opposition Democrats for being "obstructionist", and blamed the media for the widespread condemnation of his response to Charlottesville. Trump also said he would "probably" end up terminating NAFTA and raised the prospect of a government shutdown in his fight to build a wall at the U.S.-Mexican border.
     
    If we have to close down our government, we're building that wall.
     
    Those comments spurred risk-off moves, with the dollar hitting session lows against the yen and gold prices inching higher.
     

     
  • Investors will listen closely to ECB President Mario Draghi in the next few days. He speaks at the Lindau Nobel Laureate Meeting in Germany later today, and gives another big speech later in the week at Jackson Hole.
     
    Traders are hoping for signals as to ECB plans for normalising policy.
     
     
  • Trading on the Hong Kong stock exchange has been cancelled as Typhoon Hato roars ashore. A Signal 10, the highest warning level, remains in effect for the area.
     
     
  • Here are your top stories at this hour:
     
    • Renewed hopes of US tax reform spark a global rally, with the Dow posting its strongest performance since April. But stocks falter and safe haven assets catch a bid, after President Trump threatens a government shutdown. 
    • The President also throws NAFTA in doubt, saying he will probably end up terminating the North American Free Trade Agreement, speaking at a rally in Arizona. 
    • Time to drop a hint? Attention now shifts to Mario Draghi, who is due to speak at the Lindau gathering in just over two hours, with investors wondering if today's speech will provide more policy clues than Jackson Hole.
    • Trading is halted in Hong Kong as category 10 Typhoon Hato shuts down much of the city, closing most businesses and cancelling flights. 
  • Twee this morning from U.S. President Donald Trump thanking his supporters at the Phoenix rally last night:
     
  • The American government has placed new sanctions on Chinese and Russian firms and individuals, as part of efforts to curb North Korea's missile programme. The U.S. Treasury says they had conducted business with the communist state, including trading oil and other mineral resources with Kim Jong-un's regime.
     
    At the same time as imposing tough new sanctions, the Trump administration also demonstrated willingness to enter into talks with Pyongyang. U.S. Secretary of State Rex Tillerson said he would be open to dialogue with North Korea after he praised the country for going two weeks without conducting any missile tests. 
     
     
  • Let's take a look at global markets this morning with Mandy

  • Chevron CEO John Watson will step down, and is likely to be replaced by Vice Chairman Michael Wirth, according to multiple reports. 
     
    According to the Wall Street Journal and Reuters the board of the US oil major is seeking a new chief executive who could streamline operations in the current low oil price environment. An official announcement from the company is expected next month. 
     
  • The European Commission has started an in depth probe into the planned 66 billion dollar merger of Bayer and Monsanto, citing competition concerns in seed and pesticide markets.
     
    While the Commission has previously approved of other tie-ups in the industry, they did secure big concessions from companies involved. Bayer has already pledged to divest businesses with up to 1 point 6 billion dollars in annual sales. 
     
  • Shares of Salesforce fell in extended trade after the software firm's second quarter earnings topped estimates, but not enough to impress investors.

    Both Salesforce's revenue and deferred revenue - which reflects future growth - grew by 26 percent from a year ago.
    But costs also rose as the company boosted spending on research and development as well as marketing and sales in the face of increasing competition from the likes of Oracle.
  • Samsung is set to reveal its latest smartphone, the Galaxy Note 8 later today. It's an attempt to bury the bad memories of the flammable Samsung Note 7. That device ended up being recalled globally. Among the new features expected are a new camera and an updated voice assistant.
     
     
    There has been a lot of leaks about this device. Basically a large device actually and new camera technology. Samsung is going to pack a lot of technology into this. We saw it with the Galaxy S8 which is their flagship device.
  • Here are your top stories at this hour:
     
    • Renewed hopes of US tax reform spark a global rally, with the Dow posting its strongest performance since April. But stocks falter and safe haven assets catch a bid, after President Trump threatens a government shutdown. 
    • The President also throws NAFTA in doubt, saying he will probably end up terminating the North American Free Trade Agreement, speaking at a rally in Arizona. 
    • Time to drop a hint? Attention now shifts to Mario Draghi, who is due to speak at the Lindau gathering in just over two hours, with investors wondering if today's speech will provide more policy clues than Jackson Hole.
    • Trading is halted in Hong Kong as category 10 Typhoon Hato shuts down much of the city, closing most businesses and cancelling flights. 
  • WPP says H1 like-for-like net sales down 0.5 percent, annual target of +2 percent. The company cuts 2017 net sales forecast to between zero and 1 percent growth. The company sees pressure on client spending in FMCG category in Q2. 
     
    Sir Martin Sorrell, CEO, WPP joins us live to discuss these numbers:
    It's been a tough first half. Quarter two was weaker than quarter one, particularly to the end of quarter two. If you look at it geographically, the UK was the strongest part of the business. Western continental Europe was reasonable but Q2 was weaker. The weakest for us for the United States and that was across the industry.
     
     
  • European markets were set to open mixed on Wednesday morning, as traders paused for breath after a global rally spurred by gains for tech shares on Wall Street.
     
     
  • Here are your top stories at this hour:
     
    • Renewed hopes of US tax reform spark a global rally, with the Dow posting its strongest performance since April. But stocks falter and safe haven assets catch a bid, after President Trump threatens a government shutdown. 
    • The President also throws NAFTA in doubt, saying he will probably end up terminating the North American Free Trade Agreement, speaking at a rally in Arizona. 
    • Time to drop a hint? Attention now shifts to Mario Draghi, who is due to speak at the Lindau gathering in just under an hour, with investors wondering if today's speech will provide more policy clues than Jackson Hole.
    • Ad giant WPP cuts its full-year net sales forecast after first half sales decline a half a percent. CEO Sir Martin Sorrell tells this programme that the United States weighed on profits.
       
  • Myron Scholes, Nobel Laureate, Chief Investment Strategist at Janus Henderson Investors who is at the meeting in Lindau joins us live to tell us what to expect from Draghi's speech:
     
    I would think he would somewhat be neutral and maybe wait to tell the Jackson Hole. My thinking is he would continue to buy options as to when to end the repurchase program or unwind the balance sheet or to increase rates in Europe. 
     
     
    I didn't realise he was speaking here at these meetings in Lindau. I think it will be march steady as she goes. 
  • In just under an hour's time, ECB President Mario Draghi delivers the keynote speech to the Lindau Meeting on Economic Sciences. Investors will be closely watching Draghi's comments for any clues as to when the ECB could begin to wind down its asset purchase programme.
     
    Stephen Gallo, FX strategist at BMO Capital Markets, says the ECB is exiting from extraordinary stimulus, but it will be very slow. He also discussed the direction of appreciation for the euro.
     
    We think the euro appreciation will slow, but the market has the direction right because medium –term the fundamentals for the U.S. dollar are weaker in our view and I think that’s what the market consensus is now.
     
     
  • Let's check on the euro as markets focus on ECB President Mario Draghi's speech:
     
     
  • The European Commission has started an in depth probe into the planned $66 billion merger of Bayer and Monsanto, citing competition concerns in seed and pesticide markets.
     
    While the Commission has previously approved of other tie-ups in the industry, they did secure big concessions from companies involved. Bayer has already pledged to divest businesses with up to $1.6 billion in annual sales.
     
    John Rountree, partner at Novasecta, says Bayer probably expected an in depth probe to be launched.
     
    Indeed, it’s part of the process of the other two major mergers. This is a very concentrated sector now in agrochemicals and you would expect the EU to take a look at it.
     
    Rountree says they expected Bayer to make significant concessions to the EU to get approval for the deal, but the chance of the deal being blocked is low.
     
     
  • European markets are now open for trading. The pan-European Stoxx 600 has opened fairly flat:
     
     
  • French manufacturing PMI for August is estimates at 55.8, beating forecasts of 54.5. Any reading above 50 indicates economic expansion. The reading is up from 54.9 in July.
     
    Services PMI is estimated at 55.5, slightly under expectations of 55.6 and down from 56.0 in July.
     
    The composite PMI of services and manufacturing is 55.6, beating the consensus expectation of 55.5 and matching July's reading.
  • Major European stocks open lower as markets wait for Draghi's speech:
     
     
  • Let's take a look at the best and the worst performing stocks this morning:
     
  • Here is an image from Lindau where ECB president Mario Draghi is due to take the stage at the meeting of Nobel Laureates shortly.
     
    We will bring you his speech live, as soon as it begins. 
     
     
  • The European Commission has started an in depth probe into the planned 66 billion dollar merger of Bayer and Monsanto, citing competition concerns in seed and pesticide markets. While the Commission has previously approved of other tie-ups in the industry, they did secure big concessions from companies involved. Bayer has already pledged to divest businesses with up to 1 point 6 billion dollars in annual sales. 
     
     
  • Vedanta's core earnings in the first quarter have jumped about 48 percent. Driven by a doubling of zinc production at it's Indian unit, the diversified miner said revenu for the quarter rose 32 percent. 
     
     
  • Ryanair CEO Michael O'Leary says he would be interested in buying bankrupt carrier Air Berlin in its entirety. But he's not sure how much restructuring is needed and wants a closer look at the airline's books. He has expressed concerns about an Air Berlin sale unfairly helping Lufthansa.
     
     
  • Vodafone is reportedly in discussions with BT network subsidiary Openreach over a joint investment in high-speed fibre. The Telegraph says both companies are in early talks over what could be a multi-billion pound overhaul of Britain's telecom infrastructure, with Vodafone said to be targeting major metropolitan hubs initially.  
     
     
  • Eric Moore, fund manager at Miton Group, says the ECB and Fed will be careful about extracting liquidity from the markets.
     
    If you look over the last five years, the earnings reporting seasons we’ve been through have been very negative. So you’ve seen earnings downgrades persistently, but markets have gone up despite that and that’s presumably because of liquidity in the markets. So the markets have rerated and become more expensive despite deteriorating fundamentals.
     
    Moore says we’ve not seen these downgrades in the most recent earnings season, so now may be the time to withdraw liquidity as markets may be able to cope without it.
     
     
  • ECB President Mario Draghi hasn't even started speaking yet and the euro is already moving down south against the dollar:
     
     
  • Stephen Gallo, FX strategist at BMO Capital Markets, says part of the higher euro-dollar trade is people shorting the dollar.
     
    The other thing that stands out is probably there is potential for a positional squeeze lower on the euro-dollar on balance.
     
    This suggests volatility ahead for the forex pair.
  • Flashes from Draghi's speech are now being reported by Reuters.
     
    The ECB president says a policy response with a foundation in rigorous research is less likely to be "impaired by political compromise."
     
    Draghi says this research helps the central bank to decide whether a "change in the facts deserves a policy response.
     
    Draghi says the central must be aware of the gaps that still remain in its knowledge.
  • Here's a link to the full speech Mario Draghi will deliver in Lindau this morning.
  • Germany's August flash composite PMI is 55.7, beating expectations of 54.7 and better than July's reading.
     
    Breaking down the PMI, manufacturing PMI is 59.4, higher than the 57.7 forecast and beating July's reading of 58.1)
     
    The services PMI comes in at 53.4, marginally higher than the forecast of 53.3 and July's 53.1.
  • ECB President Mario Draghi makes the first of two highly anticipated speeches this week.
     
    He is now taking the stage in the German town of Lindau for his speech at the Nobel Laureate meeting.
  • Mario Draghi's speech today focuses on the interaction of economic theory with central bank monetary policy.
     
    This year marks the 200th anniversary of David Ricardo’s Theory of Comparative Advantage – in the words of Paul Samuelson, one of the few counter-intuitive fundamental ideas in economics, which moved the world away from mercantilism.
     
    And when we look at other giants in the history of economic thought, Adam Smith, who laid down the foundations of capitalism; Keynes, who drove us into policy activism and away from laissez-faire; until the founders of econometric model building in post-war time, we cannot but conclude that there is little in economics that does not have policy implications.
  • Mario Draghi is speaking in Lindau on the history of monetary policy. He is criticising government attempts to engineer surprise economic booms, as happened in the 1970s.
     
    The insights of a number of Nobel laureates showed how these policies were bound to fail and why they were time inconsistent. The same incentive to renege remains in the future, and promises to do otherwise lack credibility. Rational wage and price setters will not believe in a policy that policymakers will find it optimal to renege on, making it difficult for policymakers to achieve price stability without a recession.
     
     
  • The euro has jumped a bit on the back of German PMI data but seems unaffected by Draghi's speech:
     
     
  • ECB President Draghi says the paradigm of central banking policy before the financial crisis was focused on wage and price rigidities.
     
    The pre-crisis paradigm in macroeconomics predicted neither the onset nor the severity of the crisis in any meaningful fashion for the conduct of policy. Unconditional trust in the self-repairing capacities of financial markets, or simple neglect, had led to deregulation and lax supervision in the years preceding the crisis.
     
    Low quality capital with little loss-absorbing capacity, underestimation of asset risk, excessive and overlooked leverage, ignorance of the interconnections, disregard for the liquidity buffers, low resilience of the funding markets, and pervasive fraud, especially in the sub-prime sector were just a few of the factors that produced the most severe financial crisis since the Great Depression.
  • Let's take a look at 10-year bond yields that have edged a bit higher as ECB President Mario Draghi speaks in Lindau:
     
     
  • Mario Draghi says unconditional trust in the markets led to deregulation.
     
    The resulting crisis prompted academics to reassess existing economic paradigms and policymakers to adjust their frameworks. The rediscovery of the notion that policy may have a role in coordinating private expectations at times of severe uncertainty played a major part in the transition to today’s post-crisis world.
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