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.

  • ECB President Mario Draghi says the evolution of economic research has affected the thinking of how central banks should respond to crises.
     
    Economic research has also evolved in its thinking of how central banks should respond to an emerging crisis, particularly when their standard monetary policy instrument, typically a short-term interest rate, reaches its effective lower bound. At the lower bound, monetary accommodation cannot be provided through further reductions in short-term interest rates and policy must become non-standard.
     
    One option is to rely on forward guidance, i.e. to promise to keep interest rates low for longer in the future. Such commitments, if credible, lower longer-term interest rates and provide economic stimulus even if the current interest rate remains unchanged. While forward guidance is a useful instrument, recent research has highlighted that its effectiveness can be improved if combined with other non-standard monetary policies.
  • Mario Draghi says a large amount of research shows evidence that QE was successful in supporting the economy and inflation, both in the euro zone and the U.S.
     
    But central bank policy moves extended beyond just measures to counteract the impairment of the transmission mechanism caused by financial frictions. The ECB also acted in various ways to prevent self-fulfilling expectations from delivering socially undesirable outcomes by co-ordinating expectations onto “good” outcomes.
  • Euro zone manufacturing businesses clocked their best month of growth in six-and-a-half years in August, offsetting the weakest services growth in seven months and keeping overall activity on steady path, a survey of private companies showed on Wednesday.
     
    IHS Markit's Flash Eurozone Composite Purchasing Managers' Index, considered a good guide to economic growth, edged up in August to 55.8 from 55.7 in July, slightly above the Reuters poll median estimate of 55.5. Anything above 50 is expansionary.

    Manufacturing activity grew at the fastest pace since April 2011, based on the strongest new export orders performance since February of that year. The euro zone manufacturing PMI rose to 57.4 from 56.6, beating the Reuters poll median forecast of 56.3, driven in by performance in Germany.
  • Financial sector regulation and supervision has become stricter since the the financial crisis, and this has helped improved the quality and quantity of regulatory capital, according to Mario Draghi speaking in Germany.
     
    In addition to the overall global move to stricter regulation, there have been also a number of institutional improvements. In the euro area, banking supervision is now carried out by the Single Supervisory Mechanism, composed of the ECB and the national competent authorities. This has unified the basis on which supervision is carried out.
     
    The largest and most significant banks are now supervised directly from Frankfurt, in close partnership with the national authorities. The euro area has also set up the Single Resolution Mechanism to ensure the orderly resolution of failing banks, while at the same time reducing the impact on the taxpayer.
  • ECB President Mario Draghi has wrapped up his speech in Lindau. These are some of his conclusions in the speech, which was focused on the history of central bank policy approaches and how this changed after the financial crisis.
     
    Here's a link to the full transcript of the speech.
     
    First, sudden shocks often make visible the flaws in our policy frameworks and challenge the explanatory power of existing theories in ways that have been previously overlooked. But analysis conducted by researchers and embraced by policymakers remains essential in designing the policy response.

    Second, a policy response that has its foundation in rigorous research is less prone to being impaired by political compromise and easier to explain to the general public.
     
     
  • The euro has jumped against the dollar after the better-than-expected euro zone PMI numbers:
     
     
     
  • ECB's Draghi says central banks and economists mus be aware of existing gaps in their knowledge.
     
    Our mainstream macroeconomic models still have little to say, for instance, about the non-linear propagation of shocks, the distributional impacts of policies, or how endogenous firm entry and exit can affect economic performance.
     
    Policy actions undertaken in the last ten years in monetary policy and in regulation and supervision have made the world more resilient. But we should continue preparing for new challenges.
  • Ken Wattret, managing director of global macro at TS Lombard, says the speech from ECB President Mario Draghi today won’t rock the markets.
     
    It’s a backwards looking speech. It’s lessons from the financial crisis and the input of research into policy making. I think for markets looking for some indications of how quickly the ECB might announce the tapering of asset purchases and the form it will take, this was never likely to be the speech to deliver those, and it may be the same also at Jackson Hole (on Friday).
     
     
     
  • Euro zone bond yields are rising broadly after the latest euro zone PMI data beat expectations.
     
     
  • The U.S. Navy announces it has removed the commander of the Seventh Fleet after a series of collisions in Asia, according to Reuters.
     
    Ten sailors are missing since the last crash.
     
    Vice Admiral Joseph Aucoin has been relieved of command of the fleet. The Navy says it has lost confidence in his ability to command.
     
    Rear Admiral Phillip Sawyer will assume command of the Seventh Fleet immediately.
  • News for City commuters in London:
     
    There is no service on the Docklands Light Railway between Shadwell and Bank stations after a fire alert.
  • Here are the other headlines this morning:
     
    • Shares of WPP take a tumble after the ad giant cuts its full-year net sales forecast amid declining first half revenues. CEO Sir Martin Sorrell tells CNBC that the United States weighed on profits.
    • Moving on up! K and S shares surge to the top of the Stoxx 600 on reports activist hedge fund Elliott is mulling a stake in Europe's largest potash supplier.
    • NAFTA in doubt! Speaking at a rally in Arizona, President Trump said he will probably end up terminating the North American Free Trade Agreement.
  • WPP shares are trading sharply lower after the advertising firm trimmed its full-year sales forecast. The move came after WPP reported a zero-point-five percent decline in like-for-like sales for the first half of the year, missing analyst expectations.
     
    The share is at the bottom of the pan-European Stoxx 600. Here are the other worst performers.
     
     
  • Alex DeGroote, analyst at Cenkos Securities, predicts things will get worse for WPP before they get better.
     
    The U.S. is the biggest market for WPP and all advertisers, but it’s also where the digital impact is probably the most real and is likely to get worse in the near to medium term.
     
    No, I don’t see any obvious signs of a turnaround.
     
     
  • South Africa's consumer price index falls to 4.6 percent in July, from 5.1 percent in June.
  • Here's the statement from the U.S. Navy, which has today relieved the commander of the Seventh Fleet due to a series of mishaps and collisions in Asia.
     
    Adm. Scott Swift, commander of U.S. Pacific Fleet, today relieved the commander of Seventh Fleet, Vice Adm. Joseph Aucoin, due to a loss of confidence in his ability to command.

    Rear Adm. Phil Sawyer, who has already been nominated and confirmed for the position and promotion to Vice Adm., will assume command immediately. 
  • Following a big rally in U.S. markets led by tech stocks and renewed hopes of tax reform, the major U.S. indexes are called lower ahead of today's session open. This is likely to do with profit taking after yesterday's rally.
     
     
  • Commenting on this morning’s speech from ECB President Mario Draghi, Christopher Pissarides, Nobel Laureate and professor of economics at LSE, says the central bank's own research that shows unorthodox policy such as QE has been successful.
     
    He was very optimistic if you like because he was saying we are always on the lookout for new ideas. Now with the announcement that the ECB has the power to buy sovereign bonds, the cost of sovereign bonds has come down which enabled banks to raise more money and start lending to the economy. 
     
    Pissarides says the speech was aimed at economists, Nobel Laureates and students. He adds that the economic system is stabilising and that he can't see where the next shocks will come from.
     
     
  • U.S. stocks logged their best day since April on optimism over the prospect for tax reform. Politico 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. Here's how the markets finished yesterday's session.
     
     
    Meantime, Trump defended his policy agenda at a rally in Phoenix, Arizona. In an 80-minute speech, the president took aim at 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.
     
     
  • Egypt's foreign ministry announces it expresses regret for the U.S. decision to withhold aid, Reuters reports.
     
    Egypt says the decision reflects poor judgement on the strategic relationships between the two countries.
     
    The country says the decision could have some negative implications on their common interests. 
  • London's Fire Brigade has investigated a fire alert at Bank tube station, a central London transport hub.
     
    Transport for London says there are no injuries following the fire alert, and confirms that all lines at the station (other than the Docklands Light Railway) are running normally.
     
    The fire alert has disrupted the DLR service between Shadwell and Bank.
  • All this week we're talking about alternative investments, from prime London property to barrels of whisky. Our next guest thinks that a portfolio of luxury watches could offer impressive returns.
     
     
    Anuj Arora, managing director at Sales Extraordinaire, says the watch market is driven by the passion of collectors and watch experts.
     
    There are three parameters for watch collectors, budget, research and time.
     
    Anuj says investors should consider speaking to watch experts in order to get a better idea of what to buy.
     
     
  • Barclays Research analyst Apolline Menut says the euro zone is on track for GDP growth of 0.5 percent quarter over quarter in Q3 following the latest flash PMI readings.
     
    Euro area August “flash” surprised slightly to the upside, inching up to 55.8 on stronger manufacturing. Within composite PMIs, new orders were unchanged, while output expectations dropped and operating capacity pressures eased further (the backlog of works were at the lowest since January 2017).
     
    The rise in manufacturing sentiment, underpinned by buoyant demand in both Germany and France, was counterbalanced by a fall in services sentiment (-0.5 point to 54.9), with moderation being broad based across components.
     
    We think this is consistent with our view that growth will slow somewhat to 0.5% q/q in Q3, after 0.6% q/q in Q2. Indeed, our PMI-based GDP indicator stood at 0.5% q/q in August. In terms of countries, we expect manufacturing confidence to also improve in the peripheries (Italy, Spain, Ireland) by 0.3 point on average, while services sentiment should moderate by one point on average. 
  • The European Stoxx 600 is down 0.2 percent this morning. Here's how the individual major indexes are performing.
     
     
     
  • Walmart and Google have partnered to work on a project offering voice-enabled shopping to consumers.
     
    Google will include Walmart products on its online shopping mall, Google Express, according to a report by the New York Times.
     
    Hugh Fletcher, Global Head of Consultancy and Innovation at Salmon, says this is further evidence the industry is moving towards an "interface-less society" where shoppers will make more and more purchases through digital assistants and voice-powered devices.
     
    As we see these virtual ecosystems grow and become more widespread, we are likely to see a battle commence between the digital assistants such as Google Home, Amazon Echo and Apple HomePod, as retailers and brands affiliate themselves with one or the other. This technology is still in its infancy amongst retailers, but we will inevitably see a long line of them making the same decision as Walmart to offer its customers a voice-controlled service, removing the need for a cumbersome, physical interface and allow consumers to slot digital services into their lives with less disruption.
  • The Royal Bank of Canada reports third quarter net income of C$2.8 billion. The bank is increasing its quarterly dividend by 4 cents, or 5 percent, to 91 cents per share.
  • Lowe's reports Q2 earnings per share of $1.68 and net income of $1.4 billion. This beat the IBES view of $1.61 per share.
     
    Same store sales grew 4.5 percent in the second quarter. Total sales grew 5 percent to $19.5 billion.
     
    The company expects total sales to increase around 5 percent for the full year, and expects to add around 25 new hardware stores for the fiscal year.
  • Shares in Lowe's are down more than 6 percent in premarket trade following its second quarter earnings report.
     
     
  • China's commerce ministry says it conditionally approves of Broadcom's acquisition of Brocade Communications Systems.
     
    The mininistry says it has ordered Broadcom to take steps to abide by China's market trading conditions.
  • Gold prices are edging up as the markets focus shifts to the Jackson Hole conference. 
     
    Markets will be looking for signs of when central banks will begin to taper asset purchases or raise interest rates.
     
     
  • WPP shares are at 14-month lows after its lower growth forecast. The company's CEO warned the important U.S. market is weakening, leading to a challenging first half.
     
    U.S.-listed shares of the company are down around 11 percent in premarket trade.
     
     
  • CNBC’s “Trailblazers” met Amitabh Bachchan in Mumbai to discuss his life and career. Bachchan is the most recognizable face of the Indian film industry, a global superstar and an acting powerhouse who has starred in almost 200 films.
     
    Known affectionately as “Big B,” he’ll always be synonymous with the city at the heart of India’s film industry, Mumbai.
     

    Discover Mumbai through the eyes of the 'Godfather of Bollywood' Amitabh Bachchan

    Bollywood star Amitabh Bachchan on his favorite places in Mumbai, his home in Juhu, his Extended Family of fans and his movie career
     
  • Should police officers be fired if their IT skills aren't up to scratch?
     
    That's what the think tank Reform argues in a new report on how the authorities can best address rising levels cybercrime.
     
    David Emm, principal security researcher at Kaspersky Lab, says the focus for police forces should be on providing education and upskilling to existing staff.
     
    With the rise of crime in the cyber world, it is crucial that the skill set of police officers matches the importance of this new battleground. As with markets generally, investment tends to flow into areas where it will be most productive, and crime is no different.
     
    With so much financial activity moving online, criminals have capitalised on this by moving their activity into the cyber world –therefore it’s important that we have police officers who understand the ways in which technology can be abused by cybercriminals.
     
    However the police, like any organisation, need a diverse range of skills; and it may be that not all roles require technical knowledge and IT acumen. 
     
    Emm says the police should encouraging young people with a passion for cybersecurity to apply their skills.
     
  • Apogee Enterprises has updated its full year outlook for 2018. The company sees earnings per share of $3.05 to £3.60. It sees full year revenue growth of 24 to 26 percent and double digit revenue growth in 2019.
  • U.S. markets are called to open lower, coming off the rally in stocks yesterday, according to future values.
     
    Investors are awaiting key economic data due out today, including August manufacturing PMI and July's new home sales. The market is also focused ahead to the Jackson Hole Economic Symposium on hopes of learning more about future Fed policy.
     
     
  • The U.K. government says it will "engage constructively" with the EU to find an agreement on law enforcement and dispute resolution after Brexit, according to a government paper.
     
    The paper says the government's position is that after Brexit, rights and obligations of individuals and business will be enforced in U.K. courts and the U.K.'s Supreme Court. Britain says there is not precedent that the European Court of Justice must be given power to enforce and interpret agreements between the EU and third parties.
     
    Britain does concede that the repeal bill will give pre-Brexit ECJ case law the same binding status in U.K. courts.
  • The U.S. mortgage market index falls 0.5 percent to 416.8 for the week ending August 18, according to the MBA mortgage survey.
     
    The average 30-year mortgage rate is unchanged at 4.12 percent. The purchase index decreases 1.5 percent to 230.4.
  • The pan-European Stoxx 600 has edged down 0.28 percent during morning trading with most sectors in negative territory.
     
     
    WPP, the world's largest advertising group, cut its full-year net sales outlook after a drop in demand from consumer goods clients and weak trading in the U.S. caused it to miss first-half targets.
     
    Its shares were more than 12 percent lower in mid-morning deals.
     
    That providing a drag on the FTSE 100 index.
     
     
  • The German chancellor Angela Merkel has said that there is no military solution for North Korea.
     
    She says the situation can be avoided.
     
    Merkel says Germany, with the EU, shoudl do more to resolve the dispute but will not necessarily act as an intermediary.
     
    German Chancellor Angela Merkel
     
  • The English footballer Wayne Rooney has announced retirement from international football.
     
    You can read the full statement here.
     
    Wayne Rooney playing for England in 2014.
     
    Rooney will continue to play club football for his team, Everton.
  • Sterling is continuing to struggle against the euro. It has now hit an 8 year low.
     
    The currency is continually weakening against trading partners as confidence in the U.K. economy appears to ebb.
     
    One way traffic.
     
  • Is Trump pressure actually working on Beijing?
     

    China puts squeeze on North Korea as trade dries up in July

    CNBCEvidence is growing that U.S. pressure on China to isolate North Korea may be working.
  • U.S. futures markets are lower at this stage with just over a half hour until equity markets start up.
     
    Trump comments have weighed on sentiment.
     
    At a rally in Phoenix, Trump said he would keep his campaign promise of building a border wall even "if we have to close down our government." Trump also said he doubts a renegotiation of the North American Free Trade Agreement is possible.
     
     
  • With stocks expected to pull back at the open. U.S. Treasury's have edged higher.
     
    A threat by Donald Trump to shutdown the government is being cited by some as the reason for the buying of bonds. 
     
     
  •  
    After a few seconds, the stock markets look like this in the United States.
     
     
  • Only three stocks in positive territory on the Dow this morning.
     
     
     
  • Almost 5 to 1 declining stocks today.
     
     
     
  • U.S. July new home sales fell 9.4 percent to 571,000.
     
    The consensus was 615,000.
     
    The June figure was a +1.9 percent rise.
     
    A big miss.
  •  

    US ratchets up pressure to break Russia's stranglehold over Europe's energy market

    CNBCU.S. attempts to export natural gas to Europe appears likely to increase the pressure on the region's dominant player at a time when Washington has vowed to break down Russia's stranglehold over the market.
  • Whole Foods shareholders have vote in favor of the grocery chain being acquired by internet giant Amazon.
     
    Now, completion of the transaction is subject to regulatory approvals and other customary closing conditions. But the two companies are one step closer to sealing their $13.7 billion deal.
     
    The parties expect to finalize the merger during the second half of 2017.
  • U.S. oil stocks fell by 3.3 million barrels, compared with analyst expectations of a 3.5 million barrel draw.
     
    Gasoline stocks fell by 1.2 million barrels, which almost doubled the forecast of a panel of Reuters respondees who had an average tip of 643,000.
     
    This data was all from the Energy Information Administration.
     
     
  • European markets are lower on Wednesday afternoon as traders paused for breath after a global rally spurred by gains for tech stocks in the U.S.
     
     
    On the data front, a forecast beating survey in Germany supported the euro against the dollar. 
  • The U.S. service and manufacturing sectors offered opposing pictures in August, according to data released Wednesday.
     
    The IHS Markit flash services purchasing managers index rose to a 28-month high of 56.9, up from 54.7 in July.
     
    The manufacturing index fell to a two-month low of 52.5 from 53.3 in July.

    Any reading above 50 indicates expansion.
  • Canada has responded to last night's threat that the NAFTA trade agreement would be allowed to fail.
     
    A government official is quoted as saying that Canada always "felt it was likely" that Trump would make such a threat at some stage.
  •  
    European markets have closed on a day which saw the pound hit an eight year low against the euro.
     
    The big stock story was WPP which slumped 11 percent after the world's largest advertising group cut its full-year net sales outlook.
     
    This after a drop in demand from consumer goods clients and weak trading in the U.S. caused it to miss first-half targets. The firm had its worst trading day in 19 years.
     
     
    The Jackson Hole economic policy symposium open tomorrow with an opening reception and dinner traditionally hosted by Federal Reserve Bank of Kansas City President Esther George.
     
    Join us as we talk macroeconomic policy!
     
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