World Markets Live - August 4 - CNBC Live Events
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CNBC Live Events

World Markets Live - August 4

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

  • U.S. markets are now open for trade. The major indexes are after the latest U.S. jobs data showed 209,000 jobs were added to payrolls in July.
     
     
  • The Dow has hit a fresh record high in Friday's session. Here are the stocks leading it higher at the top and dragging at the bottom.
     
    Financials are performing well, wil JP Morgan Chase, Goldman Sachs and American Express among the top performers on the Dow.
     
     
    At the bottom of the index is Disney, which is reporting earnings next week. There's also news today that a class action lawsuit is being launched against the company over allegations of child online privacy protection laws.
     
     
  • The U.S. nonfarm payrolls showed 209,000 jobs were added to the economy in July. This beat expectations of 180,000 jobs.
     
    Jim O'Sullivan, chief U.S. economist at High Frequency Economics, says this was another strong month of gains for payrolls.
     
    The household survey employment measure rose sharply as well, leading to another drop in the unemployment rate, even with a rise in the participation rate.  The 12-month change in hourly earnings did not change, even with an above-trend 0.3% rise, but we expect there will be more acceleration in coming months as the unemployment rate keeps falling.
     
    The data don't change our forecast for the Fed to start balance sheet normalization in September, followed by another rate hike in December.  The rate hike in Dec will depend significantly on the inflation as well as labor market data, but the main precondition for balance sheet normalization appears to be still-solild labor market data.  That criterion is being met with ease.
  • The dollar is extending gains against major world currencies following the latest jobs data. The greenback has hit session highs against the euro, sterling, yen and Swiss franc.
     
     
     
  • We also got data on the June trade gap for the U.S. 
     
    The U.S. trade deficit narrowed from $46.4 billion in May to $43.6 billion in June, beating expectations. 
     
    Imports declined 0.2 percent, while exports grew 1.2 percent month on month. This is solid export growth, says Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
     
    Real goods imports were +0.1% m/m (+2.4% y/y), while real goods exports were +1.6% m/m (+6.9% y/y).
     
    They were were fairly consistent with what was assumed in the advance estimate of Q2 GDP. Other data -- notably construction spending and manufacturing inventories -- have been somewhat negative so far -- by enough to subtract about 0.3 pts from the originally reported 2.6% growth rate.
  • The U.S. dollar continues to extend gains following the latest jobs data.
     
    The dollar index hit a one week high of 93.599. The euro is at a four-day low against the greenback and also the dollar is at a one week high versus the Japanese yen.
     
     
     
  • The dollar isn't the only asset extending gains.
     
    European trade is also doing well. The Stoxx 600 has hit session highs, up around 1 percent. All sectors of the pan-European index are trading positively.
     
    With the euro and sterling extending losses against the dollar, this will have a forex impact of boosting returns for European exporters and firms with overseas earnings.
     
     
  • Brazil auto sales fall 5.2 percent in July from June, while auto production rises 5.9 percent from June to July, according to the Anfavea Automakers Association.
  • Wells Fargo announces it has settled a 2006 lawsuit related to VA loans. The U.S. bank denies allegations in the lawsuit but will pay $108 million to the U.S. government to resolve the claims.
     
    The lawsuit claimed that some VA interest rate reduction refinance loans originated by the company should not have been eligible for VA guarantees.
     
    Shares in the bank rose slightly on the news. The stock is up for the week as a whole.
     
     
  • More U.S. earnings are still being released.
     
    MGE Energy reports Q2 earnings per share of 45 cents on net income of $15.5 million. Revenue for the second quarter was $126.5 million.
     
    Security Bancorp of Tennessee reports Q2 earnings per share of 97 cents, on net income of $378,000. 
  • Volkswagen executive Oliver Schmidt pleads guilty over the diesel emissions scandal in the U.S. district court of Detroit.
     
    Schmidt pleads guilty to conspiracy and violating the clean air law. He is the second VW executive to please guilty in the U.S. emissions probe. Schmidt admits he conspired to aid VW diesel-emissions cheating. 
     
    He now faces seven years imprisonment and $500,000 in fines. Sentencing will take place on December 6th, according to reports.
     
  • U.S. markets have tapered gains and are fairly flat at the end of the week.
     
     
    Media stocks in the U.S. are under pressure today. 21st Century Fox shares are down 2 percent and Viacom shares are down nearly 11 percent.
     
    Viacom shares are nosediving on its weak forecast and concerns about affiliate sales.
     
     
  • The U.S. Center for Disease Control and Prevention reports 64 more ill people from 15 states are added to an investigation of a multi-state outbreak of salmonella.
     
    The number of people affected has increased to 109, including 1 death and 35 hospitalisations. 
     
    The CDC says 2 illness from Utah and Texas were removed from notice after lab testing showed they were not related to the outbreak.
  • Following the latest U.S. jobs data, focus now turns to how the Fed will interpret the numbers.
     
    Lower unemployment and better wage growth supports the central bank's plan for shrinking the balance sheet in September and raising rates in December, according to Danske Bank.
     
    We still think the jobs report underpins the Fed's dilemma: unemployment and (wage) inflation are low at the same time. The reason why the Fed continues hiking is Janet Yellen and co's strong belief in the Phillips curve. The tight labour market should be sufficient to push wage growth and inflation higher eventually.

    In our view, the problem is that the tightness of the labour market is not the only factor determining wage growth, as second-round effects following many years with low inflation have hit wage growth.

    EUR/USD fell slightly on the NFP announcement. However, the very modest price action shows the market's eagerness to buy EUR/USD. In our view, we could see a push towards 1.20 over the coming one to two weeks, as momentum is very strong.
     
     The euro's down 1 percent against the dollar following the data.
     
     
  • Attorney General Session condemns the leaks of sensitive government matters, according to Reuters.
     
    Sessions says request for investigations of leaks have exploded. He says the "culture of leaking" must stop. He adds there have been too few resources dedicated to investigating leaks.
     
     
  • Attorney General Sessions tells leakers "don't do it," adding the Justice Department is committed to prosecuting leakers.
     
    He says the administration has tripled the number of active leak investigations and says four people have been charged with unlawfully disclosing material or concealing contacts with foreign intelligence officers.
     
     
  • U.S jobs data has boosted the dollar and U.S. stocks, as well as European equities, according to David Madden, market analyst at CMC Markets U.K.
     
    European equity markets were propelled higher by the robust US jobs report. 209,000 jobs were added to the payroll in July, and the unemployment rate dipped to 4.3%. The feel good factor form the US lifted investor sentiment in Europe, and the decline in the pound and the euro accelerated the move higher in the FTSE 100, DAX and CAC 40. 
     
    The Dow has hit a record high and the Nasdaq and S&P 500 made gains at the start of trade.
     
    The S&P 500 and NASDAQ 100 also higher today, which makes a nice change, because we were starting to see divergence between them and the Dow Jones. The broader economic picture has improved a touch in the US, and it is reflected in the wider US equity market.  
     
    The U.S. revealed all an all-round positive jobs report. The headline number for July was 209,000, while economists were expecting 183,000, and the June number was revised higher to 231,000 from 220,000. Unemployment fell to 4.3% from 4.4%. Average earnings were 0.3% on a month-on-month basis, up from 0.2% in June. While on a year-on-year basis average earnings remained at 2.5%. All aspects of the report were well received.    
  • European markets are now closed. The strong U.S. payrolls data boosted investor sentiment for European equities, and the sliding euro and sterling helped stocks with overseas earnings.
     
    The Stoxx gained almost 1 percent in today's session. Over the week, the index rose 1.13 percent.
     
     
  • These are the best and worst performers on the Stoxx 600 today. Click or tap on the arrows to switch charts.
     
     
  • Gains were spread across Europe in Friday's session, but some markets, such as the German DAX and French CAC, outperformed others. Click or tap the arrows to switch charts.
     
  • Here's a last look at U.S. markets.
     
    The Dow hit a fresh all time high earlier but has pared these gains.
     
     
    The dollar is appreciating against other major currencies today, as the latest jobs data adds to expectations the Fed will shrink its balance sheet and raise rates.
     
     
  • We'll close the blog there. Thanks for reading and have a great weekend.
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