World Markets Live - January 5 - CNBC Live Events
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CNBC Live Events

World Markets Live - January 5

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


  • Good Morning readers! How are you doing today? Looks like the markets are singing to the tune of Fed minutes this morning. European equity markets have had a fairly good start this year with the FTSE100 reaching all-time highs but will the trend continue? Futures point to a fairly flat start to the trading day. Here's a look at European futures from IG index:


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  • Here are your top headlines at this hour:

    • Minutes from the Fed's December meeting reveal a notably hawkish tone, as FOMC officials say more fiscal stimulus under a Trump presidency could stoke higher inflation and prompt the need for tighter policy.
    • It's not a very merry Christmas for two of the top U.S. retailers. Kohl's and Macy's both cut their profit guidance due to weak holiday sales, sending their shares sharply lower in afterhours. 
    • Donald Trump taps a dealmaker to run the SEC, selecting Wall Street lawyer Jay Clayton to become the next chairman of the financial agency and signalling a reduced focus on regulation. 
    • AND Theresa May picks her new man in Brussels, appointing tough career diplomat Sir Tim Barrow as the U.K.'s ambassador to the EU

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  • The Federal Reserve struck an uncertain, but hawkish tone in the minutes from its December policy meeting, as views within the committee are shifting in response to the election of Donald Trump. The President-elect's policy proposals to ramp up fiscal spending have brought "considerable uncertainty" to policy outlook and have increased inflationary risks. 

    According to the minutes from its December 13-14 meeting, "many participants judged that the risk of a sizable undershooting of the longer-run normal unemployment rate had increased somewhat and that the Committee might need to raise the federal funds rate more quickly."

    Michael Yoshikami, founder and CEO of Destination Wealth Management joins us on the phone from California to discuss more:

    I think it is important to really understand the word uncertainty. One can certainly look at this report and say there is potentially going to be higher inflation. If that's the case why is the dollar down? The dollar is down because there is uncertainty that the policies that are implemented are not necessarily going to have as much impact on the economy as market watchers predicted.


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  • It was a similar story for rival Macy's - shares extended losses,  slumping nearly 11 percent in afterhours. 

    The department store chain cut its full year adjusted profit forecast and outlined plans to close 68 stores and cut over 10 thousand jobs. The company's CEO said he expects 2017 sales to be consistent with the disappointing holiday trend.  


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  • China's Caixin services PMI rose to 53 point 4 percent in December, the highest level in in 17 months. 

    The spread between the offshore and onshore yuan has extended to its widest level since August 2015. This after the offshore currency saw its biggest one-day gain in over a year on speculation of Beijing intervention to prevent capital outflows. 

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  • President-elect Donald Trump will nominate Wall Street laywer Jay Clayton as Chairman of the Securities and Exchange Commision. Clayton, an expert in corporate finance, most recently worked on the Alibaba IPO. 

    Analysts believe the pick signals Trump's intention to reduce regulations seen as burdensome by corporations. 
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  • European futures point to a slightly higher start to the trading day but the DAX looks set to remain unchanged:


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  • New car sales in the U.K. hit a record high in 2016 according to preliminary data, which shows 2 point 7 million cars were sold.

    That surpasses the previous record of 2 point 6 million set in 2015.

    However sales to individuals have fallen every month since April but overall figures were supported by business demand.
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  • Marine Le Pen has outlined her plan for France to leave the Euro, should she be elected President in May. In a New Year's address to journalists, the far-right leader proposed a system similar to the European Currency Unit where national currencies would co-exist with a common currency. 

    Le Pen also signalled her presidential campaign will be heavily based on social media and that she doesn't recognize herself in the description that journalists make of her party.

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  • Global IPOs fell in 2016 as investors got to grips with political uncertainty, however there were a number of big deals.


    In October, Innogy became Europe's largest listing since 2011 -- shares have struggled since then down over 11 percent.

    Philips' spin off of its lighting division has fared better, up over 6 percent.

    While Europe's second largest listing in 2016, Dong Energy has seen its shares rise over 3 percent.


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  • Gareth McCartney, Head of Equity Syndicate at UBS joins us live to discuss the outlook for M&A market in 2017:

    For investors the challenge is pretty straightforward. There is a structural shortage of growth in the market as a whole therefore they are looking for growth opportunities. I think they give you two things - differentiated equity story and genuine growth. That's going to be attractive.


    Looking to 2017, there are three key themes for me. M&A volumes will pick up and I think we will see equity issuance associated with it so that is more growth orientated financing. Two, we are going to see more in the banking sector in terms of recapitalization and given some of the regulatory changes. And third I think we will see normalized IPO market in the backdrop supporting that.

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  • The dollar stepped further away from a 14-year peak against a basket of major currencies on Thursday as market players were spooked by sharp falls in the dollar against the Chinese yuan.


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  • Let's take a look at Asian markets with Pauline

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  • Here are your headlines:

    • Minutes from the Fed's December meeting reveal a notably hawkish tone, as FOMC officials say more fiscal stimulus under a Trump presidency could stoke higher inflation and prompt the need for tighter policy
    • The Dollar slides in Asian trade hitting a yearly low against the Yuan and falling over 1 percent against the Yen to the weakest level since mid December. 
    • It's not a very merry Christmas for two of the top U.S. retailers. Kohl's and Macy's both cut their profit guidance due to weak holiday sales, sending their shares sharply lower in afterhours. 
    • Donald Trump taps a dealmaker to run the SEC, selecting Wall Street lawyer Jay Clayton to become the next chairman of the financial agency and signalling a reduced focus on regulation. 
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  • Fed minutes: Officials were moved by Trump win before December hike

    CNBCThe Federal Open Market Committee in December approved its first rate hike in a year and indicated that three more may be on the way.
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  • Our guest host Fredrik Nerbrand, Head of Global Asset Allocation at HSBC joins us on the set to discuss the uncertainty surrounding central banks:

    I think there is definitely a lot of uncertainty about the Fed. I think that's uncertainty from most central banks. We don't know and we are grasping their Twitter feeds to find out what the future will hold for us. Of course there is a risk that the FOMC will change tack and focus on inflation but this is an environment where the dollar is strengthening and the rest of the world doesn't look that great.

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  • The dollar stepped further away from a 14-year peak against a basket of currencies on Thursday, as investors locked in gains from its two-month-old rally since Donald Trump won the U.S. presidential election.

    The dollar had soared following the election on Trump's plans to cut taxes, boost fiscal spending and protectionist trade rhetoric, all seen as inflationary and lifting U.S. bond yields.

    But looming uncertainty on exactly what his presidency will be like is prompting some players to take off their bets on the dollar for now, as his inauguration nears, with many market players focusing on his news conference next Wednesday. That's according to Reuters.

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  • Vice President-elect Mike Pence said the 'first order of business' for the Trump administration will be to dismantle Obamacare. At a news conference with Congressional Republican lawmakers, the Indiana governor signalled a plan to replace the 2010 Affordable Care Act would come in the coming weeks and months.

    We're working right now. The White House staff is on a series of executive orders that will enable that orderly transition to take place even as the Congress appropriately debates alternatives to and replacement of Obamacare

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  • In case you are just joining us, here are your headlines

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  • European banks have kicked off the year with strength, as investors and analysts have become more bullish on the sector. UBS is the latest broker to brighten its outlook, raising its price targets on BNP Paribas, Credit Agricole and SocGen.

    Gildas Surry, Senior Analyst at Axiom Alternative Investments joins us live to discuss more:
    In the political story you have two drivers - you have rates and deregulation. In rates, when you look at 2016 essentially the Euro Stoxx Banks index moved in sympathy with rates. Apart from December when the 10-year swap rates went down and the index continue d to go up. That is where the deregulation era is impacting valuations where you see capital requirements in Europe in particular reducing by 200 basis points following some guidance by ECB in December.


    This Basel postponement is very interesting. People have been focusing on the quantum of capital requirements, capital regulation but essentially it comes down to the momentum and the time it takes for banks to adapt. We have been moving from an environment where banks have been front loading the new capital requirements up until 2016. Now with the Basel III requirements postponed there is more time to phase in so the banks will be given more time to implement those last batches of new capital.

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  • Missed the headlines this morning? Here's your daily dose of TL;DR with our top stories:


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  • U.S. new auto sales hit a record high in 2016. Our own Phil LeBeau has all the details.

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  • Citigroup expects global equities to rise 8 percent in 2017, in line with an expected recovery in earnings per share. Citigroup says now forecast 9 percent EPS growth in 2017, up from 3 percent outcome likely in 2016. 

    The global investment bank expects better world economy and rising commodity prices to help drive EPS growth acceleration in 2017. 

    Citigroup also says it is overweight Japan and underweight emerging markets on strong US dollar and overweight UK equities due to the weakness in pound and strength in commodities. 

    That's according to Reuters.
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  • European markets are now open for trading with the Stoxx Europe 600 opening 0.34 points lower.

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  • Major European stocks open in negative territory after minutes from the last U.S. Federal meeting showed willingness to increase rates at a faster pace. 

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  • Let's take a look at the best and the worst performing stocks this morning. Sitting at the top of the best performing stocks list is Zodiac Aerospace is up nearly 4 percent this morning. Meanwhile, Rolls Royce, down 2.25 percent tops the list of worst performing stocks. 

     
     

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  • Basic Resources leads the European indexes, while insurance is the worst performing sector this morning, down 0.9 percent:

     
     

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  • UBS has raised its outlook on the French banks. The analyst team has increased its price targets on SocGen, Credit Agricole and BNP Paribas. 

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  • Volkswagen and its former CEO Martin Winterkorn must face a lawsuit against investors in California, a U.S. judge has ruled. The investors are mainly U.S. pension funds, which invested in VW shares on exchanges in the U.S.  

    In the fallout from its emissions cheating scandal, the same judge has also rejected the dismissal of a number of securities fraud legal cases brought against VW's brand chief Herbert Diess. Volkswagen remains under criminal investigation from the U.S. justice department. A deal could be reached before Trump's inauguration on January 20. 

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  • The Stoxx Europe 600 banking index is down more than half a percent this morning after starting the year on a strong note. Analysts continue to worry about the state of the European banking sector that are under pressure due to low interest rate and uncertainty around Brexit and regulatory reforms:
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  • Venezuela's President Nicolas Maduro has appointed Nelson Martinez as Oil Minister in a cabinet reshuffle. Martinez, who has previously led American refiner Citgo, will now represent the country during OPEC meetings. 

    The outgoing Oil Minister Eulogio del Pino will remain President of the state oil company P-D-V-S-A. 
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  • Here are your top headlines at this hour:

    • Lack of direction in early European trade, but the French market underperforms as a downgrade sends Socgen lower. 
    • The Dollar slides in Asian trade suffering the biggest drop against the Yuan in a year and falling over 1 percent against the Yen to the weakest level since mid December. 
    • A sweet result from Persimmon, as the UK housebuilder reports an 8 percent rise in annual revenue, sending the shares higher. 
    • JP Morgan says the insurance sector offers great growth potential, raising its price target on Allianz, Aviva, and others. 
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  • Oil prices dipped on Thursday, hit by doubts that producers would fully deliver on promises to cut output, although record U.S. automobile sales and falling crude stocks offered markets some support.

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  • Gold touched its highest in four weeks on Thursday as the U.S. dollar stepped further away from a 14-year peak hit earlier this week, and on a technical rebound.

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  • Philippe Dauba-Pantanacce, Senior Economist and Global Political Analyst at Standard Chartered joins us live to discuss the risks faced by the Turkish economy:

    I think Turkey is a very tough spot. They are facing multiple threats and it is difficult to see how they come out of this anytime. They are facing threats from the Islamic State, threat that are internal and let's not forget the radical left. And I think all these threats are feeding each other.


    I think we are going to see a consolidation of power around President Erdogan which probably will continue to feed some of these problems. At the end of the day he is going to be more pragmatic in his relationship with Europe. 
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  • Sir Tim Barrow has been appointed Britain's new EU ambassador, just a day after Sir Ivan Rogers resigned from the role. Barrow, who is currently political director at the Foreign Office, previously served as Britain's ambassador to Moscow. 

    Downing Street described Sir Tim, who will play a key role in Brexit negotiations, as a 'seasoned and tough negotiator'. 

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  • Speaking to CNBC Arabia, U.K. Chancellor Phillip Hammond warned that the upcoming Brexit negotiations would be challenging.

    Of course the negotiations will be tough and challenging. We have spent 40 years integrating our economies and now we have to separate them and there are lots of complicated things that need to be unpackaged, unbundled and that will take time and effort.

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  • Here are your top headlines at this hour:

    • Mixed fortunes in early European trade. The FTSE reaches new highs, but the French market underperforms as a downgrade sends Socgen lower. 
    • The Dollar slides in Asian trade suffering the biggest drop against the Yuan in a year and falling over 1 percent against the Yen to the weakest level since mid December. 
    • A sweet result from Persimmon, as the UK housebuilder reports an 8 percent rise in annual revenue, sending the shares higher. 
    • JP Morgan says the insurance sector is 'underappreciated' and offers great growth potential, as it raises its price target on Allianz, Aviva, and others. 
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  • It's been an hour since the start of the European session and stocks are trading lower as investors analyse Fed minutes:

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  • Persimmon’s trading update ahead of full year results due on 27 February 2017 shows an improving trend in sales and margins from the first half of the year to the second. The shares rose by 3.5% on the news.

    George Salmon, Equity Analyst at Hargreaves Lansdown analyses the numbers:

    With solid increases in average selling prices and legal completions, Persimmon’s growth continues despite the uncertainty around the UK’s impending exit from the EU.

    In fact, with margins and completions on an improving trend in recent months, many would argue that this is more than just a resilient update. Forward sales are some 12% higher than at this time last year. 

    With a healthy balance sheet, demand outstripping supply and no sign of borrowing costs rising in the foreseeable future, Persimmon looks in a strong position.
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  • Turkey's deputy prime minister is speaking at a press conference about the recent nightclub attack.

    The deputy PM says the links of the attacker and their possible locations have been established, but cannot rule out the possibility of the attacker escaping abroad.

    The deputy PM adds that the attack was carried out by one person but the attacker may have been helped.
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  • Business confidence among both manufacturing and services firms edged higher in the final quarter of 2016, according to a survey by the British Chambers of Commerce. 

    However, the BCC also found that inflationary pressures are a growing concern for UK companies. 52 percent of British manufacturers say they are likely to raise prices over the next 3 months, amid rising input costs. 
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  • JP Morgan has raised its price target for several European insurers, saying the growth potential of the sector is under-appreciated. The investment bank estimates 3.2 percent average underlying growth for full year 2018. 

    Among its preferred insurers are Ageas, Allianz, Swiss Re, Aviva and St James. RSA, however, saw its rating cut to neutral from overweight

    Meanwhile, shares in Zodiac Aerospace are receiving a boost from JP Morgan's upgrade to overweight whilst Airbus is also taking off after the bank upgraded the company to neutral. 
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