World Markets Live - July 18 - CNBC Live Events
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CNBC Live Events

World Markets Live - July 18

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

  • Good morning, our top stories as the blog gets underway:
     
    • Flatline. The healthcare overhaul bill is effectively dead, as more Republican senators say they won't support it. But President Trump says repeal Obamacare anyway, even if there's nothing to replace it.
     
    • Netflix blows away expectations for subscriber growth, with investors scrambling to bid up the streaming service's stock, sending it more than 10 percent higher
     
    • Hot summer for Lufthansa. The German carrier raises its profit target, citing strong summer bookings and a healthy economy in Germany.
     
    • Chinese small-cap tech stocks sell off sharply in a mini-crash reminiscent of the summer of 2015, but the moves don't extend into the broader indices. 
  • Novartis has confirmed a second quarter adjusted earnings per share of $1.22. That on sales of $12.24 billion.
     
     
  • The U.S. dollar is at multi-month lows following news that President Trump's revised health-care bill has failed to get enough backing to proceed to a debate.
     
    In messages posted to Twitter, Sens. Jerry Moran, R-Ks., and Mike Lee, R-Utah, became the third and fourth GOP senators to say they would not support their party's Obamacare replacement plan as written.
     
    Soon after Senate Majority Leader Mitch McConnell abruptly called for a vote to repeal Obamacare without an immediate replacement after the latest Republican effort to overhaul the U.S. health-care system fizzled out.
     
    President Trump tweeted that Republicans should repeal Obamacare anyway, and worry about a bill to replace it afterwards.
     
     
    The dollar index, which measures the greenback against a basket of currencies, extended its recent tumble, falling as low as 94.745 in Asia trade on Tuesday, from a high as 95.191 prior to the news the current version of the bill was likely to fail.

    That was the index's weakest since September of last year, prior to the U.S. presidential election.
     
     
  • Netflix shares soared more than 10 percent in after hours trading after  the TV and movie streaming service smashed its subscriber targets. 
     
    It added 5.2 million new customers during the second quarter, with a significant proportion coming from non-US markets. 
     
    Netflix said it is spending $6 billion a year on content.
     
    Greg Peters, president of Japan at Netflix Inc., speaks during a news conference in Tokyo.
     
    Trey Williams, Media Reporter with MarketWatch is on the phone from New York.
     
    He says new subscribers is the metric that investors currently care about and that 's why shares rocketed so strongly.
     
    Williams says Netflix doesn't seem to be too focussed on competition from platforms such as Amazon or Hulu.
     
    The media analyst says Netflix next move will be to widen its foreign language content for overseas subscribers.
  • In the US  think we will maybe get another rate hike this year but next year we will may be see the Fed revise their rate hike path downwards.
    - Megan Greene, Chief Economist, Manulife Asset Management
     
    On set Megan Greene says the Fed is going to have to accept hard data as the benchmark for deciding its interest rate path.
     
     
  • The Swedish mobile network maker Ericsson has reported worse than expected earnings.
     
    The operating income came in at -1.2 billion Swedish crowns, generating a net loss of -1 billion. The market had been expecting a net loss of around 500,000 Swedish crowns.
     
    Ericsson posted Q2 revenue of 49.9 billion Swedish crowns, just shy of analyst estimates.
     
    We'll speak to Ericsson CEO Börje Ekholm at 10:15 CET.
     
     
     
     
     
     
  • This stunning overnight move by Netflix is yet to be incorporated to its open market performance.
     
    The firm has impressed in earnings by adding  5.2 million new customers during the second quarter.
     
     
     
  • Proctor and Gamble is the target in the largest proxy fight ever.
     
    Billionaire investor Nelson Peltz is taking on the firm and seeking a board seat. His firm Trian owns about $3.3 billion dollars of P&G stock.
     
     
    Peltz says the company isn't structured properly and is losing market share due to its "suffocating bureaucracy":
     
    P&G's average selling price across the product line is 40% higher than the rest of the industry. 

    They are also number 1, but yet their margins, albeit are right up with the top guys in the business, they’re bigger than anybody else and they have this 40% price advantage. 
     
    Something's wrong. Something is wrong. They have taken $10 billion of costs out since 2012 and we can't find a penny of it.
     
     
    - Billionaire Nelson Peltz
  • Megan Greene, Chief Economist at Manulife Asset Management says the asset management industry is definitely struggling to accept the new world of technology.
     
    Like in the media industry we are struggling to deal with technology in active management. We have robo-advisers outperforming some real life managers and that is driving people toward passive management.
    Greene checks her point by nothing that the ability of passive exchange traded funds (ETF'S) to react quickly to a change in circumstances has yet to see a real test.
     
    BlackRock, the world’s largest asset management firm, said Monday that second-quarter earnings had risen 9 percent as investors pushed money into the company’s expanding fleet of exchange traded funds.
  • Global stocks have moved lower in line with that dollar collapse. 
     
     
  • Novartis shares are tipped to open two percent higher. This as the drugmaker lifted the outlook for its Alcon eyecare division after surgical equipment sales bucked the trend of consecutive declines.
     
    The Swiss pharma company reported a smaller than expected two percent drop in core net income. Meanwhile falling revenue from cancer drug Gleevec and US pricing pressures at Novartis' Sandoz business were blamed for the decline in overall sales.
     
    On air is Joseph Jimenez, CEO of Novartis.
     
    He tells Karen that the developments for the U.S. healthcare bill don't impact his company and that weaker sales in the U.S. will be offset by higher international sales.
     
     
    When we are interacting with the administration it is all about ensuring patients have access to medicines. 
    The Novartis boss says today's developments don't particularly provide much certainty on the future of healthcare in the U.S.
  • Moody's has stated that the EU-Japan economic partnership will be credit positive for Japan.
     
    Moody's says the deal will promote Japanese economic growth and productivity by raising competitiveness of Japanese industrial products sold into European market.
  • With only around 30 minutes to go until the European open, it is a picture of red on the futures board. This a continuation of selling that we saw in Asian trade.
     
     
  • Dutch vitamin company Royal DSM expects over 10 percent annual revenue growth in China during the second quarter.
     
    Speaking to China Daily, CEO Feike Sijbesma said he wants to continue seeking investment opportunities in the country.
     
    Royal DSM has 21 operations in China and Geoff asks him if he is nervous about China's economic future and its debt levels.
     
    Sijbesma says he not so sure that the Chinese economy is so fragile and you need to
     
     
    The DSM leader says European companies are still trying to work out how to benefit from China's long term economic plan.
     
    On the company's business Sijbesma says people all around the world are looking to become healthier and that is helping to sustain a continued growth in sales.
     
    Shares in DSM have had a healthy run in the last year.
     
     
  • The CFO of Ericsson see the mobile equipment market in decline by a low single digit in 2018, and see a flattish market in 2019 for mobile infrastructure. The CFO adds that the Swedish mobile network provider has no sales forecast for its partnership with Cisco, versus a previous view of $1 billion extra sales in 2018. That's according to Reuters reports.
     
    This after the company reported worse than expected earnings. Operating income came in at -1.2 billion Swedish crowns, generating a net loss of -1 billion. The market had been expecting a net loss of around 500,000 Swedish crowns. Q2 revenue was 49.9 billion Swedish crowns, shy of analyst estimates.
     
    CNBC will be speaking to Borje Ekholm, CEO of Ericsson, later this morning.
     
     
  • French real estate investment trust Gecina has announced it is launching a share capital increase with preferential subscription rights for approximately 1 billion euros.
     
    Gecina says the net proceeds will be used to finance a portion of its acquisition of Eurosic, another French real estate investment trust.
     
    Existing shareholders will be entitled to receive preferential subscription rights. The subscription price for new shares will be 110.50 euros per share. The subscription price reflects a discount of 20.87 percent to the stock closing price on July 14. 
  • Vodafone Qatar says it's made progress on restoring 2G voice services and is now focusing on restoring full connectivity across the network with the aid of global network experts. 
     
    The company says it will announce a compensation plan within 24 hours of service restoration.
     
    This after the company said on Monday that access to its network was affected by technical issues.
  • Feike Sijbesma, CEO at Royal DSM is still on set with Geoff and Karen.
     
    He disagrees with Geoff that carbon pricing is "dead in the water".
     
     
    Sijbesma argues that China, Mexico and a number of European countries are all working toward a price on carbon.
     
    He says a survey of 60 CEO's shows that business want a price on carbon and it should sit between $20 and $40 per ton. 
  •  
    And as we enter Tuesday's trade, European markets have opened lower:
     
     
  • And as trade settle we can see that only two sectors are trading on a positive bias.
     
     
     
  • And when we see it on an individual country basis, the Swiss market is the only one in positive territory.
     
     
  • Novartis has lifted the outlook for its Alcon eyecare division after surgical equipment sales bucked the trend of consecutive declines. This as the Swiss pharma company reported a smaller than expected two percent drop in core net income. Meanwhile falling revenue from cancer drug Gleevec and US pricing pressures at Novartis' Sandoz business were blamed for the decline in overall sales.
     
    Ericsson has posted a bigger than expected loss in the second quarter. The Swedish telecom equipment maker reported an operating loss of 1.2 billion Swedish crowns, compared to a profit of 2.8 billion a year earlier.  Ericsson said it expected the mobile infrastructure market to decline by a high single-digit percentage this year, but added its planned cost cutting would be accelerated. 
     
     
    Lufthansa has boosted its 2017 profit target after seeing a strong rise in summer bookings. The German carrier is now forecasting full-year EBIT higher than last year's 1.75 billion euro haul. Lufthansa added it also expected profits to receive a shot in the arm from lower fuel costs and a deal to lease 38 planes and crews from Air Berlin.
     
    Zalando has reported slower second quarter growth while profitability improved after the launch of its membership scheme. The German online retailer says sales have increased between 19 percent and 21 percent in the second quarter, compared to a 23 percent rise in the first quarter.
  • Edmund Shing, global head of equity derivative strategy of BNP Paribas, share his view on the state of the U.S. market.
     
    If you were to look at the U.S. VIX volatility index, it had one of its lowest ever weekly closes, so we know that volatility is extremely cheap.
     
    You could translate that and say there’s a lot of complacency in the market and certainly if we look at the performance, let’s say, of the Nasdaq 100 this year in the U.S., the momentum stocks have been fantastic in the U.S.
     
    He says the thing that worries him is retail investors piling into short volatility trades. He argues they are set up for a lot of pain as it’s a bad deal to short U.S. volatility at the moment.
     
     
     
  • First quarter revenue rose 1 percent at Royal Mail, with strength in the firm's pan-European parcel delivery business offsetting weakness in the UK. The company kept its guidance unchanged for full-year 2017. 
     
    Royal Mail among the top movers in Europe.
     
    Ericsson meanwhile is the biggest loser in Europe after posting a bigger than expected second quarter loss.
     
     
  • Discussing government bonds, Edmund Shing, global head of equity derivative strategy of BNP Paribas, warns the central banks are taking away the “punch bowl” of monetary stimulus.
     
    If you look at central bankers, they are taking the punch bowl away. They’re inching away; they’re not running away. But nevertheless they are inching away. The Federal Reserve is withdrawing liquidity and will be withdrawing more liquidity.
     
    I think the Bank of England will have to follow at some point in the future. The ECB will of course taper, if for no other reason than they cannot find enough German bonds to buy. 
     
    Shing says taking away the punch bowl from financial markets will remove support for riskier assets, which may create problems.
     
  • Netflix shares soared more than 10 percent in after-hours trading after the TV and movie streaming service smashed its subscriber targets.
     
    It added 5.2 million new customers during the second quarter, with a significant proportion coming from non-U.S. markets.
     
    The shares closed at 161.70 and rose to nearly 180 in extended hours trade after the results.
     
     
    Edmund Shing, global head of equity derivative strategy of BNP Paribas, says Netflix has been very smart.
     
    We focus on their U.S. content and they have spent a lot of money on building content provision, not only in TV series but also now in films. Of course, films do work internationally but what’s more interesting is they have taken their success in TV in the U.S. and translating it by also funding TV in Europe.
     
    Shing says Netflix is trying to nurture home-grown talent, which enables them to penetrate home-grown markets in Europe and elsewhere more easily.
  • And after 30 minutes of trade, out top headlines look like this:
     
    • Poor reception for Ericsson! Shares in the telecoms giant head for their worst day in 9 months, after it slashes its 2017 outlook amid declining sales.
     
    • Swiss pharma giant Novartis beats expectations in the second quarter, amid improvements in its eyecare unit Alcon, as the CEO tells this program the collapse of Republicans' latest healthcare bill will not affect his business.
     
    • Shares of Lufthansa drift lower despite the German airline lifting its profit target for 2017 after a busy summer for bookings. 
     
    • Netflix blows away expectations for subscriber growth, with investors scrambling to bid up the streaming service's stock, sending it more than 10 percent higher.
  • Minutes from the most recent meeting of the Swedish central bank are out.
     
    The Riksbank's Martin Floden says the economic upswing and reduced risks abroad mean that setbacks for the upturn in inflation are now less likely. Floden says this in turn means the risk of needing more expansionary monetary policy during the autumn has subsided. He adds the upturn in underlying inflation is still dependent on support from the expansionary monetary policy.
     
    Stefan Ingves, governor of the Riksbank, says it is important future rate rises are not pre-empted. He says inflation touching 2 percent in the short term is not stable enough. He says it it important to keep to the bank's monetary policy plan and to be prepared to work with the entire balance sheet until inflation stabilises around 2 percent. He adds that wage development is uncertain.
     
    Finally, Per Jansson said it is pleasing that prices for services have recovered significantly in recent months. He says he is prepared to spearhead and stand behind a decision to cut the repo rate, if it needs to be. He adds that it will be difficult for the Riksbank to stop new purchases altogether if the ECB continue to buy more assets next year. He says that he does not expect Swedish monetary policy to change tack soon.
     
    Following the release of the central bank minutes, the Swedish crown is up 25 basis points against the U.S. dollar.
     
     
  • A number of Wall Street titans are gearing up to report earnings this week.
     
    Today, we'll hear from Bank of America and Goldman Sachs.
     
    Morgan Stanley, Visa and Blackstone publish their latest numbers on Wednesday and Thursday.
     
    Paul Kavanagh, CEO at Patronus Partners is on set and says he expects fixed income earnings to be lower for Goldman Sachs today.
     
    As we come into this season we are now seeing a few downgraded ahead of these reports so there is a chance we could see a small beat but the quarter will be softer.
     
     
    He says Goldman Sachs may well be recognizing that low volatility and therefore lower trading fees, could be in place for some time.
     
    Kavanagh says on U.S. banks it is now time to recognize that the share price run has been very strong and it would be prudent to look elsewhere for continued momentum.
     
     
  • London's economy is 'beginning to wobble' from the effects of Brexit, according to a report from the Centre for London.
     
    The think tank said it is too early to know how the UK's exit from the EU will play out, but that weaker growth in the housing market, slowing job creation and fewer EU citizens registering to work were the first signs of the impact of Brexit.
     
     
  • David Davis and Michel Barnier have kicked off the first full round of Brexit negotiations.
     
    Davis raised eyebrows by returning to London and leaving talks in the hands of teams of civil servants, after a brief meeting. But officials said the Brexit secretary will be back in Brussels on Thursday, to join Barnier in endorsing a first set of partial agreements. 

    The British team's lack of notes during the meeting -- compared to the EU side's pile of papers -- also sparked jokes from critics in the U.K., who see the government as unprepared.
     
    David Davis, right, and Michel Barnier, second left, meet at the EU Commission headquarters in Brussels
  • These are the top headlines for the hour:
     
    • Poor reception for Ericsson! Shares in the telecoms giant head for their worst day in 9 months, after it slashes its 2017 outlook amid declining sales.
    • Swiss pharma giant Novartis beats expectations in the second quarter, amid improvements in its eyecare unit Alcon, as the CEO tells this programme the collapse of Republicans' latest healthcare bill will not affect his business.
    • Shares of Lufthansa struggle, despite the German airline lifting its profit target for 2017, in a busy summer for bookings.
    • Netflix blows away expectations for subscriber growth, with investors scrambling to bid up the streaming service's stock, sending it more than 10 percent higher.
  • The ECB says it sees rising demand for corporate, mortgage and consumer loans in Q3, according to its latest lending survey. The ECB says banks expect easing credit standards for loans in the next quarter.
     
    The ECB says access to wholesale and retail funding improved in the second quarter. Credit standards for businesses eased in Q2.
  • Ahead of U.K. inflation, retail price and house price data, sterling is rising against the dollar.
     
    It spiked to $1.3126, its highest since September 16 and up around 0.5 percent for the day, just before the hour change. Sterling pared back but remains up 0.4 percent.
     
     
  • The latest Republican healthcare overhaul bill is dead, after two more Republican Senators said they won't support it. That led to Senate Majority Leader Mitch McConnell conceding that the votes aren't there to repeal and replace Obamacare.
     
    President Trump tweeted that Republicans should repeal Obamacare anyway, and worry about a bill to replace it afterwards.
     
     
    The news has knocked the dollar, sending the index lower.
     
     
  • Richard Kelly, head of global strategy at TD Securities, says he never bought into the “Trump trade”. He says there’s been a big asset allocation trade going on, and he says it’s a mistake to believe this was driven by President Trump. He says Trump was just a catalyst for it. 
     
    People mistook the fact that U.S. data was becoming phenomenally strong before we went in there. It was the strongest data surprise. When Trump was elected, it was the strongest data we’d had in the U.S. in five years. It was the strongest data in the history of the Eurozone, but no one was focusing on it, because everyone was focusing on Hillary versus Trump. He got in, everything was priced in, we kept going and people probably built a little bit of irrational expectations on the back of that.
     
    Since then, he says, people wanted to be long U.S. fixed income and long European equities, which helped to bring the Dow Jones up. 
     
     
  • Ericsson has posted a bigger than expected loss in the second quarter. The Swedish telecom equipment maker reported an operating loss of 1.2 billion Swedish crowns, compared to a profit of 2.8 billion crowns a year prior. 
     
    Börje Ekholm, CEO of Ericsson, says the quarter was unsatisfactory and adds the market is tighter for telecoms. They have seen tighter markets across Europe, Latin America, the Middle East and Africa.
     
    We believe the market will decrease a little bit more than we anticipated before.
     
     
    Shares in Ericsson are now down more than 10 percent in European trade.
     
     
  • Börje Ekholm, CEO of Ericsson,  says the company will take out at least 10 billion Swedish krona in costs by next year in order to double the operating profit.
     
    It is a tighter market out there. We need to take costs out faster and that’s what we’re trying to do. At the same time we need to invest in R&D to be competitive long-term and that’s the strategic direction we have.
  • The head of Libya's National Oil Corporation says they will lead a Libyan delegation to the next OPEC and non-OPEC meeting in St Petersburg to share the country's production plans.
     
    Rising Libyan production has come into focus as OPEC struggles to cut oil output to rebalance the market.
     
    The NOC chief says they hope to present a "unified Libyan position in St Petersburg that will show we can act together in the national interest," according to Reuters.
  • U.K. CPI inflation is flat in June, unchanged month on month. Year on year it is up 2.6 percent, lower than forecasts of 2.9 percent.
     
    The fall in CPI to 2.6 percent in June from 2.9 percent in May represents the biggest drop between  two months since February 2015, according to the ONS. It said the fall was due to the drop in fuel prices.
     
    Sterling turned negative against the dollar on the news, giving up all the gains made earlier in the session.
     
    House prices in May rose 4.7 percent year on year versus 5.3 percent in April. London house prices grew 3 percent year on year in May, the second slowest growth in all regions of the U.K.
     
    Producer input prices fell 0.4 percent month on month in June, and is up 9.9 percent uyear on year, above expectations. This is the lowest year on year figure since Sepember 2016.
    by luke.graham edited by Spriha Srivastava 7/18/2017 8:31:20 AM
  • The Stoxx 600 is down 0.18 percent today, with a mixed performance from the individual European bourses.
     
    The weaker sterling is being welcomed on the FTSE 100, which is up 0.14 percent. The bluechips on the index mainly earn abroad, so a fall in the currency boosts their results.
     
     
  • The U.S. government says trade deficit reduction will be its top priority when it renegotiates Nafta. A list of U.S. goals has been released ahead of official talks with Mexico and Canada due to start next month.
     
    Trump has branded the North Atlantic Free Trade Agreement "a disaster" and called for a new round of talks earlier this year.
     
    Meanwhile, President Trump has kicked off his "Made in America Week" to promote U.S. manufacturing. He posed in front of iconic U.S. products on display at the White House, promising to make legal and regulatory moves to help American-made goods.
     
    The president wearing a U.S.-made Stetson brand hat to promote Made in America Week
  • 10 year U.K. gilt yields slide  following the U.K. inflation data. The yield dropped to 1.24 percent from 1.284 percent earlier.
     
     
  • Japan's government says its primary budget deficit will be 1.3 percent of GDP in the full year 2020, down from the previous forecast of 1.4 percent of GDP.
     
    Debt to nominal GDP will reach 189.5 percent in the full year 2017, up from previous forecasts of 188.5 percent, the government revealed. However, it expected this ratio will drop to 179.3 percent by full year 2020.
  • Netflix shares soared more than 10 percent in after-hours trading after the TV and movie streaming service smashed its subscriber targets. 
     
    It added 5.2 million new customers during the second quarter, with a significant proportion coming from non-U.S. markets. Netflix now expects foreign growth to result in its first full-year profit for overseas markets in 2017.
     
    However, Paolo Pescatore, the vice president of multiplay and media at CCS Insight, warns Netflix is burning through a lot of cash to create original content.
     
    He says this is a concern for any media business. Netflix needs to differentiate itself from competitors. This can only be done through content, either licensed content or original content.
     
    Netflix is placing some huge bets that its investments in the original content will pay dividends not only in one particular market, but also globally. It goes to show, certainly in this quarter which is traditionally a poor and challenging quarter, not only for Netflix but for other providers as well, and they’ve  exceeded in smashing all expectations.
     
    He adds that Netflix has been smart to rely on local telco partnerships to increase its presence in markets outside the U.S.
     
     
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