World Markets Live - July 18 - CNBC Live Events

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.

  • Sterling is trading down sharply against a host of other global currencies after U.K. inflation slowed from May to June. 
    Jake Trask, FX Research Director at OFX, says the fall was apparently due to falling prices for car fuel and recreational and cultural goods.
    The gap between CPI and wage growth has narrowed from 1.1 percent to 0.8 percent, easing pressure on consumers hit by the depreciation of the pound since the Brexit vote. 
    The drop in CPI could see Mark Carney, labelled by some as an ‘unreliable boyfriend’, again change his tone on interest rates. At a conference in Portugal late last month, he shocked the markets by suggesting that rates may need to rise by the end of the year to combat inflation.
    Should the spread between inflation and wages remain where it is, he may be forced to make another about-turn. The chances of an interest rate hike this year now seem remote – and the same may even be true for 2018.
  • The spread between 10-year German and Spanish bond yields has narrowed to less than 100 basis points. The spread is now at its tightest since Septembr 2016, according to Reuters citing Tradeweb.
  • Yields on U.K. gilts are dropping along the curve following the latest inflation data. The yield on the benchmark 10-year gilt is down 4 basis points
    Slowing inflation means the Bank of England is less likely to hike interest rates in the coming months, therefore increasing the appeal of government bonds.
    Shilen Shah, bond strategist at Investec Wealth & Investment, says the inflation data removes some of the central bank's "hawkish urgency." 
    The downward surprise in June’s inflation print removes some of the hawkish urgency within the BoE, with petrol prices and recreational items being the primary contributors.
    The inflationary impact of Sterling’s fall following the Brexit vote seems to have lessened following the recent one-year anniversary of the Brexit vote.
    Core inflation was also weaker than the consensus at 2.4 percent, hinting that the domestic economic slowdown may finally be creating some downward pressure on inflation.”
  • U.S. markets finished yesterday's session broadly flat. The Dow and S&P finished a few points lower, while the Nasdaq gained a whole 0.03 percent.
    Looking ahead to Tuesday's session and the future values are looking a little stronger, implying a gain at the market open. The S&P is called 3 points higher, the Dow 17 points and the Nasdaq 20 points.
  • U.K. department store chain John Lewis reports sales rose 4 percent in the week to July 15. Sales at its food retailer stores Waitrose were up 2 percent.
    John Lewis is a private company owned by its employees, but it provides a useful barometer on the state of retail sales in the U.K.
  • U.K. year-on-year inflation slowed to 2.6 percent in June from 2.9 percent in May. The ONS said this was the biggest drop between two months since February 2015.
    A spokesman for the U.K. government's treasury department has published a statement in reaction to the data.
    While it is encouraging that inflation was lower this month, we appreciate that some families are concerned about the cost of living. That’s why we have introduced the National Living Wage, which is helping to boost earnings by £1,400 a year, and why we’ve cut taxes for millions of people to help them keep more of what they earn. We are also increasing our free childcare offer to help 400,000 working parents.
     The euro is up sharply against the U.K. currency.
  • Speaking in Lisbon, the EU commissioner for economic and financial affairs Pierre Moscovici says Portugal's strategy to deal with banks' bad loans is "ambitious and going in the right direction," Reuters reports.
    Moscovici says Portugal's growth will probably exceed 2.5 percent this year. He adds that Portugal's progress is very impressive and he is optimistic about Portugal's economy.
  • The euro has hit a 14-month high of $1.1560 against the U.S. dollar in today's session. It is currently up about 65 basis points.
  • Among the inflation data released this morning was the retail price index (RPI), another measure of inflation. Unlike CPI, which was unchanged in June, RPI increased 0.2 percent on the month. 
    On the year, RPI rose 3.5 percent. 
    While the RPI reading is used less often, it is tied to many parts of the U.K. economy. Student loan debt, rail fares and index-linked gilts use this measure of inflation for calculating interest and price rises. As such, increases in the RPI can be very costly for U.K. consumers.
  • The pan-European Stoxx 600 has slipped today. It is down 0.39 percent so far this morning.
    These are the stocks at the top and bottom of the index.
    British Land shares are near the top of the index after it announced a £300 million share buy-back programme.  The company said 370,000 square feet of lettings and renewals were made during the first quarter, and a further 870,000 square feet of space is under offer or in advanced stage of negotiations. The company has decided investing in its own shares offer better value than making purchases.
    Ericsson remains at the bottom of the index after its worse than expected Q2 results. The second to last share is Zalando, which 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.
  • UnitedHealth reports Q2 earnings per share of $2.32, on net profits of $2.28 billion, from revenues of $50.05 billion.
    The adjusted earnings per share of $2.46 beat the Thomson Reuters IBES forecast of $2.38.
    UnitedHealth raised its outlook for 2017 earnings to a range of $9.75 to $9.90 per share.
  • The Republican-led U.S. House budget panel has unveiled its 2018 fiscal budget plan, with reconciliation instructions for tax reform.
    The plan sets a path for the partisan repeal of Dodd-Frank Wall Street reforms, according to a Reuters report.
    The budget includes $4.02 trillion in outlays for 2018, including $621.5 billion for defense. The plan seeks $203 billion in savings over a decade from mandatory programms such as welfare.
    The plan expects to reach a surplus by 2027 based on a forecast of 2.6 percent annual U.S. growth.
  • The U.S. earnings season continues today. We expect earnings from Bank of America, Goldman Sachs, Johnson & Johnson, Lockheed Martin and Charles Schwab this morning.
    In the U.K. at 11:30 BST, finance minister Philip Hammond will take questions in the House of Commons. 
  • Health care company AngioDynamics reports a Q4 loss of 30 cents per share. This against a forecast of 16 cents earnings per share.
    Sales in the fourth quarter came to $86.9 million, under forecasts of $90.7 million. The company sees full year 2018 net sales of $352 to $359 million.
  • Electronics manufacturer Littelfuse has issued a revised Q2 earnings guidance. It expects sales in Q2 in the range of $312 to $314 million.
    It expects GAAP diluted earnings per share between $2.09 and $2.13. The revision is due to stronger demand exceeding forecast across the electronics segment and a lower adjusted effective tax rate for Q2.
    Previous forecasts were for $1.92 earnings per share and revenue of £307.2 million.
  • James Murdoch, the chairman of Sky PLC and son of media mogul Rupert Murdoch, has been appointed as a director of Tesla, Inc. with effect from 13 July 2017. 
    It was previously announced that he, along with Linda Johnson Rice, were appointed to Tesla's board of directors.
  • Following its Q2 results, UnitedHealth shares are trading 1.68 percent higher in premarket trade.
    UnitedHealth reported an earnings beat, with adjusted earnings per share of $2.46 beating forecasts of $2.38.
  • Medidata Solutions reports second quarter revenue of $137.4 million, with earnings per share of 14 cents. Net profit came to $8.25 million. Revenue beat the IBES view of $134.3 million.
    The company said it is maintaining its previous revenue and profit guidance for the full year. It sees net profit for the year of $31 million to $36 million, and revenue of $538 million to $562 million.
  • The U.K. consumer prices index fell to 2.6 percent in June from 2.9 percent in May, well below the no-change consensus. 
    Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, says the fall is not a sign that the malign impact of sterling's depreciation already has been fully felt. 
    The drop primarily reflected a 0.1 percentage point decline in motor fuel’s contribution to inflation due to the fall in oil prices and a 0.1pp decline in the contribution from the recreational and cultural sector, driven largely by a base effect. We had expected the impact of these decreases to be offset by a large rise in food inflation, but it only edged up to 2.3% in June from 2.1% in May. 
    Tombs also commented on what the inflation means for the Bank of England.
    The sharp fall in CPI inflation in June brings it back in line with the MPC’s May Inflation Report forecast and almost certainly eliminates the chance of an interest rate rise at the August meeting. Indeed, the Committee likely will revise down its forecast for inflation next month, given the recent fall in oil prices and the deterioration in wage growth.
  • Johnson and Johnson reports Q2 net profit of $3.83 billion. Earnings per share was $1.40 on sales of $18.8 billion. The company sees full year adjusted earping per share of $7.12 to $7.22.
    The company says U.S. sales were $9.73 billion, with worldwide consumer sales of $3.48 billion. This represents an increase of 1.7 percent versus the previous year.
  • Johnson and Johnson shares are up more than 1 percent in premarket trade following the earnings beat.
  • Bank of America reports Q2 revenue increased 7 percent to $22.8 billion from $21.3 billion. Net income for the quarter was $5.3 billion. Earnings per share increased 12 percent to 46 cents.
    These results beat estimates.
  • Moody's predicts the probability that negotiations between the EU and the U.K. will fail and no agreement is reached is substantial.
    This after David Davis and Michel Barnier kicked off the first full round of Brexit negotiations yesterday.
    Barnier, second left, and Davis, right
    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.
  • Harley-Davidson reports second quarter net profit of $258.9 million. Revenue was $1.58 billion for the quarter. Earnings per share were $1.48, beating the IBES view of $1.38.
    However, the company says worldwide retail sales were down 6.7 percent in Q2 compared to the same period last year.
    Also, the company expects to ship 39,000 to 44,000 motorcycles in Q3, down 10 to 20 percent from 2016.
  • U.S. stock index futures point to a slightly higher open, as investor attention shifted to the bumper pack of earnings set to come out.

    In earnings news, Bank of America, Goldman Sachs, Johnson & Johnson, and IBM are some of the major names that have reported this morning:
  • As the painful and quite frankly embarrassing stumble out of Europe continues for the U.K., I watch with sadness at the pathetic lack of conviction of both the previous Remain and pro-Leave camps.
    It's never been easier for this journalist to sit on the fence in splendid apolitical isolation given that the pro-Brexit camp seem to not actually believe a word they are saying any more. Brexiteers seem to be tacitly admitting that their previous grandiose promises are in tatters, whether it's now a non-existent money tree for the NHS (National Health Service) or the failure of Germany to cave in over threats to tariffs on imported BMWs and Mercedes. And let's not even go there on immigration.

    Op-Ed: If Brexiteers need a real reason to leave the EU, then just look at Italy

    CNBCAs the painful and quite frankly embarrassing stumble out of Europe continues for the U.K., I watch with sadness at the pathetic lack of conviction of both the previous Remain and pro-Leave camps.
  • Goldman Sachs earnings: $3.95 per share, vs $3.39 EPS expected
  • A lot has happened over the past week between sharp market reversals, anaemic US inflation and strong Chinese growth. Here’s what Bilal Hafeez of Nomura has to say:
    Euro FX losing (relative) momentum:

    The top three performing G10 currencies over the past week have been the Australian dollar, Canadian dollar and Norwegian dollar; the worst three have been the US dollar, euro and Swiss franc. This hasn’t always been the case. In recent months, the euro has often been in the top five performing currencies across both G10 and EM (Figure 1). Investor positioning shows that, as of one week ago, both asset managers and hedge funds were close to their most bullish euro positioning in a year. The challenge for the euro will be whether it can deliver news that would once lead to euro outperformance, such as a hawkish ECB this Thursday. In the absence of that, it is broad dollar weakness that could lift the euro, which also suggests that other currencies may be better placed to capitalise on such weakness. 
    Falling yields helping growth currencies:

    Core bond yields have all recently peaked. It started with 10yr JGB yields peaking on 6 July, then 10yr US yields a day later, and finally German 10yr yields on 13 July (Figure 2). At the same time, recent activity data such as US non-manufacturing ISM, euro-area industrial production and Chinese GDP have all surprised to the upside. Such a combination of low core yields and strong global growth is perfect for growth-sensitive currencies such as the dollar-bloc in G10 and high-yielders in emerging markets
    US, euro area, Chinese and Japanese (fiscal) politics get interesting:

    The latest US healthcare bill has been abandoned, which is the latest trigger for short-term dollar weakness. Last week, it was emails regarding a meeting between Donald Trump’s son and Russian contacts. These have taken the spotlight away from progress that has been made on the tax reform led by Gary Cohn and Treasury Secretary Steve Mnuchin. This likely has more chance to succeed as it falls into more conventional and tried-and-tested Republican policies. 
  • Check out which companies are making headlines before the bell:
    Harley-Davidson – The motorcycle maker earned $1.48 per share for the second quarter, 10 cents a share above estimates. 
    UnitedHealth – The health insurer came in eight cents a share above estimates, with second quarter profit of $2.46 per share
    Bank of America – The bank reported quarterly profit of 46 cents per share, three cents a share above estimates. Revenue topped forecasts, as well. Higher interest rates helped negate the effects of a slump in trading.
    Johnson & Johnson – Johnson & Johnson beat estimates by three cents a share, with adjusted quarterly earnings of $1.83 per share. Revenue came in slightly short of expectations.
    Netflix – The video streaming service posted a much-larger-than-expected addition of 5.2 million customers for its latest quarter. 
    Tesla – The automaker added two independent directors to its board of directors, naming 21st Century Fox CEO James Murdoch and Johnson Publishing CEO Linda Johnson Rice to the board.
    PayPal – PayPal struck a deal to offer Visa debit cards in the European market, according to the Financial Times.
    Click here for a full list of companies.
  • Earnings season in the spotlight on Wall Street, as Goldman Sachs, BofA report

    CNBCU.S. stock index futures pointed to a relatively flat open on Tuesday, as attention shifted to the bumper pack of earnings set to come out.

    Oil rose on Tuesday as demand soaked up some of the surplus supplies from OPEC and the United States, but traders said the market was trading in a tight range and showed few signs of big short term moves.
  • US import prices fell 0.2% in June, as expected
    U.S. import prices fell for a second straight month in June amid further declines in the cost of petroleum products, suggesting inflation pressures could remain benign for a while.

    The Labor Department said on Tuesday that import prices decreased 0.2 percent last month after an upwardly revised 0.1 percent decline in May.

    US import prices post second monthly drop

    CNBCU.S. import prices fell for a second straight month in June amid further declines in the cost of petroleum products, suggesting inflation pressures could remain benign for a while.
  • A complicated drama is unfolding among three major Chinese firms that have invested in each other, highlighting wider concerns over the country's growing debt problem.

    The recent events, which also loop together longstanding financial system issues like accounting trickery and overspending, are continuing to weigh on investor sentiment — even though China's second-quarter economic growth beat analyst expectations on Monday.

    Debt problems are sinking three major Chinese companies

    CNBCA complicated drama is unfolding among three major Chinese firms that have invested in each other, highlighting concerns over China's growing debt problem.
  • U.S. stock index futures pointed to a mixed open, as investor attention shifted to the bumper pack of earnings set to come out.

    In earnings news, IBM is one of the major names set to report. Bank of America and Dow components Johnson & Johnson and Goldman Sachs reported earlier on Monday.
  • Wall Street stocks are now open for trading. All three indexes have opened slightly lower as investors digest a flurry of earnings:
  • Dow opens lower on DC gridlock, Goldman Sachs shares fall

    CNBCU.S. equities opened mostly lower on Tuesday as investors parsed through more corporate quarterly reports.
  • Here's a look at the performance of three major Wall Street indexes over the past 3 months:
  • The Greek government seems ready to tap the bond markets again as early as next week, a source close to the situation told CNBC on Tuesday, which would mark the first time since 2014 that the country has borrowed from the capital markets.

    Athens' return is important to show that the reforms under the current bailout program are working to both international investors and Greek voters. However, the government needs to get the timing right to avoid any political or economic backlash.

    Greece could return to the bond markets as early as next week

    CNBCThe Greek government seems ready to tap the bond markets again as early as next week, a source close to the situation told CNBC on Tuesday, which would mark the first time since 2014 that the country has borrowed from the capital markets.
  • Goldman Sachs Group Inc reported a 40 percent drop in bond trading revenue during its second-quarter earnings, mirroring a broader weakness in trading activity that has plagued big U.S. banks.

    Overall revenue was roughly flat, however, as gains in investing and lending and asset management helped offset the trading slump, and the bank topped Wall Street earnings estimates.

    Goldman's revenue from trading fixed income, currency and commodities fell to $1.16 billion from $1.93 billion the same quarter a year earlier, when trading activity had surged around the Brexit vote.

    The fifth-largest U.S. bank by assets is typically more reliant on bond trading revenue than its peers and has remained committed to the business even as others backed away amid increased regulatory scrutiny since the 2007-2009 financial crisis.
  • Less than 30 minutes to market close and European stocks look like this:
  • Europe markets sink on stalled US health-care reform; Ericsson down 14%; IG Group up 12%

    CNBCBourses in Europe were lower on Tuesday with global sentiment dampened by a gridlock in U.S. politics over health-care reform.
  • European markets are now closed for trading. The pan-European Stoxx 600 has closed over 1 percent lower as markets sink on stalled U.S. health-care reform:
  • Major European indexes have closed lower across the board:
  • And that's all from us here at World Markets Live. Join us tomorrow from 0600 London time for more. Till then, have a great evening and see you soon.
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