World Markets Live - July 20 - CNBC Live Events

CNBC Live Events

World Markets Live - July 20

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

    The European Central Bank says it is leaving its interest rates on hold as expected.
    The ECB says confirms that net asset purchases are kepy unchanged at 60 billion euros per month.
    It says the governing council expects the key ECB interest rates to remain at their present levels for an extended period of time and well past the horizon of the net asset purchases. It says net purchases are made alongside reinvestment of the principal payments from maturing securities purchased through the programme.
    The euro recovered to session highs during Mario Draghi's press conference.
    Good morning and welcome to the World Markets Live blog. Your headlines are as follows:
    • Showtime for the ECB. Investors want to know whether Mario Draghi will signal when the bank could pull back on its bond buying programme, but he is expected to tread carefullly to avoid a market fallout.
    • Flashback to the dotcom heyday. Record closes for U.S. stock indices, including the S and P tech index, finally topping its high, 17 years later.
    • Strong signals. T-Mobile's quarterly numbers blow past estimates, as the wireless carrier gobbles up market share from its bigger rivals.
    • Raise your right hand. Donald Trump Junior, Jared Kushner and former campaign manager Paul Manafort, all called to testify, about alleged campaign ties to Russia.
    Last night the S&P 500 rose 0.5 percent and hit intraday and closing records, with energy rising more than 1 percent to lead advancers. Vertex Pharmaceuticals led the index higher, rising 21 percent.
    The Nasdaq composite advanced 0.6 percent and also notched record highs. The Dow Jones industrial average rose 65 points to notch a record close.
    Later today the earnings season remains in full swing in the U.S.
    Earnings before the Bell : Abbott Labs, Philip Morris, SAP, Travelers, Unilever, Union Pacific, Alliance Data, Bank of NY Mellon, BB&T, Blackstone, Danaher, Genuine Parts, KeyCorp
    Earnings after the Bell: eBay, Microsoft, Visa, Capital One, E-Trade, Intuitive Surgical, Skyworks Solutions
    President Trump has called on Republican Senators to get back to work on a plan to repeal and replace Obamacare, before leaving DC for their August holiday.
    This as a new report from the CBO showed 32 million Americans would lose health insurance if the plan is repealed without a replacement.
    Trump's back is against the wall on his healthcare plan but he is putting on pressure to get a deal done.
    The Swedish construction firm Skanska has reported first half revenues of 79.1 billion Swedish crowns giving earnings per share of 7.35.
    Joining us on the phone from Stockholm is Johan Karlström, the CEO of Skanska.
    Last week Skanska issued a profit warning after revealing around £33 million in writedowns at its UK unit. 

    The Stockholm-based construction giant said the UK writedowns were due to “lower-than-anticipated production rates, projects being delayed with estimated penalties and multiple customer-driven changes, which have caused cost overruns”.
    Karlstrom says the warning relates to just a few projects and its UK division will be profitable going forward.
    Reinhard Cluse, Chief Economist for Europe at UBS is today's guest host for TV.
    On the ECB meeting today, Cluse says he expects Draghi to prepare the markets for a tapering decision in September  and that tapering is likely to begin in January 2018.
    He says Draghi will do his utmost to be clear and avoid rattling markets as the central bank leader is very concerned about a sudden rise in the euro and bond yields.
    What might we see from the ECB today appears to be a scenario of playing for time:
    easyJet has reported a trading statement which reveals a fiscal third quarter revenue of £1.39 billion, up 16 percent.
    The firm said it carried 22.3 million passengers across the quarter, a rise of 10.8 percent.
    Revenue per seat, a key metric for the sector, rose 2.2 percent.
    Givaudan has beat expectations, posting a 4.5 percent rise in first half net profit. 
    The Swiss fragrance and flavor maker said it continues to pass on price increases, to compensate for cost inflation of raw materials.
    Gilles Andrier, CEO of Givaudan says his firm is adapting to the world's greater desire for natural flavors.
    Gilles Andrier, CEO of Givaudan says emerging markets have actually been flat compared to last year but in mature markets growth has been strong.
    He notes that Africa is an exception to this where sales have been strong.
    Andrier says the firm has restrained costs in order to hit profit targets.
    European futures suggest a positive open for markets in just under 30 minutes.
    Earnings this morning appear to be supporting stock prices on average. 
    The Bank of Japan Governer Kuroda is giving a press conference following his bank's earlier decision to keep monetary policy steady but lower inflation forecasts.
    The central bank now expects to reach its 2 percent target by March 2020, later than previously projected. The move could signal the BOJ is going to scale back its stimulus program later than other major central banks.
    In the conference, Governor Kuroda has said economic growth in 2019 will slow slightly because of a schedule sales tax hike and capital expenditure levels.
    Kuroda also said there is a risk to prices and the Japanese economy is tilted to the downside.
    Fairly flat and cautious trading around dollar/yen as the Bank of Japan Governor Kuroda speaks at a press conference:
    Kuroda says central banks in U.S., Europe have also pushed back their inflation forecasts. 
    Unilever says its full year sales forecast is on track as it raised its margin expectations.
    This after reporting second quarter earnings broadly in line with analyst forecasts.
    Moments ago, Gemma spoke to the CEO about the numbers and the company's portfolio expansion.

    Polman said topline growth of 3 percent was a very strong result, driven largely emerging markets.
    The CEO added that volume has fallen in the sector and believes Unilever is ahead of its competitors. He says the volume component should rise again over the next 6 months.
    On portfolio optimization he says all companies have different strategies.
    We have been very fortunate with recent acquisitions over the last 6 months. Dollar Shave Club would be a very good example with growth in the double digits. 
    Unilever says its full year sales forecast is on track as it raised its margin expectations. This after reporting second quarter earnings broadly in line with analyst forecasts. Gemma spoke to the CEO Paul Polman about the bid from Kraft Heinz, which has shaken up the company's strategy
    Only financials in the red as we look at the sectors breakdown. Oil & Gas performing strongly despite almost no movement in crude prices this morning.
    ABB posted second quarter earnings that fell short of analyst estimates. 

    The Swiss industrial company reported quarterly revenues of 8.45 billion dollars, missing  forecasts. ABB is struggling with an order backlog, which now totals 23-point-6 billion dollars
    Rising costs in SAP's cloud services business depressed its quarterly operating profit, which came in below expectations. However, the German software firm's revenue for the second quarter rose 10-point-4 percent, beating forecasts. SAP expects to meet its full year targets. 
    Publicis Groupe results for the second quarter have been boosted by improved performance in its North American business. The advertising giant rallied with a rise of 0.8 percent in underlying sales. Net profit rose 1.6 percent in the first half. The improvement comes after a broad reorganization of its business.  
    Let's take a look at the best and the worst performing stocks this morning:
    Sterling falls below $1.30 ahead of retail sales numbers, down 0.3 percent on day:
    Shares in Easyjet continue to slip  as ongoing revenue pressure weighs, despite the carrier lifting its profit outlook on a better than expected third quarter.
    The European Court of Justice is assessing whether to allow a class action lawsuit against Facebook.
    Austrian privacy activist Max Schrems and 25-thousand other global users are suing. Schrems wants 500 euros in damages for each user, alleging privacy violations through Facebook's use of personal data and user tracking.
    Facebook says it looks forward to presenting its case, noting Schrems' claims have been rejected twice before.
    Facebook says it is "looking forward" to going to court.
    Greek government bond yields rise after IFR reports six banks hired to manage new debt sale. A source told IFR that Greece has mandated Bank of America Merril Lynch, BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs and HSBC for a five-year trade. That's according to IFR.
    President Trump has demanded senators stay in Washington through their August recess, until they reach a deal on a health care overhaul. Trump gathered GOP senators for lunch after the latest bill to repeal and replace Obamacare collapsed earlier this week.
    This comes as a new report estimates 32 million Americans would lose health insurance, if senators repeal Obamacare without a replacement.
    Mary Jo Jacobi, Former US Assistant Secretary of Commerce says Trump and Obama both made mistakes by letting the House of Congress and Senate put a healthcare plan together without outside input.
    Jacobi says Trump is a Republican and mid-term elections will see senators recognize his continued solid support among the base.
    Here are your top news stories at this hour:
    • Can he avoid a taper tantrum? Mario Draghi walks a tightrope, as the ECB president looks to signal a shift away from easy money without roiling markets
    • Engineering giant ABB underperforms the rest of the Swiss market, after posting weaker-than-expected second quarter profit, despite a strong performance in its robotics division.
    • Investors dial into Deutsche Telekom, after its U.S. subsidiary T-Mobile blows past estimates, adding more than a million customers in the latest quarter. 
    • The CEO of Unilever tells CNBC he is not worried about deals competitors like Reckitt Benckiser are striking, as the maker of Dove Soap and Hellman's mayonnaise celebrates improved margins in the first half. 
    UK government to make a statement to Parliament on Thursday on the proposed Fox-Sky merger, that's according to the Labour party.
    Steve Clayton, Fund Manager of the HL Select funds commented on Unilever’s half year results. Unilever is the largest position in the funds, approaching a 5% weight.
    Volume growth is still hard to come by, in today’s world of lacklustre economic growth, but Unilever’s strength in emerging markets is allowing it to push revenues forward through pricing gains. Overall, these numbers look to be ahead of where analysts thought the group would be due to strong margin expansion. 3% underlying sales growth in the first half should pick up further in the second half as the results of recent acquisitions kick in. Meanwhile, after coming under intense pressure following the Kraft Heinz bid approach, Unilever’s redoubled efforts to raise margins are paying off. Cost savings of over a billion euros were achieved in the half year, with another €5bn planned in the medium term. Unilever look well set to hit their target of a 20% margin by 2020.
    Kraft Heinz may have gone away, but Unilever know they cannot relax and investors expect them to raise their game. The Connected 4 Growth programme is designed to drive margins forward, whilst their €5bn buy-back programme should keep EPS moving ahead of underlying profit growth. The dividend increase of 10% shows the company’s confidence in its future prospects. Unilever has a well-established track record of delivering compounding growth in earnings over the long run, and an acute focus on upping the ante in the near term.
    UK retail sales for June up 0.6 percent month-on-month, up 2.9 percent year-on-year. Sterling jumps back above $1.30 after data:
    UK Trade Minister Liam Fox to call for new rounds of trade liberalization under world trade organisation, according to an advance draft of speech seen by Reuters.
    Britain wants a new round of global trade liberalisation at the World Trade Organization (WTO), Trade Minister Liam Fox will say in a speech in Geneva on Thursday, according to an advance draft text seen by Reuters.

    Fox will also say that Britain sees the agenda of global trade being shaped by the digital economy, trade promotion as the main tool of development, and services.

    Britain wants to see a "positive outcome" on the digital economy at the WTO's two-yearly ministerial conference in Buenos Aires in December, according to the draft.
    That's according to Reuters.
    What can we expect from the ECB today? Johannes Mayr, eurozone expert at BayernLB, shared his thoughts with CNBC.
    Unlike many observers, we do not expect the ECB to drop its easing bias on QE at the July meeting. However, Draghi will reiterate that QE parameters will be adjusted in Autumn if the economic outlook keeps improving. 
    Writing on his blog, economist Alessandro Tentori warned that portfolio rebalancing, one of the three main transmission channels of ECB's asset purchase programme, is not working.
    The process of portfolio rebalancing in the Eurozone remains a slow one. Some progress is being made over the years, but we're still far from pre-crisis levels despite the phenomenal non-standard tools deployed by the ECB. I am afraid, this transmission channel might eventually end up colliding with national interests, thus influencing a political process that is already showing signs of stress. 
    ECB's effort to demonstrate that the portfolio rebalancing channel is making good progress is somewhat biased. For example, the purchase of European equities by non-resident investors is seen by the Eurotower as a sign of confidence. However, it also exposes European markets to stability risks, as foreign investors are less sensitive to domestic European regulation and a fast reversal of the flow cannot be centrally controlled (see foreign selling of Eurozone periphery in 2011). 
    Dover reports Q2 earnings per share of $1.04, beating estimates of $1.01. The company reports net income of $164.1 million on revenue of $2 billion. It sees full year revenue up 12 to 14 percent, an increase on its previous guidance of 11 to 13 percent.
    The EU's Brexit negotiator Michel Barnier says this week's negotiations with the U.K. showed a "fundamental divergence on how to guarantee citizens' rights," Reuters reports.
    He says the EU sees no alternative to the EU court overseeing EU citizens' rights in the U.K. He says the U.K. must clarify its position on the financial settlement with the EU.
    He also says the impact of Brexit on Ireland and the North-South divide needs to be studied more and the U.K. must clarify next month how it will maintain the common travel area with Ireland after Brexit.
    A spokesman for Turkey's Erdogan says remarks by Germany's foreign minister are unfortunate and that Germany needs to think rationale.
    This is after Germany called for the release of a German human rights activist arrested in Turkey.
    The spokesman says Germany is treating many innocent Turks as spies and that Germany needs to accept the independence of Turkey's judiciary.
    The ECB will shortly release its latest monetary policy decision. The euro is currently trading down 18 basis points against the dollar.
    Valentin Marinov, head of G10 FX research at Crédit Agricole, says the important angle for the ECB is the impact of euro appreciation on inflation and less so on growth.
    He says the ECB’s latest statement is more dovish than previously.
    It seems like the governing council wants to keep all its options on the table, so that optionality is still there. To me that suggests the discussion on how to approach tapering, especially in view of the persistent tightening of the Eurozone financial conditions is still ongoing.
    He says it will be interesting to see what happens at the next meeting in September.
    Here are the top headlines following the ECB decision.
    • The ECB keeps the easy money flowing, saying it stands ready to bolster its bond buying programme if the economic outlook becomes less favourable.
    • The euro falls on the surprisingly dovish statement by the central bank, coming off its 14 month high against the dollar
    • Government bond yields edge lower and bank stocks come off, while the rest of European equity markets stay in the green.
    • We agree to disagree! The EU and UK's top Brexit negotiators say this week's talks in Brussels have revealed fundamental differences on how to guarantee citizens' rights.
    EU Chief Negotiator Michel Barnier says the UK needs to clarify key issues in the next round of Brexit talks. Speaking at a press conference with his U.K. counterpart David Davis, he added that the two sides are still far from finding a solution on EU citizens' rights. Those remarks follow four days of official negotiations over Britain's departure from the bloc.
    Davis, left, and Barnier
    Meanwhile, Britain could survive without an EU trade deal. That's what the U.K.'s Trade Minister Dr Liam Fox told the BBC in an interview which aired this morning. His intervention comes as the latest round of intensive Brexit talks draw to a close.  
    A quick check-in on the U.S. as jobless claims data and the results of the Philly Fed manufacturing survey come in.
    U.S. jobless claims for the week ending July 15 comes in at 233,000. It was expected at 243,000. The previous reading was revised to for 248,000.
    The Fed business index for July fell to 19.5 versus 27.6 in June. It was expected at 20.0.
    The employment index fell to 10.9 from 16.1 and new orders fell to 2.1 from 25.9 the month before.
    U.S. treasury yields are falling to session lows after the latest jobless data and Philadelphia business index.
    Mario Draghi has begun his press conference.
    You can watch the whole thing live here or keep following the blog to stay up to date.

    Mario Draghi talks monetary policy after ECB holds rates steady

    CNBCDraghi could give clues on the anticipated end to the ECB's ultra-loose monetary policy.
    Mario Draghi says monetary policy has continued to secure very favourable financing conditions. He says the risk to the growth outlook are broadly balanced.
    He says growth is yet to translate into stronger inflation dynamics, and that headline inflation is dampened by energy prices. He says the ECB stands ready to increase asset purchases if needed.
    Draghi says the global recovery should support exports, but warns downside risks from global factors still exist.
    He is now taking questions from journalists.
    ECB President Draghi says euro repricing has received some attention. He says discussions on QE changes should take place in the Autumn but sets no precise date.
    The ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering. That's according to Carsten Brzeski
    chief economist at ING.

    Given the experience of earlier meetings, the message of the 1.45pm CET release is the main message the ECB would like to give market participants to start their summer vacation with.


    Not only did the ECB keep interest rates unchanged, but it also kept the language on QE unchanged. The key sentence to watch out for was and still is “the Governing Council stands ready to increase the programme in terms of size and/or duration”. In our view, this is a clear sign that the ECB does not want to pour more oil on the small taper tantrum fire seen in financial markets over the last few weeks.
    This as the euro steadily rises against the dollar.
Powered by ScribbleLive Content Marketing Software Platform