World Markets Live - July 20 - CNBC Live Events
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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.

  • Mario Draghi says the ECB will "first and foremost look at inflation in Autumn decisions." He says if we experience unwanted tightening of conditions, then the central bank would have to act.
     
     
  • Draghi reveals he has not tasked staff with preparing options for exiting the QE programme.
     
    He says the governing council has not discussed what is going to do in September and beyond. They don't want to set dates, they want to think and gather data. He says it does not want to make decisions in the absence of data.
  • Mario Draghi is answering a question on inflation.
     
    Draghi says the reasons for central banks around the world to adopt a 2 percent inflation target are still valid. He says the monetary policy measures have produced very positive effects, even if they haven't achieved their inflation target.
     
    Also, he says the ECB has not discussed increasing purchases of corporate bonds and other alternatives, but retains the flexibility to do so.
  • President Draghi warns that changing the inflation target would not be credible, and would be highly destabilising for market expectations. He says we need to be patient and not change the objective.
  • The ECB press conference has now come to an end.
  • Timothy Graf, head of macro strategy at State Street Global Markets, says the dovishness of the ECB and Mario Draghi today comes as a surprise.
     
    Below-target inflation always meant tight policy was a long way off, but some hint of extraordinary easing measures coming to an end was a reasonable expectation given the strong tone to Eurozone data.
     
    European markets should like the news and we look for the recent underperformance of peripheral bonds to reverse. The trade-weighted euro also has ample room to test lower and retrace a portion of its 5 percent gain over the last quarter.
     
    Brendan Lardner, senior portfolio manager for global active fixed income at State Street Global Advisors, also weighed in, saying today's meeting unwound some of the hawkish commentary made at the Sintra forum in June.
     
    While Draghi had raised the prospect of potentially removing some extraordinary policy measures in the not too distant future, today’s meeting seems to have again focussed on the subdued inflation pressures in the Eurozone and the need for ongoing policy support. The ECB will have also been cognisant of the downward pressure an ongoing rise in the euro could have on future inflation readings.  
     
    While the ECB waits for more data to support a tapering of asset purchases, risk assets should receive some support while the recent strength of the euro has scope to correct somewhat.
  • U.S. markets are now open, building on yesterday's strong session. The markets open to the upside.
     
     
     
     
  • The Nasdaq index ticks above 6,387.72 to hit a fresh record high. The index is on its longest winning streak for some time, with nine consecutive winning sessions. Could today be the 10th?
     
    These are the stocks at the top and bottom of the index. Near the bottom is Qualcomm. The company's forecast for Q4 profits were below analysts estimates. Its ongoing dispute with Apple over patent rights is taking a toll on the business.
     
  • U.S. jobless claims for week ending July 15 fell 15,000 to 233,000. This was well below expectations.
     
    However, Jim O'Sullivan, chief U.S. economist at High Frequency Economics, warns the drop should be ignored due to seasonal adjustment issues.
     
    This report covers the second of two weeks for the main annual plant shutdowns in the auto industry, cautioning against taking the data too literally.  The shutdowns often cause seasonal adjustment challenges and extra volatility, as we have been emphasizing in recent weeks.
     
    The four-week average was 244,000 after 246,000.
     
    Continuing claims for regular benefits rose 28,000 to 1,977,000. The insured unemployment rate -- continuing claims as a % of the insured workforce -- remained at 1.4%.
     
    In short, this week's drop in claims should probably be discounted because of likely seasonal adjustment problems. 
    However, the trend has been flat-to-down, consistent with employment growth remaining more than strong enough to keep the unemployment rate trending down.
  • The Dow is flat today, down around 10 points.
     
    Here are the stocks weighing on the index. Nike shares top the index after analysts at Morgan Stanley predicted growth to accelerate in the coming months.
     
    At the bottom of the income is Travelers, which disappointed after reporting its Q2 core income and core return on equity was impacted by high levels of catastrophe and non-catastrophe weather-related losses.
     
    Microsoft shares are also down; it is due to report its latest results after the bell.
     
  • Mario Draghi today managed to strike a dovish tone and play down his comments at Sintra in June, according to Claus Vistesen
    chief eurozone economist at Pantheon Macroeconomics.
     
    The president reverted to the story told at the June ECB meeting. The central bank recognises that the economy is enjoying a robust cyclical recovery, bu still sees no signs that underlying inflation pressures and wages are responding in a satisfactory way.
     
    As a result, the ECB believes that a “very substantial degree” of monetary accommodation is still needed to push inflation higher. The comment on inflation which is sticking in our head is Mr. Draghi’s notice to markets that: “We are not there yet.” 
     
     Despite Draghi's comments, the euro rose against the dollar to session highs.
     
     
    Mr. Draghi snubbed all questions about changes to QE, deferring to autumn, when the central bank will have more information to make a decision on how to continue QE, if at all, after December. We struggle to see, however, how the ECB can announce tapering anytime soon. If the euro pushes sustainably above 1.15 it likely would mean a lower core CPI forecast in September, which makes it difficult for the central bank to announce a major tightening. 
  • Bank of New York Mellon shares hit a more-than 16 year high after its latest Q2 results. The shares were trading at $54.04 during early Thursday trade.
     
     
  • This was overlooked as we focused on the ECB, but South Africa's central bank cut its repo rate by 25 basis points to 6.75 percent today.
     
    South African government bond yields edged lowered and the rand extended loses after the decision.
     
    The bank's governor said the inflation outlook has improved, but domestic growth prospects have deteriorated following the Q1 GDP contraction, adding that the outlook for domestic growth remains a concern with Q2 recovery expected to be moderate.
     
    Lesetja Kganyago, governor of the South African Reserve Bank, said it is unclear where drivers of growth will come from. He says the central bank's independence is not under threat and they are not under political pressure. He says he hopes the rate cut will provide some relief.
  • The U.S. June leading economic indicators index rose 0.6 percent to 127.8. It was expected to rise by 0.4 percent. This is the best reading since January. To get a better reading than 0.6 percent you have to go back to December 2014.
  • The euro is doing very well against the dollar in trade today.
     
    It pared earlier losses (it was down 0.3 percent against the dollar at one point) and is hitting session highs.
     
    This as markets seemingly ignore warnings from Mario Draghi that "we are not there yet" on inflation and that the ECB will act if the unwanted tightening of financial conditions occur.
     
     
  • Eurozone July flash consumer confidence falls to minus 1.7 from minus 1.3 in June, according to the EU commission. This was below the consensus view of minus 1.2.
     
    This is the first decline in the index since February, but a minor one, according to Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
     
    Overall, consumer sentiment in Eurozone has shown few signs of weakness in light of slower real wage growth as inflation has increased.
     
    We think the headline index will dip further in Q3, in line with weakness in other survey data following big gains in the first half of the year.
     
    That said, it won’t change the key message from this survey of robust growth in consumers’ spending, at least not in the near term. 
  • The euro rises to a more-than 14 month high against the dollar according to FactSet data, hitting $1.1590. This after the latest policy announcements from the European Central Bank.
     
     
    Carsten Brzeski, chief economist at ING, says the ECB seems to be in rush to taper its QE programme due to the lack of inflationary pressure.
     
    It seems as if the one and only goal of today’s ECB meeting was to calm financial markets and recent tapering speculations, which some even labelled a light version of taper tantrum. There were no changes to interest rates and even more important there were also no changes to the easing bias on QE or any other key phrases of the official communication. In fact, the introductory statement was almost a verbatim copy of the one from the last meeting in June.
     
    In short, the ECB still sees an improving momentum of the Eurozone recovery, but without inflationary pressures or wage increases. Risks to the economic outlook are still balanced and the outlook for inflation still has not received any risk assessment. 
     
    Carsten adds that looking ahead they see the ECB tasking its working committees to investigate several options for tapering in September, before deciding on “lower for longer” starting in January 2018 at the October or December meeting.
  • U.S. attorney general Jeff Sessions says he and his colleagues will continue to serve. 
     
    This despite comments from President Trump that he wouldn't have chosen Sessions if he knew Sessions would recuse himself from the Russia investigation.
     
    Sessions says he loves his jobs and plans to continue to do it. He says he is totally confident that he can continue to run the justice department in an effective way.
  • The U.S. Senate Judiciary committee has approved Chris Wray's nomination to be FBI director. The panel has unanimously advanced Wray's nomination.
     
    This vote clears the way for Wray to be confirmed in August by the full senate.
     
     
  • The European Central Bank was widely expected to keep interest rates unchanged. 
     
    However, markets were interested to see its language on tapering the QE programme and in that regard the ECB remained steadfast, with President Mario Draghi saying they had not discussed it and would not until some time in the Autumn.
     
    Commerzbank analyst Ralph Solveen says they had expected the ECB to take steps towards normalising its monetary policy, but it did not.
     
    It has left its forward guidance unchanged and there were cosmetic changes at most to President Draghi’s statement. We see in this the ECB’s desire to keep as much flexibility as possible for as long as possible. We still expect it to announce a reduction of its bond purchases for the beginning of 2018 at the next meeting in September. 
     
    Solveen added that Draghi's language was effectively unchanged from the last meeting 6 weeks ago.
     
    The central bank once again stressed its readiness to not only prolong but also expand its bond buying if need be. According to Draghi, there was unanimous agreement on this. The same applies to the decision not to announce a date for reviewing the further course of action regarding QE. The staff was not even asked to look at the options here.
     
    And the statement read out by Draghi essentially matched what was said six weeks ago. The only halfway relevant change was the comment that the recovery is not only strengthening but also broadening. 
  • U.S. stock markets turn negative, touching session lows, on news that a special counsel is expanding its probe into President Trump's business dealings.
     
  • Deutsche Bank CEO tells employees in a video that Brexit will impact the bank significantly. That's according to Reuters reports.
     
    CEO John Cryan says they assume a "reasonable" worst-case scenario with minimal agreement that is helpful for the financial services industry. The CEO says they will probably book the bast majority of their business in Frankfurt post-Brexit. 
     
    John Cryan says they are adding jobs to Frankfurt as part of their Brexit planning.
  • Just 20 minutes until the close of European markets and the Stoxx 600 is down half a percent.
     
     
    This is likely because the accumulating euro is weighing on stocks which rely on overseas earnings but report with the euro, such as exporters. A higher euro suppresses their earnings.
     
    The euro continues to rise against the dollar. It is now up 1 percent against the U.S. currency.
     
     
  • Elon Musk has announced his tunnelling company The Boring Company has permission to build an underground tunnel for the hyperloop.
     
    The hyperloop is an innovative transportation system that can potential travel at 700mph. 
  • U.S. leading economic indicators rose 0.6 percent in June, above consensus expectations of 0.4 percent.
     
    Ian Shepherdson, chief economist at Pantheon Macroeconomics, says the data was boosted by a rebound in building permits.
     
    The index overshot the consensus because most forecasts were made before the release of the very strong building permits numbers yesterday. The jump in permits alone added 0.21% to the index, though note that seven of the other nine components of  the index also made positive contributions.
     
    The LEI has understated growth in the past couple of years because it overweights manufacturing, which suffered disproportionately as oil sector capex collapsed, but it should soon become a more reliable indicator as the hit fades. For Q2, the index is consistent with GDP growth of about 2%; we look for 3.0%. Our core LEI-X3 measure, which ignores the yield curve, ISM orders and the Conference Board's proprietary credit conditions measure, signals 3% growth.
     
  • The European markets are now closed. The Stoxx 600 finished the session down 0.4 percent following sharp losses in the afternoon, partly caused by the rising value of the euro.
     
     
  • Most of the major European markets finish lower after the ECB's latest press conference led to the euro rising 1 percent against the dollar.
     
    The FTSE 100 finished up around 0.8 percent; sterling dropped 1.4 percent against the euro, which boosts the returns for U.K. companies which receive earnings from abroad.
     
  • Tech, media and household goods were the only sectors of the Stoxx 600 to record gains.
     
  • Another look at the euro, which is surging against world currencies today, including the dollar.
     
    This after comments from ECB President Mario Draghi.
     
    His comments also caused yields on bonds to fall to lows.
     
     
  • U.S. markets turn more firmly lower today, after opening to initial gains.
     
    The Nasdaq is down just 5 points. If it retraces losses to finish positive, it would be its 10th consecutive winning session.
     
     
  • We'll close the blog there. In the U.S. keep an eye for earnings from eBay, Microsoft and Visa. 
     
    Join us tomorrow when we report on even more U.S. earnings, including Colgate-Palmolive, General Electric and Autoliv.
     
    Goodbye!
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