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.

    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.
    Draghi says today's statement and his comments from Sintra are not very different. 
    He says the factors holding back inflation will last for some time and are not permanent.
    Draghi says his comments on reflation just means the concerns of deflation have been replaced with hopes for inflation.
    He says the council trusts the strength and power of its monetary package.
    ECB President Draghi is answering questions from CNBC's Annette Weisbach. He says he is confident that the programme can continue smoothly.
    On the topic of buying Greek government debt, he says it is up to the Greek government to tap the markets with a bond issue and adds that there has been serious progress in Greece in last several months..
    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.
    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 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.
    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 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. 
    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.
    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.
    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.
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