World Markets Live - July 21 - CNBC Live Events
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World Markets Live - July 21

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

    Good morning and happy Friday. Our top headlines are as follows:
     
    • Microsoft racks up strong earnings, pumped up by cloud computing growth. But the stock settles down on the company's future guidance.
     
    • Under investigation. A new report says the Russia probe is now looking into money laundering allegations against President Trump's former campaign manager Paul Manafort.
     
    • Traders think twice about sterling, as Brussels Brexit talks fail to find much common ground. Negotiators say they're far apart on what to do about expat rights in the EU and the UK. 
     
    • And the Euro surges against the dollar, as ECB president Mario Draghi says details on a shift away from the central bank's easy money policy could come in autumn.
    The U.K. and EU ended their first full round of Brexit talks with few compromises. Brexit Secretary David Davis said the negotiations had been "robust", but both sides needed to show "flexibility".
     
    EU negotiator Michel Barnier
     
    EU negotiator Michel Barnier called on the U.K. to be clearer over its position on citizens' rights and its 'Brexit bill'.
     
    This week, it has been the time for presenting, and the third position must be that of clarification. And we need this clarification on financial regulations, the rights of citizens, on Ireland with its two important points of the Common Travel Area and the Good Friday Agreement and on other subjects of separation for which the experience of this week simply proves that we progress better when our respective positions are clear.
     
    Meanwhile, U.K. trade minister Liam Fox said Brexit on 'WTO terms' would not be the end of the world. Speaking at the WTO headquarters in Geneva, Fox said Britain is aiming for the best possible trade deal with the EU, but that may not be reached by the 2019 deadline for Brexit negotiations.
     
    On set Professor Jonathan Portes, Senior Fellow of UK in a Changing Europe is on set and says while citizens rights the two sides may well have a workable deal involving a supranational body combining a mixture of judges.
     
    Portes, however, highlighted that the issue of an "exit bill" seems to be an issue that is proving a problem with Europe still unclear on the U.K.'s position.
     
    Amazon's loss leader strategy.
     

    Amazon is buying products from some US retailers at full price to build global inventory

    CNBCProving again that it's willing to sacrifice profit to please customers, Amazon is buying some merchants' inventory at full price.
    Vodafone has reported better-than-expected revenue growth of 2.2 percent in its first quarter. It says that was driven by robust performance in Italy and Spain and accelerating demand growth in Turkey.
     
    But there hasn't been a lot of growth across the UK, where Vodafone says the market is still recovering.
     
    Simon Weeden, Managing Director and Head of European Telecoms Research at Citi is on air.
     
     
    He says the Vodafone numbers are "fine" and a little better than expected without being particularly strong.
     
    Weeden says Vodafone has made profound steps towards being a cable and content operator as well as a mobile firm across Europe.
     
    Citi are currently neutral on Vodafone with a price target of 230 pence.
     
     
    The U.K. and EU ended their first full round of Brexit talks with few compromises. Brexit Secretary David Davis said the negotiations had been "robust", but both sides needed to show "flexibility".
     
    EU negotiator Michel Barnier called on the U.K. to be clearer over its position on citizens' rights and its 'Brexit bill'.
     
    Here's what Davis had to say.
     
    All in all, the second round of negotiations have given us a lot to be positive about. And they've also highlighted the need for both sides to demonstrate a dynamic and flexible approach in the way we approach these challenges. We've conducted this round constructively and at pace. And I hope this is a model we can continue going forward. To coin the phrase Michel, the clock is ticking.
     
    Davis, left, with Barnier
    On a sector basis, Vodafone's earnings have helped telecoms into the green.
     
     
     
    Strength in the euro is helping stocks in those neighboring countries that trade with the euro zone.
     
     
    Stephen Macklow Smith, head of European equity strategy at JP Morgan, Europe is set to outperform the U.S.

    He says Europe is mid-cycle and in the early stages of recovery. He adds that there’s much further to go in terms of unemployment coming down and people re-gearing.
     
    Valuations still look, to our mind, attractive, plus you get operating leverage which kicks in and lifts earnings over the next two or three years.
     
     
     
    Swatch has reported a rise in net profit short of analyst expectations. The group's net sales fell 0-point-3 percent on a current exchange rate basis. However, Swatch says the outlook for the second half of the year remains positive as it gears up for a fresh round of product launches. 
     
    Hermes second quarter sales growth slowed to just over 8 percent, below analyst estimates. The group says it is still "ambitious" on revenue for the medium term, despite economic, geopolitical and monetary uncertainties, and that it expects first half profitability close to last year's record level.
     
     
    Discussing some of the tech stocks that have been leading U.S. markets higher, Stephen Macklow Smith, head of European equity strategy at JP Morgan, says it is difficult to see how they are contributing to overall productivity in the economy.
     
    There is a dearth of productivity growth. If you went back to the previous cycle and you thought about the “nifty 50” stocks in the 70’s, IBM, Hewlett-Packard Bell, those were genuinely contributing to a productivity surge.
     
    He’s say the network effect offered by services such as Facebook is "nebulous."
    With the final session of the week firmly underway, our  headlines are as follows:
     
    • The Euro surges to a two year high against the dollar after ECB president Mario Draghi hints at when the central bank could shift its policy away from easy money.
     
    • Mediterranean delight for Vodafone! The mobile operator calls in with forecast-topping numbers on the back of a strong performance in Italy and Spain, sending the shares higher. 
     
    • Shares darken down on sales. Philips Lighting posts a 2 percent decline for its professional lighting arm, despite a beat on core earnings. 
     
    • Valeo shares drive lower as the car parts maker misses revenue forecasts. But, the CEO says that the growth potential of electric vehicles could be huge.
    The IMF has committed "in principle" to lend 1.6 billion euros to Greece, if the country delivers on economic reforms. This follows almost 2 years of negotiations between the IMF and Greece's European lenders. The fund is also seeking reassurance that Greece can repay its debt.
     
    James Athey, Fixed Income Investment Manager at Aberdeen Asset Management says the fact that Greece might be able to come to market, even though the country doesn't even qualify for the ECB's bond buying criteria.
     
    Athey says Greece would likely want to issue debt before the ECB tapers as this tapering action could roil sovereign debt markets.
     
     
    Athey says he would expect any Greek debt issuance to be held by investors who would sell at the first sign of trouble.
    The U.S. is reportedly toughening its stance on foreign deals.
     
    According to Reuters, the Committee on Foreign Investment in the United States has objected to at least nine acquisitions by foreign buyers so far this year.
     
    The  historically high number deals a blow to China's overseas buying spree. Chinese firms have made a record 87 takeover deals of US firms so far in 2017.
     
     
    On air our guest host Chris Watling says the move is consistent with the Trump promise to block more Chinese firms from buying U.S. assets.
    Turkey's economy minister says the crisis with German is temporary and urges to refrain from talk that could cause lasting economic damage, he tells Reuters in an interview.
     
    Nihat Zeybekci says Germany's warning against its citizens visiting Turkey is unfortunate, but he does not see it causing harm to tourism. He adds that the Turkish government guarantees 100 percent of German investments in Turkey.
     
    On other topics, the minister says interest rates are too high and that July exports are seen  up by 20 percent. 
    These are the top headlines for the next hour:
     
    • The euro surges to a two year high against the dollar after ECB president Mario Draghi hints at when the central bank could shift its policy away from easy money.
    • Paysafe shares rocket to the top of Europe's Stoxx 600 after a consortium of funds managed by Blackstone and CVC bid for the payments firm.
    • Mediterranean delight for Vodafone! The mobile operator calls in with forecast-topping numbers on the back of a strong performance in Italy and Spain, sending the shares higher.
    • Dimming down on sales. Philips Lighting posts a 2 percent decline for its professional lighting arm, despite a beat on core earnings. The company's CEO tells this programme sales growth will return.
    Spain's trade deficit increased to 50.7 percent in May year-to-year, according to the economy ministry.
     
    Despite the trade deficit, Spanish bonds are in demand today. The yield on 10 and 30 year bonds are down 4 basis points. Yields move inversely to prices.
     
     
    The latest ECB survey of professional forecasters is out. Inflation forecasts are cut by 0.1 percent for 2017 to 2019. Long-term projections are unchanged at 1.8 percent.
     
    2017 GDP growth is seen higher at 1.9 percent versus 1.7 percent previously. Unemployment projections are cut by 0.2 to 0.3 percentage point.
     
    The survey says risks for inflation are tilted to the downside in the longer term and balanced for GDP growth.
    Greece's current account deficit for May increased to 582 million euros from 457 million euros in May last year.
     
    Greek tourism receipts in May rose to 1.094 billion euros from 1.075 billion euros the same month last year, according to the central bank.
    Microsoft shares rose by as much as four percent after the company reported its fourth quarter earnings. However, the stock flattened out when the company offered guidance for the next quarter. 
     
    The company beat estimates on earnings per share and revenue. Its cloud business was the star performer, with Azure revenues rising 97 percent year-on-year.
     
    CNBC’s Arjun Kharpal says the initial excitement around the stock was to do with Microsoft’s success with the cloud. 
     
    Microsoft has successfully transitioned into a business with recurring revenues from its cloud business, from its suite of products and that’s something it typically hasn’t had before. 

    One of the weak spots in the earnings however was their personal computing division, essentially the hardware products and we saw Surface revenue, which is this series of tablets and 2-in-1 computers, down 2 percent.
    The U.K. public sector net borrowing in June increased to £6.278 billion versus £4.085 billion in June last year. This is greater than expected
     
    Public sector debt excluding banks and the BOE is £1.624 trillion, equivalent to 80.9 percent of GDP.
    In its latest survey, the European Central bank has said euro zone inflation may slow more than expected in the coming years, after the central bank kept its policy rate unchanged. 

    Based on responses from 56 forecasters, the ECB said it sees inflation at 1.5 percent in 2017, and down to 1.4 percent in 2018, a tenth of a percentage point below forecasts from 3 months ago. The central bank said GDP growth and unemployment, however, could exceed past projections. 
     
    The euro edged towards a near 2-year high versus the dollar of $1.1670 earlier in the session, according to Reuters citing FactSet.
     
    Here's how the euro has performed over the past 7 days.
     
     
     
    Discussing central banks, Ben Gutteridge, head of fund research at Brewin Dolphin, says it would be foolish to say there is zero risk that central banks will move to quickly on rate rises or tapering.
     
    I think the balance of the debate has shifted away from quite extreme dovishness within the European Central Bank and the Bank of England to something more balanced. I think the evidence of a more tenuous debate has already been present in the Federal Reserve.
     
    I certainly don’t think we should start thinking the central banks are going to announce they are behind the curve and need to act more forcefully.
     
    He says the core view remains central banks will move cautiously.
     
     
    Data today revealed the U.K. public sector's net borrowing increased to £6.278 billion in June versus £4.085 billion in June last year. It was expected at £5 billion.
     
    A spokesman for the U.K. Treasury had this to say.
     
    Today’s release shows that our national debt, at £65,000 for every household, is still too high and leaves us vulnerable to any future shocks. That is why we have a credible fiscal plan to get debt falling and deliver the sound public finances needed for a stronger economy and higher living standards.
     
    U.S. markets are called higher ahead of Friday's open. That's according to future values.
     
    The Nasdaq is called to gain 7 points. It finished Thursday up by less than 5 points, but this was its 10th consecutive positive close. Will the Nasdaq's winning streak continue for an 11th session?
     
     
    The German government and auto industry agree on a diesel rescue plan to be presented in August, according to Reuters citing industry and political sources.
     
    The plan will involve recalling cars with diesel engines and be given a software update. The auto industry will pay for the recall at a cost of about 100 euros per vehicle. The plan will cost less than 2 billion euros, according to reports.
     
    The aim of the plan is to crease a legal basis for avoiding a diesel ban in cities.
    Vodafone shares are making strong gains today after its latest earnings result.
     
    The company beat expectations with revenue growth of 2.2 percent in its first quarter. 
     
     
    The Q1 results revealed a few surprises, according to Kester Mann, Principle Analyst, Operators, CCS Insight.
     
    Tentative recovery in Europe continued, led by Spain and Italy which more than offset another mixed bag for the U.K. Emerging markets including Turkey, Egypt and South Africa stood out for impressive growth, but a near-14 percent fall in service revenue in India again laid bare the reasons for merging with local provider Idea Cellular.
     
    The U.K. business remains in the doldrums, but some encouraging signs are emerging of a long-awaited turnaround. Notably, contract churn fell for a second consecutive quarter, while Net Promotor Score (NPS) continues to rebound. The operator will point to strong recent investment in network and customer service as drivers of recovery, but it still has plenty to do to regain standing in one of Europe’s most competitive markets.
    Thomson Reuters has released its latest "Investment Banking Scorecard" providing facts on the week in investment banking and deal making.
     
    Here are the highlights:
     
    • United States M&A activity hits $661.3 billion, down 11 percent compared to YTD 2016
    • Technology M&A down 33 percent compared to 2016 with $163.0 billion in deals announced
    • Global IPO activity is up 75 percent compared to YTD 2016 with $92.8 billion in capital raised
    Fifth Third Bancorp reports Q2 earnings per share of 45 cents on net income of $367 million. This beat the forecast estimate of 43 cents per share. 
    OPEC's July oil supply is set to rise by 145,000 barrels per day and exceed 33 million barrels per day. That's according to Petro-Logistics
     
    It says the supply rise is led by Saudi Arabia, the UAE and Nigeria.
     
    This is not good news for OPEC's efforts to cut supply and rebalance the market.
     
    Oil prices are trading lower today.
     
     
     
    Colgate-Palmolive has reported earnings. Q2 earnings per share was 59 cents. Net income was $524 million and Q2 sales was $3.83 billion.
     
    Organic sales growth was down 1 percent and global pricing was down 0.5 percent.
     
    Estimates were for sales of $3.9 billion and earnings per share of 72 cents per share.
    Colgate shares are down in premarket trade after its disappointing Q2 results.
     
     
    Oil prices fell on Friday ahead of a key meeting of major oil producing nations next week, slipping further from the $50 per barrel level that Brent crude briefly breached for the first time in 6 weeks in the previous session.

    International benchmark Brent crude futures fell 40 cents to $48.90 per barrel in thin trading by 7:37 a.m. ET (1137 GMT). U.S. West Texas Intermediate (WTI) crude futures were 42 cents lower at $46.50 per barrel.
     
     
    The Greek government might be preparing to return to the bond market but there are many structural problems that have yet to be resolved to make the economy more sustainable, an analyst told CNBC on Friday.

    Greece is currently on a third financial program since 2010, due to expire next year. According to James Athey, fixed income investment manager at Aberdeen Asset Management, despite the reforms implemented until now, "it still doesn't seem we are particularly far down the road in solving the structural issues of Greece."
     

    A third of Greeks at risk of poverty as Athens considers return to bond market

    CNBCThe Greek government might be preparing to return to the bond market but there are many structural problems that have yet to be resolved to make the economy more sustainable, an analyst told CNBC on Friday.

    German, French stock markets crater on fears of falling exports as euro surges against the dollar

    CNBCBourses in Europe were lower in early afternoon trade on Friday as fresh corporate earnings failed to boost shares.
    European markets are now closed for trading. A strong euro weighed in on continental stocks as Dax hit session lows and the French CAC 40 finished nearly 2 percent lower. Here's a look at the pan-European Stoxx 600 indes:
     
     
    And that's all from us here at World Markets Live. Join us again on Monday from 0600GMT. Till then, have a nice evening and see you soon.
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