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.
  • 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.
     
     
    Ebay shares dropped more than 5 percent in extended-hours trade after the online market place published profit forecasts, which fell short of analysts' expectations. The e-commerce company delivered a second-quarter profit of 45 cents-per-share on revenue of $2.3 billion dollars. 
     
    Ebay is in the midst of a strategic a overhaul, having recently launched three-day guaranteed delivery, a new home page and a more user-friendly website. 
     
     
  • The Dutch company Philips Lighting has reported a better-than-expected rise in second-quarter core earnings.
     
    The company identified improvements at its LED and home lighting businesses.
     
    The company's adjusted earnings before interest and amortization rose 8 percent to 174 million euros ($202 million) in the quarter from a year earlier. This on sales of 1.7 billion euros, down 2 percent. 
     
     
    Eric Rondolat, CEO of Philips Lighting, joins us from Amsterdam and says he sees satisfying growth in Europe.
     
    Europe is not an economy that moves extremely fast but when it moves in the right direction it moves steadily.
     
    He identifies that steady trend in Asia and the rest of the world but cites some slowdown in the United States, Brazil, Middle East and Turkey.
     
    He points out that the U.S. business is being maintained by big wins on latrhger projects.
  • Markets in Europe are set to open higher on Friday as investors digest comments from ECB President Mario Draghi and fresh corporate earnings.
     
    At the last look The FTSE 100 is seen unchanged at 7,491; the DAX is set to start up by 14 points and the CAC 40 is set to begin higher by 4 points at 5,192.
     
    Yesterday European markets offered a mixed picture. Sterling weakness and euro strength accounting for the divergence.
     
     
    The euro was near a two-year high after the European Central Bank Mario Draghi said that tapering will be discussed in the autumn. Most analysts foresee a tightening in policy next year.
     
    Meanwhile, the International Monetary Fund agreed on Thursday evening to give $1.8 billion in loans to Greece, on the condition that Athens keeps reforming the country. The announcement might help Greece’s efforts to return to markets.
     
    In the corporate world today, Hermes, Thales, Samsung and Vodafone are due to report their latest earnings reports. 
  • 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.
     
  • by david.reid
    French auto parts company Valeo reported a 20 percent increase in profit in the first half of the year, boosted by strong demand for fuel-efficient engine systems and LED lights.

    Jacques Aschenbroich, CEO of Valeo is on air from Paris.


    Aschenbroich
     says the company is moving away from being a parts company to a technology company as it helps to develop electric powered vehicles.

    It is clear we see a trend. Diesel is going down because of the regulations in the towns. And less diesel means more and more electric.

    Aschenbroich says the company's switch to electric car focus means the content per car is magnified by seven times, offering a real opportunity for his firm.

    He says Europe and China will be the first drivers of electric cars.
  • The euro is at two year highs against the dollar after European Central Bank president Mario Draghi said policymakers would discuss changing its bond-buying program in the autumn.
     
    Draghi said that no exact date had been set for discussing any changes to the ECB's ultra-easy monetary program but did specify the season.
     
     
    Dollar weakness is a factor. The U.S. currency has reportedly dipped on a report that a probe into whether any of Mr. Trump’s advisers aided Russia’s campaign to disrupt last year’s presidential election will include the president's private business.
     
    The investigation into alleged election-meddling by Russia is reportedly looking into money laundering.

    The Wall Street Journal reports Special Counsel Robert Mueller is investigating possible money laundering by President Donald Trump's former campaign manager, Paul Manafort. Trump has denied any collusion with Russia and Russia has denied meddling accusations.
  • It was a typical Draghi dance. 

    A dovish ECB kept monetary policy unchanged, making no changes to its asset purchase program. President Mario Draghi worked hard to remain as quiet as possible on any tapering plans during his press conference, in an effort not to upset markets.

    However, the euro rose to a two year high against the dollar after he suggested that a decision on amending the ECB's ultra-easy money policy could come in autumn:

    by david.reid
  • Vodafone has updated the market with a first quarter revenue of 11.47 billion euros as organic service revenue rose 2.2 percent.

    The company said there was good momentum in Europe, robust growth in Italy and Spain with Germany showing similar trends and the U.K. offering a picture of recovery.

  • 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.
  • Elon Musk says he has the green light for a New York to Washington hyperloop. Taking to Twitter, the Tesla CEO said he had received "verbal" government approval to build the ultra high-speed tunnels, which he claims would move passengers between the cities in just half an hour.
     
     
    Officials in Washington and New York downplayed the news, saying they had not approved any project, adding Musk would need to seek the required permits. 
  • Siemens has said that it has received credible information that 4 gas turbines delivered for a project in southern Russia have been illegally relocated to Crimea.
     
    Siemens says the development constitutes a blatant breach of delivery contracts, trust and EU contracts.
     
    Siemens is to temporarily halt power generation equipment to state-controlled customers in Russia.,
     
    According to Reuters data, no Russian company has ever got a Siemens gas turbine working without the input of the firm's engineers.
     
    An employee working on a Siemens AG gas turbine
  • 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.
     
     
  •  
    Once a consensus is built it generally pays to lean against it.
     
    Our guest host, Chris Watling offers financial strategy advice with something of a Dickensian flourish.
     
    His firm is shifting allocation to the US equity market from the Europe market because he doesn't think Europe can cope with much tightening of monetary conditions.
     
    Chris Watling, CEO, Longview Economics
     
    Watling says Europe has been a great reflation trade but he thinks it is now time to go more defensive.
     
  • 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
  •  
    European markets are open!
     
    And it is a pretty flat looking market this Friday morning. Slightly skewed to the downside.
     
     
  • 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.
     
     
  • 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.
     
     
    Philips Lighting has beaten expectations in second quarter core earnings, with better margins making up for falling sales. The world's largest maker of lights says EBITDA rose 8 percent, while sales dipped 2 percent. Shares are getting slammed however.
     
    French auto parts company Valeo reported a 20 percent increase in profit in the first half of the year, boosted by strong demand for fuel-efficient engine systems and LED lights. Revenue however fell short of expectations. Speaking to CNBC, the CEO of Valeo Jacques Aschenbroich says there is huge growth potential for the company.
     
    Siemens says it plans to divest its minority stake in a joint venture for Russian power plants, Interautomatika, after four gas turbines it sold for use in Russia, ended up in Crimea.
     
    The German company said the four turbines had been locally modified and illegally moved to Crimea, which is subject to EU sanctions. Siemens added that it will halt deliveries to state-controlled companies in Russia.
     
  • 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."
  • As it is Friday, it's a good time to consider European stocks on the week. The story seems to be that a strengthening euro is pressuring stocks listed in euro zone companies.
     
     
  • Shares in Sears closed more than 10 percent higher after Amazon agreed it would sell the U.S. retailer's Kenmore appliances on its website. 
     
    The e-commerce giant also said it would integrate the brand's smart gadgets into its Alexa voice assistant platform. News of the deal sent shares in rival retailers Home Depot, Lowe's, Whirlpool and Best Buy sharply lower.
     
    CNBC’s Arjun Kharpal says this is a bigger win for Amazon than it is for Sears.
     
    It does signal a very ominous sign for bricks and mortar retailers and we saw some of the others shares go down, such as Whirlpool and Home Depot.

    Amazon’s a massive, massive threat to these guys and because of the e-commerce threat. It just looks like Amazon is eating the world.
  • 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.
  • A choppy start to trade on Friday in Europe. The Stoxx 600 is edging to the downside as the autos and construction sectors weigh on trade.
     
     
  • 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.
  • Lord Mark Malloch Brown, chair of the business and sustainable development commission, says there are huge amounts of value creation in areas of development that have not previously had business solutions applied to them.
     
    Infrastructure in the big cities in the developing world. The move to modern agriculture to feed a growing global population. The provision of health care to people who currently don’t have it, and the switch to renewable energy.
     
    These can create profit really quite quickly. There isn’t a complete conflict between the impression that sustainable business is some kind of long-term social impact thing with lower returns.
     
    We’ve tried to position this as the next big global business opportunity.
  • 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.
     
     
  • The investigation into allegations that Russia meddled in last year's U.S. Presidential election could be expanding. The Wall Street Journal reports that Special Counsel Robert Mueller is investigating possible money laundering by Paul Manafort, President Donald Trump's former campaign manager.
     
    Trump has denied there was any collusion between his campaign and Russia, while Russian authorities have repeatedly denied that they meddled in the election.
     
    Paul Manafort standing between Donald and Ivanka Trump.
  • Here's an update on U.S. earnings news:
     
    • Visa has posted third quarter profit above expectations and raised its forecast for full-year earnings. The card company says results were boosted by growing consumer spending in Europe and the U.S. Visa is forecasting annual net revenue to rise 20 percent.
    • Blackstone has posted an increase in second quarter profit, but has fallen short of expectations in another key income measure. The buyout firm says its economic net income was at 59 cents a share. That's below the 62 cents per share analysts expected.
    • Turning to next week, which is the busiest in the US earnings calendar, Alphabet is due to report results after the bell on Monday. Shares in the owner of Google have had an impressive run up this year, but the jury is out on whether the group will deliver another earnings surprise. It has only missed estimates once in the last four quarters.
  • Mike Bailey, director of research at FBB Capital Partners, says markets have been moving up on the shoulders of the tech giants.
     
    It’s really the big tech companies driving things. We’ve seen some results from Visa; Microsoft had a good quarter; Alphabet is coming up next week. We are comfortable that some of these names will continue to beat and raise; it’s a pattern we’ve seen.
     
    Bailey says the companies are good at driving up growth and revenues. He adds that the outperformance of U.S. earnings will continue.
     
     
     
  • 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.
     
    Shares in the online payments company are rallying after private equity groups CVC Capital Partners and Blackstone returned to the table with a sweetened bid for the firm.
     
    The consortium is now offering 590 pence-per-share, in a deal that would value the FTSE 250 company at £2.9 billion. Old Mutual Global Investors, Paysafe's largest shareholder, has recommended the takeover.
     
     
  • Paysafe shares are up more than 7 percent to the top of the Stoxx 600. Here are the other winners and losers on the index.
     
  • 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?
     
     
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