World Markets Live - July 5 - CNBC Live Events
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World Markets Live - July 5

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

  • Get ready for an interest rate rise. That's the message from BOE policymaker Michael Saunders. Speaking to the Guardian newspaper, Saunders, who last month voted in favour of raising interest rates, added he was "reasonably confident" that investment and exports would compensate for a consumer slowdown.
     
     
    Meanwhile, the Federal Reserve could strike a more hawkish tone in the minutes from its June policy meeting, due out later today. Investors are eagerly watching to see if the central bank will signal that it is on track to move ahead with interest rate rises in the second half of the year. 
  • William Vereker, global co-head of corporate client solutions at UBS, explains he is concerned about the second half of 2017 due to the levels markets have reached.
     
    We’ve seen a very strong rally across the first half of the year across all asset classes and that has driven some very active deal activity, both across M&A and equity markets. 
     
    As we move into the second half, I think all of us are a little bit concerned about where markets sit and are quite cautious about the outlook.
     
     
  • Monte dei Paschi's CEO says there are no mergers planned and there is no Plan B on the table. 
     
    Italian banks responded positively to the bailout plans for BMPS. UniCredit shares rose at the start of trade before paring gains, while Ubi Banca shares are up nearly 2 percent.
  • Italian composite PMI for services and manufacturing falls to 54.5 in June from 55.2 in May.
     
    Services PMI fell to 53.6 from 55.1 in May. This was below forecasts.
  • Russia's Gazprom may issue eurobonds in Swiss francs in July, Reuters reports citing a financial market source.
  • The Pentagon has confirmed North Korea's claim that it fired its first intercontinental ballistic missile. Experts say the ICBM was capable of reaching the American mainland.
     
    U.S. Secretary of State Rex Tillerson condemned the missile launch, saying global action is required to combat the threat posed by North Korea.  
     
    Meanwhile, President Trump is criticising North Korea, all while he preps for a busy week of diplomacy. He'll travel to Poland, before visiting Germany for the G-20 summit, where high-stakes meetings with world leaders are on the agenda.
  • French final June composite PMI falls to 56.6 from 56.9 in May.
     
    Services PMI fell to 56.9 from 57.2 in May.
  • The euro is up against dollar this morning following decent PMI figures from France, Italy and elsewhere. We still have the German reading and the euro area PMI data to come.
     
     
  • U.K. new car registrations are down 4.8 percent year on year in June to 243,454 units, according to the car industry body SMMT.
  • German June final composite PMI confirmed at 56.4 points, from 57.4 in May.
     
    Service PMI came in at 54.0 points, better than forecast but down from May's 55.4 points.
  • Eurozone June services PMI confirmed at 55.4 points, above forecast. It is down from May's 56.3
     
    The composite June PMI number is 56.3, higher than forecast.
  • Here are the top headlines this hour:
     
    • Monte dei Paschi unveils a drastic restructuring plan as Rome pumps more than five billion euros into the failed bank, formally taking it under state control.
    • It's buying time in the retail sector. Adidas and Moncler catch a bid thanks to newly issued buy ratings, while a new CEO gets to work at Burberry.
    • Qatar signals its open to talks, but warns it will not accept any intervention in its domestic affairs, as Saudi Arabia and its Gulf allies get ready to meet to discuss their demands on Doha.
  • U.K. new car registrations is down 4.8 percent year on year. New diesel car sales are down 14.7 percent in June. Total private sales are down 7.8 percent and fleet sales are down 2.4 percent.
     
    Arndt Ellinghorst, head of global automotive research at Evercore ISI Group, says these numbers are better than expected.
     
    We forecast the market to be down 8 percent this year.
     
    As you mentioned, consumer uncertainty is pretty high, consumer confidence is down, so naturally you would expect car sales to fall, but car makers are offering huge discounts so that’s driving people into showroom rights now, but that drop of 4.8 is better than we expected.
     
     
     
  • Monte dei Paschi CEO says the Italian regulator will reassess relisting the bank's shares when the bank's prospectus on the exchange offer is finalised by the end of September.
  • Adidas shares have gotten a lift after HSBC raised its stock rating to buy from hold.
     
     
    In other retail re-ratings, Zalando has been dropped from Goldman Sachs' pan-Europe buy list.  And Jefferies has initiated coverage of Moncler and Yoox Net-a-Porter, giving both buy ratings.
  • A Monte dei Paschi executive confirms the italian state will buy the bank's shares at a 25 percent discount to the price used for conversion to subordinated bonds.
  • The foreign ministers of Saudi Arabia, the UAE, Bahrain and Egypt are set to meet in Cairo to discuss whether to continue sanctions on Qatar. 
     
    CNBC's Willem Marx reports on the mood in Doha.
     
    The mood here is very, very interesting. The Qataris have managed to rally people around the Emir here. Tamim has had his image plastered all over buildings and shop fronts across the capital city here.
     
    Any efforts that the Saudis had hoped to try and get a swift resolution, it doesn't seem that that's going to happen.
  • International Energy Agency chief Fatih Birol says the global oil market should rebalance in the second half of the year under the present conditions.
     
    Speaking on the sidelines of an Energy Institute event, Birol warned, however, that further output increases from producers Libya and Nigeria could complicate things.
     
    John Abbott, global downstream director at Shell, discussed coping with low oil prices.
     
    Shell looks at a range of oil prices and quite often we talk about lower for longer. Really the longest term strategy is the thing that is really important for Shell. 2016 was a year for Shell which was a complete reset with the BG integration and we saw oil prices come down after that. So we said, look, we need to set up a world-class investment case for Shell. What does it look like for the next 5, 10, 15 years? We set very clear free cash flow targets and return targets.
     
    Abbott says the company has achieved good free cash flow performance this year.
     
     
  • U.K. services PMI data for June has been released. The reading came in at 53.4 points versus 53.8 in May.
     
    June services business expectations fell to 63.7 versus May's 68.1 points. That's its weakest since July 2016.
     
    All-sector PMI falls to 53.9 in June from 54.5 in May.
  • Sterling dips against the dollar, however it was already down around 0.2 percent on the day before the PMI data was released.
     
     
  • Volvo has unveiled plans to phase out the conventional car engine. The move is the first by a major auto maker to abandon combustible engines in its models. Volvo, which is owned by Chinese investment group Geely, previously announced plans to launch five new electric and hybrid vehicles by 2021.
     
    John Abbott, global downstream director at Shell, says this move was not a surprise.
     
    In Shell we welcome all forms of energy. Of course, our marketing business is extremely important to us. We delivered $900 million of earnings in the first quarter from our marketing business.
     
    But what we’re finding is a shift. People are buying more premium products. Premium fuels like V power, our premium lubricant, as more energy efficient and demanding engines come onto the market. We find that 1 in 4 litres of lubricant we sell is premium lubricant.
     
    Abbott says they are anticipating a change towards electric, hybrid, hydrogen and LNG-powered vehicles. 
  • U.K. labour productivity, as measured by output per hour, falls by 0.5 percent in Q1 versus Q4, according to the ONS.
  • Benchmark 10-year U.K. gilt yields are up 3 basis points today following the weaker PMI and productivity data.
     
     
  • We'll be live from the World Petroleum Congress next week, speaking to the top oil company chiefs, and leading OPEC and non-OPEC energy ministers.
     
     
  • U.S. markets were closed yesterday for the 4th of July celebrations, but will be open today.
     
    Futures predicts a mixed to negative open for markets later today, with the Dow and S&P called flat and the Nasdaq down around 20 points.
     
     
  • The South Korean President Moon Jae-in is due to arrive in Germany later today, where he will seek to rally international support behind a plan to impose fresh sanctions against the North Korean regime. The South Korean government says it remains open to dialogue with Pyongyang, despite the latest missile launch. 
     
    President Moon Jae-in
     
    Meanwhile, Chinese President Xi Jinping has already arrived in Berlin ahead of the G20 meeting.
     
    During his trip to Germany he will also attend the opening of a 10-million dollar Panda enclosure at the Berlin Zoo with his counterpart Angela Merkel.
     
    President Xi Jinping
  • The U.K.'s bad bank is set to reduce its balance sheet by another £5 billion by early next year.
     
    The U.K. Asset Resolution Authority has already offloaded about 80 percent of its original portfolio -- helped by the sale of Bradford and Bingley mortgages. The bank says that current market conditions and global yields are creating demand for such loans from institutional investors.
  • Tencent shares have just started recovering slightly, after falling more than 4 percent in yesterday's session. This after the Chinese tech giant said it was limiting the play time for younger gamers for one of its most popular games: "Honour of Kings".
     
    A child plays online game "Honor of Kings"

    The move is aimed at curbing addiction among children, something the company and its peers have come under pressure for. "Honour of Kings" has over 50 million daily active users and is Tencent's top grossing game.
     
    Earlier today, Deutsche bank raised its price target for Tencent by 7.4 percent to HK$320 and rated the stock a buy.
  • A manager of the Italian bank rescue fund Atlante says it has signed a binding deal with Monte dei Paschi for securitisation of bad loans worth 26.1 billion euros.
     
    Monte dei Paschi announced this deal earlier this morning. The bank outlined plans to sell junior and mezzanine securities to Atlante II at a price of 21 percent of the gross value.
  • The U.S. government is seeking to intervene in Apple appeal against an EU order to pay up to 13 billion euros in taxes to Ireland. That's according to a Reuters report.
     
    The European Commission says Apple received illegal subsidies from a sweetheart tax deal with the Irish government.  
     
    Apple shares are currently trading marginally lower in premarket trade, carry on from a dip on Monday.
     
     
  • Euro zone May retail sales rise 0.4 percent month on month and 2.6 percent year on year.
     
    April retail sales were revised to 2.6 percent from 2.5 percent previously.
  • Norway June seasonally adjusted housing prices fell 0.7 percent versus May. Housing prices are up 6.3 percent year on year.
  • Lufthansa announces an agreement with Fraport on cost savings and further growth. the agreement will provide the basis for further discussion regarding a medium and long-term partnership.
     
    The airline says Fraport is not planning to make a new application for airport changes in the coming year.
     
  • Manchester Airport says one of its terminals is being evacuated due to a potential issue with a bag. That's according to Reuters.
  • The Kremlin says President Putin will use his meeting with Trump to explain Russia's stance on Syria and Ukraine, Reuters reports.
     
    The meeting, which will take place during the G20 summit, will be limited in time. The meeting is to explore whether there is a possibility and readiness for Russia and U.S. to fight terrorism together.
     
    Moscow hopes the meeting will establish an effective working dialogue between the two leaders, which is needed to resolve mounting conflicts around the world.
  • U.K. 30-year gilt yields hit 1.911 percent earlier in the session, this is its highest level since February. The yield is up 4 basis points currently.
     
     
  • Euro zone retail sales rose 0.4 percent month-on-month in May. This was in line with consensus, says Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics. 
     
    A decent headline lifted mainly by month-to-month gains in Germany, France and Spain which offset weakness in a number of the smaller economies. Italy reports later in the month, which could drive revisions in the June report.
     
    Across sectors, the headline increase was driven by jumps in spending on automotive fuel and apparel. Assuming growth of 2.7 percent year-over-year in June, retail sales increased 0.8% quarter-on-quarter in Q2, accelerating from a modest 0.3 percent rise in Q1. This adds to the evidence that EZ consumers’ spending rebounded in Q2, following a slow start to the year. 
     
    The result has helped the retail sector of the Stoxx 600, which is up half a percent today.
     
     
     
     
     
  • Worldpay shares are up more than 5 percent today, following on from yesterday's strong gains.
     
    The payment processing company announced yesterday it had been approached by two separate companies bidding to take it over.
     
    Today's share price spike is apparently due to a Sky report that the company's board is backing an £8.5 billion deal with Vantiv, according to Reuters citing traders.
     
     
  • Lloyds Bank has announced a series of organisational changes in anticipation of a new strategic plan. Here are some of the appointments.
     
    • Juan Colombas, the executive director, is appointed to a new role as chief operating officer.
    • George Culmber, chief financial office and executive director, will take over the legal and strategy teams.
    • Zaka Mian is appointed group director of transformation.
    • Vim Maru is appoint to group director of retail.
  • Rreserve bank of Australia board member Ian Harper says now is not the time to "scare the horses" with hawkish guidance, Reuters reports. This after the central bank yesterday voted to keep rates on hold.
     
     
    Harper says is it a case of "steady as she goes" on policy and there is no reason to rush policy changes, or follow other central banks' hawkishness.
     
    Harper says Australia's recover is on track, but the job market slack is notable and a lower Australian dollar would be welcome. He says it is not clear if inflation is rising.
     
    The Australian dollar dropped sharply against its U.S. counterpart yesterday on the central bank decision. It is down more than 1 percent against the U.S. currency so far this week.
     
     
  • President Trump will be visiting Germany for the meeting of world leaders at the G20 summit later this week. But first, he will be visiting Poland.
     
    He is visiting the Eastern European country at the invitation of President Andrzej Duda, to "reaffirm the U.S.' steadfast commitment to one of its closest European allies and emphasize the administration's priority of strengthening NATO's collective defense."
     
    Presidents Trump and Duda discuss bilateral and regional issues, while President Trump also delivers a 'major speech' and attends the Three Seas Initiative summit.
     
    The president takes off in Air Force 1 at 07:40 a.m. EDT and will in Warsaw around 4:15 p.m. EDT.
     
    Polish President Andrzej Duda stands to the right of President Trump during the May NATO meeting.
    by luke.graham edited by Spriha Srivastava 7/5/2017 9:55:26 AM
  • German Chancellor Angela Merkel says her country would like the mutual opening of markets to each other with China, Reuters reports.
     
    Merkel says she discussed civil society with China's President Xi and we must continue the human rights dialogue.
     
    On the topic of the G20, she said there are difficult negotiations coming up at the summit. She told Germany's Die Zeit weekly that globalisation is seen by the U.S. administration not as a win-win situation but as producing winners and losers.
  • Strategic ties between Russia and China were appraised in glowing terms as Chinese President Xi Jinping wrapped up a two-day state visit to Russia, concluding with at least $10 billion in agreements.

    Xi, who met with Russian President Vladimir Putin during the trip, told Russian media that relations between the two countries were currently at their "best time in history." The Chinese president also said Russia and China were each other's "most trustworthy strategic partners," Xinhua reported.
     

    ‘Best time in history’ for China-Russia relationship: Xi and Putin boost ties

    CNBCStrategic ties between Russia and China were appraised in glowing terms as Chinese President Xi Jinping concluded a two-day visit to Russia.
  • U.S. stock index futures pointed to a mixed open on Wednesday morning as traders awaited the release of the Federal Reserve's latest meeting minutes.

    On the data front, Wednesday will see factory orders for May released at around 10 a.m. ET, while the much-anticipated release of last month's FOMC minutes is set for around 2 p.m.
     
     
  • Paresh Davdra, CEO and Co-Founder of RationalFX analyses the fall in the pound after today's PMI data:
     
    The pound has dipped against its peers following the release of PMI Services data. Growth within the services sector has fallen to a four month low, highlighting reduced confidence amongst businesses and consumers alike. The pound had declined against the dollar in the lead up to the PMI release this morning as investors remained cautious in the aftermath of weak data earlier in the week.
     
    The data released today marks three consecutive days of PMI data that points to slowing growth, and also revealed that business optimism was at its lowest since the Brexit Referendum. This is significant as it would appear that the uncertainty of the election period and Brexit has had a visible effect on the economy as it has had on volatility in the pound. 
     
    The disappointing growth figures across the manufacturing, construction and services sectors are likely to temper expectations of a rebound in the UK economy in the second quarter and created further uncertainty over whether interest rates will be raised at the next BoE policy meeting in August. Analysts will be watching closely to see if the pound will be able to move towards stability in the coming months despite uncertainty manifesting in economic data.
     
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