World Markets Live - July 7 - CNBC Live Events
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CNBC Live Events

World Markets Live - July 7

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 welcome to World Markets Live. We'll begin coverage from 0600 BST.
     
    Here are the opening calls for Europe.
     
     
  • These are the top headlines this morning:
     
    • Stocks in Asia follow Wall Street into the red, after the major U.S. averages close at their lowest levels since mid-May, weighed down by the big tech names and the continued rise in yields.
    • It's started with a handshake, but world leaders prepare for tense moments with U.S. president Donald Trump at the G20 summit, amid disagreements over trade and climate change and his first ever meeting with Vladimir Putin.
    • The memory chip super cycle fuels record earnings for Samsung, as it forecasts a $12 billion operating profit in the second quarter.
    • The cost of cyber crime mounts. Mondelez lowers its second quarter revenue growth forecast due to the recent attack, while a new report suggests hackers are targeting nuclear power stations.
  • Tough talks on issues of trade, climate change, and international security await the world's leaders, as the G-20 summit kicks off in Hamburg. All eyes are on President Trump and his counterpart Vladimir Putin as they hold their first face-to-face meeting on the sidelines of the summit.
     
    President Trump and Chancellor Merkel met ahead of the formal talks. They appeared to have a slightly less awkward introduction than their meeting in Washington. They did in fact shake hands.

    That's in contrast to Merkel's Washington visit, where she reached out for a handshake that never happened.
     
     
    Meanwhile, around 12,000 protesters greeted arriving heads of states with a message - "Welcome to Hell." Overnight, the protests turned violent, as anti-capitalist demonstrators clashed with police, injuring more than 70 officers.
     
    Up to 100,000 protesters are expected in Hamburg over the course of the G-20 summit.
     
     
  • ECB economist Benoît Cœuré says the recovery has finally arrived, in a media interview published today. He says it would be unwise to let our guard down, because this recovery is of a cyclical nature. 
     
    He adds that there is no disagreement over the current monetary policy stance within the central bank. He says, if needed, the governing council will continue to adjust its instruments both qualitatively and quantitatively.
     
     
  • U.S. stock markets stumbled yesterday, closing at their lowest levels since mid-May. A disappointing ADP jobs figure, showing the private sector created 158,000 jobs last month, and tensions in Korean peninsula added to pressure on the markets.
     
     
    Asian markets followed Wall Street lower. Central bank hawkishness is driving up yields on government debt, making equities less attractive.
     
     
  • South Korea's police raided the headquarters of Korean Air Lines on suspicions of embezzlement and breach of trust, Reuters reports citing a police official.
  • Alex Kokcharov, principal analyst for Europe & CIS country risk at IHS Markit, says the objective of the G-20 meeting is to bring back a multilateral approach to solving key issues.
     
    Whether it will succeed, it’s yet a big unknown. This is the first G-20 meeting which Trump will be attending.
     
    The key thing is he’s the new president of the U.S. and the reality is that all the other countries will have to deal with that. We will see also bilateral meetings as part of the G-20, also meetings between Trump and Putin, and also Trump and other international leaders.
     
     
     
  • The countries leading the Qatar boycott have vowed to enact fresh measures against the state, after it refused to comply with their initial demands.
     
    Saudi Arabia, the United Arab Emirates, Egypt and Bahrain issued a joint statement arguing that the Qatari government's refusal to co-operate offers proof of the state's links to terrorism. Qatar denies supporting terror.
  • Reuters poll have released forecasts for where currencies are headed.
     
    The poll sees most major Asian currencies slipping against the dollar by the year end, but at a slower pace compared to last month's poll.
     
    The Norwegian and Swedish crown are also seen weakening against the dollar.
  • Samsung expects operating profit in the second quarter to be the highest in the company's history, which would put it above arch-rival Apple. The South Korean firm says a surge in the price of semiconductors and memory pushed earnings 72 percent higher, from the same time last year.

    CNBC’s Arjun Kharpal says there is a supply shortage which has been going on throughout the first half of the year and is set to continue.
     
    That’s mainly because there’s an increased demand here from the likes of data centers: the increase in cloud computing; people wanting more from their mobile device. Imagine how much data is required to begin streaming services for the likes of Netflix and Spotify. Those data centers that are on the rise because of cloud computing need these chips.
     
    Arjun says supply is not keeping up with demand, pushing the price of memory higher and driving Samsung’s earnings.
     
     
  • JP Morgan has released a set of new stock price targets. Here are some highlights.
     
    • Bovis - the target price is raised to 950p from 880p.
    • Campari - target price up to 5.8 euros from 5.5 euros.
    • Heineken - target price increased to 82 euros from 74 euros.
    • Sodexo - target price cut to 112 euros from 116 euros.
     
    Deutsche Bank also released some new targets and recommendations.
     
    • Sodexo - cut to hold from buy and target price cut to 115 euros from 125 euros.
    • Associated British Foods - target price increased to 3300p from 3200p.
    • Roche - cut to hold from buy and target price cut to 260 Swiss francs from 273 francs.
    • BHP Billiton - upgraded from hold to buy and price target raised to A$27.50 from A$240.
  • Swiss adjusted jobless rate is unchanged at 3.2 percent in June. The unadjusted rate dipped to 3.0 percent in June from 3.1 percent the previous month.
  • Carrefour's all-important hypermarket sales turned positive for the first time since 2015 as the French grocer began to reap the benefits of outgoing boss Georges Plassat's new strategy.
     
    Carrefour beat second quarter sales expectations and maintained its 2017 growth targets. Investors have challenged incoming CEO Alexandre Blompard to continue improving the performance of French hypermarkets, whilst revamping the digitalisation of the business. 
  • The Tesla selloff continues. Shares of the electric car maker are down more than 20 percent after hitting an all-time high in June, now entering bear-market territory.
     
    Investors are skittish about Tesla's disappointing second quarter delivery figures.
     
     
    However, it seems Tesla CEO Elon Musk had bigger concerns than Q2 sales, tweeting "the world's population is accelerating towards collapse, but few seem to notice or care."
     
     
  • Free trade and Brexit will be on the agenda in the upcoming G20 summit. Speaking in Hamburg, German Finance Minister Wolfgang Scheauble said the EU's doors will always remain open for Britain.
     
    Meanwhile, IMF Managing Director Christine Lagarde says she hopes Britain and the EU will cooperate during the Brexit negotiations.
     
    But EU Chief Brexit Negotiator Michel Barnier used tougher language describing future trade relations between the UK and the bloc. He says frictionless trade is impossible, if Britain leaves the single market. U.K. Foreign Secretary Boris Johnson responded by saying a free trade deal would be in everyone's best interest.
     
    Next week, Barnier meets with Labour leader Jeremy Corbyn in Brussels. They will discuss future trade relations and the rights of EU citizens. Corbyn says he wants tariff-free trade with Europe.
  • Ahead of the G-20, Canada's leader Justin Trudeau tells Germany's Bild newspaper that they will tell Trump that it's important to take a lead in tackling climate change. Trudeau says there's "absolutely no doubt" that climate change is happening, according to Reuters.
     
    Trudeau says that instead of stopping trade, we must create opportunities for smaller companies and protect workers' rights with progressive trade agreements.
     
     
  • The CBI says Britain should remain in the single market until a Brexit deal is in force. This ahead of an informal meeting between corporate leaders and the UK Government later today. The business organisation's Director General Carolyn Fairbairn also pointed out that it won't be possible to agree on a final trade deal by the end of the Brexit negotiations.

    Lady Barbara Judge is chairman of the Institute of Directors, which represents small and medium-sized businesses.
     
    80 percent of the U.K. is small and medium-sizes business, so we have a big voice and we’ve been calling for, first of all, certainty on European Union people here in the U.K.. Four out of 10 of our members employ EU citizens. We really have a role with respect to EU citizens.
     
    Second of all, we, like the CBI, have been calling for transitional arrangements for a long time. We really believe we need access to the customs union and single market until we leave the EU and we need a transitional time, because business hates uncertainty.
     
  • German May industrial output rose 1.2 percent month on month, versus 0.7 percent in April, according to the economy minister. This beat forecasts.
     
    The ministry says the upswing in the industrial sector has broadened.
     
    Meanwhile, Norway's May manufacturing output dropped 0.3 percent month on month. This matched Reuters expectations.
  • These are the top headlines this hour:
     
    • Stocks in Asia follow Wall Street into the red, weighed down by big tech names and the continued rise in yields.
    • It's started with a handshake, but world leaders prepare for tense moments with U.S. president Donald Trump at the G-20 summit, amid disagreements over trade and climate change, and his first ever meeting with Vladimir Putin.
    • The memory chip supercycle fuels record earnings for Samsung, as it forecasts a $12 billion operating profit in the second quarter.
    • The cost of cyber crime mounts. Mondelez lowers its second quarter revenue growth forecast due to the recent attack, while a new report suggests hackers are targetting nuclear power stations.
     
  • Here's a round-up of central bank news today.
     
    • Federal Reserve Vice Chair Stanley Fischer is calling on policymakers to implement legislation to boost "dismal" productivity. Fischer said the government could do more to invest in research, infrastructure, education and public health, among other areas. He added that the current policy environment was making businesses "reluctant to invest".
    • Meantime, Federal Reserve Bank of Cleveland President Loretta Mester says the Fed should shrink its $4.5 trillion balance sheet "sooner versus later." Mester, who is not currently a FOMC voting member, added that the central bank could raise rates and launch a balance-sheet plan at the same meeting. This despite comments from other Fed officials suggesting the two actions should not take place at the same time. 
    • Also, the recovery has finally arrived. That's according to ECB board member Benoit Coeure. In a joint interview with French and Italian newspapers Le Monde and La Stampa, Coeure warned however that it would be "unwise" for the ECB to "let it's guard down." He said the central bank will continue to adjust its policy as needed.
     
    Central bank hawkishness is being seen in bond yields. The German 10-year bund broke above 50 basis points yesterday for the first time since early 2016.
     
     
  • Bond yields are rising in several markets on the back of central bank hawkishness. The Italian 10-year government bond yield is at a 2-month high today.
     
    Neil Dwane, global strategist and chief investment officer of European equity at Allianz Global Investors, says the door has not closed for yields to fall again.
     
    What we’re seeing at the moment, particularly driven from the Fed, is concerns that they think they can look through this falling inflation from oil at this moment in time, and they want to raise rates. They are very much focused on financial conditions which remain loose on Wall Street. The markets have not been listening to the fact that the Fed wants to tap the brake a little more.
     
    Dwane says if the market gives them space, the Fed will raise rates. He expects at least one or two more rate rises, as long as conditions remain loose.
     
     
  • Neil Dwane, global strategist and chief investment officer of European equity at Allianz Global Investors, says he is looking for a sense of self-confidence from Europe at the G-20 meeting.
     
    I think with the momentum building behind Macron, with Merkel looking more assured going forwards, I think from a European investors perspective, we would like to see some more EU self-confidence, which would give us a sense that 2018 can navigate the Italian elections and start putting more of the foundation blocks that we need to see in the euro zone to get rid of some of the concerns that we’ve had for the last six or seven years.
  • The Renault-Nissan alliance confirms its annual synergies have risen 16 percent to 5 billion euros in 2016. The car-makers confirm the alliance is on track to deliver synergies of at least 5.5 billion euros.
  • Siemens says it has no credible evidence of actual deliveries of its turbines to the Crimea. The company says it is has a task force investigating the matter.
     
    Siemens says if there were any re-routings of recently purchased turbines to Crimea, it would be a violation of contractual agreements.
     
    The company says it will take operational measures to prevent the equipment being used in an unlawful way.
  • Dong Energy and Siemens have signed an agreement with Belgium's Geosea, stating that Geosea will acquire full ownership of A2SEA, an offshore wind farm operation.
     
    The transaction, which require approval by the authorities, is expected to complete in Q3 2017.
  • French May industrial output increase 1.9 percent month-on-month, compared to a fall of 0.6 percent last month. This beat forecasts of 0.5 percent growth.
     
    Also, the French budget deficit was 66.4 billion euros in May, versus a deficit of 65.7 billion euros a year earlier. The trade deficit narrowed to 4.9 billion euros in May, versus a deficit of 5.6 billion euros in April.
  • Oil has been trading down more than 1 percent. This after both the U.S. and OPEC reported production increases. The dip comes as leaders from major oil producers are set to meet in Istanbul for the World Petroleum Congress.
     
    Herman Wang, OPEC specialist at S&P Global Platts, discusses oversupply in the market and geopolitical risks facing the market.
     
    This geopolitical stuff is always something to watch in the oil market, but you had this escalation of this crisis and there’s a lot of dominoes here. Obviously you talked Syria, there’s the war in Yemen, there’s Saudi and Iran.
     
    Saudi is now cozying up to the Trump Administration and the Trump Administration seems to be looking for an excuse to re-impose sanctions on Iran, so there could be an impact on Iran’s oil sector.
     
    We’ve got Libya also involved, Egypt and the UAE are heavily involved in the conflict going on in Libya. There’s a lot of dominoes here.
     
     
     
  • European markets are now open, moving cautiously lower.
     
     
  • Here is some data to digest:
     
    • Spain's May calendar-adjusted industrial output is up 3 percent year on year, better than the 2 percent forecast.
    • Hungary's May trade balance was 913 million euros, versus forecasts of 825 million euros.
    • Denmark's unemployment rate in May was 3.4 percent. Also, Danish May industrial production grew 2 percent month on month, according to Statistics Denmark,
  • Utilities and the insurance sectors are leading markets today, while the oil & gas sector is weighing on the Stoxx 600.
     
     
  • Here's how the individual European bourses are performing. All are in negative territory at the start of Friday trade.
     
  • Activist investors Elliott Advisers are seeking to remove the chairman of Akzo Nobel. The group, which holds a 9.5 percent stake in Akzo Nobel, is seeking an EGM through an interim relief court lawsuit. They cite shareholder dissatisfaction over the PPG offer conduct as the reason.
     
    Chris Bailey, European strategist at Raymond James, welcomes the move, saying Europe needs more activism.
    They’re not giving up, are they? Because unfortunately they got pushed back. Akzo Nobel’s share price never reached some of the heights that I think Elliott hoped, but they’re not giving up, which is good news actually because this is what you want to see in Europe.

    You want to see activists keep on pushing companies to try to perform. We’ve had a decade of under performance in European stocks, maybe these are some of the catalysts to help us continue the recent strong performance run.
  • Carrefour's all-important hypermarket sales turned positive for the first time since 2015 as the French grocer began to reap the benefits of outgoing boss Georges Plassat's new strategy.
     
    It beat second quarter sales expectations and maintained its 2017 growth targets. Investors have challenged incoming CEO Alexandre Blompard to continue improving the performance of French hypermarkets, whilst revamping the digitalisation of the business. 
     
    Shares are down more than 3 percent this morning.
     
     
  • China's foreign ministry says it opposes using the freedom of overflight as an excuse to harm China's security after U.S. bombers flew over the South China Sea.
  • Neil Dwane, global strategist and chief investment officer of European equity at Allianz Global Investors, criticised central bankers and says a key contributor to low productivity has been low interest rates.
     
    The first thing to say is no government legislation generally improves anything, but low interest rates have definitely affected the willingness to invest. I think it’s changed the dynamic, particularly for corporates in terms of share buybacks over any type of behavior.

    The central bankers are part of the problem of the low productivity puzzle.
  • U.K. house prices are up 2.6 percent year on year in the three months to June, under expectations.
     
    House prices fell 1 percent month on month in June, versus forecasts of 0.2 percent.
  • Sweden's household consumption is up 0.3 percent month on month and 2.8 percent year on year in May, according to the country's stats office.
  • Germany's finance minister Wolfgang Schaeuble has cancelled an appointment in Hamburg as part of the G-20 summit due to the security situation in the city, according to organisers.
  • French president Emmanuel Macron has arrived in Hamburg for the G-20 summit of world leaders.
     
     
     
     
  • Munich prosecutors announce it is investigating several individuals for fraud and false advertising in relation to the Audi diesel probe.
     
    Management board members at Audi are not among those under investigation. An Audi employee was arrested and brought before a judge. The employee is now in custody.
     
    The prosecutors say the arrest was made at behest of Munich prosecutors, not U.S. authorities, and was made following searches carried out by Munich prosecutors.
  • Reporting from the G-20 summit in Hamburg, Annette Weisbach says many bilateral will take place at the G-20 summit today.
     
    We have Trump and Putin meeting for the first time at 4:00 reportedly. They are going to miss the session on climate change, which of course might be in the interest of Donald Trump.
     
    The president took to Twitter this morning ahead of the summit.  
  • Bob Ward, policy director at Grantham Research Institute, says the coal industry is in long-term decline.
     
    It’s simply cheaper in most parts of the United States to burn natural gas, or renewables, to generate electricity.

    That was the reason that President Trump cited for his opposition to the Paris Agreement, that it was killing the U.S. coal industry and that’s simply not true.
     
     
     
  • Speaking in Hamburg at the G-20, EU President Juncker says the EU trade agreement with Japan shows we are not putting up "protectionist walls". He says the EU will respond "adequately" if U.S. take punitive trade measures on steel.
  • Taiwan June exports rose 13 percent on the year, more than expected. Imports rose 3.7 percent year on year. The June trade surplus was $5.83 billion, above the $3.3 billion expected.
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