World Markets Live - June 29 - CNBC Live Events
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CNBC Live Events

World Markets Live - June 29

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 Thursday's live blog. To kick us off, we'll take a look at the headlines:
     
    • Buybacks make a comeback! Citi and JPMorgan lead the $100 billion dollar race to return capital to shareholders after clearing Fed stress tests and getting the green light from regulators. 
     
    • Financials boost U.S. stocks, driving the best gains for the S&P since April and helping the Nasdaq log its best day of the year. 
     
    • Oil catches a bid as data shows a drop in U.S. output while gas stockpiles decline, but oversupply concerns continue to cap gains. 
     
    • Chinese President Xi Jinping arrives in Hong Kong to mark the 20th anniversary of the city's handover to China and oversee the inauguration of the island's new leader. 
  • U.S. equities closed higher on Wednesday evening as bank stocks led the charge.
     
    The Dow Jones industrial average jumped about 140 points with Goldman Sachs contributing the most gains. Caterpillar was the best-performing stocks in the index, rising 2.4 percent.

    The S&P 500 advanced 0.88 percent with financials rising 1.54 percent to lead advancers. The index also notched its biggest one-day gain since late April.
     
     
    American banks are rolling out massive dividend increases and buyback programs, after the Fed gave a green light to shareholder payout plans of the 34 biggest U.S. banks, in part 2 of the stress tests.
     
    Citigroup doubled its quarterly dividend and announced its largest ever share buyback program, at $15.6 billion. JPMorgan following suit with a dividend increase and $19.4 billion dollar stock buyback.
     
    The positive sentiment has continued into Asia, where stocks are still trading.
     
     
  • American banks are rolling out massive dividend increases and buyback programs, after the Fed gave a green light to shareholder payout plans of the 34 biggest U.S. banks, in part 2 of the stress tests.
     
    Citigroup doubled its quarterly dividend and announced its largest ever share buyback program, at $15.6 billion. JPMorgan following suit with a dividend increase and $19.4 billion dollar stock buyback.
     
    For the first time since the financial crisis, the Fed did not reject any of the capital plans of any of the 34 US banks getting stress tested.
     
    Following that, the banks in the United States closed the day looking like this:
     
     
    A rapid growth in credit card balances for U.S. consumers was noted by the Fed as the only real fly in the ointment.
  • On set Carl Tannenbaum, Chief Economist at Northern Trust is explaining that he used to stress bank balance sheets on behalf of the Federal Reserve. 
     
    Steve asks him what he thinks of the latest round of results.
     
    Selfishly I would say the Fed has gone easy since I left but of course times are better for the banks and the American economy.
     
    Tannenbaum highlights that U.S. banks have built up a wall of protective cash to absorb any shocks.
     
     
    On consumer credit, Tannenbaum notes the Fed's early warnings for a couple of banks but says the American consumer has reduced debt considerably in relation to household income.
     
    He does note the car debt issue as a bit of an issue but student debt is not likely to be a problem.
  • The Department of Homeland Security has unveiled new security measures to avoid the expansion of an in-cabin laptop ban.
     
    The measures will go into effect in three weeks, and could impact as many as 2 thousand commercial flights arriving daily into the United States. 
     
    The new procedures could include:

    - More thorough carry-on bag checks.
    - More bomb-sniffing dogs.
    - More swabbing for explosives.
    - and in time, next generation bag screening technology.
     
    Michael Fein | Bloomberg | Getty Images
     
    If any airline doesn't meet the new requirements, Homeland Security could ban its flights, or ban all personal electronics larger than a cell phone.
  • European bourses are expected to open higher today as investors look ahead to NATO’s meeting of defense ministers and a G20 preparatory meeting between European heads of state.
     
    The FTSE 100 is on track to open higher by 32.2 points at 7,420; the German DAX is seen opening 58.3 points higher at 12,705; and the French CAC is expected up by 17.3 points at 5,272.
     
    The euro hit a one year-peak ahead of market open Thursday while the dollar dipped in U.S. trade. 
     
     
    On the agenda Thursday, NATO defense leaders will be meeting in Brussels while German Chancellor Angela Merkel will host European heads of state in a G 20 preparatory meeting. 
  • The UK government is expected to announce its decision today on whether to give the green light to 21st Century Fox's takeover of Sky.
     
    Having weighed reports from regulators, Culture Secretary Karen Bradley will reveal whether to approve the $11.7 billion pound deal or refer it for a fuller investigation.
     
     
    One of the tests will be if the Murdoch family have a corporate structure in place at Fox that is deemed fit and proper.
  • Bank of England Governor Mark Carney says the central bank will debate a rate rise in the "coming months".
     
    That sent Sterling to its highest level against the dollar since the UK's general election on June 8. 
     
     
  • Robin Bew, CEO of The Economist Intelligence Unit has joined the on air team.
     
    He kicks off his slot by addressing the stress test and says it is clear that U.S. banks have improved their financial stability.
     
    Bew says the fed wants an industry that can withstand any crisis and we have moved on from the environment where people wanted to see the Fed rapping the knuckles of banks who were not ensuring a robust balance sheet.
     
     
    Bew says banks are less profitable than they once were and some of those high margin activities are not likely to return.
     
  • Plans by Nestlé to strengthen its capital structure appeared to be well received by investors after shares closed almost 1 and half percent higher.
     
    The Swiss food and drinks giant announced a $21 billion share buyback and hinted at acquisitions in consumer healthcare. The shake-up comes days after activist shareholder Third Point urged Nestlé to shed non-core assets and buy back shares.
     
    Jon Cox, Head of European Consumer Equities, Kepler Cheuvreux says he thinks Nestlé and Third Point may actually be fairly well aligned in their ambitions.
     
    I think what Leon does is give Mark Schneider, the new boy on the block of Nestle's management team, the impetus to get on with accelerating earnings.
     
     
    Cox says fast moving consumer good firms such as Nestlé will soon start to benefit from an end to deflationary pricing and that a level cost cutting is still available.
     
    He says in emerging markets, the big companies recognize a need to move faster on what locals are demanding and he says that will happen.
  • A reminder of our headlines: 
     
    • Buybacks make a comeback! Citi and JPMorgan lead the $100 billion dollar race to return capital to shareholders after clearing Fed stress tests and getting the greenlight from regulators.
     
    • German Finance Minister Wolfgang Schaueble calls on Europe to rethink the "regulatory loophole" that allowed Italy to wind up its failing Veneto banks, warning about the hefty costs passed on to local taxpayers.
     
    • The UK's Financial Reporting Council opens an investigation into PWC's audits of BT, in the latest development in the telco's Italian accounting scandal.  
     
    • H&M beats expectations with a 10 percent boost in pre-tax profit in the second quarter. The fashion retailer says cost cutting and expansion plans are working.
     
    European futures currently look quite healthy for those long on the market:
     
     
  • Chinese President Xi Jinping has arrived in Hong Kong to celebrate the 20th anniversary of the handover from British to Chinese rule. Protests over China's influence in the financial hub have accompanied his visit. 
     
    Emily Tan in Hong Kong says arrests of well known student protesters have already been made ahead of the July 1st protest which is likely to be the biggest event.
     
     
     
    Tan says democracy and ease of business are, on the surface, still in place in Hong Kong but the next stage for analysts will be to see what Hong Kong's new chief executive will outline for the next 5 years.
     
    The chief executive designate, Carrie Lam, is seen as being favored by Beijing.
  • The financial industry regulator in the UK is launching an investigation into audits of BT's financial statements.
     
    The regulator says the decision to investigate the PWC audits follows announcements from BT related to accounting issues in its Italian business.
     
     
    BT shares have lost around 20 percent of their value since the scandal broke.
  • Greek FinMin Euclid Tsakalotos has said he is entirely confident Greece will have good growth in 2017 and 2018. He further adds that Greek access to markets is possible with or without ECB's QE. That's according to Reuters.
     
    European Finance Ministers Set To Discuss Greek Debt Burden At Eurogroup Meeting : News Photo
  •  
    And markets in Europe have opened positively, following on from that robust trading session in the U.S.
     
     
     
  • The drift south in the dollar is supportive of Basic Resources and that Fed news on the U.S. financials is helping the banking sector.
     
    Markets have also been interpreting comments from the Bank of England and European Central Bank as being yield positive for financials.
     
     
  • Bank of Japan board member Yutaka Harada said on Thursday a weak yen will stimulate the economy and help accelerate inflation.

    He also said the BOJ's current policy framework is based on the premise that the central bank will raise interest rates should inflation accelerate well above its 2 percent target. That's according to Reuters.
     
    We don't know when it will happen but at some point, the BOJ will undoubtedly need to tighten monetary policy, Harada said in a seminar.
     
  • Another look at this morning's positive reaction in European bank stocks. This following buyback and dividend announcements in the U.S. after the Fed approved shareholder payout plans.
     
     
  • Robin Bew, CEO, The Economist Intelligence Unit is on the set and he says it will be interesting to see if Europe engages with Trump in a single voice:
     
    The thing I would like to see is particularly in Europe if there is consistency in voice when they are engaging with Donald Trump because I suspect that there won't be. Because if you see Donald Trump's interaction with the rest of the world, there is a vacuum being created for someone else to step up and carry the flag of free trade. 
     
     
     
     
     
  • Rio Tinto shareholders have approved the sale of the miner's Australian coal assets to China-backed Yancoal.
     
    Shares have risen more than 3 percent this morning.
     
     
    Rio Tinto's chairman said it had not decided how funds from $2.7 billion dollar deal would be used.
     
    This amid calls by shareholders to boost dividends or buy back shares. The approval ends a bidding war with Glencore, which also wanted Rio's coal assets.
  • German Chancellor Merkel says it is a mistake to believe the problems of this world can be solved with isolationism. The EU's unity is greater than some heated debate might suggest and the remaining EU-27 are well prepared for the Brexit negotiations, Merkel said. 
     
    She further added that Germany can only do well if Europe is doing well. 
     
     
  • Sterling hits four-week high of $1.2985 against a broadly weaker dollar:
     
     
     
  • H&M has exceeded expectations for the second quarter, posting a 10 percent increase in pretax profit. The Swedish fashion retailer saw profit grow to 7.7 billion Swedish crowns. The firm credited cost cutting as well as company expansion.
     
    Local-currency sales grew 7 percent year-on-year in June, a touch less than forecasters predicted.
     
    The net result appears to be that of impressed investors.
     
     
  • The biggest moving stocks in Europe look like this at the last print:
     
     
     
  • The UK government is expected to announce its decision today on whether to give the green light to 21st Century Fox's takeover of Sky. Having weighed reports from regulators, Culture Secretary Karen Bradley will reveal whether to approve the £11.7 billion deal or refer it for a fuller investigation.
     
    Daniel Morris, Investment Strategist at BNP Paribas says the market is just right for M&A activities:
    I think we need to take into account the interest rate. If you are a CEO and you are looking for opportunities for M&A and you also have a sense as most of them do that interest rates do have to go higher, you make those accusations now when they are going to be cheaper. So it is a combination of dramatic changes both within the industry but also market environment that is good for M&A activities.
    by Spriha Srivastava edited by david.reid 6/29/2017 7:23:23 AM
  • After 30 minutes of trade, we have the following headlines:
     
    • Buybacks make a comeback! European financials rally after gains stateside for some of the largest lenders, which got the green light to launch 100 billion dollars of returns to shareholder. 
     
    • Fashion forward for H&M shares which jump to the top of the Stoxx 600 on forecast-beating results and a bullish outlook.
     
    • A rally for Rio Tinto lifts the mining sector, after it agrees to sell 2 point 6 billion dollars in coal assets to Yancoal. 
     
    • The unity of the European Union is stronger than some debates suggest. That's the message from Angela Merkel as the German chancellor tells the Bundestag the bloc is prepared for Brexit. 
  • European financials are in rally-mode this morning, following the gains stateside. This after the Fed gave a green light to shareholder payout plans of the 34 biggest U.S. banks, in part 2 of the stress tests. Citigroup doubled its quarterly dividend and announced its largest ever share buyback program, at 15.6 billion dollars. JPMorgan is following suit with a dividend increase and 19.4 billion dollar stock buyback.
     
    Let's take a look at the top European banks this morning:
     
     
  • Investors appear to be picking up on messages from central bankers that a tightening of policy is no longer to be restricted to the United States.
     
    Comments from ECB President Mario Draghi at the central bank's forum in Portugal appear to have convinced some money movers that the bank will accelerate plans to taper its stimulus plan.
     
    That, as well as a weakening of the U.S. dollar have pushed that pair to levels not seen since this time last year.
     
    Reuters is reporting some analysts who believe the ECB is being misinterpreted and that its main message was not one of stimulus removal but rather that it was prepared to look through short term weaker inflation. 


    The Bank of England Mark Carney has also made comments in the last 24 hours that have been interpreted as a sign that the UK central bank will raise rates in the not too distant future.
     
    Carney said: "some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional".
     
    This is sterling over a 12 month period:
     
     
  • Shares in HSBC are trading at a 2 year high after Morgan Stanely upgraded the stock to overweight, boosting its target price by 20 percent to 84 Hong Kong dollars. 
     
    London-listed shares are also trading higher. 
     
     
  • European bourses were higher Thursday morning as investors awaited a NATO meeting of defense ministers and digested major buyback plans from some of the U.S.' biggest banks.
     
     
  • Here are your top news stories at this hour:
     
    • Buybacks make a comeback! European financials rally after gains stateside for some of the largest lenders, which got the green light to launch 100 billion dollars of returns to shareholder. 
    • Fashion forward for H&M shares which jump to the top of the Stoxx 600 on forecast-beating results and a bullish outlook.
    • A rally for Rio Tinto lifts the mining sector, after it agrees to sell 2 point 6 billion dollars in coal assets to Yancoal. 
       
  • German Bund yields extends rise to new five-week high at 0.4 percent after regional inflation data, up 6 basis points on day:
     
     
  • Chinese e-commerce giant Alibaba is ponying up $1 billion to boost its stake in Southeast Asian online retailer Lazada, ahead of Amazon's much-anticipated entry into the region.

    On Wednesday, Alibaba said it will increase its stake in the company from 51 percent to about 83 percent, bringing its total investment to over $2 billion.
     

    Alibaba to invest $1 billion in Lazada as Southeast Asia awaits Amazon

    CNBCAlibaba said the new investment will increase its stake in Lazada from 51 percent to 83 percent.
  • The Stoxx Europe 600 index is trading sharply higher this morning. This after the Fed gave a green light to shareholder payout plans of the 34 biggest U.S. banks, in part 2 of the stress tests. 
     
     
  • Money markets are pricing in a roughly 90 percent chance the ECB will lift interest rates by July 2018, reflecting a rise in investors' rate-hike expectations after comments from the ECB earlier this week were seen opening the door to policy tweaks. That's according to Reuters.

    Forward Eonia bank-to-bank rates dated for the ECB meeting in July 2018 stood on Thursday at around minus 0.2713 percent, about 9 basis points above the Eonia spot rate of minus 0.3620 percent.

    This gap suggests markets are pricing in a roughly 90 percent chance of a rate hike by the end of July 2018.

    Market expectations for a tightening in monetary policy have shot up this week after comments from European Central Bank chief Mario Draghi, remaining elevated even after the ECB tried to soothe the market reaction on Wednesday.

    "I think markets are getting ahead of themselves again on ECB rate normalisation hopes," said Martin van Vliet, senior rates strategist at ING.
  • Stephen Gallo, head of FX strategy at BMO Financial analyses the move in the euro:
     
    Essentially what the FX and rates markets have done this week is concluded that the ECB must have intended to push investors closer towards normalisation rather than further from it.  From my perspective, this is true even when we account for the attempt by ECB sources yesterday to dilute some of the 'hawkishness' Draghi injected on Tuesday.  
     
    Thus, EUR rates, the EUR (FX) and swap rate differentials have all moved in a EUR-supportive fashion this week. But, as mentioned yesterday, the move in EURUSD looks overdone, largely because the spot rate has overshot the levels implied by a number of its fundamental drivers, including swap rate differentials.  To add to the situation, the USD continues to get clobbered vs its main European rivals, and the general underperformance of European fixed income vs US fixed income is driving that feedback loop. My model shows short-run FV in a very well-defined uptrend for EURUSD (hence the buy on dips), but it currently pegs FV as low as 1.1280.
     
     I am therefore inclined to turn a bit cautious on the EUR in the 1.1450/1.1500 range. A hot Flash CPI estimate tomorrow would certainly eliminate a big chunk of this valuation gap, but the attempt by ECB sources yesterday to dilute Draghi's perceived ‘hawkishness’ means we shouldn't ignore a softer print either, and in that case the valuation gap would only look even more glaring.
  • Mortgage approvals and lending in the United Kingdom grew faster in May than had been expected.
     
    Unsecured consumer borrowing rose to 10.2 percent on an annualized basis in the three months to May.
     
    The last time that figure was reached was in November 2016.
     
    Sterling has held on to its pre-release gains.
     
     
  • It is the 20th anniversary of the handover of Hong Kong from U.K. control.
     
    Chinese President Xi Jinping has arrived in Hong Kong to celebrate the 20th anniversary of the handover from British to Chinese rule.
     
    Protests over China's influence in the financial hub are expected to accompany his visit.
     
    Lord Chris Patten was the last governor of Hong Kong before China took control of the administrative region.
     
     
    He says the Chinese have never really understood what Hong Kong stands for.
     
    Hong Kong is about greater accountability, rule of law and freedom speech. I think that increasingly got under China's nose.
    Lord Patten says Xi's vist will be heavily choreographed to portray China's popularity on the autonomous territory.
     
    On his time as governor he regrets not starting on the process of installing democracy at an earlier stage.
     
    Patten has described those protesting against Beijing as "incredibly brave" but says pushing for independence would not be successful.
  • Sterling hits $1.30 for the first time in five weeks:
     
     
     
  •  
    The Federal Reserve appears to have gone soft on U.S. banks after the regulator opted to clear every major lender in its latest annual review, according to former Federal Reserve official Carl Tannenbaum.
     
    For the first time in seven years, the Federal Reserve did not object to any of the capital plans of the 34 banks it reviewed in the second part of the annual stress tests implemented in the wake of the financial crisis.
     

    Fed has gone easy on big banks since I left, says former stress tester

    CNBCThe Fed appears to have gone soft on U.S. banks after the regulator opted to clear every major lender in its latest annual review, according to former Federal Reserve official Carl Tannenbaum.
  • Bank of England chief economist says interest rates could "edge up" if cost of living continues to rise. That's according to Reuters citing BBC, 
  • ECB's Weidmann says doesn't see willingness to shift decision-making power to European level. He says it is evident in the extent to which new principles on winding down of banks are adhered to, especially by countries demanding more mutual liability. That's according to Reuters.
     
    That (unwillingness) is evident not only in the handling of budget rules but also in the adherence to new rules on winding down banks, especially by countries demanding more mutual liability he said, according to a prepared text of a speech he is holding in Stuttgart.
  • Russia's Lavrov, USA's Tillerson to meet at G20 summit in Hamburg. That's according to Reuters citing RIA
  • U.S. stock index futures pointed to a slightly higher open on Thursday, as investors geared up for a slew of data announcements during trade, while keeping an eye on the central banking sphere.

    In data news, real Gross Domestic Product (GDP) data is due out at 8.30 a.m. ET, along with jobless claims. Meanwhile, investors will likely be keeping a close eye on yields in the bond market, as yields move higher.
     
     
  • UBS downgraded European utilities to neutral on Thursday saying that after a four-month rally it was time for a pause, as valuations of cyclical stocks looked more attractive again.
    Valuations, especially relative dividend yields, no longer look attractive and we believe the sector is in need of a pause from here, strategists at the Swiss investment bank said.
    We stop short of moving to an underweight as we still see pockets that could see further upside but it is unclear to us the sector as a whole can continue to deliver from here unless yields continue to fall, they added in a note.
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