World Markets Live - May 11 - CNBC Live Events

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World Markets Live - May 11

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

    It's "Super Thursday" in the U.K. today, with Bank of England set to announce its latest policy decision and its inflation report.
    The central bank is seen holding rates at 0.25 percent.
    Sterling is have a mixed performance this morning. It is up against the euro, flat against the dollar and down against the Japanese yen.
    Comment ()
    The Bank of England is expected to keep its benchmark lending rate unchanged at a record low of 0.25 percent when it publishes its May policy decision later today.

    Gemma is outside the Bank of England with Rob Wood, the chief U.K. economist at Bank of America Merrill Lynch

    He says the U.K. consumer is "one punch short of being knocked out".

    He cites less than punchy data allied to downbeat consumer surveys and attempts to imagine what a BOE MPC member might be thinking today:

    The inflation outlook has softened a bit because oil is down and sterling is down. Let's just sit on our hands and wait until August to reassess.
    Wood: No sign of upwards domestic generated inflation pressure in U.K.

    He predicts the Bank of England will estimate the inflation rate to be at 2.3 percent by the end of 2018. He says that is not a rate hiking forecast.
    Comment ()
    A big day for earnings with Telecoms playing its part.

    Deutsche Telekom has confirmed its full year outlook after posting a 7 .5 percent rise in core profit in the first quarter, just above analyst expectations. Sales were also higher in the period, partly thanks to a recovery in Germany, where mobile service revenues grew 1.4 percent. 

    On set Neil Campling, Head of Global TMT Research at Northern Trust Capital Markets says Deutsche Telekom are struggling as the European Commission enforces restrictions on upward pricing.

    He says apart from stifling margins that will also hamper market consolidation. 

    Campling highlights that the T-Mobile U.S. division that Deutsche Telekom owns is doing very well, hoovering up customers stateside.

    T-Mobile has gone from a problem child to a prize asset.

    BT says it will lower its dividend growth forecast for the year ahead,  after enduring what it called a "challenging year." The British telecoms giant also announced plans to restructure its global services unit in a move which will involve slashing 4 thousand jobs and taking on a 300 million pound charge. The reshuffle comes as BT reported fourth quarter earnings broadly in line with expectations. 

    Neil Campling, Head of Global TMT Research at Northern Trust Capital Markets says BT's description of a "progressive dividend policy" simply means a cut in the dividend.

    He says the only ray of light in the BT numbers was in the mobile division EE which was promising on the "churn" metric.

    Finally, operating income at Telefonica came in at just over 4 billion euros in the first quarter. Revenue for the first three months rose about 4 and a half percent year on year due to a strengthening of the Brazilian Real.The Spanish telecoms giant also saw net debt widen to 48.8 billion euro.

    Campling gives Telefonica quick thumbs down because "all the KPI's missed and the stock has rallied hard recently". 
    Comment ()
    A non-binding ruling from an EU court adviser has stipulated that Uber is a transport company and not just an app maker or "information-society company".

    The designation could determine how Uber is regulated in Europe. 

    Although non-binding, EU judges tend to rule in line with such advisory opinions.

    Uber responded by saying that "being considered a transportation company would not change the way the company is regulated in most countries"

    Uber: Is it an app or a taxi firm? 

    Comment ()
    Shares in Italian banking giant Unicredit are now up more than 4 percent in trade today.

    Unicredit has exceeded expectations with a 907 million euro net profit in the first quarter, swinging back from a loss in the fourth quarter. The bank benefited from higher fees and a sharp rise in trading income during the period.

    Wealth management was a particularly supportive division during the quarter. 

    In a note investment bank, Jefferies has said that Unicredit showed a strong rebound in asset quality, capital levels, and profit recovery.

    Comment ()
    The U.K. industrial output figure rose 2.1 percent year-on-year in March, but that missed expectations. It marks the third straight month of falls.

    Within that manufacturing also disappointed in March, posting a year-on-year rise of 2.3 percent against predictions of 3.0 percent.

    U.K. March construction output is up by 2.4 percent year-on-year versus a forecast of 2.8 percent.

    All 3 measures fell on a month-to-month basis.

    The trade gap has widened more than expected according to the Office for National Statistics. It now sits at £13.44 billion, the third highest level on record.

    The ONS said today's figures would not affect its estimate that the U.K. economy, measured by GDP, grew by 0.3 percent in the first quarter of 2017.

    Sterling has dipped lower.

    Comment ()
    Today’s economic calendar in The United States looks like this (New York time):

    0830 Jobless Claims

    0830 PPI

    1030 Natural Gas Inventories

    1300 30-Yr Bond Auction

    1630 Fed Balance Sheet/Money Supply

    Markets look set to open lower at this early stage. Yesterday stocks in the U.S. lacked direction, closing mixed. 

    The 'VIX fear index'  closed below 11.0 for 13 consecutive sessions. That is a record.

    Comment ()
    U.S. government debt prices were higher on Thursday morning as investors looked to data and the auction of $15 billion in 30-year bonds. 

    At the last print, the yield on the benchmark 10-year Treasury note was lower at 2.3980 percent, while the yield on the 30-year Treasury bond was also lower at 3.0351 percent. Yields move inversely to prices. 

    In oil markets, Brent crude traded at around $50.85 a barrel on Thursday morning, up 1.25 percent, while U.S. crude was around $47.95 a barrel, up 1.29 percent.

    Comment ()

    Later today we hear the BoE policy announcement and Inflation Report. 

    RBC's Adam Cole says the May MPC meeting is expected to conclude with the main policy settings remaining unchanged. 

    He says  7-1 vote on the bank rate is anticipated but some risk of a move to 6-2 is possible.

    Cole believes the main risk for GBP is any mention in the press conference of the 2.5 percent trade-weighted index appreciation of sterling since the last Inflation Report being unwelcome. 

    Recent releases have shown export volumes virtually flat y/y, suggesting little positive impact from GBP’s depreciation. 

    Despite poor official March data from the U.K. this morning, gilts have performed relatively well with yields only ticking up.

    Comment ()

    Will caution be the watchword as the Bank of England issues its latest growth and inflation forecasts?
    by david.reid
    Comment ()
    Will caution be the watchword as the Bank of England issues its latest growth and inflation forecasts?
    Comment ()
    At the time of Bank of England’s (BoE’s) last Inflation Report in February, the projections pointed to CPI inflation peaking a little below 2.8% in 2018.

    Investec has suggested in its latest note that this, along with some other hawkish signals, suggested the Bank of England was previously eyeing up a return to less accommodative monetary policy.

    However, the research team there now believe a drumbeat of soft data relating to consumer spending, GDP, poor wage inflation and a rise in the pound could trigger a return to a more neutral, if not dovish, stance from Mark Carney and his team.

    Investec predicts the 8 member MPC (Charlotte Hogg has yet to be replaced) will vote unanimously to hold the QE total steady and that 7 of the 8 MPC members will vote to hold Bank rate steady next week, with just Kristin Forbes dissenting again. 
    Comment ()
    S&P Global Ratings have released a report looking at why UK Gilt yields are low ahead of the BoE decision today.

    They say several factors suggest higher yields: 

    1. Higher short- and long-term inflation expectations
    2. The end of the latest phase of quantitative easing (QE) 
    3. market expectations of an earlier hike by the Bank of England (BoE)

    "Yet, yields declined. This is partly due to a significant deterioration of market-implied real rates, which seems overly pessimistic and can only to some extent be explained by a more muted outlook for U.K. economic growth due to Brexit."

    S&P believe yields should rise again if a "softer" Brexit begins to look more likely once negotiations with the EU begin in earnest.
    Comment ()
    Comment ()
    The Bank of England has left rates unchanged at 0.25 percent. 
    The BoE's Monetary Policy Committee (MPC) voted 7-1 in favour of keeping interest rates on hold at their record low 0.25 percent this month, as expected in a Reuters poll of economists.

    American academic Kristin Forbes, who leaves the MPC at the end of June, again voted to raise rates to 0.5 percent and warned that the overshoot in inflation could become more protracted without tightening policy now.
    Comment ()
    Sterling slips 0.3 percent as the BoE holds rates at 0.25 percent:
    Comment ()
    The Bank of England has revised its forecast for inflation to peak at 2.82 percent by the end of 2017. That versus February's peak forecast of 2.75 percent in the second quarter of 2018.

    The bank says interest rates may need to rise by "somewhat greater extent" than implied in market projections.

    The BOE has said rates may need to rise before late 2019.
    Comment ()
    Kerim Derhalli, CEO and founder of invstr, reacts to the BoE’s decision to keep interest rates unchanged:
    No surprises here that Carney has opted not to rock the boat by keeping interest rates unchanged. 
    Inflationary pressures and uncertainty around Brexit will persist and rushing into a decision now could be dangerous. The Bank of England’s verdict shows that they are mindful of the possibility of lower growth as companies put investment on hold in the face of this uncertainty.
    While there are cases for a rate hike driven by consumer price inflation, the pressures aren’t enough and it seems unlikely that we will see any changes until at least the end of 2018.
    Comment ()
    The Bank of England has lowered the UK economic forecast to 1.9 percent for 2017. In February, it was set at 2.0 percent.

    The growth forecast was upped in 2018 to 1.7 percent from 1.6 percent and in 2019 to 1.8 percent from 1.7 percent.

    On inflation we learn:

    Inflation in three years time at 2.26 percent (Feb forecast 2.36 percent)
    Inflation in two years time at 2.20 percent (Feb forecast 2.56 percent)
    Inflation in one year's time at 2.64 percent (Feb forecast 2.72 percent)
    Comment ()
    Sterling has hit day's low against the euro. Meanwhile, the currency has hit one-week low against the dollar:
    Comment ()
    The Bank of England said that some MPC members would need "relatively little upside news on growth or inflation" to consider voting for tighter policy.

    Comment ()
    Anthony Doyle, Head of Fixed Income Business Development at M&G Investments joins us live to analyse the Bank of England rate decision:
    It is undeniable that the Bank of England is a very credible institution and independent central bank. Very much  an inflation targeting central bank. However they have shown that since the financial crisis they are willing to target higher inflation levels whether they would be transitory factors such as higher oil prices or not.
    Comment ()
    Let's take a look at the European stock markets this morning as the Bank of England kept rates unchanged at 0.25 percent:
    Comment ()
    Bank of England governor Mark Carney has just arrived. Stay tuned as we bring you the latest from the press conference.
    Comment ()
    Bank of England's Carney says sterling has appreciated, possibly reflecting market expectations of a more orderly Brexit. 
    Comment ()
    Mark Carney says projected inflation overshoot entirely reflects effects of sterling's fall since November 2015. He further adds that sterling depreciation caused by market expectations of material adjustments to UK's medium-term prospects as it leaves the EU.
    Comment ()
    Sterling hit a one-week low earlier and is trading 0.4 percent lower against the dollar as Mark Carney speaks to press:
    Comment ()
    Bank of England says while Brexit will play important role, other factors will influence UK economic outlook. Carney further says that monetary policy will respond in either direction to changes in economic outlook.
    Carney says the MPC judges that monetary policy could need to be tightened by somewhat greater extent than very gentle path implied by markets in May forecasts.
    Comment ()
    BOE's Carney warns that this is going to be a more challenging time for UK households but says that the economy is still growing solidly. 
    Carney also says that we have not made a forecast on disorderly Brexit transition. Smooth Brexit assumes there will be agreement on future trading arrangement, smooth transition. 
    Comment ()
    Bank of England governor Mark Carney says we haven't changed judgement on range of possible outcomes on Brexit transition. Carney says there is a bit of a drag on productivity in our forecasts as economy reorients to new post-Brexit arrange,ents. 
    Carney further adds that the squeeze on real household incomes is not all because of Brexit. 
    Comment ()
    Sterling slips as Bank of England's Carney speaks to the press, hit's day's low of $1.2860:
    Comment ()
    Ben Brettell, Senior Economist, Hargreaves Lansdown analyses the BOE rate decision:
    The Bank of England’s view of the UK economy remains largely unchanged from February, today’s quarterly inflation report showed. Provided whoever wins the election can manage a ‘smooth’ Brexit, the Bank predicts steady if unspectacular growth for the UK over the next couple of years.
    This year’s forecast was trimmed slightly, from 2% in February to 1.9%, but next year’s was upgraded from 1.6% to 1.7%.
    The economy is battling some significant headwinds at present, as higher inflation puts the squeeze on consumers’ real incomes ahead of June’s general election and the start of Brexit negotiations. The economy has surprised on the upside since last summer’s referendum, powered by a resilient consumer, but it looks like households are now starting to feel the pinch from the current bout of inflation. The Bank expects inflation to peak a little below 3% in the fourth quarter.
    Comment ()
    Bank of England's Carney says we do expect real income to turn positive over next few years. 
    He says there is some evidence businesses are hesitating to bring in higher wage costs during uncertainty around Brexit. 
    Comment ()
    Bank of England's Deputy Governor Ben Broadbent says squeeze from rising import prices won't last for ever. Broadbent says we still think tightness of labour market means something for future growth.
    Carney says trade, investment not expected to boom and trade growth relatively modest given extent of sterling depreciation and growth in world economy. 
    Comment ()
    BOE's Carney says some MPC members think equilibrium unemployment rate could be below 4.5 percent, some higher. He says exporters in European supply chains, Brexit means expanding capacity makes no sense. 
    Comment ()
    Carney says monetary stimulus isn't excessive, it is appropriate. 
    Sterling meanwhile, continues to trade lower as Carney speaks to the press:
    Comment ()
    Bank of England's Carney says forecasts don't project a debt-fuelled consumption boom. 
    Comment ()
    Chris Saint, Senior Analyst, HL Currency Service analyses the move in sterling following the BOE's rate decision and Carney's press conference:
    Sterling slipped by about half a cent against both the euro and US dollar after the Bank of England left interest rates at a current record low of 0.25% and maintained its quantitative easing measures at £435 billion this afternoon. The decision was as anticipated, although the Bank cautioned that interest rates could need to rise sooner than markets currently expect if the UK economy evolves in line with its updated projections. The 2017 growth forecast was trimmed to 1.9%, from 2% previously, whilst the fact that Kristin Forbes remained the sole dissenter favouring an immediate 0.25% rate rise in a 7-1 vote provided a mild disappointment for markets. The pound had also dipped earlier in the day after weaker-than-expected data showing UK industrial output shrank for a third straight month in March.  
    Elsewhere, the Reserve Bank of New Zealand left its key policy interest rate unchanged at 1.75% overnight, maintaining a neutral policy stance. There had been some expectation that the central bank could signal interest rates might rise sooner than previously expected in response to higher inflation in the March quarter, although Governor Graeme Wheeler attributed this to the temporary impact of higher petrol and food costs. The New Zealand dollar fell heavily after the announcement, with sterling advancing to 9-month highs just below the NZ$1.90 level.
    Comment ()
    Bank of England's Carney says the thing to watch in global economy is that there could be upward pressure on global interest rates. 
    Comment ()
    Bank of England's Deputy Governor Ben Broadbent says sterling's recent appreciation will have had at the margin a depressing effect on inflation forecasts at the end of horizon. 
    Here's a look at sterling's performance year to date:
    Comment ()
    Bank Mark Caney says Brexit process does not tie hands of MPC. He said UK economy is still growing solidly. 
    Carney said volatility is quite low in financial markets, but closer to historic averages in sterling markets. 
    Comment ()
    US weekly jobless claims total 236,000 vs 245,000 estimate
    First-time claims for state unemployment benefits were expected to total 245,000 in the most recent week, up from the 238,000 claims reported for the week earlier.
    Comment ()
    US Producer Price Index rose 0.5% in April, vs 0.2% increase expected
    The U.S. Producer Price Index was expected to rise 0.2 percent in April, after slipping 0.1 percent a month earlier.
    Comment ()
    U.S. stock index futures point to a lower open after the Nasdaq notched a record close and a five-day winning streak.

    But tech stocks could come under pressure after Snap posted revenue that missed estimates and slower-than-expected revenue growth. The stock slumped more than 20 percent in after-hours trading.
    Comment ()
    Following the MPC's decision today to hold interest rates, Richard Theo, CEO of online investment service Wealthify argues that by keeping interest rates on hold - the MPC continues to ignore the growing savings crisis silently plaguing the UK:
    By keeping interest rates on hold again today, the MPC continues to ignore the growing savings crisis silently plaguing the UK. And today’s temporary halt on rising inflation will do little to reassure savers.

    Inflation continues to outpace interest rates and at current levels is wiping around £6.8bn per year off the real value of people’s cash savings – equivalent to taking £95 out of the average saver’s pocket – yet our research shows most of them are totally unaware.

    Despite the majority (78%) of savers claiming to understand the effect of low interest rates and rising inflation on the value of their cash savings, 71% still expect the real value of their savings to rise this year. That’s wishful thinking unless they are one of the lucky few to enjoy returns above the rate of inflation.

    In their defence, British savers are not given fair warning. Our research also revealed 81% of savers think banks should be required to issue warnings on real-term potential losses on cash savings, to help them avoid being blindsided by below-inflation cash savings rates.

    But it doesn’t have to be all doom and gloom. If Brits would just shake off their switching inertia they would realise there’s a wealth of alternative ways out there to grow their money that are hassle-free, affordable and can give them good long-term, inflation-beating returns.
    Comment ()
    RBS Chairman Howard Davies says expects significant one-off costs for 2017 related to conduct and litigation. Davies says nothing new to report on U.S. investigation into mis-selling of residential mortgage backed securities.
    Davies defends high cost of defending in 2008 shareholder case, saying it reflects "extraordinary breadth and complexity of the case".
    RBS CEO Ross McEwan says bank is focused on 'going further on cost reduction and faster on digital transformation'
    Shares in RBS plunged 1.2 percent lower but have now slowly edged back a bit:
    Comment ()
    The Bank of England has warned that Brexit will weaken incomes for years as new UK data suggests firms are already holding back on investment.

    In its latest assessment of the U.K. economy, the Bank of England (BOE) kept interest rates on hold and warned that a squeeze on households could intensify with inflation set to rise higher in the short term than previously forecast.

    BOE warns of weaker incomes for years while UK adjusts to Brexit

    CNBCThe Bank of England has warned over the protracted adjustment that the UK faces as it leaves the EU.
    Comment ()
    US stocks are now open for trading with all three major indexes opening in negative territory. Stocks take a breather after a five-day winning streak for Nasdaq:
    Comment ()

    Stocks open lower after poor earnings from Macy's and Snap; Nasdaq and S&P pull back from records

    CNBCStocks opened lower as investors digested quarterly results from Macy's and Snap.
    Comment ()
    Here's a quick look at the performance of all three Wall Street stocks this week:
    Comment ()
    Macy's shares hit more than 6-year low of $26.40 after quarterly results miss estimates. Shares down nearly 11 percent:
    Comment ()
    Shares in Snap down more than 20 percent after the social media network posted results showing revenue that missed estimates and slower-than-expected user growth.:
    Comment ()
    Dollar hits session low vs yen, as U.S. stocks fall, yields slip:
    Comment ()
    The Stoxx Europe 600 index has hit day's low, down 0.6 percent:
    Comment ()
    In reaction to the Bank of England (BoE) Monetary Policy Committee (MPC) meeting and publication of its inflation report today, Michael Metcalfe, global head of macro strategy at State Street Global Markets, and Alan Wilson, senior investment manager of active fixed income at State Street Global Advisors offer their views:
    Michael Metcalfe, global head of macro strategy at State Street Global Markets commented: Like the Federal Reserve (Fed), the BoE has chosen to put little weight on the weakness of Q1 GDP data. However, the hawkish tone suggests they are less willing to ignore recent inflation trends and that the committee now has a clear tightening bias.
    Taking its lead from the much higher inflation observed by State Street PriceStats* - a daily measure of inflation derived from prices posted to public websites by hundreds of online retailers – the trend in official inflation data this year has been stronger than the BoE had originally projected. The BoE’s inflation projections have now been adjusted upward in response. However, unless this stronger inflation trend is compensated by a much weaker growth profile, effectively a repeat of Q1 GDP data this quarter, interest rate markets will need to better price the possibility of an interest rate hike later in the year. This has the potential to provide a considerable boost to sterling.
    Alan Wilson, senior investment manager of active fixed income at State Street Global Advisors commented:
    In line with market expectations, the BoE left interest rates and its asset purchase programme unchanged. Despite growing market speculation that Michael Saunders could have been the second committee member to vote for a rate hike, Kristin Forbes remained the sole dissenter.  While Forbes’ influence can be somewhat discounted given her imminent departure, inflation concerns do seem to be rising within the MPC given the hawkish signalling within the meeting minutes and the upward revisions to the near term inflation forecasts within the Quarterly Inflation Report. Since the UK referendum last year, the BoE has been contending with the conflicting forces of a strong domestic economy, inflationary pressures and its projection a Brexit related slowdown may be coming.
    Comment ()
    Wall Street stocks continue to trade lower weighed down by Macy's that is down more than 10 percent and Snap down more than 20 percent. The stocks take a breather after a 5-day winning street for Nasdaq:
    Comment ()
    Less than thirty minutes to Europe close and stocks look like they will go home in red:
    Comment ()

    The world's advanced economies meet this week, and they left a very big topic off the agenda

    CNBCFinance ministers will punt any formal discussion of trade as they meet in Italy.
    Comment ()
    European markets are now closed for trading with the Stoxx Europe 600 closing 0.6 percent lower after a day of losses:
    Comment ()
    Major European stock indexes have also closed in negative. FTSE 100 turned positive just before closing, up 0.1 percent:
    Comment ()
    And that's all from us here at World Markets Live. Join us tomorrow from 0600 London time for yet another day of market moving news, views and analysis. Till then, have a great evening and see you soon.
    Comment ()
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