World Markets Live - May 18 - CNBC Live Events

CNBC Live Events

World Markets Live - May 18

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

    The pan-European Stoxx 600 is down by almost 0.5 percent so far today. European bourses are also extending the losses suffered yesterday. This is down to worries about the future of the Trump presidency.
    Deputy Attorney General Rod Rosenstein has appointed former FBI Director Robert Mueller as special counsel to oversee the agency's ongoing investigation into possible ties between Russia and the Trump Campaign. 
    In a statement, President Trump said "As I have stated many times, a thorough investigation will confirm what we already know - there was no collusion between my campaign and any foreign entity."
    Meanwhile, former National Security Advisor Michael Flynn informed President Trump's transition team that he was under federal investigation weeks before the election, according to a report by the New York Times.
    Flynn told Donald McGahn - now the White House counsel - on January 4th that authorities had opened an inquiry into his work as paid lobbyist for Turkey during the campaign.  Despite this, Flynn was named National Security Advisor, before being fired after 24 days on the job.
    Richard Lewis, head of global equities at Fidelity, says there are other reasons behind this risk-off trade hitting markets.
    The Wall Street drama is creating a great news story and a great narrative for why the market sell-off, but quite frankly the Trump trade had been in reversal for a long time.
    The whole move into cyclicals and financials which the Trump victory initiated in the fourth quarter has already been washed out.
    Burberry stock is trading at the top of the FTSE after the fashion firm told investors that its pre-tax profit is set to rise this year.
    However, on a less positive note, the luxury group reported a 21 percent fall in underlying profits for the last financial year.
    Michelle McGrade, CIO at TD Direct Investing, says markets are relieved as they were concerned about the results.
    People were expecting them to be flat, but I think they came in with a good set of numbers. The fact that sales actually rose 1 percent like-for-like was positive.
    What the market is really looking forward to is the new CEO coming on board and seeing how that dynamic will work with the creative director.
     Burberry shares are up more than 1 percent today.
    Thomas Cook has posted a 3 percent rise in half-year revenue, in line with expectations. 

    The British tour operator also said it expects strong demand during the summer season. Speaking to CNBC, the CFO of Thomas Cook Michael Healy said the pick-up in demand shows the company's strategy is working.
    Shares in Thomas Cookare slightly down today.
    Fiat shares are tumbling to the bottom of the Stoxx 600 after reports emerged that the U.S. Justice Department will sue Fiat Chrysler over excess diesel emissions. 

    According to multiple media reports, the DOJ could file a civil lawsuit as early as this week if no agreement is reached over the automaker's alleged violations of clean-air rules.

    The Italian-American company maintains that software in its cars wasn't designed to cheat emissions tests, but investigators say Fiat Chrysler still hasn't fully explained its purpose.
    Shares are down 6 percent today.
    U.K. April retail sales grew 2.3 percent month on month versus a March decline of 1.4 percent. This is better than the 1 percent growth expected.
    Sales grew 4 percent on the year. 
    Sterling spikes against the dollar following the release of U.K. retail data.
    The U.K.. April retail sales rise is the biggest since January 2016, according to Reuters market correspondent Jamie McGeever.
    Among the data released by the ONS there was April retail sales deflator grew 3.1 percent year on year, while value growth was up 7.1 percent year on year, the biggest rise since January 2011.
    The ONS says good weather boosted retail sales, but added that it was too early to judege the impact of higher inflation on spending.
    Sterling has hit a day's high against several major currencies on the back of the better than expected retail sales data. The pound has broken above $1.30 for the first time since October.
    Prudential reports higher Q1 new business profit of £856 million, up 25 percent.
    The company says it made a strong start to the year and reports broad-based growth in Asia. The company also announced the appointment of Mark Fitzpatrick as group CFO. 
    Shares in the firm are negative following the results.
    The latest poll from Harris Interactive shows President Macron's party gaining support ahead of the French legislative elections in June. The centrist political movement is currently polling on 32 percent, 13 points ahead of both the far-right National Front and centre-right Republicans. 
    Also, President Macron has revealed his cabinet line-up. His ministerial picks were drawn from across the political spectrum and his cabinet contains an equal amount of men and women. Macron appointed Bruno Le Maire, who previously served under centre-right President Nicolas Sarkozy, to the post of Economy minister. 
    Theresa May is expected to reveal measures aimed at curbing the rising costs of social care when she unveils the Conservative Party's manifesto later today.
    Reports say the Prime Minister will introduce means-testing for determining winter fuel payments for the elderly and ditch the so-called "triple lock" on increasing state pensions. May is also expected to retain her party's pledge to limit immigration to the tens of thousands. 
    LinkedIn has revealed the best companies to work for across Europe and fashion is first in several countries.
    Retailer John Lewis tops the U.K. list with sector peers ASOS, Topshop and Harrods also making the top 5.
    Amazon heads up the tech heavy German leaders with Zalando, Rocket Internet and Google all making the list.
    Luxury firms lead the way in France according to LinkedIn's rankings, with LVMH, Chanel, Richemont and Hermes at the top of the pile.
    Indonesia's central bank has announced it is keeping its benchmark interest rate at 4.75 percent as expected.
    The central bank says it  is monitoring global risks such as potential Fed rate hikes and U.S. trade policy.
    Here's a look at U.S. market futures, which look set for very modest gains following Wednesday's sell-off. The Dow has dropped for six of the last seven sessions.
    The pan-European Stoxx 600 is struggling in trade today. It is now down almost 0.8 percent at a session low. The index is at its lower level in 2 weeks.
    German government bond debt yields are extending falls today as concerns about links between Russia and the Trump campaign linger.
    The yield on 10-year Bunds is now at a two-week low.
    Reuters reports there at least 18 calls between Russian officials and Michael Flynn and other advisers to the Trump campaign during the last seven months of the 2016 presidential election.
    Conversations between Flynn and Russia reportedly concerned setting up a back channel for communication between Trump and Vladimir Putin which would bypass the U.S. national security bureaucracy.
    Euro zone bond yields are tumbling today following an exclusive Reuters report revealing the extent of contact between Trump's advisers and Russian officials.
    These previously undisclosed communications are being reviewed by the FBI and congressional investigators looking into possible Russian interference in the election.
    Cisco shares are trading down sharply in premarket trade.
    The cybersecurity firm reported its latest earnings results after the market close bell yesterday, which beat earnings and revenue forecasts.
    But Cisco Systems outlook for the next quarter warned revenue would drop sharply. The firm also announced another 1,100 of job cuts.

    Trump campaign reportedly had at least 18 undisclosed contacts with Russians

    Michael Flynn and other advisers to Donald Trump's campaign were in contact with Russian officials, current and former U.S. officials familiar with the exchanges told Reuters.
    Elections will take place in Iran tomorrow to choose the country's next president. 
    Indicators point to the incumbent, Hassan Rouhani, winning a second term in power.
    Torbjorn Soltvedt, principal MENA analyst at global risk consultancy Verisk Maplecroft, says companies are cautious awaiting the result of the vote.
    Before committing to any investments, most companies will want to see Rouhani affirmed as president for a second term. This caution is understandable. The 2015 nuclear agreement has so far survived the election of Donald Trump as U.S. president, but could in all likelihood not survive the removal of one of its key architects and proponents.
    Torbjorn says Rouhani has several advantages: incumbents are historically preferred; there was a strong anti-hardline current in last year's parliamentary elections; and his defence of his broad support base.
    A second Rouhani term would almost certainly pave the way for further foreign investment in Iran’s oil and gas sector. The main challenges facing foreign companies will, however, remain the same: the threat posed by U.S. sanctions and uncertainty over the resilience of the nuclear agreement.
    Hassan Rouhani speaking with reporters and photographers
    U.K. retail sales for April rose 2.3 percent month on month and 4 percent year on year, better than expected and providing a boost for sterling.
    Barclays analysts Andrzej Szczepaniak and Fabrice Montagne remain cautious, however, as the results were driven by the late Easter and the "other" category of retail.
    Non-food store retailing rebounded materially, after a poor March reading, printing 2.3 percent m/m. However, within non-food store retailing, the “other” category drove the strength, despite usually playing a muted role, with negativity from the typical categories (clothing, non specialised, and household).
    All in all, this results in a Q2 17 retail sales volumes growth carry-over of 1.9 percent q/q, after -1.4 percent q/q in Q1 17, which if realised implies a positive contribution to Q2 17 household consumption of 0.4pp, after -0.3pp in Q1 17. 
     The analysts said the strength in growth was related to the timing of Easter and warned the that posititivity will not last long.
    We are cautious as to why the “other” category within non-food store retailing, which is usually muted, suddenly contributed 1.0pp to the headline 2.3 percent m/m figure. We could very well see this subcomponent materially revised in the next release. Excluding this brings the monthly growth rate more in line with what we and consensus had expected.
    Furthermore, the underlying dynamics of the channels that support household consumption do not suggest positivity will be long-lived. Given continued weakness in nominal core wage growth, the aforementioned ascent in CPI (where the April printed surprised to the upside), real incomes will be squeezed, thus forcing households to tighten the purse strings
     Either way, sterling reacted strongly to the news. It is now up half a percent against the dollar and broke above $1.30 for the first time since October.
    Here's what to look out for from U.S. markets this afternoon.
    On the data front, we have:
    • At 08:30 a.m. ET the weekly jobless claims for the week ending 13th May. The previous reading was 236,000, forecasts predict it may rise to 240,000
    • At the same time, we'll have the Philly Fed survey for May. The last reading of the survey was 22 points.
    • At 10:00 a.m. ET we have the leading indicators index for April. The previous reading grew 0.4 percent.
    On the earnings front, we have Alibaba, Wal-Mart and Ralph Lauren reporting before the bell. After the bell, Applied Materials, Gap and Autodesk will post their latest earnings.
    The announcement that former FBI chief Robert Mueller will take over the investigation into links between Russia and the Trump campaign, as well as reports of 18 undisclosed calls between former National Security Adviser Mike Flynn and Russian officials, has added pressure on the Trump administration.
    Peter Chatwell, head of European rates strategy at Mizuho, says President Donald Trump is safe from being impeached, as these investigations could take years and would require two-third majority votes in both the House and the Senate, but he could end up as a lame duck president.
    In the house the Republicans have a majority, so for impeachment to become probable we would need to see the Republicans turning against their President. We are doubtful that the GOP wants to turn on the President yet, given that he remains popular with his core supporters. 
    The biggest risk is simply that the President becomes a lame duck. The Keynesian stimulus potential of Trump's tenure is now more doubtful. Tax reforms should still be possible, but we would expect that the market will be paring expectations of a larger deficit and a significant spending-driven boost to growth. 
     The dollar index is flat today, weighed by the concerns around Trump's presidency as well as poor U.S. economic data. Here's how the U.S. currency is performing against other major currencies.
    Oil prices are dropping today on reports that U.S. crude oil exports to Asia have soared, undermining OPEC efforts to reduce the global oversupply.
    Now Saudi Arabia has released data showing its crude exports rose to 7.232 million barrels per days in March. Output fell by 111,000 bpd in March, to 9.9 million.
    Saudi Arabia's crude stocks also rose 3.15 million barrels to 267.854 million, according to Jodi data.
    U.K. Prime Minister Theresa May has pledged to enter negotiations with the EU in the spirit of "sincere cooperation", according to her Party's election policy document as reported by Reuters.
    May says the U.K. will remain signatories to the European convention of human rights for the next parliament and pledges to maintain the common travel area and as frictionless a border as possible between Northern Ireland and the Republic of Ireland. 
    May says the days of Britain's vast contributions to the EU's annual budget will end, but it may be reasonable to make contributions for access to specific EU programmes.
    Nick is Head of Economic and Investment Research at Intermediate Capital Group, warns that the latest scandal surrounding the Trump administration may represent the "death knell" for President Trump's fiscal agenda.
    Scepticism about Trump’s ability to follow through on his campaign promises has been growing over time as reflected in the flattening of the U.S. yield curve and weakening of the U.S. dollar since the beginning of the year.  Up until the Comey firing, however, most investors in risk assets largely ignored the political noise, preferring to focus on improving economic and earnings data.  
    The most recent events are being taken far more seriously by investors, with recent market movements indicating investors are looking at the latest scandal as potentially representing a death knell for Trump’s fiscal agenda. Those investors that have not already capitulated on so-called Trump trades will likely be liquidating those positions sharply. A prolonged wider risk asset sell-off seems unlikely, however, as long as the macro and earnings data continues to hold up.
     Concerns about a "Trump slump" are leading to moves towards safe-have assets. U.S. Treasury yields are dropping today. The yield on 10-year Treasuries is at its lowest level in almost a month.
    U.K. Prime Minister Theresa May's election policy documents are being reported by Reuters. They cover her pledges on tax, foreign ownership, workers rights and fiscal spending.
    The documents says May will legislate to change planning laws concerning applications for shale oil drilling. May believes shale energy could a crucial role in rebalancing the economy.
    May is sticking to the objective to reduce annual net migration to the tens of thousands. This will include toughen visa requirements for students and increase the earnings threshold for people wishing to sponsor migrants for family visas.
    As we hit the midday point, European stocks remain subdued on concerns about the future of the Trump fiscal agenda.
    The Stoxx 600 index is down more than 1 percent today. Here's how the individual European bourses are looking.
    Meanwhile, U.S. stock market futures have turned sharply lower. The Dow and S&P 500 are coming off their biggest drop since October on Wednesday. It was the worst day for the Nasdaq since June.
    The Chinese e-commerce giant Alibaba has reported a fourth quarter adjusted EBITDA of $2.14 billion. 
    In revenue terms, the firm said it generated $4.69 billion from its core commerce operation witha  further $314 from cloud computing and $571 from digital media entertainment.
    Alibaba Group says it is to buy back up to $6 billion worth of stock over the next two years.
    In pre-market trade, Alibaba is down more than 3 percent.
    "This is your king speaking"....those crazy Dutch.
    U.S. futures had hit triple-digit losses earlier but are looking slightly healthier now. 
    Fears over President Donald Trump's future and his ability to deliver on his pro-growth agenda is still weighing on investors.

    The Dow lost 370 points on Wednesday recording its worst day since September last year.
    The president of the United States is taking to the social media site Twitter to again complain at how unfairly he has been treated in comparison to other politicians.
    In perhaps a sign of a hurried tweet, the leader of the free world appears to have misspelled "counsel".
    I make no judgment, I spell things wrong all the time.

    Early movers: WMT, BWLD, BABA, HIBB, PERY, PLCE & more

    Read some of the names that are on the move ahead of the U.S. open.
    President Trump is tweeting after the Department of Justice appointed the ex-FBI director Robert Mueller as a special counsel to investigate Washington connections with Russia.
    Mueller is known to be thorough.
    Trump feels he his the victim of the "single greatest witch hunt of a politician in American history!"
     European markets have slid to two-week lows following on from the steep selling witnessed in the United States session yesterday.
    The sell-off is th steepest and most sustained seen in a while but the pullback has come from a point of relatively richly valued stocks.
    Just over an hour until U.S. markets open and futures remain negative. The Dow is expected to open down about 80 points. That follows yesterday's fall of 372 points.
    U.S. jobless claims have come in at 232,000 in the May 13 week. The consensus forecast was 240,000. The number of Americans applying  for first-time unemployment benefits has fallen for the third straight week.
    The dollar has risen since that U.S. jobless data and is now flat for  the session against the the yen and Swiss franc.
    Only one source for this, but Fox news is reporting that former boss of Fox news, Roger Ailes, has died.

    Brazil stocks set to crash on political scandal, dragging down hot emerging markets trade

    CNBCThe iShares MSCI Brazil Capped ETF (EWZ) crashed more than 17 percent on the back of an emerging political scandal.
    Oil prices are lower in session. The market remains awash with crude despite efforts by OPEC and other big exporters to curb production.

    Chances of Trump impeachment are low, says Nomura

    CNBCU.S. President Donald Trump is unlikely to be impeached anytime soon, but the current political turmoil will derail his pro-growth agenda, Nomura said in a research note Wednesday.
    U.S. stocks move positive. This after futures had earlier suggested triple-digit losses.
    The dollar has jumped up versus the yen and is now 0.30 percent higher against the Japanese currency.
    The Brazilian Bovespa fell more than 10 percent in opening trade but is now down around 8 percent.

    Brazilian newspaper O Globo reported late Wednesday that Brazilian President Michel Temer gave his blessing to an attempt to pay a potential witness to remain silent in the country's biggest-ever graft probe.
    The performance of the Brazilian currency and stocks listed in the country are shown below.
    U.S. Treasury Secretary Steven Mnuchin is making his first official appearance and is addressing the Senate Banking Committee.
    He tells the lawmakers that:
    • 3 percent "or higher" GDP growth is achievable
    • Mnuchin reiterates goal to provide middle-class relief
    • Says he will focus on housing reform in the second half of 2017
    • Mnuchin says it is too soon to know if housing reform wold requite a government guarantor for mortgages
     Here are the best and the worst on the S&P 500.
    Argentina's Merval is down -4.27% on pace for worst day of the year. Brazil is Argentina's largest trading partner so it would seem the political scandal in Brazil is affecting its neighbor.
    UBS has issued a note on what is next for Brazil:
    In our view, the important question will be when, and not how, the current state of acute political uncertainty is resolved.
    The most benign scenario, in our view, would involve a quick and definitive refutation of the charges. A less market-friendly scenario would involve the President's resignation, followed by the election of a caretaker President who would maintain the current economic team in place and attempt to reboot the reform effort.
    This would still create near-term uncertainty. A more negative scenario would see prolonged political uncertainty as the country would face another impeachment process with potentially rising social tensions and a return to an economic scenario akin to what Brazil faced in the second half of 2015.
    UBS has removed its overweight call for Brazilian stocks and says investors should stick to high quality names such as Telefonica Brasil, Klabin and AmBev
    Brazilian President Michel Temer (C) speaks during the presentation ceremony of the Olympic athletes delegation for the Rio 2016 Olympic Games in Brasilia, on July 13, 2016.
    European markets are closed for business. A day of selling as the cream continues to come off the general trend upwards of recent weeks.
    That is where we will leave the blog, on a day when emerging market concerns roared to the front page. 
    Tomorrow is Friday when the attention on Donald trump will turn to his overseas trip.
    Donald Trump departs on a whirlwind trip that takes him first to the Middle East and then to Europe for meetings with Pope Francis, NATO and the G7.
    A big focus on Brazilian politics will also be in order. Join us again!
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