World Markets Live - May 25 - CNBC Live Events
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CNBC Live Events

World Markets Live - May 25

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

  • Khalid al-Falih, the Saudi energy minister, says compliance with oil cuts has been very impressive.
     
    He says all options have been considered, from how long the cuts should last, to how deep.
     
    We found out that 9 months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick.
     
     
  • Our top headlines as we get underway:

    • In Vienna, oil ministers from Iran and Iraq tell CNBC they back a 9-month extension to the output deal but say deeper cuts are only up for discussion.
    • Fed minutes show policymakers agreeing to wind down the central bank's $4.5 trillion balance sheet while signalling a rate hike "soon" despite soft data in the first quarter. 
    • US lawmakers demand information from Deutsche Bank to determine whether the bank facilitated financial links between President Trump and the Russian government. 
    • Donald Trump's arrival in Brussels is met with protests, as he prepares for tough talks with EU and Nato leaders in a test of transatlantic ties. 


  • Barclays says a nine-month production cut extension is the most likely outcome from today's OPEC meeting, pointing out that a six-month extension would mean members begin to increase output when demand is at its weakest point.

    Oil prices are higher ahead of today's OPEC meeting that is expected to extend a production cut. 


  • Bijan Zanganeh, the Iranian oil minister had an exchange with Steve Sedgwick yesterday who asked if Iran was ready to extend the 9-month production cuts?

    Zanganeh said both a 6 or 9-month extension was acceptable.

    Bijan Zanganeh: 9 months is acceptable. 

    Iraqi oil minister Jabbar Al-Luiebi also told Steve that he was "very happy" with a 9-month extension.

    But is it all in vain? Steve highlights that OPEC efforts to manipulate supply could be undone by U.S. shale oil production. 

    Goldman Sachs says the production for U.S. shale is set to rise.


  • Treasury yields ticked lower and the VIX fell back below 10 last night. 

    This after the minutes from the latest Fed meeting showed policymakers are on the same page about unwinding the central bank's $4.5 trillion balance sheet, a process which has been a key concern for the market. 

    Odds of a June rate hike remained unchanged at around 78 percent.


    U.S. markets closed higher on Wednesday as investors cheered the Federal Reserve's plan.

    The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, according to the minutes from its May 3 meeting. Any amount it receives in repayments that exceed the cap limit will be reinvested.

    On set, Simon Derrick, Chief Currency Strategist at BNY Mellon says the market is currently ignoring the Fed as it continues to hunt for yield.

    When asked to nail down what might cause a crack in the market, Derrick says it is impossible to know hat might burst a bubble but he says China and a slowdown in its growth "seems to be a major story but the market is not focussing on it". 

    Derrick: Market is ignoring Fed in favor of hunting for yield

  • Senior Russian intelligence and political officials discussed how to use Donald Trump's aides to influence his decisions, according to a report by the New York Times.  

    The conversations specifically focused on Michael Flynn, the now former-National Security Advisor and Paul Manafort, Trump's campaign chairman.  

    According to the report, American intelligence discovered Russian officials bragging about how well they knew Flynn, who is now the center of multiple investigations into his connections with Russia.

    Separately, Democrats on Capitol Hill have asked Deutsche Bank to release a number of documents related to President Donald Trump, to determine whether loans made to his businesses had any links to Russia.

    Letters from Democrats to Deutsche Bank 

    Deutsche Bank has been fined 10 billion euros for its part in a Russian money laundering scheme with a Department of Justice settlement still pending.

  • All eyes are on the Organization of the Petroleum Exporting Countries (OPEC) ahead of a highly-anticipated meeting later today when the oil group looks set to extend their crude production cuts but is the big downside risk coming from China?

    If you wanted to know where the downside risk is, it is not in OPEC's decision or in U.S. driving demand or in global inventories rebalancing. I think China is the big source of concern.

     - Prestige Economics President Jason Schenker.

    The OPEC and 11 non-members will be negotiating whether to extend an agreement reached in December to cut oil production by about 1.8 million barrels a day in the first half of this year. 
  • UK scolds US ‘friends’ for leak of Manchester bomb intelligence

    CNBCRelations between the U.K. and U.S. have been strained after details about the Manchester bombing reached U.S. news outlets.
  • U.K. government officials are warning that repeated intelligence leaks by U.S. security services stand to undermine their hunt for the network behind the Manchester terror attack. 

    It was a breach of information-sharing protocol that allowed the New York Times to obtain images of the remains of the bomb detonated outside the Ariana Grande concert on Monday night. 

    British Prime Minister Theresa May is expected to broach these leaks when she meets U.S. President Donald Trump later today. 
  • A lawyer for Fiat Chrysler says a software update can help fix the company's diesel excessive emissions. This after the US Government filed a lawsuit against Fiat, accusing the carmaker of emissions violations. 

    According to the U.S. Department of Justice, Fiat has cheated emissions tests by intentionally using software to bypass controls on more than 100 thousand vehicles. 

    Anna-Marie Baisden, Head of Autos Research at  BMI Research says it doesn't look good for Fiat Chrysler as there is very little evidence to see how the issue differs from the Volkswagen scandal.

    Baisden says Fiat, who are facing multiple legal issues, would likely be better served if they accepted fines and carried on with business.

    Baisden: Not looking good for Fiat Chrysler on emissions

  • According to Sky News, the British Prime Minister Theresa May is "furious" about U.S. leaks of intelligence on Manchester attacks.

    The Guardian newspaper claims May will raise the matter when she meets Donald trump later today.


  •  
     
    Marios Maratheftis, Chief Economist at Standard Chartered Bank says the Federal Reserve wants to hike rates because it wants the flexibility to deal with any slowdown in the U.S. economy.
     
    If you expect a boom in the U.S. economy you will be disappointed. The reflation trade is not going to materialise. The U.S. economy is doing a little bit worse than most people realise but the Fed wants to hike.
     
    Maratheftis says fiscal policy is not doing anything to change economic dynamics and monetary policy and central bankers remain in everyone's focus.
     
    He says the Fed can raise rates 3 times this year and run down the balance sheet, but he doesn't foresee a multi-year hiking cycle.
     
    He claims the Fed's tightening will be "short and front loaded".
  • Low-cost European carrier Wizz Air has posted a record profit in its latest full year results as increased passenger numbers and lower fuel costs boosted earnings. 

    The airline said that there are no signs of demand weakness on routes to or from the UK despite the vote to leave the European Union.


    Jozsef Varadi, CEO at Wizz Air is on set and he says 45 percent of short-haul flights are now catered for by budget airlines. With competition remaining stiff, he expects prices to match those witnessed last year.

    On fuel, Varadi says the company is 18-months hedged and he doesn't expect to see much volatility in the price of oil and its variants.
  • European futures point to a higher start at the open after Fed minutes show policymakers agreeing to wind down the central bank's $4.5 trillion dollar balance sheet while signalling a rate hike "soon."


    Other top stories this morning:

    • Oil ministers from Iran and Iraq tell CNBC in Vienna they back a 9-month extension to the output deal but cast doubts on deeper cuts.
    • US lawmakers demand information from Deutsche Bank to determine whether the bank facilitated financial links between President Trump and the Russian government. 
    • Welcome to the "hellhole!" Donald Trump's arrival in Brussels is met with protests, as he prepares for tough talks with EU and NATO leaders in a test of transatlantic ties. 
  • British police have made a string of additional arrests as part of on-going investigations into the Manchester Arena attack. The latest evidence from the crime scene points to the involvement of a terror network linked to the bomber. 

    NBC's Richard Engel has the details. Click or tap play for his report. 

    by david.reid

  • NATO Secretary General Jens Stoltenberg has welcomed President Trump's budget proposal to increase military spending in Europe. Trump plans further investments into the European Reassurance Initiative, a special fund created by President Obama to counter Russian aggression.
     
    CNBC’s Hadley Gamble is in Brussels, where the president will head to NATO’s headquarters later today. She says Trump may have talked tough about NATO on the campaign trail but hasn’t decreased the amount of spending on NATO.
     
    At the end of the day he’s planning, or at least proposing to add an additional $1.4 billion to this Reassurance Initiative for European countries and the question going forward is how much more is he going to be willing to give?
     
     
     
  • Oil prices continue to climb higher as investors expect OPEC and non-OPEC members to agree on a production cut extension of 6 to 9 months in today's meeting.  

    Johannes Benigni, chairman of JBC Energy Group, thinks this cut may need to carry on for even longer to rebalance the market.
     
    We see the market not balanced before the end of 2019, so really OPEC now giving a signal they are going into 2018 is great, but you will see they have to roll-on with their cuts. They have to go until the end of next year and beyond.
     
     
     
  • A bill passed by the House of Representatives earlier this month would cause 23 million people in the U.S. to lose health insurance by 2026.  

    According to the Congressional Budget Office, the bill would also destabilize health insurance markets, limiting providers and making it more difficult to buy coverage.  

    Senate Republicans are currently writing their own bill which is expected to be unveiled in the next few months.

    Meanwhile, members of the Trump Administration testified before Congress Wednesday, defending the White House budget proposal which has drawn fire for its drastic cuts to Medicaid.  

    NBC's Blayne Alexander has more from Washington.

    by david.reid
  • Marios Maratheftis, chief economist at Standard Chartered Bank, discusses the impact of an OPEC production cut extension on prices.
     
    Demand is strong and the way we see the global economy it’s probably going to remain strong. It’s all about supply when it comes to prices.
     
    I think it will be positive for oil prices; we see them gradually moving higher as the market gradually moves into deficit.
     
    Maratheftis says this is important for the global economy, which is oil-based. He says the $50-$60 range is the "Goldilocks" range for the economy.
     
     
  • Barclays says a nine-month production cut extension is the most likely outcome from today's OPEC meeting, pointing out that a six-month extension would mean members begin to increase output when demand is at its weakest point.

    Oil prices are higher ahead of today's OPEC meeting that is expected to extend a production cut. 

    A 5-year chart tells the story of repricing across the second half of 2014.



  • European markets opening higher.



  • Spanish GDP growth for the first quarter is confirmed at 3 percent year on year, matching the preliminary reading.
     
    Quarter on quarter, GDP grew 0.8 percent in the Q1. That's compared to 0.7 percent growth in  Q4.
  • Only two sectors trading lower than yesterday's close.




  • European markets loook like this, so far. Remember that the Swiss market is closed for Ascension Day.

    Ascension Day commemorates the Christian belief of the bodily Ascension of Jesus into heaven


  • Zodiac Aerospace has accepted Safran's revised takeover bid, which is 15 percent less than originally agreed upon. This after the French aircraft seat-maker reported a series of profit warnings, which severely dented its share price. Despite the cut, Safran said it was confident of overcoming Zodiac's problems, adding plans to create the world's third-largest aerospace supplier were still well on course.


    Weaker Sterling has helped sweeten profit at Tate and Lyle. The British ingredients maker saw sales rise 17 percent in the year-end to March. When the currency impact is stripped out, profits rose 20 percent with improved margins boosting the business.

    A lawyer for Fiat Chrysler says a software update can help fix the company's diesel excessive emissions. This after the US Government filed a lawsuit against Fiat, accusing the carmaker of emissions violations. According to the DOJ, Fiat has cheated emissions tests by intentionally using software to bypass controls on over 100 thousand vehicles. 

    BNP Paribas has paid a 350 million dollar settlement to New York's banking watchdog in a bid to close a probe related to misconduct in its FX business. According to New York's Department of Financial Services, dozens of local traders manipulated rates while the French lender failed to stop the illegal activity. BNP said it "deeply regrets" its past misconduct.
  • Marios Maratheftis, chief economist at Standard Chartered Bank, says a Federal Reserve interest rate hike is priced in as far as emerging markets are concerned.
     
    We went through a period of re-pricing earlier on when the Fed was going ahead with tapering, and when the Fed was signaling the beginning of the hiking cycle we saw a lot of volatility in emerging markets.
     
    I remember writing a paper in April 2015 and I said who’s vulnerable if the Fed shocks? And if the Fed shocks, the main shock absorber in emerging markets is the currency, and I find the most vulnerable currencies from Fed shocks are the Turkish lira, the Indonesian rupee, the Brazilian real and the Malaysian ringgit.
  • Petrofac has shed almost 16 percent in value this morning after the firm suspended its COO Marwan Chedid.

    Chedid was interviewed earlier in May by the U.K.'s Serious Fraud Office in relation to an investigation into Monaco-based Unaoil. 





  • Democrats on Capitol Hill have asked Deutsche Bank to release a number of documents related to President Donald Trump, to determine whether loans made to his businesses had any links to Russia.
     
    CNBC’s Annette Weisbach, says Deutsche Bank is not going to do a lot to answer this request.
     
    Legally they are not obliged to do anything for that request. The request is asking for an answer until June 2nd. So what could happen of course behind the scenes, what I’m hearing is they could meet with Democrats, perhaps now or perhaps a little bit later when that whole thing gets elevated to a higher level of the Democratic Party.
     
    That could happen in the future but for now nothing really of substance will happen to that request.
     
     


    Democrat Party letters to Deutsche Bank 

  • The UK government is said to be considering scaling back its intelligence sharing with U.S. security services. The move comes after a string of leaks by American security agencies to domestic media regarding the Manchester terror attack. 

    In the latest breach of information sharing protocol, The New York Times obtained pictures of the remains of the bomb detonated outside the Ariana Grande concert on Monday night. 

    NATO Secretary-General Jens Stoltenberg will meet Trump today.

    Hadley Gamble is in Brussels at NATO where Donald trump will visit today to speak with Secretary -General Jens Stoltenberg.

    He was keen not to get in the middle of the U.S. and U.K. spat.
    The issue related to the Manchester attack, it's a bilateral issue between the US and UK, it is not for me to comment on that. But in general, intelligence is of great importance to NATO. We are stepping up our efforts and work to sharing intel. We have just established a new intelligence division here at HQ to better analyse and share intelligence. We are also today announcing a new fusion cell related to fighting terrorism, especially addressing issues like foreign fighters. 

    Stoltenberg has said that how to treat Russia will be on the agenda in discussions with the U.S. president.

    Russia is on NATO's agenda always and Russia will be discussed later today. As part of our discussions relating to the trans-Atlantic bond and burden-sharing because one of the reasons we are investing in our collective defence, increasing our military presence in the eastern part of the alliance, is of course as a response to the aggressive actions of Russia in the eastern Ukraine. 

  • Commenting on the Trump budget proposal, Marios Maratheftis, chief economist at Standard Chartered Bank, says he does not buy into the Trump administration narrative that it can cut taxes, cut the deficit and increase spending.
     
    It’s not going to happen. The growth assumptions in the budget are way too optimistic. I don’t think the U.S. economy will be going at 3 or 4 percent to help with balancing the books or not balancing the books but keeping the budget deficit relatively steady.
     
    There will be some form of tax cuts; I think that will actually happen. The cuts in discretionary spending, such as on Medicaid, will be negative for growth, and I also think they will not be enough to fund the tax cuts either.
     
    Maratheftis says the net effective on growth will be neutral or even negative. He says spending on Medicaid is a form of fiscal stimulus for the poorer part of the population, which spends more of their income on consumption.
  • Oil prices are higher in session.

    A nine-month extension of the deal is the most likely outcome to be announced at OPEC’s post-meeting press conference due to be held at 5:00 p.m. local time in Vienna, according to analysts at Barclays.

    A key risk to OPEC only agreeing a six-month extension is that it would expire shortly ahead of the seasonally weak first quarter in 2018, bringing idle capacity back online at a time of poor market demand, said the Barclays’ note.


    Brent and WTI futures prices have tracked 13 percent and 14 percent higher respectively since this month’s lows were reached on May 4, as hopes for a nine-month extension have risen on the back of increasingly supportive comments from Saudi Arabia, Iran and Iraq for such a result.
  • Italy's industry sales rose 0.5 percent month-on-month in March, compared to February's 2.0 percent.
     
    Italy's March industry orders decreased 4.2 percent, from growth of 5.2 percent in February, according to Istat.
  • Meanwhile, Poland's registered unemployment rate came in at 7.7 percent in April, matching expectations.
     
    The unemployment rate for Q1 was 5.4 percent, compared to 5.5 percent in Q4, according to the country's stats office.
  • These are the top headlines this hour.
     
    • European stocks trade cautiously higher after Fed minutes show policy makers agreeing to wind down the central bank's $4.5 trillion dollar balance sheet, while signaling a rate hike "soon."
    • Oil ministers from Iran and Iraq tell CNBC in Vienna they back a 9 month extension to the output deal but cast doubts on deeper cuts.
    • Petrofac on a slippery slope! Shares in the oilfield services provider hit an 8 year low after the COO is suspended amid allegations of fraud.
    • EU leaders roll out the red carpet for President Donald Trump in Brussels - amid new tensions between the  US and UK over intelligence leaks.
  • President Donald Trump is meeting with EU leaders this morning, in the latest leg of his inaugural overseas trip. The atmosphere amongst the delegation is expected to be tense, given the derogatory remarks President Trump has made about the European Union in the past.   
     
    Gina Sanchez, CEO of Chantico Global, says Trump is travelling with a cloud above his head.
     
    It was already going to be a difficult first trip because he has his past to contend with, which is to say he has been very inflammatory in the past with regard to Europe and to Brussels.
     
    So he was already coming into this situation with a past and what’s happening right now in Washington just makes it even harder for him to turn over a new leaf and start new relationships.
     
     
     
  • Treasury yields ticked lower and the VIX fell back below 10. This after the minutes from the latest Fed meeting showed policymakers are on the same page about unwinding the central bank's $4.5 trillion dollar balance sheet, a process which has been a key concern for the market. 

    Odds of a June rate hike remained unchanged at around 78 percent.

    Gina Sanchez, CEO of Chantico Global, says the Fed showed less conviction for a June rate hike in the latest minutes.
     
    Obviously they reaffirmed it, markets are expecting it, so I think that if we didn’t see a June rate hike it would be a surprise, but I found it interesting that they to some degree left the door open for the possibility that the next three weeks of data are going to carry more importance than we expected, particularly the jobs numbers next week.
  • Carl Bildt, co-chairperson of the European Council on Foreign Relations, has tweeted about the mood in Brussels ahead of President Donald Trump's meeting with EU leaders this morning.
     
    This is the latest leg of the president's inaugural overseas trip. The atmosphere amongst the delegation is expected to be tense, given the derogatory remarks President Trump has made about the European Union in the past.    
  • We'll have data about the U.K.'s GDP growth rate for the first quarter at 09:30 GMT.
     
    Ahead of the release, let's look at how sterling is performing and what Gilt yields look like.
     
    Sterling is up against the dollar and yen this morning, but is a little lower against the euro.
     
     
    U.K. bond yields are down between 2 and 3 basis points. Yields move inversely to prices.
     
     
  • U.K. GDP growth for the first quarter is estimated at 0.2 percent quarter on quarter. That's revised down from a previous reading of 0.3 percent. It's the weakest quarter of growth since Q1 2016.
     
    Q1 GDP growth is revised down to 2 percent year on year, from 2.1 percent. 
     
    Also, Q1 business investment grew 0.6 percent Q/Q versus a fall of 0.9 percent in Q4. This is better than the 0.2 percent expected. Year on year it grew 0.8 percent, the strongest since Q4 2015.
  • Here are some more U.K. data announcements.
     
    Services output for Q1 was revised to 0.2 percent from 0.3 percent quarter on quarter. That's the weakest since Q1 2015.
     
    Household spending grew 0.3 percent for the quarter, versus growth of 0.7 percent in Q4. That's the weakest since Q4 2015.
     
    The ONS says U.K. consumer-facing industries and household spending slowed in the first quarter, partly due to rising prices.
  • Oil prices fall sharply as the Saudi Arabian energy minister says OPEC and non-OPEC producers are likely to rule on extending production cuts for 9 months, but keep them at the same level.
     
    Prices have swung into negative territory from a more than 1 percent gain earlier today.
     
     
     
     
  • Stocks in the oil & gas and basic resources sectors are falling as the oil price drops. The consensus from oil ministers is to extend the production cut, but keep it at the same level.
     
     
  • Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, thinks markets are reading too much into oil price movement following the latest OPEC meeting.
     
    It’s the normal sort of ebb and flow of the price with the ebb and flow of the news. I think perhaps the adverse reaction was a little bit more pronounced because dismissing the idea of deeper cuts was said by the Saudi oil minister as opposed to one of the other delegates.
     
     
  • CNBC's Steve Sedgwick says the latest OPEC meeting has been well-orchestrated.
     
    9-months was the message we were getting ever since we first started speaking to ministers, from the Venezuelans to the UAE, the Iranians, the Iraqis who I've spoken to yesterday. All of them were talking about 9 months and no one wanted to go off message.
  • Khalid al-Falih, the Saudi energy minister, told reporters that a 9-month option was a "safe bet" for rebalancing the market.
     
    However, he did add that the 9-month deal could be prolonged if needed, and that there will be no oil output cap for Libya or Nigeria.
     
    These announcements have knocked oil prices this morning into negative territory, although they are now paring back losses from a session low.
     
     
    For more on this story, click here.
     
  • The U.K.'s FTSE 100 fell sharply earlier in the session after Q1 GDP was revised down to 0.2 percent Q/Q. The index has now rebounded.
     
     
    Sterling initially spiked against the dolllar, but has now turned flat.
     
     
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