World Markets Live - May 3 - CNBC Live Events

CNBC Live Events

World Markets Live - May 3

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

    Interest rates should rise and stocks should temporarily fall this summer, said noted investor, Jeffrey Gundlach.

    Gundlach expects the 10-year Treasury yield to move higher, and a summer interest rate rise should "go along with a correction in the stock market."
    I think it's more likely that equities drop when yields are rising, he said in response to a separate question.

    Jeff Gundlach sees summer correction in the stock market

    CNBCGundlach was speaking on the funds for a "Closed-End Funds Audio Webcast" Tuesday after the market close.
    Comment ()
    It was a mixed report card for Apple as iPhone sales disappointed but revenue from services grew, especially in countries such as India.

    Mizuho appears to be taking a positive view and has raised the target price for the firm from $150 to $160 on a buy rating.

    The German listing share price of Apple is now 1.35 percent lower.

    On air, Stephen Isaacs, Chairman of the Investment Committee at Alvine Capital, says the share buyback strategy by Apple hints at a lack of imagination from those at Cupertino HQ.

    Isaacs says Cook may have missed an opportunity to give more money back to shareholders. He says the good thing about Apple is that it has proper earnings that pay a dividend.

    He says the rest of the tech sector is a bubble and valuations look way too high.
    Comment ()
    Growth in Britain's construction industry accelerated to a four-month high in April, adding to tentative signs that the economy might be recovering a little momentum after a lacklustre start to 2017, a survey showed on Wednesday.

    The Markit/CIPS UK Construction Purchasing Managers' Index (PMI) rose to 53.1 from 52.2 in March, against forecasts in a Reuters poll of economists for a slight fall.

    Civil engineering grew at the fastest pace in just over a year and growth in house-building hit a four-month high.
    Comment ()
    Gold prices on Wednesday hovered near a three-week low hit in the previous session as the dollar firmed on expectations that the U.S. Federal Reserve may raise rates in June.
    Comment ()
    Britain's Brexit Minister David Davis says we do not recognize any of the Brexit bill numbers that have been bandied about in the press. That's according to Reuters.
    Comment ()
    EU Brexit negotiating directives say EU citizens already in Britain, British citizens already in EU must enjoy same rights based on EU law after Brexit, according to the negotiating directive. 
    The EU citizens in Britain who have lived in Britain for five years should have the right to permanent residence. The methodology of financial settlement with Britain has to be established in the first phase of Brexit talks, the directive says. 
    Comment ()
    EU's Barnier says time for reaching an agreement with Britain is very short. Barnier says hopes to be able to say in October, November there has been sufficient progress in talks with Britain. 
    EU's Barnier has also said that sufficient progress would allow start of talks on future relationship with Britain. On Citizens rights, sufficient progress will include a cut off date. 
    Barnier further adds that we cannot give any definitive figures, because life will continue until UK withdrawal.
    Comment ()
    EU's Barnier says Brexit talks very complicated, those who say there won't be consequences are not telling the truth. Barnier further says that he met people in London and they are aware of the difficulties. 
    Barnier says British elections will not change anything on the EU determination in Brexit talks. Agreement on citizens rights must apply to all who arrive in Britain up to the day of exit. That's according to Reuters.
    Comment ()
    The Conservative Party of British Prime Minister Theresa May has a narrower lead over the opposition Labour Party than a week ago, an opinion poll published by research firm Panelbase showed on Wednesday ahead of a national election on June 8.

    The online poll, which excluded undecided voters, gave the Conservatives 47 percent support, down two percentage points from Panelbase's previous poll published last week, while support for Labour rose three points to 30 percent.

    The Liberal Democrats and the UK Independence Party were unchanged on 10 and 5 percent respectively.

    The fieldwork for the Panelbase poll was conducted between April 28 and May 2 and 1,034 people took part.
    Comment ()
    Healthcare is the top performing sector this morning, up about 0.5 percent. This is largely driven by the gains in the share price of global healthcare firm Novo Nordisk afetr profits beat forecasts and the drugmaker raised its outlook. 
    Overall, the sector is up about 10 percent over the past 12 months and 16 percent since US President Trump got elected on November 8. 
    Investors had initially been optimistic regarding the outlook for European healthcare stocks as drug stocks had initially rallied in the aftermath of Trump's election victory which reflected investor relief that his opponent, Hilary Clinton, would not be able to implement price controls on the industry. 
    However, Trump's latest comments appeared to be indicative of a negative outlook for European healthcare stocks, especially those with a greater exposure to the U.S. market.
    Earlier Trump had said the drug industry in the U.S. was "disastrous" and pharmaceuticals had been "getting away with murder" during his first press conference as President-elect.
    But after sharp losses initially, European healthcare stocks have now started making gains after promising results in the first quarter of 2017.
    Comment ()
    The European Union hopes to make enough progress by November on citizens rights and a financial settlement in talks on Britain's exit from the bloc to be able to start discussions on a future relationship with London, the EU's chief negotiator said.

    Discussions on a future trade deal between Britain and the EU are important to London, which hopes they could be wrapped up by the time Britain leaves the EU on March 29, 2019. EU officials say much more time is likely to be needed.

    Michel Barnier told a news conference that such "sufficient progress" would include agreeing with London on a way to calculate what Britain will owe the EU on the day it leaves.

    He said he could not give even a estimate now, but that it was not his intention to ask Britain to sign a blank check.

    Such sufficient progress would also include agreeing to a cut-off date, until which EU citizens arriving in Britain would enjoy the same rights as now. The EU wants that to be the date of Britain's withdrawal -- March 29, 2019.

    Barnier urged a quick start to the negotiations, warning time was "very short" to settle a lot of very complex issues, and said Britain's elections on June 8 would change nothing in the EU approach to negotiations on Britain's exit.
    by Spriha Srivastava edited by luke.graham 5/3/2017 10:27:36 AM
    Comment ()
    Oil prices rebounded from near 2017 lows on Wednesday after preliminary data showed a much higher-than-expected fall in U.S. crude stocks, reviving bullish sentiment about easing oversupply.
    Data from the American Petroleum Institute (API) assessing closely watched U.S. oil inventories showed late on Tuesday that crude stocks had fallen last week by 4.2 million barrels, nearly double the drop expected by analysts polled by Reuters.

    The API statistics are helping the market recover, but the underlying sentiment is still bearish," said Tamas Varga, analyst at London brokerage PVM Oil Associates.

    The U.S. government releases official inventory data from the Energy Information Administration on Wednesday at 1430 GMT.
    Oil investors continue to eye producing countries' compliance with their pledge made in late 2016 to cut production by around 1.8 million barrels per day (bpd) by the middle of the year.

    Russia, contributing the largest production cut outside OPEC, said on Wednesday that as of May 1, it had curbed output by more than 300,000 bpd since October.
    This means Russia has achieved its reduction target a month ahead of schedule, just as the latest Reuters survey of OPEC production showed compliance had fallen slightly.
    More oil from Angola and higher UAE output than originally thought meant OPEC compliance with its production-cutting deal slipped to 90 percent from a revised 92 percent in March, the Reuters survey showed.
    Comment ()
    Wimbledon Men's and Women's singles champions to receive 2.2 million pounds each for 2017 tournament. The Tennis championships increase total prize pot to 31.6 million for 2017, prize money up 12.5 percent on 2016 figures. 
    The numbers also show that first round losers to earn 35,000 pounds at Wimbledon in 2017. That's according to Reuters.
    Comment ()
    The U.S. Federal Reserve is set to announce its latest policy decision today at 2 p.m. ET. Markets currently expect the Fed to hold interest rates steady, but investors will be looking for clues on future rate rises and how the central bank will address the $4.5 trillion of bonds on its balance sheet.
    The central bank has forecast two more interest rates hikes for this year, and the market thinks odds are greater than 50 percent that the next hike will come in June.
    (Fed chair Janet Yellen)
    Ahead of the decision, U.S. stock market future point to a lower open as investors wait to hear for more from the Fed, as well as to digest several pieces of economic data due today. Later on, we'll have the ADP private sector payroll data for April, which is expected to show 175,000 jobs were added last month. The data reported 263,000 jobs were added in March.
    We’ll also get the final Markit services PMI reading for April, as well as the ISM non-manufacturing reading.
    Analysts do not think the Fed to hike today due to the recent string of slightly weaker economic data for the first quarter. In a global macro strategy note published yesterday, the UBS economic team said it expects no hike in the upcoming Fed meeting.
    In our view, the Fed will maintain its gradual stance amidst the softer tone in Q1 GDP and March inflation data. Q1 GDP softness reflected slower consumption growth but also stronger exports and capex growth. Similarly March core CPI and core PCE were unusually low due to hedonic adjustments in the communications component and ever volatile non-profit spending on behalf of households.
    In any case, the soft data is already reflected in the price; both breakevens and nominal yields have declined since the March FOMC meeting.
    Comment ()
    Covestro, a German polymer supplier, has announced it is almost doubling its dividend paid to investors.
    The company, a spinout from Bayer formed in 2015, announced that it was decided at its annual general meeting in Bonn to return more than 273 million euros to investors, representing a dividend of 1.35 euros per share for 2016, compared to 70 cents per share paid for 2015.
    “2016 was an excellent year for Covestro and our shareholders. We reached or exceeded all our financial goals. Demand for our products remains high," the company CEO Patrick Thomas said.
    Despite the announcement, shares in the company are down today, dropping by more than 1 percent. Over 3 months, the shares are up just 0.66 percent.
    Comment ()
    The Fed concludes its two-day policy decision meeting today, in which it will decide whether or not to increase interest rates.
    Currently, the U.S. base interest rate is at 1 percent. The Fed increased the rate at its last meeting in March.
    Here's a chart from Trading Economics showing how the central bank has changed rates over the past year.
    Alessandro Tentori, macro economics expert from AT Economics and Markets, recently published a post about his thoughts on U.S. GDP growth and what he expects to hear from the Federal Reserve today.
    The FF market is pricing in 34bp of cumulated hikes by Dec, i.e. the implied probability of realizing the dots is just 36 percent. Moreover, the curve is pricing in a policy normalization path, which is too cautious in my view. A 3 percent terminal rate is consistent with a so-called "new normal" scenario of 1 percent potential growth and 2 percent inflation, but what if future realized growth and inflation are stronger than that? 
    We already have evidence of accelerating US inflation, which both policy makers and market participants still tend to shrug off somewhat. Any official reference to strong growth above and beyond Q1 should be interpreted as a signal that the FOMC is factoring in some degree of residual seasonality and is prepared to deliver a policy path that is currently not priced in by the strip. 
    Comment ()
    Apple shares are down more than 1 percent in premarket trade, after the company reported its Q2 results following yesterday's closing bell.
    Revenue came to $52.9 billion. missing expectations of $53.02 billion. iPhone shipments also fell, hitting 50.8 million, versus 52 million expected.
    Apple CEO Tim Cook tried to talk up the results, such as the increased spending in research and development.
    "We are investing a ton in machine learning and autonomous systems," Cook told CNBC. 
    "In services, the App Store was up 40 percent and our developer community is growing by over 20 percent. There is a lot of momentum," he added.
    Comment ()
    The ADP April payrolls data is in. The U.S. private sector added 177,000 jobs in April, beating expectations of 175,000.
    The reading was lower than the 263,000 seen in March. The slowdown was blamed on  a pullback in construction and retail jobs, according to the report. Retailers cut jobs due to competition from online sellers.
    Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in the report that there was a moderate slowdown in April compared to the strong pace of job hiring in the first quarter.
    Despite a dip in job creation, the growth is more than strong enough to accommodate the growing population as the labor market nears full employment. Looking across company sizes, midsized businesses showed persistent growth for the past six months.
    Stock futures have hardly moved on the results.
    Comment ()
    Media giant Time Warner reported its first quarter results earlier today. The company achieved revenues of $7.7 billion in the quarter, with net income of $1.42 billion and earnings per share of $1.80.
    The company says it is on track to close the merger with AT&T before the end of the year, pending the result of regulatory results.
    Chairman and CEO Jeff Bewkes highlighted the success of films including The LEGO Batman Movie for contributing to the company's Q1 result.
    We're off to a strong start to 2017, as we continue to benefit from the investments we're making in the best content while also developing new revenue streams that will drive growth and meet consumer demand for great experiences built around their favourite programming and brands.
    Warner Bros. delighted audiences in both film and television, with global hits in Kong: Skull Island and The LEGO Batman Movie and more series across broadcast for the current season than any other studio.
    Shares bounced higher in premarket trade, rising on the results.
    Comment ()
    The Fed may be the focus in the U.S., but Brexit remains a major driver in the U.K. markets.
    Ahead of negotiations over the U.K.'s exit from the European Union, the EU's chief Brexit negotiator Michel Barnier has warned the U.K. to stop creating the illusion that talks will be fast and painless.
    Speaking in Brussels, Barnier laid out the European Commission's recommendations for what to achieve in the first phase of negotiations, which include reaching agreements on citizens' rights, the financial settlement and new external borders.
    The U.K. must put a great deal of energy and effort into these three issues over the next weeks and months. That will increase the chances of reaching a deal.

    Some have created the illusion that Brexit would have no material impact on our lives or that negotiations can be concluded quickly and painlessly.
    This is not the case; we need sound solutions. We need legal precision and this will take time. 
    Ahead of the June general election, the U.K.'s Institute of Directors has today called for the next U.K. government to meet with the EU in the spirit of transparent negotiation. Allie Renison, head of EU and Trade Policy at the Institute of Directors, had this to say.
    It is clear that the EU has a fixed idea about the stages the Brexit negotiations will follow, with reciprocal rights of citizens and any exit bill needing to be discussed first, before we can move on to the future trading relationship.
    The European Commission and member states look unified in their approach to the negotiations, and are being transparent about their aims.
    We would urge whoever is Prime Minister after the election to publish as soon as possible a similar set of detailed negotiating priorities, beyond what was provided for in the Government's White Paper. Businesses know neither side can show their whole hand during the talks, but the more information that politicians can provide on their objectives, the more companies will be reassured that a good deal can be signed at the end of it.             
    What will be the economic impact of leaving the European Union? No one knows for sure, but Kallum Pickering, senior U.K. economist at Berenberg, shares his base case scenario.
    In our base case, we expect the U.K. and EU27 to agree on a deal for preferential market access that covers almost all goods and some services, with the U.K. losing its EU financial services passport and some other similar privileges.
    Such a Brexit would reduce the U.K.’s long-term potential growth rate to 1.8 percent per annum from its pre-Brexit rate of 2.2 percent. A “harder” or “softer” Brexit relative to our base case would imply a bigger or smaller negative impact on trend growth, respectively.
    In case of a hard Brexit, long-term trend growth could fall to as low as 1.5 percent per annum. While this would hurt badly, it would put the U.K. on par, in growth terms, with the current Eurozone average.
    Comment ()
    U.S. market will be opening in around half an hour, so let's check in with how European markets are performing.
    The pan-European Stoxx 600 has turned negative, currently down around 0.1 percent.
    Basic resources and autos are the sectors dragging on the index. Some of today's falls are due to profit-taking, after European shares hit 20-month highs in the previous session. Apple's miss on revenue and iPhone shipments have also hit companies which supply the tech giant.
    These are the worst performers on the index. Shares in tire maker Nokian fell more than 5 percent after missing its operating profit estimates for the first quarter. Meanwhile, shares in U.K. food grocer Sainsbury slumped on its full year results, which showed profits falling for the third straight year.
    Comment ()
    Along with Brexit, the other political event on the mind of Europeans is this weekend's French presidential elections.
    Emmanuel Macron remains the favourite and he will take part in a live televised debate with Marine Le Pen this evening.
    Some believe Le Pen may stage a Trump-style turnaround and surprise markets and pollsters to win the election this weekend.
    According to U.K. bookmaker Betfair, £23 million has been bet on the outcome of the election. Emmanuel Macron bets are trading at 1/8, implying an 89 percent chance of winning the second round, while Le Pen bets are trading at 8/1.
    However, 80 percent of bets made in the last 24 hours have been for Le Pen.
    Betfair's spokesperson, Naomi Totten, had this to say.
    Macron is the heavy favourite and continues to attract the big money, with bets of up to £85,000 backing him to go the distance. However, the number of smaller individual bets coming in for Le Pen is a similar profile to that of Donald Trump in the final days prior to the US election. 

    This pattern of Exchange betting also mimics the activity we’ve seen on our Betfair Sportsbook market; if Le Pen can shift the game by Sunday we could easily be facing a seven-figure pay at the current rate of trading.
    Comment ()
    Here's a run down of some of the key earnings releases ahead of the bell.
    Sprint reported a fourth quarter loss of $283 million on revenue of $8.54 billion. That's a loss of 7 cents a share, but better than the $554 million loss, or 14 cents a share, from a year earlier. The company managed to reduce its quarterly loss after adding more postpaid phone subscribers. 
    Yum Brands reported Q1 revenue of $1.42 billion, with net income of $280 million. The company said strong demand at Taco Bell helped the company to beat profit estimates.
    Clorox reported Q3 net income of $172 million, on sales of $1.48 billion. The company sees full year sales up 3 to 4 percent and anticipates Q4 EBIT margin to increase.
    Delphi Automotive announced a spinoff of its powertrain business. In the first quarter, the company achieved net income of $335 million on sales of $4.29 billion. 
    Comment ()
    The U.S. market is now open, with shares moving to the downside as investors digest ADP payrolls data which shows 177,000 private sector jobs were added in the April.
    The Fed is in focus. The central bank will announce a policy decision this afternoon.
    Comment ()
    The Dow Jones is down for the third time in four sessions at the start of trade today. The S&P and Nasdaq are also lower.
    Despite the recent slide, the index remains up more than 5 percent over 3 months.
    Intel and McDonald's are the best performers on the index today.
    Intel announced two new storage drives for cloud-style data centres last night, which will allow it to make strides in the memory market and capitalise on the growing importance of the cloud. Meanwhile, Goldman Sachs raised its rating on McDonald's from Neutral to Buy, providing the share price with support.
    Apple is weighing on the index, dragging the index down after the tech giant reported a miss on revenue and iPhone shipments in its latest earnings results.
    Comment ()
    Apple shares wee down nearly 2 percent at the start of trade, taking a big bite out of U.S. stock indexes. The share price has trimmed losses but remains down almost 1 percent.
    The company reported its Q2 results last night, disappointing the markets after revealing revenue came to $52.9 billion. missing expectations of $53.02 billion, while iPhone shipments also fell, hitting 50.8 million versus 52 million expected.
    Despite the disappointing results, many analysts are still favourable towards Apple. Amit Daryanani from RBC Capital Markets has a target price for Apple of $157.
    Overall, Apple reported largely in-line numbers for March-quarter and June-quarter guide is modestly below consensus. However, we don't think the modest miss on guide derails the underlying narrative on Apple - iPhone supercycle, cash repatriation and services growth - makes Apple an attractive large-cap tech name to own for 2017.
    We do think underlying iPhone demand was likely better versus headline numbers due to channel inventory management. China remained soft in the quarter and will likely be a focus. Finally, Apple increased  their buyback program by $50 billion and increased their dividend by more than 10%.  
    Comment ()
    The final reading for the U.S. Markit services sector PMI in April came to 53.1, beating the flash reading of 52.5 and the final March reading of 52.8.
    This gives a final combined PMI reading for April of 53.2 versus the flash reading of 52.7.
    The service sector PMI employment index for April softened to 50.7 from a flash reading of 50.8, lower than March's reading of 51.8. This is the lowest reading of the survey since matching 50.7 in July 2010. The composite employment index for April is 51.1, which is its lowest since February 2010.
    Comment ()
    The ISM report on the U.S. non-manufacturing sector shows a PMI reading of 57.5 in April, beating estimates of 55.8 and better than March's reading of 55.2.
    The business activity index jumped to 62.4 in April, from 58.9 in March, while the new orders index jumped to 63.2 in April versus 58.9 in March. This is highest reading since August 2005.
    However, the employment index dropped to 51.4 for April from 51.6 for March. This is its lowest reading since August last year.
    The stronger-than-expected PMI data has boosted the dollar, sending the U.S. currency to a six-week high against the yen and boosting it against the euro and sterling.
    Comment ()
    The U.S. bond yield curve has flattened slightly this afternoon, following a series of announcements by the U.S. Treasury.
    Traders had expected the Treasury may announce an extra $2 billion of 10-year and 30-year bonds to be auctioned next week. Instead, the Treasury said it would maintain issuance at current levels of $62 billion in notes and bonds. The Treasury also urged Congress to increase or suspend the debt ceiling as soon as possible.
    The Treasury did say it was studying the possibility of issuing ultra-long bonds lasting longer than 30 years, but declined to endorse Steve Mnuchin's idea for 50-year and 100-year bonds and added that it saw little demand for debt lasting longer than 30-years.
    These comments sent the yield on 30-year Treasury bonds to session lows. 
    Comment ()
    FBI director James Comey is beginning to testify before the Senate judiciary committee.
    Comment ()
    James Comey is discussing the FBI's role in taking down bot nets and arresting a Russian hacker, as well as the FBI's role in dealing with the bomb threats made against Jewish community centres earlier this year.
    Comment ()
    James Comey answers why he reopened the probe into Hilary Clinton's emails 11 days before the U.S. election. He says his choice was either to speak or conceal that the FBI had found new evidence.
    He said speaking out was really bad, but concealing the truth was "catastrophic." 
    He says it was made him "nauseous" to think the investigation had an impact on the election, but he stands by the decision and says he would take it again.
    Comment ()
    James Comey says Anthony Weiner's laptop might have had missing emails, which is why they needed to go through the emails and announce the probe was being reopened.
    Comment ()
    Here's how the U.S. stock markets are performing so far in Wednesday trade. The Nasdaq is currently down almost 0.7 percent.
    Despite the falls today, the Nasdaq has had a strong run recently, hitting fresh record highs. Over 3 months, the index is up more than 7 percent, helped by gains in the FAANG stocks: Facebook, Apple, Amazon, Netflix and Alphabet (owners of Google)
    The fall in Apple shares is weighing on the index, but its not the worst performer today. Concerns about Apple is weighing on its suppliers as well.
    Akamai is the worst performing stock. Several financial brokers have cut its rating from Buy to Hold or Neutral on disappointment after it reported Q2 revenue and profit would miss estimates.
    Comment ()
    Tomorrow, CNBC will be interviewing HSBC's group finance director Iain Mackay to discuss the bank's first quarter earnings results.
    Analysts expect the bank to report net profit of $2.67 billion, down from $4.3 billion in the same quarter last year, according to Margot Patrick at the Wall Street Journal.
    Shares in the bank have struggled over the past three months, dropping sharply lower in mid-February and again in April. Year to date, the shares are down almost 2 percent.
    A major topic in tomorrow's interview with Mackay is likely to be the impact of Brexit. The bank has warned repeatedly that companies and clients are already looking to move or re-rout their businesses into Europe before a final Brexit deal is reached.
    The bank itself said in January that it may move 20 percent of its London banking operations, representing thousands of jobs, from the U.K. capital to Paris.
    Comment ()
    European markets are now closed. The pan-European Stoxx 600 finished Wednesday's session down 0.12 percent.
    Comment ()
    This is how the individual European markets performed today.
    Comment ()
    Lastly, these were the best and worst performers on the Stoxx 600 today.
    Comment ()
    FBI director James Comey is testifying before the Senate judiciary committee. He says the Russian government is still involved in American politics and warns that Russia represents 'the greatest threat of any nation on Earth given their intention and capability.'
    Comment ()
    Here's a last look at U.S. stock markets. The indexes are trimming losses, but remain lower.
    Comment ()
    We'll close the blog there, thank you for reading and join us tomorrow at the slightly earlier time of 0530 BST to cover the release of HSBC's Q1 earnings.
    Comment ()
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