World Markets Live - May 4 - CNBC Live Events

CNBC Live Events

World Markets Live - May 4

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

    Britain's Prince Philip is to step down from royal duties. The cessation of duty will take place from the autumn of this year.

    Prince Philip is 95.

    The palace also said the queen would continue to discharge her duties.
    Comment ()
    U.S. markets all expected to open higher today. The ADP number yesterday was solid enough to suggest the main U.S. jobs number on Friday will be solid enough.

    Comment ()
    It has been a steady grind higher for European stocks this morning.

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    Amazon said on Thursday it would open a 60,000 square foot development center later this year in the U.K. focused on artificial intelligence (A.I.) and drone delivery research.

    The site in Cambridge, which is just north of the capital London, will have a capacity for 400 people but the U.S. e-commerce giant did not say how many people it was hiring.

    Amazon founder Jeff Bezos 

    Comment ()
    Miners are lower for a fourth day straight after metal prices plunged.

    High copper supply, concern over the outlook for demand in China and a stronger dollar are all weighing on metals.

    Comment ()
    Morrisons says like-for-like sales excluding fuel rose 3.4% in the 13 weeks to 30 April.

    The U.K.grocer said its expectations and guidance for the current financial year were unchanged.

    However, shares of WM Morrison have not reacted positively this morning.

    Morrisons also said its deal to sell groceries through Amazon "continues to grow", with the same-day and one-hour delivery service recently extended into more London postcodes. 

    Russ Mould, investment director at AJ Bell, explained the strength of the firm.
    “Morrisons reported like-for-like-sales growth of 3% in its first quarter, the sixth consecutive period of growth and accelerating growth at that.

    “Analysts are now expecting Morrisons to show earnings growth in 2017 and 2018, after it finally stopped a long string of profit declines in 2016."

    Source: WM Morrison 

    Comment ()
    Markets will be keeping watch for key economic data being released today.
    At 08:30 a.m. ET, we have the latest weekly jobless claims for the week ending April 29, the trade deficit for March and Q1 productivity and unit labor costs.
    Then at 10 a.m. we have factory orders for March. 
    The jobless claims figure will be important. Yesterday’s ADP payrolls report showed 177,000 private sector jobs were added last month, and these two figures will provide markets with an indication for Friday’s nonfarm payrolls data.
    Consensus expectations for the jobless claims figure are 248,000. The previous week's reading was 257,000.
    On the earnings front, AB InBev, Adidas, Kellogg and Viacom are set to report before the bell. Activision Blizzard, CBS and Herbalife are due to report after the bell.  
    Comment ()
    While the U.S. is looking ahead to fresh data, European markets are still digesting this morning's PMI readings.
    The U.K. April services PMI ticked up to 55.8 from March's 55.0, higher than expectations and hitting a four-month high. The reading suggests the economy is growing at a quarterly pace of 0.6 percent, according to Markit.
    UBS analysts Andrzej Szczepaniak and Fabrice Montagne says the PMI reading sets Q2 on a firm footing.
    The headline Composite PMI (output) index rose by 1.4pts to 56.2 in April, its highest print in 2017, and 0.7sd above its long-term average. The rise in April was driven by services and manufacturing.
    Spring was clearly in full swing in April as positivity was abound. The headline services activity index rose on the month, going from 0.1sd above its long-term average in March to 0.5sd above in April. New orders, too, rose, as did outstanding business. According to the press release, stronger business-to-business sales helped offset subdued consumer spending. Business expectations, meanwhile, fell markedly on the month, from 0.5sd above its long-term average in March to 0.6sd below in April. 
    Szczepaniak and Montagne predict that PMI readings in the second quarter will confirm the U.K. economy is softening, as Brexit uncertainty weighs.
    However, Kallum Pickering, senior U.K. economist for Berenberg, was more optimistic, saying data indications suggest upside risk to growth.
    The PMIs hugely underestimated growth before and after the Brexit vote last year – see chart. But the correlation between the soft PMI data and the hard GDP data has improved in recent quarters. If the weighed average of the PMIs for April remains stable during Q2, it would – at face value – point to growth of 0.6% qoq in Q2, well above our estimate of 0.4%, suggesting a little upside risk to our near-term growth outlook.
    While the April surveys all reported continued inflationary pressure, they reported a continued improvement in demand both at home and abroad, adding to capacity limitations and leading to increased labour demand. 
    The pan-European Stoxx 600 is trading up about 0.4 percent today. The U.K.'s FTSE 100 is performing similarly.
    Comment ()
    CNBC is now speaking live to Kasper Rorsted, CEO of Adidas, about the company's Q1 results.
    Adidas has scored larger than expected sales and profits during the first quarter. This thanks to stronger growth in online trading and a boost to its North American performance. 
    Comment ()
    Kasper Rorsted, CEO of Adidas, says the results are strong, with good growth in the U.S.
    We’ve had three great years in the U.S. We have a long way ahead of us. So right now we’re building market share in key franchises and the pricing we have right now is appropriate, but we need to make sure we maintain a very strong growth for the quarters to come.
    Comment ()
    Shares in Facebook are called around 1 percent lower in premarkets trade after the social media giant report Q1 results last night.
    The company's CFO David Wehner warned that the company expects ad revenue growth to decline, while expenses will remain higher.
    Despite the warning, some analysts are still optimistic towards the company. Several brokers, including Barclays and JP Morgan have raised their target prices for the company.
    Meanwhile, Peter Garnry, head of equity strategy at Saxo Bank, says Facebook remains a high-growth business, with Instagram able to drive growth in the years ahead.
    Investors are willing to buy Facebook shares despite the looming growth slowdown because that growth is still above the average offered by the market, and the quality (in terms of return on invested capital) is exceptionally high.
    Revenue growth in the first quarter was 49% year-on-year, down from 59% in Q2 2016. A bit worrying is the EBITDA margin that slipped to 49.8% in Q1 from around 53% on average in the previous quarters.
    The overall conclusion is that Facebook is still a high-growth business, and Instagram may be a big growth engine over the coming five to 10 years as that business is rolled out.
    Comment ()
    As well as economic data, European markets are eyeing a key political contest this weekend.
    French voters will be going to the polls on Sunday to elect either Emmanuel Macron or Marine Le Pen as their next president.
    Macron remains the favourite to win this weekend, according to opinion polls, says Felix Huefner, UBS economist, in a research note.
    Following his win in round one, when he obtained 24% of the votes, Emmanuel Macron looks set to defeat Marine Le Pen in Sunday's second round of the French presidential election, according to opinion polls. These polls suggest support of around 60% for Macron and 40% for Le Pen.
    Investor anxiety has decreased after polls proved rather accurate in forecasting the round-one outcome. Participation is projected to be 75%, lower than in round one (78%) or in the 2012 round two (80.5%). In prior presidential elections since 1988, the round-two winner obtained between 51% and 54%, with 2002 being an exception, when Jacques Chirac received 82.2% as he faced Jean-Marie Le Pen.
    However, the next cause for concern will be parliamentary elections in June. Neither Macron or Le Pen's parties are likely to have large parliamentary presence, which will make it hard for either to push laws through parliament. 
    Barclays analysts Francois Cabau and Philippe Gudin says there is a high chance of a hung parliament occurring.
    While polls suggest that Macron remains poised to win the Presidential election, a substantial winning margin, a strong turnout, and a low number of nil votes will be necessary but may not be sufficient for his party is to follow up with a good result at the Parliamentary elections, given the lack of local presence EM has.

    Extrapolating the results from the first round of the presidential election to the legislative election based on outcomes in the 577 constituencies (Opinion Way, Harris Interactive, Atlantico) suggests that the probability of a hung parliament is high.
    Cabau and Gudin say that the next French president will have to rely on a coalition or a minority government.
    Our view is that the legislative elections will likely be followed by a comprehensive reshuffling of the political landscape, triggered by the formation of a new majority.
    If you want to stay up to date on the election results, World Markets Live will be keeping track of the latest news on Sunday evening.
    Comment ()
    The recovery of the Eurozone economy is solid and downside risks to growth have diminished.
    That's the message from Peter Praet, executive board member of the European Central Bank, has said today.
    Praet says the ECB takes comfort in the fact that Euro area growth seems robust to overseas influences and the recovery is broadening across countries.
    He admits progress towards the ECB's inflation target is insufficient, and says wage growth has to be stronger, Reuters reports.
    Comment ()
    Some key earnings updates have been released this morning.
    Viacom reports a 60 percent decline in profits. The media conglomerate reports revenue rose 8 percent to $3.26 billion in the second quarter, but net profit fell to $121 million, or 30 cents per share, compared to $303 million, or 76 cents per share, this time last year.
    Viacom shares are marginally higher in premarket trade after the results.
    Meanwhile, profits at Regeneron jumped 37 percent in the first quarter. The pharmaceutical firm reports total revenues increased 10 percent to $1.319 billion in the first quarter, helped by a jump in net sales of its Eylea produce to $854 million.
    Shares in the company are flat in premarket trade following the results.
    Comment ()
    HSBC shares are up 3 percent today after the U.K. head-quartered bank reported an earnings beat on estimates, with headline results 15 percent ahead of consensus.
    Don Hunter, head of global markets at Deutsche Bank, discusses the results.
    The main source of the c. $400 million revenue beat was life insurance manufacturing ($606 million in 1Q17, some $241 million higher than 4Q and nearly $400 million better than 1Q17).
    Market impacts here were $138 million positive in the quarter. Investment distribution was also $125 million better. We expect questions on the call as to how sustainable this revenue should be in future quarters.
    Meanwhile in corporate centre BSM printed around $100 million higher than we had expected. This reduces the revenue beat to around 1%. Loan losses were much better than expected, however gross charges were largely flat, and unlikely to change consensus expectations for outer years.
    Hunter says the capital beat will raise expectations of further share buybacks in the second quarter.
    Here's how shares are performing. Over 3 months shares are down more than 2 percent.
    Comment ()
    April job cuts fell 15 percent to 36,602 from the month before, according to Challenger Gray. That's 43 percent lower than this time last year.
    The retail industry announced 11,669 job cuts in April. In the first four months of 2017, 162,803 jobs cuts have been announced by employers.
    Comment ()
    Yesterday, the Federal Reserve decided to keep interest rates on hold at the end of its two-day policy meeting, but comments by the central bank increased market expectations for a June rate hike.
    In light of the decision, Nicholas Colas, chief market strategist at brokerage firm Convergex, asks whether or not markets can fight the Fed and continue to make gains at the same time as interest rates rises?
    The answer is yes, and no.  “Yes”, other market drivers (tax legislation, oil prices, economic growth, etc.) hold more sway than the Fed just now. And “No”, because the Fed could still make a policy mistake.  
    Bottom line: equity markets have bigger policy fish to fry, and they feel they have the Fed narrative under control.  In short, they feel the Fed can be beaten.  We’ll see.
    Colas also answered the questions: what could go wrong?
    The simplest answer is that the Federal Reserve is fundamentally mistaken about the state of the US economy. Its commentary shrugged off both a weak Q1 GDP print and the subpar March jobs report. Fair enough. 

    But what if Q2 is no stronger than Q1? That is not a scenario that either the Federal Reserve or equity markets are giving much credence.  And that makes it the one that could knock both out.
    U.S. bond yields rose on the Fed's decision, as traders began to price in a possible June rate hike. Here's how the U.S. debt yield curve is looking.
    Comment ()
    Oil prices have dropped sharply, falling around 2 percent and bringing Brent crude below $50 a barrel.
    Comment ()
    Oil prices are falling sharply following U.S. inventory data which showed supplies of the commodity decreased less than expected.
    Analysts were expecting crude stocks to fall by 2.3 million barrels in the week to April 28. However, U.S. data showed crude stocks fell just 930,000 barrels. U.S. stocks are just 7 million barrels off a record high, according to Reuters.
    This despite the continued production cuts by OPEC and non-OPEC members. Speaking to Reuters, Petromatrix analyst Olivier Jakob had this to say about oil prices.
    We've had some pretty sharp price corrections already so it does reduce the risk of length liquidation. I do think as long as OPEC maintains the cuts, the price will get some stability.
    We still have some downside risk, but we're starting to get near the bottom.
    This is the fourth  consecutive day of falling oil prices, hitting multi-month lows.
    Over 3 months, the price of Brent and WTI is down around 12 percent.
    Comment ()
    Brent crude prices are below $50 a barrel for the first time since March 22, falling on U.S. crude inventory data.
    Brent futures hit a session low of $49.69 per barrel, its lowest price since the end of November.
    Compounding the problem for crude prices is the fact that U.S. oil production is rising, according to UBS analyst Jon Rigby in a research note yesterday.
    Recovery in US crude production is now in full swing with latest EIA 914 data showing +215,000 b/d m/m in Feb and the recent Drilling Productivity Report suggesting less than 100,00 b/d m/m in shale output may be the norm near term. Like March, speculative positioning may have impacted price movements – the net long building to 355,077 contracts by mid-month (vs the end-March figure of 269,443) but then falling by 70,135 contracts in the week to 25 April – a significant liquidation accompanying the price fall.
    Comment ()
    Lots of U.S. economic data has hit the wires.
    Initial jobless claims fell 19,000 to 238,000 in the week ending April 29th, more than expected.
    Q1 productivity fell 0.6 percent.
    Unit labour costs for the first quarter increased 3 percent.
    The trade deficit for March dropped 0.1 percent to $43.71 billion, which is a little better than the expected deficit of $44.5 billion.
    The dollar index ticked down in reaction.
    Comment ()
    Mixed reactions in forex trade to the latest U.S. economic data.
    The dollar is down against the euro and sterling, but rose to a near 7-week high versus the Japanese yen.
    Comment ()
    Kellogg earlier posted its latest quarterly earnings report, with profits beating estimates thanks to tax benefits and lower costs.
    Net sales fell 4.1 percent to $3.25 billion, but net income rose to $262 million, or 74 cents per shares, compared to $175 million, or 49 cents per share, the year before.
    Shares remain flat in premarket trade ahead of the open.
    Comment ()
    Earlier today, Initial jobless claims data was released, showing fell 19,000 to 238,000 in the week ending April 29th. It had been expected to fall to 248,000.
    The number of jobless claims is now at its lowest level in three weeks, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.
    Seasonal adjustment problems caused by the changing date of the Easter holiday and spring break from year to year mean the claims numbers for individual weeks can't be taken seriously at this time of year. We didn't believe last week's 257K reading and we don't believe this week's 238K; the trend is somewhere in between. 
    The key point, though, is that the trend seems not to have moved for some time, consistent with our view that the reported slowdown in Q1 growth was due to seasonal adjustment problems, weather effects, the late Easter and delayed tax refunds, rather than marking the start of a sustained softening. 
    Looking ahead to tomorrow's nonfarm payrolls figure, Shepherdson says the trend in jobless claims is consistent with payroll gains trending over 200,000.
    Jim O'Sullivan, chief U.S. economist at High Frequency Economics, also commented on the data, saying jobless claims show no sign  of an uptrend, which is consistent with the strong trend in employment growth.
    Of course, as usual, there is no guarantee that the strong trend will be reflected in the monthly payrolls reading for Apr tomorrow, but our forecast is still up 180,000, in line with the recent trend. We believe the sharp slowing in the Mar report reflected payback for weather-related strength in Jan and Feb. 

    We expect the unemployment rate to hold on to last month's 0.2-point drop.
    Job seekers queue up to enter a military jobs fair in Washington.
    Comment ()
    U.S. markets are now open. Stocks are moving cautiously higher.
    Comment ()
    The Dow Jones is moving higher for the a third day. The Dow hasn't risen for three or more days since February.
    Stocks are on track for a third straight week of gains.
    These are the best and worst performers on the Dow at the start or trade.
    Walt Disney continue to lag on the Dow. It weighed on the index yesterday as well.
    Comment ()
    The Nasdaq is down today, but looks set to finish the week higher after some strong gains in previous sessions.
    Weighing on the index are these stocks. Viacom posted earnings before the bell, while Tesla reported last night. 
    Despite reporting revenue rising 8 percent to $3.26 billion, Viacom profits plunged 60 percent in the second quarter, leading to the current decline.
    Comment ()
    More U.S. data is up.
    Factory orders for March was up 0.2 percent, less than the 0.4 percent estimated.
    Factory orders excluding defence fell 0.2 percent, versus 1.4 percent growth in February.
    The euro jumps to a session high against the dollar following the weaker than expected result.
    Comment ()
    Viacom shares are struggling today.
    The media company reported revenue grew 8 percent to $3.26 billion the second quarter, driven by a 37 percent rise in filmed entertainment revenue to $895 million.
    However, profits plunged, falling 60 percent  to $121 million, leading to the decline in share price.
    The share price is down more than 2 percent. Over 3 months they are down 11 percent.
    Meanwhile, the company's took part in a conference call with investors and journalists. The company warned of additional, modest restructuring charges in the next quarter. 
    The company's CFO also shared his outlook for the rest of the year.
    For the June quarter, expect continued improvement in worldwide ad sales driven by ongoing double-digit growth in international. For the full year, expect that the growth rate for media networks programming spend will be in mid-single digits.
    Comment ()
    European markets are now closed. The pan-European Stoxx 600 finished the session up more than 0.5 percent.
    Comment ()
    Here's how the individual European markets performed in a buoyant day for the continent.
    Decent earnings from several companies, plus strong PMI data, helped boost the market.
    Comment ()
    These are the top and bottom performing stocks on the European Stoxx 600 index.
    HSBC, AB InBev and Carlsberg all beat estimates with their earnings, which helped the markets make gains. 
    Italian aerospace firm Leonardo was the third biggest riser on better than expected margins in electronics, defence and security systems.
    Comment ()
    Before we go, we report the U.S. Congress is currently debating a new health care bill. Voting will take place today and the GOP is expected to have the votes to pass health care reforms.
    The Republican health care bill will repeal and replace major parts of Obamacare. However, it may face challenges in the Senate.
    Comment ()
    U.S. markets are choppy today, with the indexes struggling to make and hold gains.
    Comment ()
    We'll close the blog there. Join us again tomorrow as we look back over the week, discuss the Congress vote on health care reforms and look forward to the latest nonfarm payrolls number.
    Comment ()
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