World Markets Live - September 14 - CNBC Live Events

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World Markets Live - September 14

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

    These are the top headlines this morning:
    • Russia commences its War Games, launching a huge exercise to display its military might, as NATO's Secretary General tells CNBC that Putin's forces are becoming increasingly assertive.
    • The isolation of Qatar is completely justified. That's the view of Egyptian billionaire Naguib Sawiris, who tells CNBC exclusively that the move against the nation was a long-time coming.
    • The rally stalls in Asia after disappointing Chinese data shows weaker factory activity and a 40 percent plunge in outbound investment.
    • President Trump says taxes for the rich may have to go higher as he meets with top congressional Democrats to push his key reform agenda.
    China's factory output grew 6.0 percent in August from a year earlier, while fixed-asset investment expanded 7.8 percent in the first eight months, both well below economists' forecasts, data showed on Thursday.

    Analysts polled by Reuters had predicted factory output would grow 6.6 percent in August, up from 6.4 percent in the previous month.
    Outbound non-financial investment between January and August sunk 41.8 percent year on year, although China's Commerce Ministry said "irrational" overseas investment was effectively under control following a clampdown in recent months. This was intended to curb speculative capital outflows that put pressure on the yuan, according to Reuters.
    For more on this story click on the link below.


    Russia's biggest war games since 2013 are set to officially start today. Moscow says the exercises - conducted across Belarus, the Baltic Sea, western Russia and Kaliningrad - will involve some 13,000 troops and 250 tanks.
    But NATO believes the scale could be much larger, with up to 100,000 troops and nuclear-capable ballistic missiles being deployed.
    NATO Secretary General, Jens Stoltenberg, told CNBC's Steve Sedgwick why the war games had become more dangerous.
    This is part of a pattern which we have seen develop over several years with a more assertive Russia, which has tripled defense spending over the last years, which is using force against neighbors and is exercising much more modern capabilities in a more aggressive way.
    He says Russia has a right to exercise its forces like any other nation, but this should be done in a transparent way to prevent misunderstandings. He says Russia has used military exercises as a cover for aggressive actions, such as in 2008 and during the annexation of Crimea during 2014.
    Thousands of people were evacuated from buildings across Moscow yesterday following a series of bomb threats. Russia's RIA news agency says Moscow's three train stations and over 20 other buildings were checked after a flurry of anonymous phone callsclaimed the locations had been mined.
    RIA says there has been a wave of bomb threats affecting more than 20 Russian towns and cities this week - all of which have turned out to be hoaxes.
    Asian stocks eased off from the recent rally that saw the broad-based MSCI index of Asia Pacific shares hit a 10-year peak.
    The stocks declined following the soft Chinese economic data.
    Qatar has pumped over $38 billion of reserves into its economy to offset the impact of the blockade from neighbouring countries. That's according to rating agency Moody's, which says the equivalent of 23 percent of the country's GDP has been used.
    Saudi Arabia, the UAE, Bahrain and Egypt have imposed a trade embargo on Qatar since the start of June, after accusing it of sponsoring terrorism.
    CNBC’s Hadley Gamble spoke to Naguib Sawiris, the executive chairman of Orascom and Egyptian billionaire, shared his view on the situation and how it has affected Monaco.
    It’s not a diplomatic row. It’s a position against terrorism. People have not spent enough time figuring out who is financing what’s really happening here.
    When a country’s hosting all the advocates of terror, whether they’re leaders of the Muslim Brotherhood or other terror organizations, when they host clergymen that are illiterate and tell young people to go and blow up this place, kill innocent people and it’s okay you’ll go up to heaven, then there is no more to talk about.
    Sawiris said it is a stand against terrorism in order to say enough is enough.
    U.S. President Donald Trump says that taxes on the rich might rise. The president told reporters that if taxes on the wealthy "have to go higher, they'll go higher." Trump's statement comes as he looks for bipartisan support to overhaul the U.S. tax code.  
    Meanwhile, leading congressional Democrats say they have agreed to a deal to shield about 800,000 young immigrants from deportation. Top Senate and House Democrats - Chuck Schumer and Nancy Pelosi - made the announcement following a dinner with President Trump. The Democrats say the deal excludes the building of a border wall - a claim Trump administration officials reject.
    European car sales (which includes the EU and the European Free Trade Association) are up 5.5 percent in August to 903,143 vehicles, according to the ACEA. For the period January to August, sales are up 4.4 percent to 10.56 million vehicles.
    Individual car makers have also reports their latest car registration data.
    Nissan new EU car registrations are up 17 percent in August. Toyota registrations are up 14 percent and Hyundai up just 0.1 percent on the year.
    Renault new EU car registrations are up 13 percent, Fiat Chrysler 9.4 percent and Volkswagen up 2.8 percent.
    Ricardo reports full year pretax profit fell 2 percent to £32.2 million. Full year revenue rose 6 percent to £352.1 million.
    The company will pay a final dividend of 13.88 pence per share. Net debt stand at £37.9 million.
    The company says the outlook remains positive and has a good platform for growth.
    U.K. retailer Next reports first half earnings per share of £1.765. Operating profit came to £325.2 million on revenue £1.89 billion.
    The retailer will pay an interim dividend of 53 pence. The company says the first half has been difficult and profits are in line with its "cautious expectations."
    Brazil's central bank has decided to cut interest rates to a four-year low as it looks to encourage economic recovery. The bank's monetary policy committee slashed the benchmark Selic rate to 8.25 percent. It's the fourth straight cut, but the committee says the pace of monetary easing will be reduced.    
    European markets are called to open lower later this morning. This follows a weaker session on Wednesday.
    Disgraced Pharma executive Martin Shkreli has been jailed while awaiting sentencing for securities fraud.
    He had been out on a $5 million bail but a judge revoked the bond after Shkreli offered a $5,000 bounty for a chunk of Hillary Clinton's hair on social media.
    Speaking outside the court following the ruling, Shkreli's lawyer Benjamin Brafman said the decision was avoidable.
    President Trump has barred a takeover bid by Chinese-backed private equity firm Canyon Bridge Capital Partners, for U.S. semiconductor company Lattice.
    The $1.3 billion move was rebuffed after it was revealed the firm is partly funded by Beijing and had indirect links to China's space program. Washington has said it will oppose deals that involve technologies with military applications. 
    Meanwhile, China's fixed-asset investment grew at its slowest pace in 18 years, between January and August. Weaker than expected industrial output and retail sales were also reported during the period, sparking worries that China's economy might be slowing down as lending costs rise. 
    Markets await the latest from the Bank of England in a few hours. The August announcement saw the vote split 6-2 in favour of keeping rates at 0.25 percent.
    A move in rates is not expected today, but the wording of the latest statement will be closely studied for any hints as to future moves.
    North Korea has threatened to use nuclear weapons to "sink" Japan and reduce the U.S. to "ashes and darkness" for supporting a U.N. Security Council resolution over its latest nuclear test.
    Japan criticised Pyongyang's statement as provocative and said it is working with U.S. missile defence ships in monitoring the threat from North Korea.
    Shares in German re-insurer Munich Re are called to open around three percent lower after it warned that losses from hurricanes Harvey and Irma could weigh on profits this year.
    Earlier this week, the company estimated that Harvey could cost between $20 and $30 billion in losses to insurers globally. The figure would put the storm on the same scale as Hurricane Sandy in 2012.
    The headquarters of Munich Re
    European markets are open for trading. The pan-European Stoxx 600 initially moves to the downside.
    All the major European bourses are moving lower at the start of trade, following yesterday's move to the downside which broke a five day winning streak.
    The retail, autos and oil & gas are the best performing sectors this morning, while basic resources, utilities and technology are leading the markets lower.
    French August EU-harmonised inflation rises 0.6 percent on the month and 1 percent on the year, according to INSEE.
    This after the OECD predicts the French public sector deficit will be 3 percent in 2017, and 2.9 percent in 2018. The OECD raises the French economic growth forecast to 1.7 percent from 1.3 percent and sees 2018 growth of 1.6 percent from 1.5 percent previously.
    European car sales rose 5.5 percent in August, up from just 2.6 percent in July. Renault and Toyota reported the largest increases in August, with a 13 and 12.5 percent increase in the month.
    This as the German market posted the biggest rise in car sales, and the UK the largest fall. 
    These are the top headlines following the market.
    Russia begins its War Games, launching a huge exercise to display its military might, as NATO's Secretary General tells CNBC that President Putin's forces are becoming increasingly assertive. 
    Hitting the 'Next' level. Shares in the British clothing retailer soar after the company raises its full-year profit guidance, on the back of a boost in demand to its directory business.
    Munich Re shares hold steady after the German re-insurer warns of a hit to full year profits following Hurricane season in the United States.
    The strong euro takes the shine off Hermes, sending the shares lower in Paris and weighing on the rest of the sector across Europe.
    The Swiss National Bank has held interest rates unchanged. However, the central bank has reduced its growth forecast from 1.5 percent to under 1 percent for 2017.
    The central bank says the Swiss franc remains "highly valued" and the situation in the foreign exchange market is still fragile.
    The term "highly valued" is significant as it marks and end to the central bank's trend to refer to the franc as "significantly valued". That suggests the bank is a little bit more relaxed about the value of the franc.
    Print taken at 9:33 a.m London time.
    The euro has gained around 5 percent against the Swiss franc since the start of July and that trend has continued this morning.
    The dollar is marginally lower against the Swiss franc following the latest decision by the SNB.
    Protectionism is an increasing trend, warns Francesco Filia, CEO & CIO of Fasanara Capital.
    It looked like it was going to be worse than it actually is, looking at the statements from the Trump administration. So we need to understand better the pace of what the tightening of trade could look like going forward. It’s probably not as dramatic as we thought it could be at the beginning of the year.
    Filia says he is more concerned about markets where valuations are really extremely, specifically those affected by inflows relating to central bank quantitative easing.
    The estimated total insured loss (including in the U.S. and the Caribbean) from Hurricane Irma comes to $25 billion, according to catastrophe risk modellers Karen Clark & Company.
    The estimates includes losses to building, structures, contents, business interruption and autos, but not crop of NFIP.
    Italian lender Banca Carige has announced plans to cut around 1,000 units and close 20 branches as part of its new business plan to return to growth in 2018.
    The plan includes selling 500 million euros in unlikely-to-pay loans and close its liability management exercise. The company expects to cut its gross problem loans stock by 54 percent by the end of 2018.
    Carige says these moves will see net profits of 25 million euros in 2018 and 146 million in 2020. The company targets a return on tangible equity of 6.5 percent in 2020.
    These are the top headlines for the hour:
    Russia begins its War Games, launching a huge exercise to display its military might, as NATO's Secretary General tells CNBC that President Putin's forces are becoming increasingly assertive.
    Hitting the 'Next' level. Shares in the British clothing retailer soar after the company raises its full-year profit guidance, on the back of a boost in demand to its directory business.
    Munich Re shares hold steady after the German re-insurer warns of a hit to full year profits following Hurricane season in the United States.
    These are the stocks making headlines today:
    Next is trading at the top of the STOXX 600 after raising its full-year guidance for sales and profit for the second time in less than two months. This despite posting a 9.5 percent drop in first-half profit. Slower consumer spending on fashion and footware has weighed on Next's profit in the past few years.
    Morrisons shares are plunging after the company warned that the impact of inflation will start unwinding at the end of the next fiscal year. The company reported a nearly 13 percent increase in first-half profit. This is the seventh consecutive quarter of underlying sales growth for Britain's fourth largest supermarket.
    Shares in Hermes are trading sharply lower after warning that the strong euro could weigh on next year's profits. However, Chief Executive Axel Dumas said the company is "fully hedged" against currency headwinds. The French luxury goods maker also reported record operating margins in the first half of the year.
    Adecco has agreed to buy U.S. life sciences career manager Biobridges. This in a bid to grow its higher-margin professional staffing business. The world's largest employment firm did not disclose financial terms of the deal.
    North Korea has threatened to use nuclear weapons to "sink" Japan and reduce the U.S. to "ashes and darkness" for supporting a U.N. Security Council resolution over its latest nuclear test. Japan criticised Pyongyang's statement as provocative and said it is working with U.S. missile defense ships in monitoring the threat from North Korea.
    Meanwhile Egyptian billionaire Naguib Sawiris, who has the only telecom license in North Korea, discussed the U.S. tactic of cutting aid to countries seen as having ties to North Korea, such as Egypt.
    I don’t think cutting the military aid to Egypt or any kind of aid is a smart move, because we were just so happy that the relationship between the U.S. and Egypt has been restored and come to a good stance, so cutting this aid is not a good idea.
    Asked whether he would divest his assets from North Korea, Sawiris said he is "providing a good service to the innocent people of North Korea". He has invested around $250 million into the country.
    They are allowed to have the same service everyone in the west has. It has nothing to do with politics. As an investor I abide by all the UN resolutions.
    Billionaire Elon Musk has shared a sequence of clips demonstrating “how not to land” a SpaceX rocket.
    In an Instagram post on Thursday, the SpaceX chief executive described the “sordid history” of orbital rocket Falcon 9.
    The rocket “eventually managed to land in one piece and stay that way,” Musk said. “Maybe Falcon realized it still loved us or finally read the instructions…”
    Source: Instagram
    9 days a to go until the New Zealand general election.
    It takes place on Sep 23 and it is currently neck-and-neck between center-right National Party and center-left Labour Party.
    The National Party has been in power for the last 10 years.
    New Zealand has been described as a having “rock star “economy with annual growth of 3 percent but many perceive rising levels of inequality with house prices deemed among the most overvalued in world in the capital of Auckland.

    Labour were struggling badly just three months ago but switched leaders to a 37-year-old woman called Jacinda Arden.
    She has enjoyed a remarkable run and is seen as more personable than current PM Bill English.
    Is Jacinda Arden about to come from nowhere to be the next New Zealand Prime Minister?
    Ardern has stumbled on tax but has today come out and promised no new taxes until 2020.

    English with his finance background, is seen as steady but uninspiring.

    The polls are varying wildly but the Radio New Zealand poll of polls has them all tied up.
    Print taken at 9:59 a.m. London time.

    The NZ dollar is tenth most traded currency in world. It benefits from the 'carry trade' as Japanese investors buy it to benefit from NZ’s higher interest rate.
    Rupert Murdoch's planned $15 billion takeover of European broadcaster Sky will be referred to regulators over both media plurality and broadcast standards.
    Britain's Culture and Media Secretary Karen Bradley said Tuesday that she "was minded" to take this action.
    Shares in Sky fell sharply on Tuesday, which probably explains today's muted reaction.
    Print taken at London time.
    The South Korean president Moon Jae-in has said he is against bringing nuclear arms into his country to act as a deterrent against the volatile northern neighbor.
    President Donald Trump (R) and South Korean President Moon Jae-in deliver a joint statement from the Rose Garden of the White House in Washington, U.S., June 30, 2017.
    Moon said in an interview with CNN that the move would make it impossible to establish peace in the region and boosting domestic military strength would be a better option.
    This after a North Korean state agency threatened to use nuclear weapons to "sink" Japan and reduce the United States to "ashes and darkness" for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test. 
    Reuters reports that the 15-member Security Council voted unanimously on a U.S.-drafted resolution and a new round of sanctions which will ban North Korea's textile exports. 
    U.S. Stock indexes are about flat at the moment with live European markets decidedly lackluster too:
    Basic Resources and Utilities are currently the two worst-performing sectors among Europe's bigger listed companies.
    The Greek privatization agency(HRDAF) has reportedly confirmed that the Greek railway operator has now been sold to Italian firm, Ferrovie.
    The Bank of England monetary policy decision is now moments away.
    Sterling has dithered around the opening level as investor wait to see what they can divine from the consensus position of the bank.
    Most forecasters predict no move on interest rates from the bank, despite recent inflation data which suggests prices are accelerating at a faster clip than Mark Carney and his team had expected.
    Two policy makers Michael Saunders and Ian McCafferty are expected to vote for a hike but there is the potential that others may join them.
    Two new policy makers having also recently joined the Monetary Policy Committee, which has increased the uncertainty.
    No reporter is ever keen to play a story down, but it is possible the Wall Street Journal's Mike Bird might not be feeling all that excited about the Bank of England's looming decision.
    There is no press statement from BOE governor Mark Carney today but there will be a release of the Monetary Policy Summary and minutes of the latest Monetary Policy Committee meeting.
    Nomura says it will look for differences from the August summary to judge if the central bank is cautiously adopting a more hawkish stance.
    The language Nomura says it is focusing on is in the second to last paragraph of the summary:
    Specifically, if the economy follows a path broadly consistent with the August central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the path implied by the yield curve underlying the August projections.
     - BOE August summary
    Nomura outlines that If the emphasis on the forecast period were to change from “over the forecast period” to something along the lines of “coming months” then that would be considered a hawkish turn of phrase that "really will get the market excited".
    The BOE Monetary Policy Committee currently has interest rates at 0.25 percent and under its asset purchase scheme holds levels of government bonds at £435 billion ($574 billion) and corporate bonds at £10 billion ($13 billion).

    New figures released Tuesday showed inflation rose in August to 2.9 percent, well above the Bank of England's 2 percent target. 
    This is seen as putting pressure on the central bank to consider raising rates but most forecasters believe the current levels of asset purchase and interest rates will stay on hold until at least November.
    Investors will look for the vote split. If just three MPC members vote fora rate rise, that could be sterling positive.

    In its August meeting, the Bank of England said it forecast two interest rate hikes over the next three years, one more than it had estimated previously.
    However, Governor Mark Carney and his fellow rate-setters said this was likely to take place in the third quarter of 2018. 
    The Bank of England has held interest rates at 0.25 percent.
    The vote split between the Monetary Policy Committee members has come in at 7-2.
    Sterling has moved higher despite few obvious signs of any hawkish lean from the central bank.
    The comment from the BOE that says "Slack in the economy is being absorbed more rapidly than expected" might explain the sterling rise.
    The full MPC statement can be found here.
    The key passage appear to be thus:
    All MPC members continue to judge that, if the economy follows a path broadly consistent with the August Inflation Report central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations.
    A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.
    All members agree that any prospective increases in Bank Rate would be
    expected to be at a gradual pace and to a limited extent. 
    So basically, in August, the bank just said monetary tightening  could be appropriate “over the forecast period” whereas today the bank added “coming months”.
    That enough to trigger sterling purchases and the pound is now up into the 1.33 handle.
    Print taken at 12:23 p.m. London time
    by david.reid edited by Spriha Srivastava 9/14/2017 11:07:45 AM
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