World Markets Live - September 20 - CNBC Live Events
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CNBC Live Events

World Markets Live - September 20

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

  • Our top stories as we get going:
     
    • Let the Great Unwind begin! The Fed is expected to reveal details of how it will reduce its 4 and half trillion dollar balance sheet, while the CNBC survey predicts the central bank will hike rates in December.
     
    • Telecom stocks help the US markets to fresh records. But gains are kept in check as a confrontational President Trump takes aim at North Korea in his UN speech, calling Kim Jong-Un a 'rocket man' on a suicide mission.
     
    • A magnitude 7.1 earthquake hits near Mexico City killing more than 140 people and toppling dozens of buildings, less than two weeks after the quake in the South of the country. 
     
    • Shares in Fedex fall after hours, as a recent cyber attack and the impact of Hurricane Harvey shave more than 300 million dollars off the delivery company's quarterly profit. 
  • Check out these charts which offer the hard data that, at a headline level, the Fed economists will have been poring over when attempting to make sense of the U.S. economy.
     
     
     
     
     
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    The United States has great strength and patience, but if it is forced to defend itself and its allies, we will have no choice but to totally destroy North Korea.
     - President Donald Trump to the U.N. General Assembly on Tuesday 19th September 2017.
     
     
     
     
  • Spanish clothing company, Inditex, has recorded a first half net profit of 1.37 billion euros versus 1.26 billion a year earlier.
     
    Sales also rose to 11.67 billion euros.
     
    The firm says the sales rose +12 percent at a constant exchange rate from August 1 to September 17.
     
    Shares in Inditex have not moved much in the last year. On air Steve notes a well performing company but also one that holds a 27x forward valuation.
     
    He says that marks a premium to the sector which is on average 18x forward and there fore offers would be investors some pause for thought.
     
     
  • The death toll from the 7.1 magnitude earthquake that hit central Mexico is now at 226 and rising, local officials say.
     
    There are gas leaks and major fires, with dozens of buildings destroyed or damaged. It's the second major earthquake to hit Mexico recently. 
     
    Wreckage of a building knocked down by a magnitude 7.1 earthquake that jolted central Mexico damaging buildings and knocking out power. Source: Getty Images.
     
  • Peter Rosenstreich, Head of Market Strategy at Swissquote Bank says markets are too calm and that stocks, bonds and the dollar could well be in for a Fed-related shock.
     
    Below is a snapshot of his latest analysis:
     
    "The big news event on 20 September will be the report of the US Federal Reserve’s Open Market Committee – we believe the central bank will finally announce plans to start selling its massive holding of bonds. This is likely to begin in October. Meanwhile, the Fed is unlikely to move interest rates.
     
    "What does this mean for the US dollar? Possibly a shock. Markets are calm – too calm, really, like those western films where the sheriff rides into an empty town. Despite the tensions in North Korea and the Middle East, despite a see-sawing US president, despite implied volatility, willingness to take risks is historically unprecedented, which we know could end in tears. Markets continue to rationalize this, by seeing low inflation, solid growth and gradual central bank normalization. We’re not so sure. A balance-sheet unloading could end the ‘feel good’ environment, sending both bond and stock markets southward.
     
    "Our base scenario is that markets will fade the Fed announcement, instead pricing in gradual tightening and shallow interest rate cycle. This will keep the USD on weak footing. And it will keep rolling the current uptrend of high-beta currencies." 
     
    To discuss this theory, Rosenstreich is on set for Street Signs at 9:00 a.m. London time.
  • Annette spoke with Europe's top auto executives at the Frankfurt Motor Show, and asked about the challenges and opportunities for achieving their electrification goals over the next decade.

  • Shares in Tesla have fallen after a Jeffries analyst warned that it may take longer than expected for the electric car maker to become profitable.  He expressed concern over whether Tesla's business model could be scaled up as quickly and profitably as consensus thinks. 
     
     
     
  • The world's largest spirit-maker Diageo has updated on trading.
     
    The firm says expectations for the 2017 view remain unchanged and further out it forecast mid-single digit revenue growth over the three years to June 2019.
     
    An employee boxes bottles of Johnnie Walker Black Label Scotch at the Diageo International Supply and Technical Centre in Singapore.
     
  • German producer prices rose in August.
     
    The August PPI month-on-month figure came in at +0.2 percent, which equates to a +2.6 percent rise year-on-year.
     
    Both figures slightly higher than forecast by a panel of economists quizzed by Reuters.
  • Angela Merkel is on track to win a fourth term as German Chancellor, according to a new poll released by a local daily. 
     
    Annette asked Dr. Daniela Schwarzer, Director, German Council on Foreign Relations if international relationships were important to the election.
     
    She says the U.S. and German relationship looms large.
     
    Germany cannot imagine its own future without a trans-Atlantic relationship so the policies of the Donald Trump administration are a real puzzle to German policy makers.
     
    Simply because there are so many unknowns and surprises.
     
     - Dr. Daniela Schwarzer, Director, German Council on Foreign Relations
     
     
     
     
  • The Fed is widely expected to announce it will begin winding down its balance sheet. A rate hike is very unlikely at this meeting, but investors will be looking for hints of a move that could come later this year and the path for further rises in 2018.
     
    The dollar has edged lower against global currencies as investors stand by for the conclusion of this week's meetings.
     
     
    Asian markets are mostly unchanged on Wednesday as investors awaited monetary policy news coming at the conclusion of the U.S. Federal Reserve's two-day meeting.
     
    Print taken at 7:24 a.m. London time.
     
    And in Europe, a flat open is predicted.
     
    Print taken at 7:22 a.m.
     
  •  
    A slight negative bias to Europe's larger stocks, despite yet further record closes by the U.S. markets last night.
     
     
  • Shares in ThyssenKrupp are rising.
     
    This after the German metals group and Tata Steel agreed to merge their European operations in a 50-50 joint venture. The new company, called ThyssenKrupp Tata Steel, will be Europe's second largest steelmaker. The groups expect to achieve annual synergies of up to 600 million euros and cut around 4000 jobs as a result of the deal. 
     
    The world's biggest clothing retailer Inditex reported rising earnings in its first-half results. The Spanish owner of Zara saw a 9 percent increase in profit, which was below forecasts. But gross margin as a percentage of sales slipped from a year ago, in part because of a stronger euro. 
     
     
    Telecom Italia has confirmed that it will challenge a ruling by Italian regulators that the French group Vivendi has de facto control over the company. Vivendi is the the biggest shareholder in Telecom Italia but it denies having a controlling stake in the firm. The Italian government is considering using so-called "golden power", which could trigger asset sales.
     
    Sprint and T-Mobile are in active merger talks, according to CNBC sources.  Shares in both companies helped lead the telecom sector to the top of the market in Tuesday's trade. Deutsche Telekom, the owner of T-Mobile, and Softbank, owner of Sprint, are having conversations about a stock-for-stock deal where Deutsche Telekom would be the majority owner. The companies have had on-and-off talks for years, and sources caution any tie-up could be weeks away from finalization.
  • European markets look like this after about 8 minutes of trade.
     
     
     
  • The possibility of a deal between Sprint and T-Mobile are helping to push the Telecoms sector higher.
     
     
     
  • Thousands of jobs may go and that always seems to be stock positive.
     
     
    Thyssenkrupp and Tata will join forces to create Europe's second largest steel producer, with plans to cut 4 thousand jobs.
     
    Tata Steel says it has signed a memorandum of understanding with Thyssenkrupp to create a "leading European steel enterprise."

    The company said the 50-50 joint venture — Thyssenkrupp Tata Steel — will be headquartered in Amsterdam.
     
    The combination will lead to annual synergies of 400 to 600 million euros Thyssenkrupp added.
  • UK Prime Minister Theresa May is reportedly ready to pay a 20 billion euro Brexit divorce bill to the EU, according to the Financial Times.
     
    The offer will reportedly be included in May's speech in Florence, Italy on Friday. The hope from May's team is that addressing the exit payment will encourage Brussels to move forward on talks about a post-Brexit trade relationship between the UK and EU.
     
    Sterling has eradicated more than 50 percent of its losses against a weakening dollar since the June 2016 referendum.
     
     
  • A reminder of our headlines as we move on from the open:
     
    • Shares in ThyssenKrupp surge as the German giant joins forces with India's Tata to create Europe's second largest steel producer, with plans to cut 4 thousand jobs.
     
    • Kingfisher shares soar to the top of the Stoxx 600 after Europe's largest home improvement retailer reports better than expected first half profits, but sounds a cautious tone on the outlook in the UK and France.
       
    • The strong euro falls out of fashion with Inditex, denting the Zara owner's margins, counteracting a rise in first half profit and sales.
     
    • But markets otherwise lack directions as investors await details of how the Fed will unwind its $4.5 trillion dollar balance sheet. 
  • According to Reuters, Spanish police have arrested the Catalan economy junior minister in a morning raid.
     
    Police earlier scuffled with protesters in Catalonia as a proposed independence referendum looms.
     
    Disputes broke out outside the offices of Spain's biggest private delivery company Unipost, when pro-secession activists tried to prevent police and the court clerk from leaving the building. This after the offices were raided by police in search of election material. The government in Madrid has declared the referendum illegal.
  • President Donald Trump is reportedly using funds from his re-election campaign and the Republican National Committee to cover his legal fees. The RNC confirmed that more than 230-thousand dollars have gone to Trump lawyers working on the probe into Russian interference with the U.S. election. 
     
    President Donald Trump addresses the 72nd Annual UN General Assembly in New York on September 19, 2017.
     
     
    Meanwhile Former Trump campaign manager Paul Manafort is demanding a government investigation into media reports that federal authorities wiretapped him.
     
    His spokesperson called for a probe into leaks regarding the Russia investigation and suggested surveillance was politically motivated. Paul Manafort was briefly Trump's presidential campaign manager last year, but was pushed out amid internal power struggles and concerns about his business relationships with the Russian establishment.
  • The kiwi dollar is the biggest mover this morning following a new TV poll which suggests strong lead for the ruling National Party ahead of this weekend's election.
     
    A left-of-center Labour win is being viewed by money-movers as a potential drag on the country's economy and therefore, dollar negative.
     
     
    The election is on Saturday.
  • In session the dollar has shipped some value against most of its trading partners. In fairness, the greenback is pretty subdued as traders await the latest communication from the Federal Reserve. 
     
    That coming at 2 p.m. New York time.
     
    The message that most expect is that the Fed will slowly start to trim its $4.5 trillion balance sheet in October. 
     
     
  • Does this make a November rate hike from the Bank of England all but certain?
     
    August U.K. retail data has come in strongly above expectations.
     
    Retail sales ticked up +1.0 percent month-on-month and +2.4 percent year-on-year.
     
    The m/m figure was tipped at a much weaker +0.6 percent.
     
    A strong spike in sterling which did tip into the $1.36 handle but has since pulled back a touch.
     
    This print at 9:48 a.m. London time.
     
     
  • CNBC's Carolin Roth noting that higher inflation data doesn't appear to have checked the U.K. consumer appetite to spend.
     
     
    As sterling punches higher, the inevitable consequence is a sale of FTSE related stocks and we have not been let down.
     
     
  • In a surprising move, the UK trade department has tweeted about the great benefits of a trade deal between Canada and the EU.
     
    Many on Twitter highlighting that the UK will lose said benefits when it leaves the EU.
     
    The minister responsible for this department is Dr. Liam Fox who is vehemently in favor of Brexit.
     
  • The OECD has issued a raft of revisons to global growth.
     
    Overall world growth for 2017 is 3.5 percent with 3.8 percent tipped for 2018.
     
    Country breakdown
     
      2017 2018    
             
    United States       2.10% 2.40%       Both unchanged
             
    Euro Zone 2.1% (+0.3) 1.9% (+0.1)    
             
    Japan 1.6% (+0.2) 1.2%(+0.2)    
             
    UK 1.60% 1.00%       Both unchanged
             
    China 6.8% (+0.2)    6.6% (+0.2)    
     
  •  

    Spanish police raid Catalan government buildings over fears of independence vote

    CNBCSpanish police are reported to have raided several departments of Catalonia's regional government as tensions rise between Madrid and the pro independence regional government over a banned independence referendum.
  • U.S. government debt prices moved higher on Wednesday morning as investors focused on a Federal Reserve meeting.
     

    The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.2234 percent.

    While the Fed is not expected to raise rates following its two day meeting, many market participants believe the central bank will announce the unwinding of its $4.5 trillion portfolio. The U.S. central bank is due to announce its decision at 2 p.m. ET on Wednesday.

     
  • Fortum intends to become a major shareholder in German energy company Uniper, and will launch a full takeover if it reaches an agreement with E.On, which currently has a 46.65 percent stake in Uniper.
     
    Fortum is offering 22 euros per share in cash to Uniper shareholders i fit takes it over.
     
    E.On says it is in advanced negotiations with Fortum and f it reaches an agreement, then it would receive a total of 3.8 billion euros for its stake.
  • U.K. retail sales volumes rose by 1 percent month on month in August. This sharp rise was driven by volatile components, according to Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics.
     
    The jump in retail sales in August was driven by a 5.0% month-to-month surge in non-store—i.e. online—sales and a 3.6% leap in other store sales. Sales in both these categories are extremely volatile on a monthly basis; expect both to fall sharply in September. Retail sales excluding these two categories were up just 0.2% in August, in line with most of the survey data.
     
    The outlook for retail sales over the remainder of 2017 still looks challenging. The largest net balance of general retailers since November 1990 planned in August to raise prices over the next three months, according to the EC. Meanwhile, wage settlements have remained anchored at 2% and official job vacancy data point to a slowdown in employment growth ahead.
     
    In addition, the recent decline in timely indicators of housing market activity suggests that household goods retailers will struggle toward the end of 2017.
     
    Tombs believes this means retail sales growth will disappoint in the coming months, preventing the Bank of England from raising interest rates this year. 
     
    Sterling has now pared back its initial gains from the retail data.
     
     
  • While U.K. retail sales rose 1 percent in August, consumers are still feeling the squeeze on their incomes, according to Yael Selfin, Chief Economist at KPMG UK.
     
    The latest figures show that consumers’ mood remained subdued in August, as households felt the squeeze from rising costs with little compensation in pay, putting significant pressure on their spending power. It is also possible that uncertainties around the Brexit process have contributed to the decision of some to moderate spending compared to earlier years.
     

    However, the continued rise in retail sales, particularly in the non-food sector despite these headwinds, points to a relatively resilient consumer at this stage. This could support a slight pick-up in consumer spending in the third quarter following the disappointing Q2 results.

  • U.S. futures indicate a cautious open for the markets later today. Investors are likely keeping their powder dry as they await the latest decision from the Federal Reserve due today.
     
     
  • The head of Catalan's regional government says the Spanish central government has intervened in the regional government and condemns the "totalitarian attitude" of the Spanish government, Reuters reports.
     
    This after Spanish police arrested a Catalan minister involved in planning the banned independence referendum.
     
  • The latest weekly Mortgage Bankers Association survey has been released.
     
    The U.S. mortgage market index decreases 9.7 percent to 417.5 for the week ending September 15. The purchase index falls 10.8 percent and the refinancing index falls 8.5 percent. The 30-year mortgage rate rises 1 basis point to 4.04 percent.
  • General Mills posts a Q1 earnings per share of 69 cents on sales of $3.77 billion. net income was $404.7 million. The company reaffirms its 2018 full year outlook.
     
    Quarterly net sales in North American fell 5 percent to $2.44 billion.
     
    The company estimates currency translation will be a 1 cent benefit for full year earnings per share. It anticipated a slow start to the year on the bottom line and the company continues to expect sequential improvement in profitability in the coming quarters.
  • A group of real estate agents who colluded to raise fees in southwest England has been fined £370,084 ($500,620) by competition authorities.
     
    The six agents were all based in the Burnham-on-Sea area in the county of Somerset and had agreed in a meeting to fix their minimum commission rates at 1.5 percent in order to avoid the possibility of clients negotiating a better deal when undertaking local property transactions. The ultimate aim of these actions was to drive up profits for all firms involved.
     
    For more on the story, click on the link below.
     
  • Sterling rose sharply against the dollar this morning on the latest U.K. retail sales data, but is paring back these gains.
     
    Paresh Davdra, CEO and Co-Founder of RationalFX offers this comment on the currency.
     
    The pound has risen this morning following positive UK retail sales data. The retail sales data beat analyst expectations with a 1% rise, the third consecutive increase in a row. The pound jumped against the dollar in response, after being weighed down by uncertainty over unity in the UK government following confusion around Foreign Secretary Boris Johnson’s statements and speculations on his intentions to resign. 
     
    Investors will be focused  on the US Federal Reserve meeting today. The dollar is weaker currently as investors await the fed’s view on future interest rate rises. With many analysts expecting rates to remain unchanged, they will be paying close attention to any hints that policymakers will begin to unwind the US monetary stimulus programme. Investors will be looking to see how the dollar will react, and how any hints will impact on its peers.
     
     
  • The NHC says Tropical Storm Jose is about 165 miles south of Nantucket, Massachusetts, with maximum speeds of 65mph.
     
    Jose is continuing to produce dangerous surf and rip currents along a large portion of the U.S. east cost, according to the agency.
     
    Meanwhile, Hurricane Maria has slammed into Puerto Rico, according to reports.
     
     
  • THe NHC says Hurricane Maria is about 15 miles south-southwest of San Juan, Puerto Rico, with maximum winds of 150mph.
     
    The agency says the eye of the hurricane will continue to move across Puerto Rico and emerge off the northern coast by the afternoon.
  • U.S. futures remain mixed ahead of the market open later today.
     
     
  • Toshiba says it has signed a contract to sell its memory chip business to a consortium led by Bain Capital.
     
    Toshiba says the sale is worth about 2 trillion yen (almost $18 billion). It aims to complete the sale by the end of March 2018 after global antitrust reviews.
  • President Trump is criticizing Rand Paul on twitter over Paul's impact on health care reform.
  • The president is using Twitter this morning to urge GOP lawmakers to support the latest attempt to reform U.S. health care.
  • Columbia Threadneedle Investments announces it is to acquire Lionstone Investments.
     
    The terms of the deal are not disclosed, but Lionstone controls about $6 billion assets. Lionstone will retain its brand name, identity and Houston headquarters. Lionstone's executive team will also remain in place.
  • U.S. ambassador to the UN Nikki Haley says Trump's speech yesterday was not a clear signal that the U.S. would withdraw from the Iran nuclear deal, it was a signal the president is not happy with it, she said in an interview with CBS.
     
    Haley says the president does not want war with North Korea and the U.S. is not giving up on diplomatic efforts. She says the U.S. has lots of military options regarding North Korea but there are steps leading up to that.
     
    She adds that Iran's President Rouhani "needs to start following the rules" and stop arms smuggling, supporting terrorism and testing ballistic missiles.
     
     
     
  • The NHC says the center of Hurricane Maria is passing west-southwest of San Juan in Puerto Rico. The hurricane is now about 15 miles away from San Juan, with wind speeds of 145mph.
  • Pfizer has filed a lawsuit against Johnson & Johnson. The antitrust suit alleges J&J thwarted use of a Biosimilar rival to Remicade, according to Reuters. The lawsuit claims J&J engaged in "unlawful" conduct to stifle competition from Inflectra.
     
    Pfizer claims J&J's "exclusionary" contracts and "anticompetitive" practices have denied U.S. patients access to therapeutic option and violates Federal antitrust laws.
     
     
  • U.S. markets open mixed at the start of Wednesday trade, although the S&P sets a fresh record high.
     
     
  • The S&P 500 has ticked above the 2,508.32 level to set a new record high. Here are the stocks at the top and bottom of the broad index.
     
     
     
  • U.S. existing home sales fall 1.7 percent in August to 5.35 million, versus July's fall of 1.3 percent.
     
    This falls short of expectations of 5.45 million units.
     
    The inventory of unsold homes is at 4.2 months' supply. The median existing home price is up 5.6 percent on the year to $253,500.
  • Irish airline Ryanair is under pressure after being forced into a string of cancellations. The share price has taken a tumble in recent sessions.
     
     
    Chris McCullough, CEO and co-founder at Rotageek, says the company's problem is scheduling.
     
    Scheduling isn’t always a top priority for a business. Often ad-hoc systems keep the organisation running but have latent inefficiencies and failings, that may go unnoticed for years. But at some point these systems fail. And that’s what has happened to Ryanair. 
     
    Yes, airlines are complex organisations. Yes, staff scheduling is difficult to get right. But the problem here was simple. Organisations need to ensure that staff are taking leave throughout the year. Commonly businesses ensure that they don’t have too many staff off at one time, but ensuring that enough staff are off, such that you don’t have a large leave liability accruing is often overlooked. There are many businesses in this position, and probably many looking at Ryanair thinking that this story could easily have been them. 
     
    The compounding problem for Ryanair is that one misstep can affect staff and customers across the network at huge financial cost. Already facing nearly £20m of liability, ultimately, Ryanair’s entire reputation is at stake. Technology can solve this. Businesses in general, and airlines particularly need to ensure that their current scheduling software is able to identify an increasing leave liability, to avoid these issues. Businesses have the data they need to push for change. They just need to use it intelligently. Rotageek’s predictive technologies can transform the transport space. Passenger traffic can be matched with scheduling technology helping to plan transport and staff, and specifically staff leave, accordingly. There’s no quick-fix solution once the problem is manifest, which is why businesses need to act now to protect themselves from future catastrophic scheduling nightmare.
  • U.S. existing home sales fell 1.7 percent month on month to a 5.35 million unit rate in August. Below the expectations of 0.2 percent growth to 5.45 million.
     
    The decline was led by a 5.7 percent drop in the South, which may be related to Hurricane Harvey, according to Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
     
    According to the report, "Some of the South region's decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area."
     
    In short, fairly weak, although the data are volatile. Through the volatility, the trend looks close to flat recently. New home sales have been showing more strength, on average.  National Association of Realtors’ officials continue to cite low inventories as a factor restraining existing home sales, and their point looks valid. The inventory of homes for sale equated to 4.2 months’ supply in Aug, unchanged from Jul and historically low.
  • European markets are now closed. The Stoxx 600 finished the session down 0.11 percent.
     
     
  • We'll close the blog there, join us again tomorrow.
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