Europe | Europe Markets Closing Report: European stocks close lower as US-China trade tensions escalate

Elliot Smith

4-5 minutes:  Source: CNBC

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European stocks closed lower on Friday as trade tensions between the world’s two largest economies heightened.

European Markets: FTSE, GDAXI, FCHI, IBEX

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE	VOLUME
FTSE	FTSE 100	FTSE	7118.56	-9.62	-0.13	384425437
DAX	DAX	DAX	11667.38	-79.66	-0.68	63976446
CAC	CAC	CAC	5350.88	-37.37	-0.69	44455877

The pan-European Stoxx 600 closed provisionally 0.6% lower, with most sectors in negative territory. Autos stocks suffered sharp losses by the close, slumping 2%.
The Chinese State Council said it decided to slap tariffs ranging from 5% to 10% on the additional imports in two batches, effective on September 1 and December 15. A 25% tariff will also be places on U.S. cars and 5% on auto parts, with effect from December 15.
Following that announcement, President Donald Trump said he was ordering American companies to “immediately start looking for an alternative to China.” The U.S. leader urged postal carriers including FedEx and Amazon to “SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!).”
Investors also digested remarks from Powell at the central bank’s Jackson Hole symposium on Friday. The Fed chief said in a speech that the Fed “will act as appropriate to sustain the expansion,” a phrase he has used several times in the recent past.
“The global growth outlook has been deteriorating since the middle of last year,” Powell said. “Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States.”
In an apparent response, Trump questioned whether America’s “biggest enemy” was Powell or Chinese President Xi Jinping.
Powell’s remarks initially buoyed sentiment, but the latest trade escalation tipped sentiment to the downside. On Wall Street, stocks had initially turned south following China’s tariff threat, but the Dow Jones Industrial Average eked out small gains following the release of the Fed chair’s speech.

G-7, Italy

The Group of Seven (G-7) annual summit begins on Saturday in France, bringing together the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States, and is expected to end without a joint communique for the first time in its 44-year history due to deepening rifts between the heads of state.
Brexit remains on the radar after U.K. Prime Minister Boris Johnson met with German Chancellor Angela Merkel and French President Emmanuel Macron this week for talks.
Macron on Thursday signaled confidence that a solution could be found regarding a slightly amended withdrawal agreement, but reiterated that the backstop for the Republic of Ireland-Northern Ireland border is “indispensable.”
Back in Europe, Italian President Sergio Mattarella said several parties had indicated that they need more time to work out a solution to the ongoing government crisis, and will report back early next week. Luigi di Maio, leader of the anti-establishment Five Star Movement (M5S), said his party is working to avoid snap elections.
In corporate news, Deutsche Bank has agreed to pay $16 million to the U.S. Securities and Exchange Commission to settle charges that it violated the Foreign Corrupt Practices Act. The German lender’s stock traded 0.8% higher at the start of the session.
Meanwhile, the Financial Times reported that the EU is considering plans for a 100 billion euro ($110.71 billion) sovereign wealth fund to finance European industrial champions in order to compete with U.S. corporate giants, such as Apple and Google.

Stocks on the move

Danish hospital equipment maker Ambu gained 7% to top the Stoxx 600, while Simcorp shares were also up 5% after the Danish IT company posted strong second-quarter results and upgraded its earnings forecast.
At the bottom of the European blue chip index, Rockwool International’s stock tumbled nearly 16% after its second-quarter results.

-CNBC’s Yun Li contributed to this report.remains on the radar after U.K. Prime Minister Boris Johnson met with German Chancellor Angela Merkel and French President Emmanuel Macron this week for talks.
Macron on Thursday signaled confidence that a solution could be found regarding a slightly amended withdrawal agreement, but reiterated that the backstop for the Republic of Ireland-Northern Ireland border is “indispensable.”
Back in Europe, Italian President Sergio Mattarella said several parties had indicated that they need more time to work out a solution to the ongoing government crisis, and will report back early next week. Luigi di Maio, leader of the anti-establishment Five Star Movement (M5S), said his party is working to avoid snap elections.
In corporate news, Deutsche Bank has agreed to pay $16 million to the U.S. Securities and Exchange Commission to settle charges that it violated the Foreign Corrupt Practices Act. The German lender’s stock traded 0.8% higher at the start of the session.
Meanwhile, the Financial Times reported that the EU is considering plans for a 100 billion euro ($110.71 billion) sovereign wealth fund to finance European industrial champions in order to compete with U.S. corporate giants, such as Apple and Google.

Stocks on the move

Danish hospital equipment maker Ambu gained 7% to top the Stoxx 600, while Simcorp shares were also up 5% after the Danish IT company posted strong second-quarter results and upgraded its earnings forecast.
At the bottom of the European blue chip index, Rockwool International’s stock tumbled nearly 16% after its second-quarter results.
-CNBC’s Yun Li contributed to this report.

Market Insider: Stocks making the biggest moves premarket: Salesforce, HP, Gap and more

Peter Schacknow

4 minutes - Source: CNBC

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Foot Locker – The athletic footwear and apparel retailer fell a penny short of forecasts with adjusted quarterly profit of 66 cents per share. Revenue also missed forecasts. Foot Locker’s comparable sales increase of 0.8% was short of the 3.3% increase predicted by analysts surveyed by Refinitiv.
Nike was named “best idea” at Guggenheim, which noted that concerns over tariffs and market conditions have pushed the stock lower and created a compelling entry point.
Hibbett Sports posted an adjusted quarterly loss of 13 cents per share, smaller than the 16 cent loss expected by Wall Street. The athletic footwear and apparel retailer’s revenue fell short of estimates. Hibbett’s comparable store sales increase of 0.3% was also below the Refinitiv consensus forecast for a 0.4% rise. Hibbett did raise the lower end of its full-year comparable store sales growth forecast, now expecting an increase of 1% to 2% from the prior 0.5% to 2%.
The Buckle – The accessories retailer reported quarterly earnings of 34 cents per share, 4 cents above the consensus estimate, while revenue exceeded forecasts as well. Comparable store sales were up 1.8%, compared to expectations for a 1.4% decline.
Hasbro will acquire Canada’s Entertainment One for about $4 billion in cash. Entertainment One is the company behind preschool brands like Peppa Pig and PJ Masks.
Salesforce.com reported adjusted quarterly profit of 66 cent per share for its latest quarter, compared to a 47 cent consensus estimate. The business software company also saw revenue come in ahead of forecasts, and gave upbeat full year guidance.
HP Inc. beat estimates by 3 cents with quarterly profit of 58 cents per share, with the computer and printer maker’s revenue essentially in line with Wall Street forecasts. HP also announced that CEO Dion Weisler would be stepping down on Nov. 1 for family-related reasons. He’ll be succeeded by Enrique Lores, currently head of the company’s imaging and printing unit.
Gap came in 10 cents ahead of consensus with adjusted quarterly profit of 63 cents per share, with revenue in line with forecasts. However, the apparel retailer’s comparable store sales fell by 4%, and its traditionally strong Old Navy brand saw a comparable store sales decline of 5% compared to 1% in the prior quarter.
Dillard’s – The retailer raised its quarterly dividend by 50 percent to 15 cents per share.
VMware earned an adjusted $1.60 per share for its latest quarter, 5 cents above estimates, with the cloud software company’s revenue also beating forecasts. VMware also announced the acquisition of software companies Pivotal Software and Carbon Black in separate deals. Dell Technologies is a controlling stakeholder in both Pivotal and VMWare.
Walmart and Tesla are seeking to resolve issues surrounding Tesla solar energy systems sold at Walmart stores. Earlier this week, Walmart sued Tesla for “widespread negligence” involving repeated fires involving those systems.
Intuit lost 9 cents per share for its latest quarter, smaller than the 15 cent loss that Wall Street was anticipating. The financial software company also saw revenue come in ahead of estimates.
Ross Stores earned $1.14 per share for its second quarter, 2 cents above estimates, while the discount retailer’s revenue also came in slightly above consensus. The company also said it sees a slight impact on its third and fourth quarter earnings from the 10 percent tariff on goods sourced from China.

Biggest Analyst Calls: Here are the biggest analyst calls of the day: Hewlett Packard, Nike, L Brands & more

Michael Bloom

5-6 minutes - Source: CNBC

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People walk by a Nike store in New York.
Spencer Platt | Getty Images

Here are the biggest calls on Wall Street on Friday:

Seaport Global initiated KB Home, D.R. Horton, Lennar, and PulteGroup as ‘buy’

Seaport said that despite it being a “volatile” group, the firm had a “generally positive” view of the homebuilders.
“We are initiating coverage on five homebuilders with a generally positive view overall. The homebuilders are notoriously volatile with trends in order growth and gross margins, rightly or wrongly, often getting the most focus bottom-up, while changes in interest rate expectations seem to have increasingly come to outweigh (the often inversely related) near-term tenor of the economy in terms of top-down drivers. At this juncture, we are most drawn to builders oriented to affordable product, likely to generate very strong free cash generation as they pursue “land lighter” strategies and/or unlock obscured value.We have four names at Buy KBH, DHI, LEN, and PHM. ”

RBC downgraded L Brands to ‘sector perform’ from ‘outperform’

RBC downgraded L Brands due to an “uncertain” trajectory in the company’s Victoria’s Secret and Bath & Body Works brands.
“Despite a Sum-of-the-Parts disconnect with Bath & Body Works, we’re moving to the sides as the 2H plan for Victoria’s Secret comp and merch margin dollar progression are at odds with building inventories and considering traffic ramifications from a planned pullback on promotions during holiday. Longer-term, we wonder if changes in VS merchandise and positioning will strike a chord in today’s more body-positive environment. Reducing EPS and PT to $22.”

Evercore ISI downgraded Hewlett Packard to ‘in line’ from ‘outperform’

Evercore downgraded the stock after the company’s earnings report and said the stock may “languish” until it sees improvement in the Supplies revenue trajectory.
“HPQ’s FCF remains robust, but we think the stock may languish until we see an improvement in the Supplies revenue trajectory something we currently do not have a line of sight for (management does not expect Supplies revenue to grow in FY20). Additionally, we note that a lower Supplies mix will likely impact operating margin looking forward while the PC business in FY20 will face difficult compares in FY20 as HP laps the Win 10 refresh cycle tailwind. We are therefore adjusting our rating to In Line and lowering our Target Price to $19 due to the lack of near-term catalysts. ”

Raymond James upgraded La-Z-Boy to ‘outperform’ from ‘market perform’

Raymond James said in its upgrade that the company has a “strong” balance sheet and a dividend that continues to increase.
“Recognizing that we do not live in a vacuum, we acknowledge that China tariffs and potential recession worries combine to frighten some to the sidelines. Accordingly, we are using our less-than- strongest rating, not for lack of conviction, but on the supposition that investors may need to be patient while the market comes to recognize LZB’s value. That said, La-Z-Boy’s balance sheet is strong with no funded debt and the dividend has increased each year since 2013. In addition, the host of retail earnings over the last two weeks seem to point to a healthy U.S. consumer. ”

Guggenheim downgraded Macy’s to ‘neutral’ from ‘buy’

Guggenheim said in its downgrade note that it no longer sees headwinds “abating.”
“While we respect management’s attempts to move fluidly in the ever-evolving retail environment, we no longer see the secular headwinds facing the company abating. .. .Overall, while we continue to believe the company has attractive real estate assets, we are moving to the sidelines on the shares. While we would welcome additional store closures and further debt paydown, with tariffs looming large, we have limited visibility into M’s ability to sustain and/or grow earnings in 2020. ”

Guggenheim named Nike as a ‘best idea’

Guggenheim said that concerns over tariffs and market conditions have pushed Nike stock lower and created a compelling entry point.
“While we acknowledge NKE’s current robust multiple, with the current global uncertainty, we believe investors should embrace NKE’s 1) strong recent results (both reported and in CC), 2) focus on DTC/digital, 3) supply chain improvements/diversification, and 4) the company’s robust innovation pipeline. Additionally, we believe NKE is one of the best-positioned names in our group to mitigate tariff risk through potential price increases. ”

Morgan Stanley upgraded Altria to ‘equal weight’ from ‘underweight’

Morgan Stanley upgraded the stock and said it sees a more balanced risk-reward for the tobacco company.
“Upgrade to EW as our thesis has largely played out, MO has materially underperformed the S&P 500, and we see a balanced risk-reward. Risk to US cigarette fundamentals appears to be increasingly priced in at a 48% discount to Consumer Staples (10.9x 2020 P/E; 8.2x on the core business). ”

World News: Amazon rainforest fires: global leaders urged to divert Brazil from 'suicide' path

Jonathan Watts

11-14 minutes - Source: THE GUARDIAN

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International pressure may be the only way to stop the Brazilian government from taking a “suicide” path in the Amazon, one of the country’s most respected scientists has said, as the world’s biggest rainforest continues to be ravaged by thousands of deliberate fires.
The large number of conflagrations – set illegally to clear and prepare land for crops, cattle and property speculation – has prompted the state of Amazonas to declare an emergency, created giant smoke clouds that have drifted hundreds of miles, and sparked international concerns about the destruction of an essential carbon sink.

“Our house is burning,” tweeted the French president, Emmanuel Macron, who called for emergency talks on the subject at this week’s G7 summit. But the response to the crisis has been mixed: while Norway and Germany have halted donations to the Brazilian government’s Amazon fund, the EU has recently signed a trade deal with South America, and the UK spent this week focusing on post-Brexit business with Brazil.
On Wednesday, the UK trade minister Conor Burns was shaking hands with his counterparts in Brasilia and declaring a desire to “deepen relations”. Asked about the fires, he declined to comment but reportedly said Bolsonaro’s government had “legitimate ambitions to bring prosperity to its people”.
Scientists say the ongoing destruction will have dire consequences for Brazil and the world.
Carlos Nobre, a senior researcher with the Institute of Advanced Studies at the University of São Paulo, said the surge in deforestation was taking the rainforest closer to a tipping point beyond which swaths of the usually humid forest would become a dry savannah, with dire consequences for the climate, wildlife and forest dwellers.
Nobre said deforestation was on course to rise by 20-30% this year and was “very likely” to pass 10,000 sq km for the first time in more than 10 years. The trend has been worsening for several years, but it has accelerated under Bolsonaro, who has weakened the environment agency and expressed support for miners, farmers and loggers.
“The situation is very bad. It will be terrible,” Nobre told the Guardian. “A very large number of these fires are due to the cultural push that ministers are giving. They are pushing deforestation because it is good for the economy. Those who do illegal deforestation are feeling empowered.”
Nobre co-authored a study last year that predicted the southern, eastern and central regions of the Amazon would reach an irreversible stage of degradation once 20%-25% of the forest was cleared. This was not expected for 20-25 years, but Nobre said the tipping point was likely to be brought forward by about five years if this year’s rate of forest destruction continued.

In the five days to Wednesday, there were 7,746 fires in Brazil, according to data from the country’s National Institute for Space Research (INPE). This follows a 278% rise in deforestation last month. The figures are preliminary, but a rising trend has been observed by other satellite monitoring systems.
Brazil has recorded more than 72,000 fires this year, an 84% increase on the same period in 2018, according to the INPE. Not all were forest fires, but more than half were in the Amazon.
In one of the worst affected municipalities, Porto Velho, environmental activists said there were fires around the city and the streets were filled with smoke.
“People are scared. The hospitals are full of people with respiratory diseases. In 60 years, this is the first time I feel difficulty breathing,” said Ivaneide Bandeira Cardozo, the coordinator of the environmental organisation Kanindé. “It’s a thousand times worse than in other years.
“Bad farmers think they can commit all kinds of illegality because they will suffer no punishment … It seems Brazil has no law, that all the laws are in tatters.”
In the soya frontier state of Mato Grosso, which has had more fires than anywhere else in Brazil this year, burning has been detected inside indigenous lands and nature reserves.
The vast majority of Brazilians want to protect the forest, according to opinion polls, but the government has prioritised business interests. Bolsonaro announced this week that he would resume mega-hydro projects in the Amazon that were halted on environmental grounds. His son has proposed a bill in Congress that would further weaken protections around indigenous territory and nature reserves.
Nobre said one of the few remaining ways to prevent a dangerous loss of forest was through external protests and consumer actions.
“Politicians in Brazil pay more attention to international pressure than the voice of Brazilians,” he said. “I think international pressure is essential to reverse this tragic pathway. The agriculture sector in Brazil is very concerned that European consumers won’t buy Brazil produce. This may be the ultimate way to stop the Brazilian government from a suicide of the Amazon, which will have terrible consequences for the climate and for Brazil.”

These concerns were echoed by Thomas Lovejoy, a co-author of the tipping point study. In more than 50 years working in the Brazilian rainforest, he said this was one of its darkest moments, he said.
“There have always been some ups and downs, but the overall trajectory has been towards improvement. Now, Brazil is headed in the other direction.
“Under normal circumstances, the outside world would endeavour to help, but this Brazilian government is not interested in help.”
The scientists said there were already signs the tipping point was drawing closer. The dry season in the southern and eastern Amazon was more than 20 days longer than it was 30 years ago, droughts were more common, and plants that relied on high humidity were declining. In deforested areas, these trends were more pronounced.
Nobre said: “If the dry season extends two to three weeks more we will reach a critical moment. If it lasts longer than four months, this is the climate envelope of a savannah.”
Global heating is a major factor. As in Siberia, Alaska and California, climate breakdown is expected to make fires more frequent and more widely spread. Some of the biggest fires this week have been in the Bolivian Amazon, where deforestation has also been accelerating. According to Europe’s Copernicus satellite monitoring agency, this was the origin of the smoke that darkened the sky in São Paulo, thousands of miles away, on Monday.
There have been more large fires in Colombia and eastern Brazil this week than in the Amazon, where many agricultural burn-offs are in deforested areas.
In the Brazilian Amazon, only Amazonas state has registered a record for fires so far in August. Globally, huge fires in the Arctic have been even further from the norm, but Brazil remains the centre of concern because the problem is more immediately manmade.
Bolsonaro has tried to deflect blame. He sacked the head of the space agency and said the satellite data was a lie. His chief of staff claimed European environmental concerns were a plot to constrain Brazil’s economic growth. His foreign minister tweeted that it was a tactic by the international left. This week, he suggested, entirely without evidence, that environmental groups might have started the fires to embarrass his government.
This last allegation was condemned on Thursday in a letter signed by 118 civil society organisations. “The president doesn’t need NGOs to burn the image of Brazil in the world,” they wrote.

Jair Bolsonaro claims NGOs may be setting Amazon rainforest on fire – video

Concerns about the deteriorating situation have prompted protests at Brazil’s embassies. The UN secretary general, António Guterres, has also urged Brazil to take action. “In the midst of the global climate crisis, we cannot afford more damage to a major source of oxygen and biodiversity. The Amazon must be protected,” he tweeted.
Macron said he would put the matter on the agenda of the G7 summit in France this weekend, while celebrities including Leonardo DiCaprio, Madonna and Cristiano Ronaldo have also raised the alarm.
In Brazil, a petition by the campaign group Avaaz asking the government to halt illegal deforestation has received 1.1m signatures. Federal prosecutors in Pará state are investigating why environmental inspections have declined and military police are absent from inspection operations, where they used to provide protection.
Some foreign governments and conservation groups are trying to deal directly with Brazilian state governments and NGOs rather than going through the national authorities.
The UK, however, has been more focused on building post-Brexit business relations. Brazil’s international trade minister, Marcos Troyjo, said that along with ongoing negotiations with the US, Burns’s visit was a sign that Brazil continued to have the trust of the outside world.
“I think there can be no more concrete proof that not only is Brazil open for business but the international community is willing to do business with Brazil,” he said.

The UK’s stance was condemned by Friends of the Earth. The campaigner Guy Shrubsole said: “If this is what we are prepared to do to line up trade deals, rather than take a world-stage opportunity to protect the obviously irreplaceable Amazon, you have to wonder where our priorities lie. The UK government shouldn’t trade with any countries who are ignoring their Paris climate change commitments, least of all Bolsonaro’s Brazil when they’re burning their forests down to sell us and the world soya and beef.”

U.S.Market | Futures Indicator Update: Stock futures roll over, Dow set to drop 100 points after China retaliates with new tariffs

Fred Imbert, Sam Meredith

2-3 minutes - Source: CNBC

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U.S. stock index futures were higher Friday morning, as market participants awaited a key speech from the Federal Reserve’s top official.
At around 06:45 a.m. ET, Dow futures rose 47 points, indicating a positive open of about 31 points. Futures on the S&P and Nasdaq were both slightly higher.
Futures fell from their highs on concern about possible China retaliation in the trade war. Overnight, China’s Ministry of Commerce said that the country has no choice but to take countermeasures. Later in the session, the editor in chief of China’s Global Times  tweeted that retaliatory tariffs were coming soon.
But the market is largely focusing on the U.S. central bank’s annual Jackson Hole symposium, with Fed Chairman Jerome Powell expected to address an audience of policymakers and economists at 10:00 a.m. ET.
Powell faces the tough challenge of presenting a unified voice on Fed policy from the most divided U.S. central bank in years.
It comes as both the Fed and Powell are under an unprecedented siege from an angry president, while a speech that fails to assure investors the U.S. central bank will continue to cut interest rates could create even more market volatility.
As of Friday morning, Fed funds futures were pricing a likelihood of almost 90% for a 25 basis point rate cut at the September meeting, and between one or two further quarter-point rate cuts between then and the end of the year.
The yield curve remained only slightly positive on Friday morning ahead of Powell’s speech. The spread between the 10-year Treasury yield and the 2-year rate inverted on Thursday after Fed members indicated a September rate cut was not a certainty, raising fears that the central bank would not be quick enough to save the economy from a recession. The yield curve has been a reliable recession indicator in the past.
On the data front, new home sales for July will be released at around 10:00 a.m. ET

U.S. Market | Futures Indicator: US futures point to a slightly higher open ahead of Powell's speech

Sam Meredith

2-3 minutes - Source: CNBC

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U.S. stock index futures were higher Friday morning, as market participants awaited a key speech from the Federal Reserve's top official.
At around 06:45 a.m. ET, Dow futures rose 47 points, indicating a positive open of about 31 points. Futures on the S&P and Nasdaq were both slightly higher.
Futures fell from their highs on concern about possible China retaliation in the trade war. Overnight, China's Ministry of Commerce said that the country has no choice but to take countermeasures. Later in the session, the editor in chief of China's Global Times  tweeted that retaliatory tariffs were coming soon.
But the market is largely focusing on the U.S. central bank's annual Jackson Hole symposium, with Fed Chairman Jerome Powell expected to address an audience of policymakers and economists at 10:00 a.m. ET.
Powell faces the tough challenge of presenting a unified voice on Fed policy from the most divided U.S. central bank in years.
It comes as both the Fed and Powell are under an unprecedented siege from an angry president, while a speech that fails to assure investors the U.S. central bank will continue to cut interest rates could create even more market volatility.
As of Friday morning, Fed funds futures were pricing a likelihood of almost 90% for a 25 basis point rate cut at the September meeting, and between one or two further quarter-point rate cuts between then and the end of the year.
The yield curve remained only slightly positive on Friday morning ahead of Powell's speech. The spread between the 10-year Treasury yield and the 2-year rate inverted on Thursday after Fed members indicated a September rate cut was not a certainty, raising fears that the central bank would not be quick enough to save the economy from a recession. The yield curve has been a reliable recession indicator in the past.
On the data front, new home sales for July will be released at around 10:00 a.m. ET.