at because i told her every day when she was here. [theme music] ♪ good morning welcome to "street signs." i'm joumanna bercetche and these are your headlines european equities open higher on the final trading day of the first half as french inflation falls to the lowest level in 16 months and investors brace for the eurozone print at 11:00 cet. and the dutch crackdown on the exports answering concerns from the u.s. to china and pledging to comply

adidas and puma track nike shares lower after they post the first earnings miss in years and flags the first quarter revenue guidance. nasdaq points higher in the pre pre-market as it looks to notch the best wave since 1993 as it looks to ride a.i. good morning welcome again to "street signs." it has been a busy morning with data and macroeconomics cater caters -- indicators and company news we had a flurry of data and we are looking ahead to two crucial data points from the eurozone and u.s.

french inflation has fallen to the lowest level since march 2022 june cpi at 4.5% on the year that is down from the 5.3% in may. showing the disinflationary trend. and the initial figure to post zers 0.2% for the year. the eurozone inflation print is coming in for the year the flash is expected to drop to 5.6% in june above the target which is well down from october's peak of 10.6%. let's not forget the u.s the fed's favorite inflation gauge is due out at 14:30 cet. the index is expected to rise 0.3% in the month of may

down from the hotter than expected 0.4% increase in april. on the year, it is seen holding in at 4.7% on thursday, to go back to what we had yesterday with the recap. we saw two different inflation pictures from the euro area. spanish inflation came in 1.6% on the year. by contrast, inflation in germany rose in june higher than expected at 6.8% on the year this is the perfect example for the ecb as it faces this across the block. one reason why german inflation surprised to the upside is due to base effects on back of transport costs introduced in june of 2022 new data from the u.s. shows the american economy grew at a rate of 2% in the first quarter this was above the flash print at 1.3% and expectations of

1.4% following upgrades and consumer spending and exports if i can summarize it, u.s. data has come in stronger this week u.s. gdp stronger yesterday. the eurozone inflation numbers is what people are watching for. german cpi is a surprise, but french and spanish numbers are lower than expected. all eyes on the print at the end of "street signs" today. we see a lot of green on the board. the heat map is inching toward the green. the stoxx 600 is up .23% the stoxx 600 as a whole is up .80% if you exclude today today's really accounting for the performance for the week wehave been leaning in the direction for the european markets. today is a solid day of green as we talked about the

macroeconomics indicators and the central bank comments from sintra switching to the markets and look at how things are shaping up dax is .60% higher vinova and siemens health are gaining ground a lot of ground to cover and they are moving in the right path cac 40 is up .80%. a pull back in the luxury names on the back of weakness from china. industrial names the ftse 100 is up .50% on the day as we spoke about the financial gdp numbers at 0.1% for the quarter. we had house numbers come in

negative territory in terms of sectors, this is where leadership is coming from. up at the top, you will the see we have oil and gas. we are seeing a bit of a turn around with sentiment toward the end of the week. real estate as well. vinova in focus. german real estate under focus this week and also on back of the police investigation into adler a few days ago that is on investors' minds. food is up .90%. we will talk more about food and price inflation in the latter half of the show the only sector trade in the red is tech. down .60%. chipmakers are in focus. a drag from the u.s. session also to do with geopolitical developments over here in europe as well. i'll get to that shortly don't forget it is june 30th that means we are halfway through the year already my goodness. this year is flying by let's look at the indices for

the first six months of the year the best performing index is the ftse mib which is up 18.6% in name in particular is driving that performance is unicredit. out performer in the italian index and european banking index. cac 40 is up 14% dax, despite all of the noise with the german economy, has gains of 15% it has managed to do well for the first half of the year take a look at the ftse 100. dismal performance relative to the others not up 1%. you could say it is heavily weighted toward commodities and miners and basic resources and outward focused industries there has been focus on the uk economy and the stagflation diagnosis many have given to the

uk economy in terms of individual stocks, this is the best performers sit. we have some of the semiconductors up 73%. rolls-royce in the uk up 60% a lot of leaning to the chipmakers unicredit is up 60%. and marks and spencers is up given the pressure on the retailers. if we flip to the worst stocks in the stoxx 600, this is the picture of the stocks that have been under performing. the chemicals name under pressure in the last couple weeks. the profit warning there leading some of the declines people reevaluate the work from home and food delivering models. anglo american coming under selling pressure

tui down 27% i mentioned the geopolitical developments to chipmakers let me give you more detail on what exactly i'm referring to. netherlands announced new rules that come into effect from september. now, in a statement, the trade minister said the regulations mean an export lie espcense is e for those for military applications asml does not expect measures to have a material impact on the financial outlook for the year or any of the longer-term forecast it set out at investor day last year. you see the stock which has done well this year, up 30%, is pairing the gains down 2.5% this morning on the news. this is the broader picture for chipmakers asml down 1% and infineon has

had a good day in germany today. only up .50% switching to retailers, nike shares are lower in the pre-market after the retailer missed on earnings for the first time in three years and issued disappointing guidance it fell a penny shy of the forecast the u.s. rose at the slowest pace in four quarters as rising inflation hit cost conscious consumers. shares in china surged after three quarters of decline. that is setting the tone for the european retailers and you can see adidas is struhrugging off e concerns up 1.1%. nike is seen down 1% puma is up 1.5%.

we have our guest with us to discuss. let's start where i was going over the performance of the stock market indices yearto date it is still surprising that the dax and cac 40 and european economies and stock markets are able to post double digit gains in the year with focus on potential for recession and economic headwinds facing the industries >> i would say more importantly, so many are wondering about recession or no recession and earnings have continued to deliver. looking forward to the earnings season in a few weeks time the other thing is worldwide is we get closer to the peak rates which is giving support. there are differences between the different regions. that's influencing the relative performance. >> let's talk about the micro. you are looking forward to the earnings season in a couple weeks time what are you watching? >> the leadership of the

technology sector that can continue and what are the technology companies telling us about the earnings and in particular a.i. and cloud and everything that is related to that people have been looking at that obviously which is driving the leadership i would say it is not the only sector seeing strong earnings. sometimes we exaggerate the narrowness of the rally you have seen as well consumer cyclicals and communication and even industrials doing reasonably well and earnings upgraded that is what will continue to drive the market higher because from a rate perspective, the mul multiples. >> it makes sense. i want to go back to what you are saying about leadership. i was reading an article a couple of weeks ago about leadership and the u.s. is different from the leadership and in europe, it is all a.i. and tech it is a year of luxury that is driving a lot of the gains

luxury sector was the main performer for the first few months of the year with china faltering a bit, how is the trajectory forward for luxury and index level >> in terms of performance, we prefer the u.s. over europe with the outlook where the ecb is hawkish because of the weak u.s. dollar which will help the earnings in the u.s. and technology where we see more structural demand. from the consumer perspective, when i go to asia, i'm back from a three-week tour there. what are investors looking at here with luxury and names they know and consumer brands generally. you mentioned the out performers in the past six months you had goods consumer companies in there as well i think the consumer recovery in china will happen, but more

slowly than we expected. you know, there is stimulus that is coming in don't ignore the rest of asia which is doing very well >> we'll get there i want to get to that shortly. i want to finish our conversation around europe because we have this key inflation data coming up at the top of the hour. to what extent are you still watching the data? are you data dependent like the ecb? >> we need to be data dependent. that drives the market sentiment. i think it is important to see the bigger picture i think the bigger picture is the recession, if anything, is being pushed out bears were first looking at it for the second quarter and now third quarter and now not any more for the third quarter it is pushed out the risk is that people who are

un underweight will need to short cover and on the back of the strong earnings season >> you mentioned at the beginning of the conversation the relative decision making out of central banks around the world. our colleague sarah eisen was speaking to the central bankers in sintra. there are different phases of the cycle. japan is still easing. powell close to the end. lagarde still sounded hawkish. bailey has to sound hawkish. that is having an impact on currency and where the currency bears are trading. how will that impact the relative performance of the stock market indices >> we think in the west, the u.s. is less hawkish than the ecb or bank of england in that order. fed, ecb bank of england the bank of japan will need to be more hawkish.

if you are looking at the inflation and growth picture, they don't need the extraordinary growth they have that means the dollar needs to weaken it has been up and down over the last six months, but it needs a bearish buy to it. that has benefits of the relative performance in the local currency terms of the u.s. market relative to the west to europe and the uk. for japan, what it means is we think the japanese yen will stall and you will have the intervention and that band will widen and maybe ministry of finance will stop the upside to the index to equities. >> let's see the yen is up 10% year to date the pound is 4.3%. the euro 1.6%. it feels the euro has covered more ground. yen has really under performed against the dollar we will continue the

conversation about all things asia in a moment willem sills from hsbc. we will look at the top performing asia markets as the nikkei raises 30% in the first half stay with us we'll be right back. we are also live at the eu council in brussels. you see some of the eu leaders have just started arriving you can see the chancellor olof scholz there we will have a lot more from brussels with the rest of the show ( ♪♪ ) woah. ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) constant contact delivers the marketing tools

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xfinity rewards creates experiences big and small, and once-in-a-lifetime. welcome back to the show some data from overnight chinese factory activity strong for the third straight month in june the pmi of 49 was better than may. it signals contraction heaping more pressure from policymakers to act to shore um weak demand. on the back of that, we see a

mixed bag for the chinese indices. shanghai is up .09%. over at the nikkei and we are seeing a bit of a pullback in the japanese market. down .8% let's switch over and take a look at how markets have done year to date you have it. nikkei up 27%. highest level seen in three decades. a really impressive performance from the japanese index there. a lot of it, of course, has been currency with the weakness of the japanese yen hang seng down 4.4% in the first six months of trading. we saw a pull back in the chinese tech names

shanghai up 3.6% we are trading at 3,200. a key level. the australian index up 2.3% the under performance is stemming from the weakness in commodities. switching to the u.s. markets. the nasdaq up 29.8%. up 30% in the first six months of trading for the year. this is its best first half since 1983 if you were around then and trading markets you will see a repeat of the performance of the tech stocks as you have been seeing with the show, the key mega cap tech names and focus within the a.i. base s&p is up 15% here again, solid start to the year out performing the european counterparts if you just were looking at the currency outlook, we have the

same year to date. s&p with the strong start to the year and the dow is relative to the other two muted. in terms of big tech, this is the breakdown. i said the key names are important. tesla has more than doubled this year up 109% for the first six months apple, 45% microsoft, 39% some key names we talk about on the show are having a strong performance. netflix up 45% hesitation around that stock a couple months ago. take a look at meta. up 133%. also has doubled i remember when it got to $100 and many people were saying it was a good valuation play. take a look the nvidia this has been, i would say, the stock of the first six months. 180% trading through $400 joining the $1 trillion club namely because this is the chipmaker that manufactures the

chips that are important for a.i. so much of the hype has been about a.i. that is why nvidia is leading the charge up 180% in the first six months of the year. as for banks, let's see how the traditional parts of the economy have fared year to date. mixed bag. goldman sachs down 6%. a lot of issues going on within the bank and retail banking exposure didn't come out well out of the stress tests that were released yesterd yesterday. a bill of health for the banks issues rising on consumer credit and retail lending morgan stanley up .30% not really strong performance in comparative to tech and in an environment where you would expect banks to perform better with the higher interest rates and outlook. this is the picture for u.s.

banks. in march, we had the regional banking flare ups. bank of america down 16% in the first six months t this is the picture ahead. all three will open in down territory. the main issue is the core pce print. the fed's indicator for inflation in the economy we will get details on personal spending and personal income as well let's get back to willem from the hsbc private banking unit. willem, let's ask what clients are doing and looking to put their money? >> a few things. our clients are sitting on too much cash. you see that in the money market funds and the huge cash pile they are putting it to work. they had been putting it to work in the bond market typically they go up to three-to-five years. we are comfortable with

five-to-seven years and investment grade people are looking at the slowdown we are looking into that with the emerging markets the second issue is a little bit more hope and we agree with that we actually look at lower risk of recession and that recession pushed back. more and more people are comfortable with more diversified portfolios and putting things to work with solutions that are non asset and in asia, in india and indonesia in particular, those are the two top countries that people pick. >> you talk about asian valuations being cheap which markets? >> india is not cheap, but it is traditionally the case there are lots of profits and we are optimistic with everything happening with the onshoring and

everything to get to digitalization indonesia is strong with the supply chain reorientation everything around commodity related with lithium a lot of activity there. also, very large domestic market in a world which is slowing down, you like large domestic markets. that points to india, indonesia and china. >> what about the nikkei and the strong performance you see warren buffett muscling in on companies. do you get the same enthusiasm out of the clients you speak to with the japanese market >> more questions than action, i would say. as the move has been so sharp and also i think that if the yen starts to stabilize, you don't have that tailwind any more. the consensus is bullish on

japan. i think that will, therefore, there is less position >> what about your clients are they climbing on to the a.i. hype at this point anyone involved think it's great. if they weren't involved, the levels are sky high and you still want to buy into it because you want the growth profile in the portfolio >> people like to take the core diversified portfolio. people like to take more bets. these bets are longer term you know, i think there are so many people out there who are looking for a dip in the types of stocks. when you get a dip, it is not going too far of people will step in. if you are looking at it, it depends how much you expect the earnings to continue to grow if you are bullish, as we he are -- as we are, they are

warranted. >> willem, a lot to get answered in the next half of the year we will see if this can be replicated thank you for joining me on "street signs" to talk through everything from the u.s. to europe and asian markets willem sels from hsbc. coming up on "street signs," eu leaders gather in brussels with latest going on in ukraine. we will have the latest with our colleagues on the ground coming up

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welcome back to "street signs. i'm joumanna bercetche and these are your headlines european equities open higher on the final trading day of the first half as french inflation falls to the lowest level in 16 months and investors brace for the eurozone cpi print at 11:00 cet. the dutch government announces a crackdown on semiconductor exports answering u.s. concerns of technology sales to china with cheap equipment maker asml shvowing t

comply. and adidas and puma are releasing results after nike's miss. and nasdaq and tech ride the wave of euphoria with a.i. lots of green on the board today. it is broad based. every index trading in positive territory. d dax at .70%. let's see what the ecb will bring us in a half hour time ftse mib having a strong

performance. unicredit up for the year. some of the optimism has started to come out of the market. that is something to watch out for in the second half of the year ftse 100 is up .50%. mixed bag with data. we had the uk gdp number coming in 0.1% for the first quarter. that is close to zero and inflation picture is problematic. that is the reason the ftse 100 has under performed in addition to the exposure to the commodities. switching to the forex pound is trading sideways at 126. euro slipping down .25%. the year on year is up 1.5%. you can see dollar/yen up 144 fo 4144.

up 10% for the year. as for u.s. futures, we spoke about core pce which is a focus for the markets and fed today. the three majors are seen opening up in positive territory. s&p up seven points higher nasdaq up 50 points higher eu leaders have agreed long-term security for ukraine including expansion of existing support. the pledge to continue military support for the war-torn country and training of troops and modernization of the army. this after ukrainian president volodymyr zelenskyy warned against sanctions for russia we hhave charlotte with more

charlotte, what are the wagner attempted mutiny against the kremlin going to feature on the agenda today >> reporter: joumanna, after the weekend events after the wagner mutiny with ukraine and defense came at the top of the agenda for the european leaders meeting in brussels yesterday and today. they will take stock what it means for the war in ukraine and european security. in a sense, basically what a lot of european leaders say what happened over that weekend show cracks on the russian side they are looking to show no cracks on the european one it is unity defending ukraine as long as necessary. from the economic point of view or weapons or military support that was the message as well as taking stock of wagner troops in belarus. we heard from several prime ministers saying they are

watching that situation closely. they are concerned about it and monitoring the situation certainly the message of the support for ukraine is strong. we had that text published last night by the european leaders mentioning future security commitments to ukraine it was controversial and proposed and a lot of countries were not sure what it meant. if ukraine is entering nato, why is the war ongoing? it could mean the setting up a specific fund to help modernize ukrainian army and train soldiers we don't know what it means, but it is in the text of the commitment to future security commitments to ukraine from europe the european leaders is happening ten days before the nato summit in vienna. the secretary-general of nato

was here meeting the leaders as well he had also taking stock of what happened over the weekend and what it meant for the war in ukraine. i caught up with him and the president of the european council and asked what happened in russia if the members were adjusting to the support of ukraine. take a listen. >> nato allies have a broader interest and support we are stepping up just over the last weeks where we have seen announcements from eu and natnato allies and training of the f-16 pilots have started. >> we have seen in contrast with the strong eu unity and nato-eu un unity. additional element is to meet with the opposition leadership in belarus and follow closely what is happening in the

country. >> reporter: and we also were told yesterday that the spanish prime minister will take over for the next six months and then head to kyiv to meet president volodymyr zelenskyy to show the support of the eu. all of that talk on ukraine over the events in russia over the weekend and part of the conversation is china and what relationship the eu should have with china they never had a strategy for the bloc for china we heard they tried to take stock and learn lessons what happened with russia and not having the bloc dependent on another power. for russia, it was energy. for china, it is supply chain issues and manufacturing they tried to learn lessons of the crisis in ukraine and what it means for china the word de-risking on the table where the commission presented

the strategy they talk about curtailing some exports to china and sensitive technology as well something we know the u.s. and japan have been more aggressive than europe. europe have to try to get their heads around striking up that balance. i caught up with the prime minister and asked how difficult it was to strike the balance with the derisking the relationship with china given the geopolitical context >> derisking is the right direction to go. i think with the events in russia, we can see dependence and in russia's case is energy in china's days, it is goods or manufactured goods dependence or part of the manufacturing chain. we need to de-risk that means to be able to step back to some degree because geopolitically, the growing relationship or apparent growing

relationship with china and russia is a potential problem for all of us. >> reporter: the million euro question here on trying to strike the delicate balance of de-risking the relationship with china given the geopolitical context and the european leaders have different views on how to deal with china. remember, the chinese premier in germany last week signing contracts. german exporters and china is the prime client there france with a different view on the strategy that president macron has been pushing through since the first mandate. he is now at the core of the european policy. he tries to strike that balance. that is a topic they will talk about during the state visit to germany is how to address this relationship with china. all discussed with eu leaders after taking stock of the events in russia over the weekend and trying to understand what it

means for ukraine. the key message is we are keeping the unity ahead and defending ukraine for as long as it takes >> charlotte, netherlands d decided to follow suit with the u.s. in imposing export controls with the chipmaking equipment. that is one thing the leaders will talk about as well. the context of how much of an approach to china. charlotte, thank you if you want to get inn p inv -- involved on the conversation, tweet me @cnbcjou. coming up on the show, uk grocers cut prices amid hopes that food inflation in the country may have peaked. we'll discuss next

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welcome back to "street signs. let's talk about one stock in the uk that garnered attention thames water has been asked to speak with parliament after a week of reports of the shaky

financial position led to speculation that the government could be forced to step in one in four people in the uk depends on thames water for supply since it was privatized in the '80s, it built up 15 billion pounds of debt according to sky news, around 10% of that expires this year. thames has a strong liquidity position after 500 million pounds of funding from shareholders in march, but reportedly waiting on another 1 billion pounds the financial times believes it would arrive under a year ago. the ceo sarah bentley quit the firm on tuesday. sky news said they entered crisis talks the next day with the ownership under a special regime in the cards. it prepares for a range of scenarios and the sector as a whole is financially resilient thames water has a strong

liquidity position that uncertainty has weighed on the parent company campbell water holdings and the price of bonds due in 2026 plunged as much as 35% this week. amid speculation over the utilities collapse thames waters include the canadian pension fund and uk university evaluation team and abu dhabi investments and hermes which managing the uk largest pension fund switching to the bank of england. one of the dovish members of the monetary policy committee warns raising rates too aggressively could push them below the 2% target the outgoing member opposed raising rates and told the think tank that the rate hikes have yet to be felt

the latest grocer sainsbury will cut prices following ocado in reducing milk prices. it announced sweeping price cuts for chicken, pasta and rice. the price cuts point to signs that flood iood inflation in ths starting to ease food inflation at 14.5% in june. it is moving in the right direction. this is the picture of some of the key retailers in the uk market marks and spencers is one of the best performing stocks in the stoxx 600 this year. up 50% this year 54% in the first six months. sainsbury up 23% ocado. we will talk more with our next guest which is down 11%. tesco is up 11%. a lot to unpack here let's get to steve, the director

of software ag good morning, steve. let's start off asking if you think the worst of food price inflation is behind us now >> i don't think any of us know what is really around the corner i hope that we are seeing the green reduction in the food inflation prices just now in the introduction, we have seen a fall in the inflationary rate between may and june let's hope that is going to continue on that track it was interesting as you raised the point of sainsbury reducing prices of milk, chicken and rice there are others that are still on the increase. we're not out of the woods yet i think we are starting to see the green shoots >> that is encouraging for the final consumer

let's evaluate what happened the last couple months there has been price gouging that retailers were taking advantage of heiigher cost pressures to maximize margins and pass on prices to consumers and beefing up margins is there evidence to your mind that price gouging has taken effect >> we have to remember that the retailers are under very, very similar pressures to consumers they have seen costs increase in terms of the utility prices. they are pressured heavily in terms of the rates they are paying staff, et cetera. they are seeing the costs rise a and also seeing the price per unit it is not just pockets of the economy affected by this i don't know whether there has been price gouging taking place or not i think we have to look at it

from both sides. the pressures that the retailers are under and pressures the consumers are under. >> earlier on when starting off the segment, i was talking about the price cuts retailers have started to introduce on milk and poultry. how sustainable are the price cuts it is strange to see not just inflation not rising, but actually prices being cut. this is deflationary how sustainable is that >> it will depend on where the source of the cuts are coming from if you got other products within the product line subsidizing cuts on core goods, it is not really sustainable if the retailers find ways of reducing the costs through to the supply chain, it may be possible to sustain it really what we are seeing is retailers tackling some of the root causes and identifying mike

-- micro efficiencies and using that to pass on prices to consumers. >> what does this mean for ocada? it has been lagging and then reports that amazon was inn p v -- investing in the company that has not happened. how do you see ocado as a ripe target >> there are clearly two parts to ocado group the retail group which is the online grocer, but a technology partner behind that. to be honest, if ocado is an acquisition target, it would be the technology part of the organization that is of interest to the acquiring party ultimately it is about data. accumulated so much data in terms of buying behaviors and in terms of rooting information for

delivery drivers and in terms of purchasing forecast data that is really the treasure trove the acquiring party is after. it is not necessarily acquiring another route to market. >> steve, let me end this by asking why marks and spencer has done so well this year >> that is an interesting question they have gone through a transformation they are looking at information and data in terms of what customers are trying to do as all organizations are, they are becoming more customer centric. it has never been a more important time to take that on to the customer. the results we see from marks and spencers is a testament to that they found the recipe for them at this particulartime. >> very clear. steve, thank you for joining me. so much to talk about within the retailer space lots of different and drivers and i'm sure we will have you back on to talk about ocado in

the future steve ponting from software ag. today is alan jope's last day at unilever. the share price is how he found it when he took the reins in january of 2019. he took criticism from shareholders with top ten shareholder terry smith lashing out last year where he said the firm had lost the applause jope came under pressure under the healthcare division. and nelson peltz took his seat on the board let's take another look at how european markets are shaping up on this final trading day of the week, month, quarter and also half of the year.

the picture is pretty positive we have been piecing together a lot of the communication from central bankers in the sintra conference hawkishness from christine lagarde. also we are getting preliminary inflation numbers. watch out in five minutes time for the eurozone headline inflation print. it will give us signs if the disinflationary trends are moving as for european markets year to date, it is a good picture ftse mib is up 18% almost 19% one of the big names is unicredit. the stock up 60% they continue with the share buybacks and distribution which is well received cac 40 is up 14% that is on the back of luxury. dax is up 14%. the under performing index is

the ftse 100 in the uk we talk about the stagflation back drop that doesn't help for the macroeconomics pecurspectiv. it is commodities he caexposed. the miners and oil and gas companies have been dragging that index lower it is only up .8%. as for u.s. futures today, let's look ahead at the markets opening up all of them opening in positive territory. s&p up 11. dow up 35. nasdaq up 65 all eyes on the core pce number that will be a big focus for investors. that is it for today's show. i'm off the next couple weeks. i'll see you when i'm back i'm joumanna bercetche "worldwide exchange" is coming up next. ♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ )

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it is 5:00 a.m. at cnbc global headquarters. here is your "five@5." markets set to close out the strong first half of the year. stocks are looking to finish on a strong note. a different story for shares of nike this morning under pressure ahead of the opening bell after the apparel giant notched the first earnings miss in three years. fresh economic worries emerging out of china just days after leaders suggested stronger days were coming for the world power. plus