Netflix shares rose pre-market after losing less than the 2 million subscribers forecast and beating earnings estimates.
· FTSE shrugs off rising inflation, as CPI rose to 9.4% YoY in June fueling the cost of living crisis
· Pressure is rising on the BoE to hike rates by 50 basis points in August – GBPUSD rises to 1.20
· Tesla is due to report a 44% rise in revenue & 45% jump in EBITDA in Q2 earnings today
European stocks pushed higher yesterday for a second straight session, lifted by reports that Russia intended to switch gas flow along the Nord Stream 1 back online on Thursday. Germany, particularly, had been preparing for Russia to use gas as a political weapon which could have quickly pushed the eurozone’s largest economy into recession.
US markets also stormed higher yesterday on the back of healthy earnings and as investors managed to brush off concerns over companies, such as Apple and Goldman Sachs, slowing their hiring plans.
So far, earnings have been encouraging, with corporate America showing resilience amid an increasingly challenging economic backdrop. However, it is still too early in the reporting season to draw significant conclusions. The S&P500 closed 2.7% higher, pulling itself out of the bear market territory, while the Nasdaq rallied 3.1%.
Netflix
Netflix trades over 7% higher pre-market as investors breathe a sigh of relief over the latest quarterly figures. The streaming giant reported a better-than-feared subscriber trend, losing just 970,000 subscribers, rather than the 2 million guided for in the last earnings. Growth in the Asia Pacific helped offset a slowdown in the US and Europe. Revenue came in at $7.97 billion, up from 8.6% a year earlier but below forecasts of $8.05 billion, owing to unfavourable currency headwinds. EPS was $3.22 above estimates of $2.93. Netflix also provided further details on its ad-supported subscription packages, which are expected to launch in 2023. The upbeat figures were well received, sending the share price and sector peers higher after the close.
UK inflation
The upbeat close on Wall Street is lifting Europe higher ahead of the open. The DAX is heading for a 0.5% gain on the open, while the FTSE also points to a stronger start, even as inflation surges to a fresh 40-year high.
UK inflation rose to 9.4% YoY in June, up from 9.1% in May and above the 9.3% forecast, intensifying the cost of the living crisis engulfing the UK. Prices are rising faster than wages which suggests that the squeeze on household incomes will get worse. The data puts pressure on the BoE to aggressively hike rates when it meets again in August amid fears that inflation could become entrenched. Last night in his annual speech at Mansion House, BoE governor Andrew Bailey floated the idea of a 50 basis point rate hike, which appears to have become the norm among central banks. GBP/USD trades around a ten-day high at 1.20 following the release.
Even the typically cautious ECB is considering a 50 basis point rate hike tomorrow, reports of which sent the EUR soaring in the previous session, back above 1.02.
Tesla
The US economic calendar remains quiet, allowing earnings season to take centre stage. Tesla is due to report after the close, with deliveries at 254,695, which has already been announced, revenue is expected to rise 44% in Q2 to $17.3 billion and EBITDA to rise 45% to $3.6 billion.
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