DAY AHEAD: Stimulus deadline & Netflix earnings

Prepare for your day ahead investing and trading. Today the US stimulus deadline approaches and Netflix, Snap report earnings.

 

HEADLINES

House Speaker Nancy Pelosi set next 24 hours as deadline for pre-election stimulus

China to set benchmark interest rates 

Netflix, a top tech and COVID stock gainer reports its Q3 results

Snapchat owner Snap to reports Q3 earnings amid heavy Facebook criticism

 

MARKETS UPDATE

Early optimism gave way to sweeping losses across stock markets. The 48-hour deadline from House Speaker Pelosi had spurred early ideas that a compromise could be found in the next two days. But with no signs of a deal in place half-way through the deadline, risk-taking was suspended and stock markets turned lower.

 

The 180 degree turn in stocks markets had little impact in FX markets. The dollar was little moved with GBP/USD and EUR/USD both higher as USD/CHF turned lower. The dollar slid after data from China and a series of speeches from central bankers.

 

The rollover in stock markets barely dented precious metal markets. Gold and silver prices were flat. Macro traders are sitting on their hands before the 48-hour deadline for US stimulus set out by House Speaker Nancy Pelosi. OPEC was out pushing a message of strong compliance but it fell on deaf ears with oil prices turning lower on the day.

 

DAY AHEAD

China interest rate decision

China-sensitive assets like the AUD and HK equities are in play but no change is expected given the recovery in Chinese economic data. We wouldn’t expect any big shift from the PBOC while other CBs are on hold and China leads the global recovery.

 

Netflix Q3 earnings

Subscriber growth is inevitably stalling at Netflix since March as economies reopen. The open question is whether NFLX deserves its price multiples as subscriber growth slows. Netflix already set expectations low for Q3 – suggesting a likely beat. The company expects 2.5 million net adds this quarter- that’s be a big drop from 10 million in Q2. Analysts are more positive with consensus expectations at 3.3 million new adds. The shares are part of a bigger tech trade that has outperformed companies more exposed to the business cycle.

 

Snap Inc new record?

Investor optimism towards Snap is strong heading into its Q3 earnings – the stock is on the cusp of a new record high – something that has not been on the card since its IPO in early 2017. I was among the analysts questioning the ability of Snap to survive the Facebook onslaught from Instagram. It’s not that Snap have done a lot of things right but being a direct competitor to Facebook that faces so many political headwinds is still worth a lot.

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