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Wall Street futures were higher early Tuesday as traders awaited results from Netflix Inc. in the end of the day. Major European markets stabilized as the session progressed. TSX futures were moderately positive.
In the early premarket period, Dow, S&P 500 and Nasdaq futures were above water. A day earlier, all three closed lower despite early session strength. The S&P/TSX Composite bucked the trend, ending Monday’s session up 1.09 percent.
On Tuesday, we’ll see continued results from major US companies, notably earnings from Netflix after the close of trade. Investors will be keeping a close eye on the streaming giant’s subscriber numbers following a disappointing performance in the previous quarter.
“The collapse in Netflix’s share price has been something to behold over the past few months,” said Michael Hewson, chief market analyst at CMC Markets UK.
“After the head-scratching $700 rally last November, we’ve seen a collapse in confidence that has pushed the stock back to levels last seen in 2017.”
He said subscriber growth, which was the main driver of earnings in 2020, had stalled in the first quarter of this year, with investors questioning whether Netflix had peaked.
“The main fear for Netflix shareholders over the past few years has been how the business will fare once its bigger-pocketed competitors begin to stick with the streaming model that Netflix has helped shape over the past ten years,” he said. “It looks like we’re starting to see the answer to that question, with the emergence of Disney+ as its main new rival, while Amazon is also spending heavily on new content, with a new Lord of the Rings series called The Ring of Power.”
In the first quarter, Netflix surprised markets by reporting its first quarterly subscriber decline in a decade. The company said it expected to lose another 2 million subscribers in the second quarter, although it also forecast revenue growth of about 10 percent year over year, Mr. Hewson said in a note.
“That looks bullish and the stronger US dollar certainly doesn’t help. Netflix said it currently produces movies and TV in more than 50 countries, with three of its six most popular TV seasons using non-English language titles, and yet it declined to hedge its exposure to FX,” he said.
In this country, The Globe’s Emma Greaney and Marique Walsh report that the federal government says it plans to implement its cap on oil and gas emissions through a new carbon pricing system, leaving the sector to worry about being charged more for greenhouse gas emissions than other heavy industries. And Canada’s biggest oil-producing province says it won’t accept any federal plan that would harm its ability to produce fossil fuels.
Reuters, citing unnamed sources, says private equity firm CVC Capital and wood panel maker Kronospan have submitted a joint expression of interest to acquire Canada’s West Fraser Timber Co. US-listed West Fraser shares rose nearly 25 percent in premarket trading.
Overseas, the pan-European STOXX was up 0.03% by midday. Britain’s FTSE 100 rose 0.32 percent. Germany’s DAX advanced 0.12%, while France’s CAC 40 fell 0.08%. Reuters, citing sources, said on Tuesday that European Central Bank policymakers will discuss whether to raise interest rates by a higher than expected 50 basis points at the bank’s policy meeting this week. A decision on the rate is due on Thursday.
In Asia, Japan’s Nikkei rose 0.65%. Hong Kong’s Hang Seng fell 0.89 percent.
Goods
Crude oil prices fell early after a strong performance in the previous session, fueled by continued supply concerns.
Brent’s daily range is $105.16 to $106.98. West Texas Intermediate ranged from $101.71 to $103.40. Both indicators jumped about 5 percent on Monday.
“Oil prices may have peaked, but it certainly doesn’t look like they’re going to go much lower from now on unless we get a huge surprise from OPEC+,” said OANDA senior analyst Jeffrey Halley.
“Stubbornly firm economic data from the US and improving data from China are other supporting factors. Risks remain skewed to the upside if Russian gas does not start flowing back to Europe later this week.”
Later in the session, traders will receive the first of two weekly US inventories reports with fresh data from the American Petroleum Institute. That report will be followed on Wednesday morning with more official US government data.
A Reuters poll suggested analysts expected to see increases in crude oil and distillate supplies, while gasoline inventories were seen falling.
Among other commodities, gold steadied on Tuesday, helped by a retreating US dollar.
Spot gold was trading around $1,708.35 an ounce early Tuesday morning. U.S. gold futures were down 0.3 percent at $1,704.80.
Currencies
The Canadian dollar rose as its US counterpart continued to retreat against a group of global currencies.
The loonie’s daily range was 76.98 US cents to 77.31 US cents.
“Risk appetite may be restraining the CAD to some extent while crude oil prices are a bit softer,” said Sean Osborne, chief currency strategist at Bank of Nova Scotia.
Investors now await the release on Wednesday of June inflation data, which is expected to show that the annual rate of inflation exceeded 8 percent last month.
In global markets, the U.S. dollar index fell 0.8 percent to 106.64. That was below Monday’s low of 106.88, but also well back from last week’s high of 109.29, a level not seen since September 2002, according to Reuters.
Meanwhile, the euro rose on a Reuters report that ECB policymakers were weighing a surprise half-percentage-point rate hike when they meet on Thursday.
The euro rose to $1.0254, up more than 1 percent to its best level since early July.
The British pound rose 0.6% to US$1.2017, near Monday’s one-week high of US$1.2032.
More company news
BHP says it is working to bring its Jansen potash mine into operation earlier than expected. The company says it is working to bring the first stage of production to the mine in Saskatchewan by 2026. When BHP announced last year it was moving ahead with the project, the company said it would not come online until 2027. However, an operational review , published Tuesday, the company says the project is on schedule and working to begin production ahead of its original schedule.
Johnson and Johnson on Tuesday reported a 23.3 percent drop in quarterly profit and cut its full-year adjusted profit forecast as a stronger U.S. dollar slowed its sales outside the United States. The company now expects full-year adjusted earnings of $10.00 to $10.10 per share, up from its previous forecast of $10.15 to $10.35.
Twitter IncThe conflict between Elon Musk and his $44 billion takeover faces its first test on Tuesday, when a judge will weigh the company’s bid for a fast-track process it says is needed to ensure the deal’s financing doesn’t unravel . The San Francisco-based company is seeking to resolve months of uncertainty for its business as Musk tries to back out of the deal over what he says are “spammy” Twitter accounts that he says are fundamental to its value.
Hasbro Inc reported a 10 percent rise in quarterly adjusted earnings, helped by demand for the toymaker’s “Magic: The Gathering” board game and price increases. The Monopoly maker reported adjusted net earnings of $160.6 million in the second quarter ended June 26, compared with $145.4 million a year earlier.
Apple Inc plans to slow hiring and spending growth next year in some units to deal with a potential economic downturn, Bloomberg News reported Monday, citing people familiar with the matter. The potential move would see Apple – the world’s most valuable company – join a growing group of US corporations, including Meta Platforms and Tesla Inc, in slowing hiring.
IT hardware and services company IBM Corp beat quarterly revenue expectations on Monday but warned that the forex hit for the year could be around $3.5 billion due to the strong U.S. dollar. IBM now expects a currency hit to revenue of about 6 percent this year, Chief Financial Officer James Cavanaugh told Reuters. A gain of 3% to 4% was previously forecast. The results were released after the close on Monday.
Chinese authorities prepare to fine ride-hailing firm over US$1 billion Didi Global that could end an investigation into the company’s cybersecurity practices, the Wall Street Journal reported Tuesday.
Economic news
Eurozone consumer price index for June. Great Britain releases employment figures.
(830 a.m. ET) U.S. housing starts in June.
(830 a.m. ET) U.S. Building Permits for June.
With Reuters and the Canadian press
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