Investors were mixed, piling into defensive stocks as they punished the share price of Netflix after its subscriber’s miss, pushing Wall St to close mixed. A deep dive on the reaction, what it means for the ASX plus what to look out for today.Good morning. A tech glitch. I’m Melissa Darmawan for Finance News. This is your market outlook.
The Australian sharemarket is ready to rally as it flirts near record highs.
Tech glitches on Netflix difficultiesNetflix pulled the Nasdaq lower while the Dow bucked the trend in a mixed finish on Wall St while investors watched the impact of higher interest rates on March existing home sales which fell for a second month in a row as inflation weighs on affordability amid a slowdown in demand.
At the closing bell, the Dow Jones gained 0.7 per cent to 35,161, the S&P 500 fell 0.1 per cent to 4,459 and the Nasdaq dropped 1.2 per cent to 13,453.
As Wall St traded in a mixed fashion as stay-at-home stocks weighed, you can see that across the S&P 500 sectors as investors piled into defensive stocks due to the uncertainty. Real estate was the best performer, up 1.8 per cent, followed by consumer staples, adding 1.5 per cent then healthcare. Communication services by no surprise was the worst performer, the home of Netflix, tumbling 4.1 per cent followed by the consumer discretionary, down 1.4 per cent as investors assess their disposable income as high gas prices eat away at their back pocket with information tech, also closing lower.
The yield on the 10-year treasury note dipped 8 basis points to 2.84 per cent which helped tech stocks, the fall could have been worse, gold rose on a stable greenback.
Why the reaction?Netflix reported a subscriber loss in its latest quarter for the first time in more than 10 years with shares tumbling over 35 per cent. The streaming giant blamed inflation, the war in Ukraine and strong competition. The company is considering adding a new low cost ad-based plan in a bid to lure more customers while cutting down on password sharing. Hit with nine broker downgrades as analysts raised concerns about the company's long term growth potential in a competitive and saturated market.
News Corp bets on online sports in AustraliaMeanwhile, yesterday BetMaker
(ASX:BET) was put in a trading halt amid American giant News Corp looking to help launch online sports betting here in Australia, according to the
Wall St Journal.
This is a very interesting play as it was a stock to watch from yesterday, and it will continue to be today if trading resumes. The reason being is that there is an increasing trend around companies growing their global footprint through M&As.
What’s the connection?Linking this back to the story with Netflix, according to Sensor Tower, the streaming giant is significantly larger than its competitors in most developed markets with customers using Netflix more frequently than some of its streaming competitors, which means that there is some stickiness there with their user base despite the disappointing subscriber numbers miss.
Sensor Tower said that they’ve seen success with competing streaming platforms due to the integration of live sports. For example, Disney Plus partners with other providers that have access to live sports such as India who has partnered with Hotstar to host their live cricket matches, and when the sporting event is in the calendar, there are spikes in the dataset.
If we are seeing News Corp look to enter our market here, you never know, Netflix could borrow a page from Disney’s playbook or even Amazon Prime's upcoming partnership with the NFL as a means to provide a high base of subscribers through these events.
Figures around the globeAcross the Atlantic, European markets closed higher. Paris gained 1.4 per cent, Frankfurt added 1.5 per cent while London’s FTSE rose 0.4 per cent.
On the London Stock Exchange, Rio slumped 4.8 per cent on lower shipments and inflation concerns amid the lockdowns in China and the war in Ukraine. BP added 0.02 per cent and Shell lost 0.9 per cent.
Asian markets closed mixed. Tokyo’s Nikkei gained 0.9 per cent, Hong Kong’s Hang Seng lost 0.4 per cent while China’s Shanghai Composite fell 1.4 per cent.
Yesterday, the Australian sharemarket closed 0.1 per cent higher at 7,569 as the index flirted near session highs.
SPI futuresTaking all of this into the equation, the SPI futures are pointing to a 0.4 per cent gain.
What to keep an eye out forEnergy stocks could be on the rebound today along with the iron ore miners amid its underlying commodity price on the move.
Morningstar has cut three company ratings. Two healthcare stocks both got downgraded to sell from hold which are Ramsay Health
(ASX:RHC) and Sonic Healthcare
(ASX:SHL) while consumer discretionary player, United Malt
(ASX:UMG) got cut to a hold from a buy.
We have quite a few companies providing an earnings or production update. To set the tone, Rio
(ASX:RIO) reported lower than expected iron ore shipments yesterday.
So it will be interesting to see how BHP
(ASX:BHP) performs when their third quarter production update is released with analysts estimating 67.2 million tonnes in iron ore shipments.
Evolution Mining
(ASX:EVN) and Santos
(ASX:STO) also have their quarterly reports scheduled.
Brambles
(ASX:BXB) also have a third quarter update with eyes on its underlying profit set to come in higher.
Challenger
(ASX:CGF), Endeavour Group
(ASX:EDV), Stockland
(ASX:SGP) are also on the docket.
The tech sector could have added pressure if Zip Co.
(ASX:ZIP) and Megaport’s
(ASX:MP1) trading update comes in at miss.
IPOThere is one company set to make its debut on the ASX today. Keep an eye out for Pure Resources
(ASX:PR1) after raising $4.65 million at 20 cents per share.
Ex-dividendThere is one company set to trade without the right to its dividend.
Plato Inc Max
(ASX:PL8) is trading 0.55 cents fully franked.
Dividend-payThere are 9 companies set to pay eligible shareholders today
Australian Clinical Labs
(ASX:ACL)Australian Unity Office Fund
(ASX:AOF)Austal
(ASX:ASB)Cochlear
(ASX:COH)Charter Hall Social Infrastructure Reit
(ASX:CQE)Lovisa Holdings
(ASX:LOV)Naos Emerging Opportunities Company
(ASX:NCC)Nine Entertainment Co Holdings
(ASX:NEC)Rio Tinto
(ASX:RIO)CommoditiesIron ore has gained 0.6 per cent to US$150.70. Its futures point to a 1.1 per cent gain.
Gold has lost $3.40 or 0.2 per cent to US$1956 an ounce. Silver is down $0.12 or 0.9 per cent to US$25.36 an ounce.
Oil has added $0.19 or 0.2 per cent to US$102.75 a barrel.
CurrenciesOne Australian Dollar at 7:30 AM has strengthened from yesterday, buying 74.48 US cents (Wed: 73.79 US cents), 57.04 Pence Sterling, 95.30 Yen and 68.65 Euro cents.
Source: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, Wall St Journal
