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US stock futures drop after Netflix warns on subscriber numbers

US stock futures fell on Wednesday after disappointing earnings from Netflix and further signs the Federal Reserve will aggressively raise interest rates to curb inflation.

Contracts, which track Wall Street’s tech-heavy Nasdaq 100 index, were down 0.7 percent in the early European morning after Netflix called its decades of subscriber growth came to an end in the first quarter of 2022 and it has “become more difficult to attract members” in many markets.

Analysts at JPMorgan attributed Wednesday’s decline in US futures to “microcatalysts,” including disappointing Netflix results, in contrast to broader macroeconomic factors that have driven trading in recent weeks.

The streaming company, in its latest earnings update, forecast that subscribers would fall by another 2 million in the current quarter, after already falling by about 200,000 in the previous three months. Its shares are down more than 25 percent in premarket trading on Wednesday, suggesting $40 billion could be wiped off their value after Wall Street’s opening bell.

Futures, which track the broad S&P 500 gauge, fell 0.4 percent, while Europe’s regional Stoxx 600 gauge gained 0.4 percent in morning trade after closing the previous trading session down 0.8 percent percent had finished.

The IMF increased the pressure on shares on Tuesday cut revised its global growth forecast for this year to 3.6 percent, down 0.8 percentage points from its January forecast, noting that Russia’s invasion of Ukraine will slow economic progress while fueling inflation.

In the Treasury markets, the yield on the 10-year US Treasury fell 0.02 percentage point to 2.9 percent.

A Sell-off in the previous session brought the 10-year “real yield” – which is adjusted for medium-term inflation expectations – into positive territory for the first time since the coronavirus crisis in March 2020. It hovered at minus 0.04 percent on Wednesday morning.

Bond yields rise when their prices fall.

have real returns jumped this year on expectations that the Fed will tighten monetary policy to curb rising consumer price growth that hit a year 8.5 percent Last month. In turn, these rising real yields have reduced the attractiveness of and increased pressure on riskier parts of the financial markets, including more speculative technology and media stocks.

This week’s yield moves come amid a series of speeches from senior Fed officials, with Fed Chair Jay Powell set to speak on Thursday. Charles Evans, President of the Chicago Fed, has already announced that the central bank is likely to hike interest rates to between 2.25 and 2.5 percent by the end of the year. James Bullard, president of the Fed’s St. Louis branch, also said that a whopping 0.75 percentage point rate hike could occur sometime in 2022. The Fed’s current reference interest rate is 0.25 to 0.50 percent.

Elsewhere, Hong Kong’s Hang Seng gauge fell 0.4 percent, while Japan’s Topix rose 1 percent. “Continued weakness in the yen is helping Japanese stocks rally again this morning,” commented JPMorgan analysts. the yen fell past ¥128 to the dollar traded at its weakest level in 20 years this week.

In commodities markets, Brent crude, the international oil benchmark, rose 1 percent to just over $108 a barrel after falling 5 percent on Tuesday in a fall that eroded four days of gains.

US stock futures drop after Netflix warns on subscriber numbers Source link US stock futures drop after Netflix warns on subscriber numbers

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