Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for July 17, 2020.
Netflix tumbled after hours last night and US markets dipped following the momentous sell-off in Chinese equities this week. Netflix, which has seen its share price soar 75% from the lows in March, added 10.1 million new subscribers to its service in the second quarter, smashing estimates of 8 million from analysts. However, its warning that such levels were not going to be sustained into the second half spooked investors, with shares off 9% after hours. The group also promoted its content chief Ted Sarandos to co-CEO, putting the 20-year veteran of the pioneering streaming video service in line as the clear successor to co-founder Reed Hastings.
More widely, markets continue to digest events in China which have rattled sentiment. Chinese shares dropped almost 5% in one session this week after it reported a return to growth in the second quarter that failed to quash fears over the health of its economy. China’s economy rebounded 3.2%, but there were concerns it has been engineered by state support that might not last. Retail data also disappointed, suggesting an uneven economic recovery. Doubts about Chinese growth weighed on global markets, with the S&P 500 closing down 0.3% and Japan’s Nikkei off by 0.5%.
Shine comes off tech stocks as unemployment weighs
Both the Dow and the S&P 500 ended down on Thursday, with major stocks including Microsoft and Apple sliding amid rising unemployment claims which are causing concern about the long-term economic impact of the coronavirus. Although US retail sales increased more than expected in June, the resurgence in new COVID-19 cases is a major headwind, with some 32 million Americans on unemployment benefits. The S&P real estate and technology indices fell hardest, with both Apple and Microsoft off more than 1%. Twitter fell after hackers accessed its internal systems to hijack some of the platform’s most famous users, including US presidential candidate Joe Biden, reality TV star Kim Kardashian West, and Tesla billionaire Elon Musk as part of a bitcoin scam. As well as the tech stocks, American Airlines tumbled 7% after it sent 25,000 notices of potential furloughs to frontline workers and warned that demand for air travel is slowing again.
- S&P 500: -0.34% Thursday, -0.4% YTD
- Dow Jones Industrial Average: -0.5% Thursday, -6.4% YTD
- Nasdaq Composite: -0.73% Thursday, +16.9% YTD
FTSE slides as UK announces record debt issuance plans
The FTSE 100 index closed in the red yesterday as global markets dipped amid some shocking figures from the country’s Debt Management Office (DMO). The UK’s index of leading shares closed the day down 0.7% at 6,250 points, after the DMO said that planned government debt sales from April to November 2020 will total a minimum of £385bn. The estimate of how much the government is set to borrow over the period is based on the government’s latest assessment of its financing requirement, and the figure – covering the first eight months of the tax year – is more than has ever been issued in a whole year before.
Defensive stocks including the pharmaceutical giants AstraZeneca and GlaxoSmithKline felt the brunt of the selling, off 1.7% and 1.2% respectively, while Burberry was also one of the worst performers, tumbling 2.4% after Wednesday’s first-quarter trading update in which it warned that margins are being hit. Meanwhile British Airways, the world’s largest operator of Boeing 747, said late Thursday it would retire its entire jumbo jet fleet with immediate effect.
- FTSE 100: -0.67% Thursday, -17.3% YTD
- FTSE 250: -0.57% Thursday, -21% YTD
