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Tech losses deepen as global stocks, US futures slide – BNN

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Technology companies led a drop in European stocks and futures on the Nasdaq pointed to fresh losses on concerns valuations have reached extremes. The pound weakened for a fifth day.

Tesla Inc. and Apple Inc. dropped in U.S. pre-market trading and Nasdaq futures slid 1.6 per cent. EasyJet Plc shares slumped after the discount airline said flight demand is lower than expected. Treasury yields fell and the dollar index strengthened. Oil extended losses on a bleak outlook for short-term demand.

Investors will be closely watching how tech shares react on Tuesday after last week’s selloff, which was driven by doubts over stretched valuations and reports that huge options positions have fanned a speculative fever.

The U.S. and China relationship is also back in focus after President Donald Trump said he plans to end America’s reliance on the country. Trump also threatened to punish any American companies that create jobs overseas, and to forbid those that do business in China from winning federal contracts.

“The path of least resistance for the market may well be to test the downside,” said Peter Chatwell, head of multi-asset strategy at Mizuho International Plc. “Ultimately, if there is more selloff, I suspect real money investors will take the opportunity to buy the dip.”

Tesla shares fell 10 per cent after the carmaker was passed over for inclusion in the S&P 500. Royal Mail Plc, the privatized British postal service, surged 15 per cent after saying it wants to overhaul its business and shift service to the parcels market.

In the U.K., the pound weakened and stocks slumped as Prime Minister Boris Johnson threatened to abandon Brexit talks without a new trade deal. Money markets have brought forward expectations that the Bank of England will cut interest rates.

The Turkish lira weakened to an all-time low against the dollar for a fourth session amid concern that monetary policy remains too loose to backstop the currency.

Equities rose in Asia, with shares in Australia and South Korea leading the advance.

Here are some key events coming up:

  • The ECB will probably hold rates on Thursday but indicate that downside risks have intensified, suggesting further easing is possible before year-end.
  • U.S. CPI data is due Friday, with consumer prices expected to rise in August for a third straight month.

These are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index dipped 0.3 per cent as of 10:31 a.m. London time.
  • The Stoxx Europe 600 Index advanced 0.7 per cent.
  • The MSCI Asia Pacific Index was little changed.
  • The MSCI Emerging Market Index declined 0.3 per cent.

Currencies

  • The Bloomberg Dollar Spot Index advanced 0.5 per cent.
  • The euro declined 0.1 per cent to US$1.1809.
  • The British pound sank 0.6 per cent to US$1.3086.
  • The Japanese yen was little changed at 106.32 per dollar.
  • The offshore yuan weakened 0.1 per cent to 6.8365 per dollar.

Bonds

  • The yield on 10-year Treasuries fell three basis points to 0.69 per cent.
  • The yield on two-year Treasuries dipped less than one basis point to 0.14 per cent.
  • Germany’s 10-year yield declined less than one basis point to -0.48 per cent.
  • Britain’s 10-year yield sank five basis points to 0.216 per cent.
  • Japan’s 10-year yield decreased less than one basis point to 0.04 per cent.

Commodities

  • West Texas Intermediate crude declined 2.9 per cent to US$38.35 a barrel.
  • Brent crude dipped 2.3 per cent to US$41.39 a barrel.
  • Gold weakened 0.6 per cent to US$1,922.78 an ounce.

–With assistance from Kit Rees.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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