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U.S. stock futures, Chinese shares slip amid Sino-U.S. tensions, oil falters – Reuters

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SYDNEY (Reuters) – Shares struggled and the yen gained on Wednesday, with markets in China faltering on their return from a long holiday as investors fretted over Sino-U.S. tensions, while oil ended an extended winning streak on oversupply risks amid weak demand.

FILE PHOTO: People wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing Nikkei index, outside a brokerage in Tokyo, Japan February 28, 2020. REUTERS/Athit Perawongmetha

Wall Street futures turned negative after starting higher, with E-minis for the S&P500 ESc1 off 0.3%.

China, opening for the first time since Thursday, started on the backfoot with the blue-chip index .CSI300 down 0.6%. Australian shares skidded 0.8%.

“There is a distinct risk-off tone to greet China coming back from holiday,” said Stephen Innes, chief global markets strategist at AxiCorp.

“With Trump and the company still on the Wuhan Lab rampage, traders are incredibly cautious this morning, weighing all the possible China responses. And the one that would hurt the most would be for China to reduce imports of U.S. oil.”

Global financial markets have been caught this month between grim economic figures and worries about worsening U.S.-China relations, and optimism over easing COVID-19 lockdowns in many countries. 

U.S. President Donald Trump has repeatedly taken aim at China as the source of the pandemic and warned that it would be held to account.

On Tuesday, he urged China to be transparent about the origins of the novel coronavirus that has killed more than a quarter of a million people worldwide since it started in the Chinese city of Wuhan late last year.

Elsewhere, Hong Kong’s Hang Seng index .HSI added 0.7% while South Korea’s KOSPI was also upbeat, rising 1%. Japanese markets were closed for a public holiday.

That left MSCI’s broadest index of Asia Pacific shares outside of Japan .MIAPJ0000PUS up 0.3% in relatively light volumes.

On Wall Street overnight, the S&P 500 pared earlier gains after U.S. Federal Reserve Vice Chair Richard Clarida warned that economic data would get much worse before getting better.

The index .SPX finished 0.90% higher, the Dow .DJI rose 0.6% and the Nasdaq Composite .IXIC added 1.1%.

In currencies, the yen scaled a three-year high against the euro and a seven-week peak on the dollar on Wednesday, after a court decision challenging German participation in Europe’s stimulus program and worries about a bumpy global recovery spooked investors. [FRX/]

Germany’s highest court on Tuesday gave the European Central Bank three months to justify purchases under its bond-buying programme, or lose the Bundesbank as a participant in a scheme aimed at cushioning the economic blow from the coronavirus.

The euro EUR= hit a one-week low of $1.0826 overnight and slumped to a three-year trough of 115.09 yen EURJPY= in Asia, as traders fretted about both the scheme and the euro’s future.

The safe-haven yen JPY= cracked through resistance against the dollar to hit a seven-week high of 106.20. The Aussie AUD=D3 and kiwi NZD=D3 slipped slightly on the greenback, though held above 64 cents and 60 cents respectively. The pound GBP= was steady at $1.2431.

The dollar index =USD was flat at 99.810.

Traders will keep an eye for the ADP National Employment Report of private U.S. payrolls on Wednesday. It could foretell the damage to be revealed on Friday in the official U.S. government measure of jobs in April, estimated to show nearly 22 million jobs were lost last month.

In commodities, U.S. crude futures CLc1 slipped 6 cents to $24.5 a barrel after five straight sessions of gains while Brent crude LCOc1 was flat at $30.97. [O/R]

Oil prices had gained recently as European and Asian countries had ended their lockdowns to halt the coronavirus spread and as producers had axed supply after the demand crunch.

But analysts cautioned the rebalancing of the market would be choppy.

“We’re talking about normalisation of supply and demand but we’ve got a long way to go,” said Lachlan Shaw, National Australia Bank’s head of commodity strategy.

“There are a lot of supply cuts that have come through. That combined with some early signs of demand lifting has meant the rate of inventory build is slowing.”

Spot gold XAU= eased 0.2% to $1,702 an ounce.

Graphic – Global assets: here

Graphic – Global currencies vs. dollar: here

Graphic – Emerging markets: here

Graphic – MSCI All Country Wolrd Index Market Cap: here

Reporting by Swati Pandey in Sydney, additional reporting by David Henry in New York; Editing by Sam Holmes & Shri Navaratnam

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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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