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April 20, 2022

April 20, 2022 AM

EQUITIES Wall Street futures steadied early Wednesday with Netflix shares under pressure after the streaming giant’s lasts subscriber numbers disappointed. Major European markets firmed as the session progressed. TSX futures were modestly lower despite a gains in crude prices.

Futures linked to the big U.S. indexes were all in the red in the early premarket period but recouped some losses as the North American open neared. A day earlier, all three finished up with the Nasdaq adding more than 2 per cent. The S&P/TSX Composite Index added 0.6 per cent with consumer discretionary sector, tech and industrial stocks among the day’s winners.

On Wednesday, Netflix stock will be in focus after weak subscriber numbers sent the shares into a tailspin after the close of trading. In the early premarket period, Netflix shares were down more than 25 per cent.

In the latest quarter, the company posted its first loss in worldwide subscribes in its history. The company’s customer base fell by 200,000 subscribers during the January-March period. Analysts were looking for a gain of 2.5 million subscribers.

“The biggest challenge going forward will not just be a more intensive landscape competition wise, but also the rising cost of living, as well as starting to hit critical mass in some of its key markets,” CMC Markets chief market analyst Michael Hewson said.

“This in turn will prompt a sharp reassessment of future subscriber growth estimates, across the sector, with Disney, Apple TV+ and Amazon Prime expected to come under similar scrutiny in the days ahead, although at least on their part at least they have other revenue streams to fall back on.”

Investors were also keeping a close eye on bond yields, with the yield on the U.S. 10-year note holding just below 3 per cent on Tuesday. Canadian bond yields tracked U.S. yields higher, with the five-year bond yield – which has a significant influence on fixed mortgage rates – hitting a fresh 11-year high of more than 2.7 per cent. By early Wednesday morning, the yield on the U.S. 10-year note was down at 2.872 per cent.

In this country, investors got results from Rogers Communications before the start of trading. The telecom company reported a 4-per-cent increase in fourth quarter revenue to $3.62-billion in the quarter ended March 31, compared with analysts’ average estimates of $3.63-billion, according to IBES data from Refinitiv.

Meanwhile, the Globe’s Alexandra Posadzki and Andrew Willis report that Rogers Communications Inc. has presented the federal government with a deal that would see rural internet provider Xplornet Communications Inc. acquire wireless carrier Freedom Mobile in an attempt to win approval for Rogers’s $26-billion takeover of Shaw Communications Inc., according to sources.

Canadian investors will also get a fresh reading on inflation Wednesday morning with the release of March consumer price index figures from Statistics Canada. Economists are expecting to see consumer prices spike above 6 per cent for the year, marking a three-decade high. The annual rate of inflation hit 5.7 per cent in February.

“Soaring gasoline prices are expected to account for almost a quarter of the increase — and half of the price rise from February as energy surged higher on the Russian invasion of Ukraine,” RBC chief currency strategist Adam Cole said.

On Wall Street, earnings continue to roll in with results due from Tesla Inc. after the close of trading.

Overseas, the pan-European STOXX 600 rose 0.51 per cent in morning trading. Britain’s FTSE 100 gained 0.28 per cent. Germany’s DAX and France’s CAC 40 advanced 0.51 per cent and 0.90 per cent, respectively.

In Asia, Japan’s Nikkei rose 0.86 per cent. Hong Kong’s Hang Seng fell 0.40 per cent.

Commodities

Crude prices recouped some of the previous session’s sharp losses in early going helped by continued supply concerns amid the Russia-Ukraine war and fresh U.S. figures showing a decline in weekly U.S. inventories.

The day range on Brent is US$106.96 to US$108.81. The range on West Texas Intermediate is US$102.53 to US$104.

Both bench marks fell more than 5 per cent on Tuesday after the International Monetary Fund cut its global growth outlook for the year.

“There remain plenty of upside risks to the oil price, even at these levels, which makes [Tuesday’s] large declines all the more interesting,” OANDA senior analyst Craig Erlam said.

“Protests in Libya have knocked out around half a million barrels per day of output which contributed to Monday’s rally. While this is only a temporary hit, it comes at a bad time as far as global supply is concerned.”

Prices drew some support early Wednesday from new data from the American Petroleum Institute showing that U.S. crude stocks fell by 4.5 million barrels last week. Analysts had been expecting to see an increase in inventories.

More official numbers are due later in the morning from the U.S. Energy Information Administration.

In other commodities, gold prices fell to a two-week low, hit by a strong U.S. dollar and rising Treasury yields.

Spot gold was down 0.4 per cent at US$1,941.40 per ounce by early Wednesday morning, after hitting its lowest since April 8. U.S. gold futures fell 0.7 per cent to US$1,944.80.

Currencies

The Canadian dollar was higher in early trading while its U.S. counterpart held near its best level in two years against a basket of global currencies.

The day range on the loonie is 79.21 US cents to 79.66 US cents.

Canadian investors get new inflation figures before the start of trading, which are expected to show the annual rate of inflation topped 6 per cent in March.

“Headline inflation is set to rise from 5.7 per cent to 6.1 per cent, with the core measures also set to increase due to second round effects,” Jay Zhao-Murray, FX market analyst with Monex Canada, said.

“A slight miss in the inflation data will spell trouble for CAD bulls, however, as markets will begin to price out expectations of a successive 50bp hike by the Bank of Canada in June.”

On world markets, the U.S. dollar index, which measures the currency against six major peers including the yen, early in the day matched Tuesday’s high at 101.03 – a level not seen since March 2020 – before easing to 100.76, down 0.3 per cent in the day, according to Reuters.

Japan’s yen, meanwhile, hit a two-decade low against the greenback. The U.S. dollar reached 129.43 yen for the first time since April 2002 in Asian trading before easing to last trade 0.21 per cent lower at 128.615, the news agency reported.

More company news

Lululemon Inc. says it aims to double its revenue to US$6.25-billion by 2026 under a new five-year growth plan. The Vancouver-based yoga-wear maker said it expects significant growth across key pillars including product innovation, guest experience, and market expansion.

Economic news

(8:30 a.m. ET) Canadian CPI for March.

(8:30 a.m. ET) Canada’s new housing price index for March.

(10 a.m. ET) U.S. existing home sales for March.

(2 p.m. ET) U.S. Beige Book released.

Also: G20 finance ministers and central bank governors meet in Washington.

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