logo-loader

FTSE 100 finishes higher although Wall Street mixed after Netflix flop

Last updated: 01:50 21 Apr 2022 AEST, First published: 15:54 20 Apr 2022 AEST

City of London
  • FTSE 100 closes nearly 28 points higher
  • Wall Street mixed; Netflix weighs on Nasdaq
  • Tesla earnings eyed later

4.50pm: Footsie finds gains

The FTSE 100 index notched up some solid gains on Wednesday although Wall Street made mixed morning progress with Netflix-related weakness hobbling the Nasdaq Composite.

At the London close, the UK blue-chip index was 27.94 points or 0.37% higher at 7,629.22, much nearer the session peak of 7,637.87 than the day’s early low of 7,590.62.

Chris Beauchamp, chief market analyst at online trading platform IG commented: “The hesitancy of early April appears to have faded, and investors continue to move back into stocks despite the mixed progress of earnings season thus far.

“The market appears happy to separate off Netflix, with the streaming service now paying for the huge influx of subscribers and the accompanying share price rise seen over the course of the pandemic.”

“Nonetheless, stock markets on both sides of the Atlantic continue to make gains, indicative of a general calming of nerves around inflation and central bank tightening,” he added.

3.50pm: Leading shares positive buy miners weigh on the market

The FTSE 100 has brightened up again towards the close, but the gains are not that convincing, with investors still nervous about a host of subjects.

These of course include the Ukraine, the cost of living crisis, the lockdown in China and the IMF cutting its global growth forecasts.

Still, at the moment the leading index is up 23.29 points or 0.31% at 7624.57 as we head into the close, helped by a generally positive start on Wall Street although the slump in Netflix Inc (NASDAQ:NFLX) shares has pushed the Nasdaq lower.

Leading the risers is CRH PLC (LSE:CRH), up 4.66% after its said its first quarter performance was up on the same period last year.

Coca Cola HBC AG (LSE:CCH) has climbed 3.34% in the wake of a buy note from Deutsche Bank.

But mining shares are weighing on the market following a disappointing update from Rio Tinto PLC (LSE:RIO), down 5.26%.

Also lower are Glencore PLC (LSE:GLEN), off 3.4%, and Anglo American PLC (LSE:AAL), 3.2% lower.

Michael Hewson, chief market analyst at CMC Markets UK, said: "After a lacklustre session yesterday it’s been a much more positive session for markets in Europe, although a poor performance from the basic resource sector is weighing on the FTSE 100.

"Rio Tinto shares have slid back after the Australian miner said that iron ore shipments declined 10% in the first quarter, from the same period a year ago, due to various production issues, caused by COVID-19 and/or reduced production capacity.

"The mining giant also warned that rising inflation caused by the Russian invasion of Ukraine, and resurgence of  COVID-19 cases was likely to introduce downside risks to market expectations. Glencore and Anglo American appear to be also feeling the heat on these same concerns."

2.59pm: US investors positive at the open

US shares headed north at the New York open despite disappointing first quarter numbers from streaming titan Netflix Inc (NASDAQ:NFLX) after-hours.

The Dow Jones Industrial Average added 281 points at 35,192. The S&P 500 gained around 20 points to stand at 4,483.

The tech heavy Nasdaq index added 19 points at 13,638.

Netflix shares are down over 30% in early New York deals as it reported its first decline in subscribers for over a decade and warned it could lose another 2 million users in the current quarter to end-June. It lost 200,000 subscribers in the first quarter.

Other streaming companies like Disney and Warner Bros also saw their shares slide in early deals.

In a tweet, outspoken billionaire Elon Musk said the streaming service offerings were becoming "unwatchable".

"The woke mind virus is making Netflix unwatchable," he said.

Back in the UK, the FTSE 100 is virtually flat despite the positive start in the US, with the index down 1.42 points at 7599.86.

2.28pm: Mining shares undermine market

Leading shares have come off their best levels, ahead of the Wall Street open.

The FTSE 100 is now up just 6.92 points at 7608.2, having earlier climbed as high as 7637.

Miners are proving a drag, with Glencore PLC (LSE:GLEN) down 3.79%, Anglo American PLC (LSE:AAL) off 3.71% and Rio Tinto PLC (LSE:RIO) 3.63% lower after its latest update.

1.45pm: Hikma receives US approval for Custopharm deal

Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF) has slipped back despite receiving preliminary approval from the US Federal Trade Commission for its acquisition of Custopharm Inc from Water Street Healthcare Partners.

The FTC wanted Custopharm to divest an injectable steriod, triamcinolone acetonide, before agreeing the deal. Hikma said: "The parties have now obtained all regulatory approvals required to close the transaction."

Its shares are down 1.39% at 2052p.

11.50am: US investors wary after Netflix flop

US stocks were expected to open flat on Wednesday amid concerns that corporate earnings are likely to be dented as consumers tighten their belts at a time when inflation is at its highest level in decades.

News in after-hours earnings on Tuesday that Netflix Inc (NASDAQ:NFLX) lost 200,000 subscribers in the first quarter of the year and that it expects to lose another 2 million in the second quarter put the focus firmly on the prospect of waning consumer spending and its possible effects on corporate America.

Futures for the Dow Jones Industrial Average rose 0.05% in Wednesday's pre-market trading, while those for the broader S&P 500 index were unchanged and contracts for the tech-heavy Nasdaq fell 0.05%.

Ipek Ozkardeskaya, senior analyst at Swissquote noted that Netflix slumped 25% in the after-hours trading after announcing that its subscriptions fell in the first quarter, dampening sentiment overall.

“The carnage in Netflix’s share price will certainly plummet the good mood in Nasdaq, which rallied more than 2% yesterday. Nasdaq futures are pointing to the downside at the time of writing,” she said.

Earnings from Tesla Inc (NASDAQ:TSLA) and Procter & Gamble (NYSE:PG) are due out today.

Indications that consumer confidence and spending may be contracting go some way to underscore the IMF’s downward revision of global economic growth for 2022 to 3.6% from 4.4% previously, adding to market uncertainty.

Additionally, concerns about the ongoing war in Ukraine and the possibility of more sanctions on Russia’s exports continue to simmer in the background and could further dampen sentiment.

Elsewhere, oil prices were a little higher, signaling that commodity-led price pressures are a mainstay for now. While prices have come off highs near $130 a barrel, the $100 level still appears well supported.

Benchmark Brent crude futures were up 0.82% at $108.13 a barrel while WTI was 0.83% higher at $102.90 a barrel.

11.43am: FTSE 250 advances

The mid-cap index is also heading higher, but at a slower pace than the FTSE 100.

It has climbed 0.35% to 21,036 but is being held back by disappointing updates from Oxford BioMedica PLC (AIM:OXB), down 10.02%, and Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF), off 7.95%.

Meanwhile the FTSE 100 is up 32.91 points or 0.43% at 7634.19.

10.30am: Footsie higher despite weak miners

Leading shares continue to head in the right direction.

The FTSE 100 is now up 25.4 points or 0.33% at 7626.68, with building materials group CRH PLC (LSE:CRH) the leading riser, up 4.26% following its latest update.

Consumer stocks continue to recover despite the continuing concerns about rising inflation and the cost of living.

Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) is 2.22% better while B&Q owner Kingfisher PLC (LSE:KGF) has climbed 2.04%.

SSE PLC (LSE:SSE) has gained 2.61% after it paid €580mln for 3.9GW of onshore wind development projects from Siemens Gamesa Renewable Energy.

Laura Hoy, equity analyst at Hargreaves Lansdown, said: "On the surface this looks like the right play—transitioning toward cleaner energy is the clear direction of travel and the group has seen output improve steadily over the past few months.

"But having more wind in the sails doesn’t guarantee smoother seas. Performance in SSE’s renewables division has left something to be desired so far this year, and though it seems things are improving, output is still well below targets. Pouring money into a yet unproven part of the business is a risky move to be sure—but at present it seems like the only way forward if growth is eventually on the menu."

Mining shares are holding the market back a little, with Rio Tinto PLC (LSE:RIO) down 2.95% after it reported a 15% drop in first quarter iron ore shipments and a 5% fall in copper production, in what it called a challenging period due to COVID-19.

Anglo American PLC (LSE:AAL) is down 1.58% and Antofagasta PLC (LSE:ANTO) has fallen 1.33%.

9.32am: Just Eat's sale plan outweighs fall in orders

Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) has moved higher despite a 1% fall in total orders to £264.1mln, compared to expectations of £274.6mln.

The shares have responded to news that the company is considering a full or partial sale of its Grubhub subsidiary, and are up 2.83%.

Russ Mould, investment director at AJ Bell said: “Shareholders in Just Eat reacted positively to a plan to potentially sell its US platform Grubhub. Just Eat shares have struggled for months as it has lost customers gained during the pandemic as consumer habits shift back to dining out rather than booking a takeaway.

“Key to success in this highly competitive market is scale, however selling Grubhub could give Just Eat Takeaway the resources necessary to dominate in Europe.

“The price tag for any divestment will be closely watched and could embarrass current management given Grubhub was purchased for more than $7bn just last June.

“However, sparing management’s blushes should not be the priority and if this is the right decision for the future of the business then it seems logical for Just Eat to press ahead with a sale."

The company also said it expected profitability to gradually improve throughout the year, and to return to positive adjusted EBITDA in 2023.

Overall the FTSE 100 has gained a little more ground and is now up 18.8 points or 0.25% at 7620.08.

Mould said: “The markets seem to be stuck in a bit of a holding pattern. They’ve absorbed the shock of Ukrainian conflict and seemingly shrugged it off, while also reacting calmly to an escalating cost of living crisis and new COVID-19 disruption in China.

“It feels like something will have to give at some stage but when that might be and what the catalyst could be remains to be seen."

8.28am: CRH boosted by positive update

An early winner is building materials group CRH PLC (LSE:CRH).

Its shares are up 1.8% after a positive trading update, making it the biggest riser in the leading index.

The company said its first quarter performance was ahead of the same time last year, with an increase in activity levels.

Chief executive Albert Manifold said: "Although a number of challenges and uncertainties continue, our demand backdrop remains favourable and absent any major dislocations in the macroeconomic environment, we expect first-half sales, EBITDA and margin to be ahead of the prior year period."

Also heading higher is Coca Cola HBC AG (LSE:CCH), up 1.15% after a buy note from Deutsche Bank.

Analyst Mitch Collett said: "CCH will issue a first quarter trading update on 12 May. We expect organic volume growth of +6.9%, organic sales growth of +16.6% and organic revenue/case growth of +9.0%. As a result, we expect reported volumes of 575mln unit cases and reported sales of €1,612mln (Bloomberg consensus €1,556mln), including Egypt. Our strong growth expectation is due to reopening of the away from home channel, lower COVID-19 related restrictions in most markets and heavily impacted comps."

Overall the market is drifting between negative and positive, with the FTSE 100 now up 9.18 points at 7610.46.

Richard Hunter, head of markets at interactive investor, said: "Despite some early buying interest among defensive stocks, the FTSE100 has made little headway, although remaining ahead by 2.9% in the year to date.”

8.17am: Market struggling for direction

Leading shares have made a fairly flat start to trading despite a strong finish on Wall Street.

The FTSE 100 is down 3.16 points at 7598.12 as it struggles for direction.

Investors remain nervous given the continuing war in Ukraine, the rising cost of living and concerns about a slowdown in China.

The IMF downgrading its forecasts for the global economy yesterday has not helped matters.

Meanwhile US futures are indicating a dip after yesterday's gains, not helped by a 25% plunge in Netflix Inc (NASDAQ:NFLX) after hours, following news that subsciption numbers had fallen rather than risen.

Michael Hewson at CMC Markets said: "Netflix reported its first quarterly decline in subscribers in a decade, losing 200,000 customers, against an expectation that it would gain 2.5mln, reducing total subscribers from 221.8mn to 221.64mln.

"This wasn’t helped by the company’s withdrawal from Russia which resulted in the loss of 700,000 customers. Even without that, the company saw paid net additions of 500,000 so the first quarter numbers would have fallen 2mln short in any case.

"If that wasn’t bad enough Netflix said it expects to lose another 2mln subscribers in the second quarter, against an expectation of +2.4mln, sending the shares sharply down in afterhours trading...

"Despite yesterday’s disappointing first quarter update, Netflix remains the number one streaming company, with a still fairly low churn rate.

"Nonetheless 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.

"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.

"Netflix has no such buffer and will be hoping that it remains the consumer streaming option of choice, as the squeeze on the consumer intensifies.

"As investors digest yesterday’s surprise earnings miss, the altogether bigger question is, have we hit peak Netflix?"

6.54am: Muted start expected for UK market

The FTSE 100 is set to ignore the pull of Wall Street to make a muted start on Wednesday with the war in Ukraine and the International Monetary Fund’s economic downgrades acting as twin depressants.

The IMF said it expects global growth to be 3.6% this year rather than 4.4%, while inflation is set to average 5.7% across the world’s advanced economies.

The UK’s GDP outlook was cut by a full percentage point to 3.7%.

Reflecting the downgrades and uncertainty posed by the escalation of hostilities by Russia, the spread betting firms are predicting a lacklustre 10-point opening advance from the Footsie.

That looks positively anaemic compared with the Dow Jones, which finished almost 500 points higher, while both the broader-based S&P and Nasdaq also ended firmly in positive territory.

Driving those gains was the knock-on from earnings season and specifically the outperformance of a handful of blue chips including Johnson & Johnson (NYSE:JNJ), Netflix and IBM.

Asia’s main markets largely mirrored the positivity in the US, though there was some disappointment when China left five-year prime rates unchanged, eschewing stimulus measures.

“China continues to stay wedded to deleveraging parts of the economy while attempting to add stimulus in a targeted sector manner,” said Jeffrey Halley, an analyst at OANDA Markets.

“However, the Shanghai lockdown and fears its Covid-zero policy will crimp growth this year continue to weigh on markets that clearly want more of the usual cast-of-thousands stimulus measures from years past.”

 Around the markets

  • Pound US$1.3033 (+0.27%)
  • Bitcoin US$41,442.90 (-0.14%)
  • Gold US$1,946.80 (-0.64%)
  • Brent crude US$108.54 (+1.2%)

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

9 hours, 5 minutes ago