Netflix & Goldman Earnings, Industrial Output, BoE QT - What's Moving Markets

By Geoffrey Smith

Investing.com -- Netflix (NASDAQ:NFLX), Johnson&Johnson (NYSE:JNJ) and Goldman Sachs (NYSE:GS) report earnings, looking to build on the good vibes created so far by the rest of the banking sector and Pepsico (NASDAQ:PEP). Industrial production data are due, as is the National Association of Homebuilders' monthly survey. The pound and Gilts take a breather amid uncertainty over whether or not the Bank of England will go ahead with its "quantitative tightening", while European gas prices slump as the EU hits its storage targets early. Here's what you need to know in financial markets on Tuesday, 18th October.

1. Netflix aims to snap losing streak

Netflix is looking to snap a two-quarter losing streak when it posts earnings for the three months through September after the close.

The streaming giant, whose fall from grace this year has epitomized the abrupt change in market sentiment toward long-duration growth stocks, had predicted a net gain of 1 million subscribers, helped by a better quarter for new content.

The numbers will cast some light on how loyal its customer base has been after a succession of price increases. Most market research has suggested that it remains the last streaming service to be cut by those who need to cut back on their monthly outlays.

2. Calm after the storm for U.K. markets; confusion over BoE QT

Calm is returning to the U.K.’s financial markets after the new Chancellor of the Exchequer, Jeremy Hunt, ripped up the economic strategy of Prime Minister Liz Truss, reversing almost all of her proposed tax cuts.

The rout in U.K. government bonds caused by Truss’s plans had spread ripples through global financial markets, especially after the Bank of England had warned of a “material risk to the U.K.’s financial stability.” Gilts had rallied strongly on Monday, but ran out of steam on Tuesday after the Financial Times reported that the Bank is set to delay the start of its ‘quantitative tightening’ due to fears about the market’s resilience.

Newswires later quoted a Bank spokesman as calling the FT’s report “inaccurate”.

3. Stocks set to open higher, extending bounce

U.S. stocks are set to build on their gains of Monday at the open, reassured by developments in the U.K. and by the generally strong third-quarter earnings to have come out of the key financial sector so far.

By 06:20 ET (10:20 GMT), Dow Jones futures were up 394 points, or 1.3%, while S&P 500 futures were up 1.5% and Nasdaq 100 futures were up 1.7%. The Nasdaq had outperformed on Monday with a stellar 3.4% gain, while the Dow had gained around 1.5% and the S&P 1.8%.

Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK) and Charles Schwab (NYSE:SCHW) all comfortably beat expectations with their updates on Monday, encouraging hopes that Goldman Sachs will be able to repeat the trick before the open today, although the news is likely to be dominated by its apparent restructuring plans.

Also reporting early are Johnson&Johnson, Truist, State Street (NYSE:STT), Hasbro (NASDAQ:HAS) and Omnicom. Industrial production numbers for September at 09:15 AM ET head the data calendar, along with the monthly tale of woe from the NAHB survey.

Others in focus include Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) after reports of a cut in Intel's ambitions for the Mobileye spin-off and job cuts at the software giant.

4. Russia continues to pound Ukraine's power stations

Russia continued to attack Ukraine’s power sector with missiles and Iranian-made kamikaze drones, knocking out around 30% of the country’s energy supply, according to President Volodymyr Zelensky.

The Kremlin has abandoned any pretense of targeting military infrastructure this week, as Russia’s new military commander, Sergey Surovikin, has adopted the same kind of tactics against anti-government forces in Syria’s Idlib province.

Iran denies that it has been sending weapons to Russia, despite photo evidence of shrapnel fragments that appear to leave no doubt about their origin. The development has prompted speculation that Israel may loosen its ban on supplying weapons to Ukraine in response.

Elsewhere in Russia, the Kremlin stripped Exxon Mobil (NYSE:XOM) of its stake in the Sakhalin-1 offshore oilfield, a project that had come to symbolize the rejuvenation of Russia’s oil industry after the fall of the Soviet Union.

5. Oil steady near two-week low as Europe's gas prices ease sharply

Crude oil prices fell to their lowest in two weeks on continued jitters about the outlook for world demand after fresh signs that key economies are slowing.

By 06:30 ET, U.S. crude futures were down 0.1% at $84.42 a barrel, while Brent futures were down fractionally at $91.61.

Earlier, a closely-watched sentiment indicator for the German economy had suggested that the outlook had darkened further, although there had been better news on the energy supply front in the last 24 hours. German Chancellor Olaf Scholz said he would allow all three of the nuclear reactors currently scheduled to end operations in December to run at least through April. In addition, industry data showed that the EU – and Germany in particular – have met their targets for filling gas storage ahead of schedule. Benchmark gas prices slumped nearly 10% to a four-month low.

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