The asset that is seeing the highest volatility during this morning’s Asian session, believe it or not, is Netflix stocks. The price of Netflix has increased by 14.38% after the company released their quarterly earnings report after the US trading session ended. A note for beginner traders, the increase will not be able to be seen on trading platforms yet, as the price movement has taken place outside trading hours.
The price of the stock has declined by over 62% over the past 12 months due to poor declining user subscriptions, but also pressure from interest rate increases and the Ukraine-Russia conflict. However, this quarter set a new bar in terms of surprising the market and proving analysts wrong.
The Earnings Per Share for the latest quarter has increased to $3.10 which is on average 35-40% higher than expected by the market. The number of subscribers also increased significantly to over 2.41 million, while the company revenue increased slightly above expectations. Lastly, the company also reconfirmed their plans to add advertisements on the streaming service, similar to Youtube. This is likely to become a significant source of income in the future.
However, not all assets are experiencing the same positive news. Crude oil declined once again as the asset continued its attempt to fully correct back down to $76 per barrel. Even though the price was supported by OPEC’s decision to cut production, many economists believed that the price may be overbought due to the risk of recession. The price is currently under pressure from the US decision to sell a further 26 million barrels into the market from its strategic reserve. The aim is to increase supply and pressure prices even further.
The US Dollar Index is higher this morning, increasing by 0.27%. However, the price has reached the 112.45 level which has acted as a resistance level for a little over a week. The USD continues to make strong bullish moves against the Japanese Yen, increasing for 10 consecutive trading days. However, most analysts are expecting an intervention from the Japanese government any day now.
GBP/USD
The GBP/USD pair continues to form a symmetrical triangle pattern on the daily timeframe with both higher lows and lower highs. In other words, the price is neither in a downtrend nor an uptrend. This morning, it has declined again attempting to form a downward trend. This is mainly in response to the latest inflation figures and the current political turmoil in the UK. Investors are now keen to see if the price will be able to form a bearish breakout at 1.1253, which acted as a support level yesterday.
GBP/USD 1-hour chart on October 19th
The latest development related to the UK is the most recent CPI figure which was released this morning. The inflation figure has once again increased to 10.1% which is a 40-year high that we’ve also seen in July. Normally, a higher inflation figure results in a positive reaction for the national currency like we’ve been seeing with the US Dollar. However, in this case the inflation figure is feared to add more pressure the UK economy that is already vulnerable due to fiscal incompetence.
Most economists, including those at Goldman Sachs, have revised their expectations for the UK economy. The economy is still expected to experience a recession within 2023, but the prediction has been altered from a 0.4% decline in GDP to a 1% as a bare minimum. The US economy is also likely to experience a recession within 2023, but the effects are not yet visible as they are with the Pound and UK GILTS.
Quick Summary:
- Highest volatility is seen in Netflix stocks after a positive earnings report…
- Netflix’s EPS has increased to $3.10, about 35-40% higher than expected by the market.
- Crude oil comes under pressure from the US decision to release further barrels from its reserve.
- UK inflation comes in at 10.1% again and the GBP reacts negatively.
- Goldman Sachs believes the UK may see a stronger recession than originally predicted.
