Trading in Asia was mixed overnight, despite Wall Street putting in a solid performance as fears over geopolitical tensions eased and investors focused on what is expected to be a blowout earning season. After making a failed attempt on its 50-day moving average at 24,623, the Dow closed over 200 points higher at 24,573. The S&P closed 0.8% and just 2 points shy of its 50-day moving average, a level which has alluded it since mid-March. The Nasdaq also closed 0.7% higher.
Netflix reported after the bell, surging over 6% in after hours trading after revealing that subscribers hit 125 million, well above analysts’ estimates as the firm sees the benefits of its aggressive international expansion. Expectations were high going into the release, but Netflix has not stumbled where some other tech firms have, amid increased regulatory concerns and the stock is up 60% over the past year.
Chinese GDP 6.8%
China’s economy grew by an impressive 6.8% in the first quarter, significantly above the governments’ target and despite fears that growth was going to slow significantly. The market response has not been particularly euphoric, which we expect is due to the significant headwinds faced by the Chinese economy for the coming year; a potential trade war with the US and government efforts to restrain excessive debt and property prices. Metal prices are cautiously higher following the release, so we expect a solid start for miners on the FTSE at the open
Russian cyber attacks
Europe is taking the lead from the US, with European bourses pointing to a stronger start on the open, as investors take news of a posssible military cyber-attack from Russia on millions of homes and business and infrastructure in the US and the UK in their stride, for the time being. This will remain a closely watched headline with the potential to weigh heavily on stocks.
GBP/USD to $1.45?
Overnight the pound struck $1.435, its highest level since the Brexit referendum in anticipation of a more hawkish BoE at the next MPC meeting in May. Traders are looking optimistically towards today's UK jobs data, with expectations that it will support a Spring rate rise by the central bank. Whilst UK unemployment is forecast to remain constant at 4.3%, average earnings are forecast to hit 3% in the three months to February. Given that inflation was 2.7% in February we could start to finally see the pressure of falling wages in real terms ease for the UK consumer. A strong reading could pile the pressure on the BoE to hike rates as good inflationary pressures pick up, potentially pushing GBP/USD to $1.45.
FTSE to open 18 points higher at 7216
DAX to open 72 points higher at 12463
CAC to open 20 points higher at 5332
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