Surprisingly strong growth from China in the fourth quarter has bolstered risk-appetite across global equity markets on Tuesday morning and prompted what looks to be a higher open for US equities ahead of key earnings reports.
An expansion of 7.4% in 2014 was the slowest pace of growth in 24 years for China and misses the growth target set out at the beginning of the year by the government. In the light of the housing slowdown domestically and the sluggish demand for Chinese goods from Europe it seems likely the government will lower its growth target for 2015 to closer to 7%
Netflix Inc (NASDAQ:NFLX) will report its latest quarterly earnings on Tuesday after the close of US markets. Netflix shares were volatile in 2014 ranging between $300 and just under $500 but ended the year essentially flat and are currently trading around $340.
The share price gains in 2013 were in anticipation of the growth that was realised in 2014, however expectations rose to unsustainable levels and shares have not made new highs since September. Netflix added 3 million new subscribers in Q3, short of the 3.7m forecasted and the stock plummeted over $100 and hasn’t recovered since.
New customer additions in the US is slowing as Netflix matures so the company is producing original content such as the award-winning TV show “House of Cards” to help further incentivise new sign-ups. Netflix is rapidly expanding abroad; the setup cost and lower monthly fee offered will affect margins short term but should go a long way towards long term revenue growth. A key in the upcoming quarters will be any details on an expansion into Asia.
Facebook Inc (NASDAQ:FB) has commissioned a report by consulting firm Deloitte & Touche that has unsurprisingly found that Facebook makes a big contribution to the real economy. The report concludes Facebook has a $227bn economic impact and contributed towards the creation of 4.5m jobs in 2014.
Twitter Inc (NYSE:TWTR) has acquired an Indian mobile marketing company called ZipDial for a reported $30m-$40m.
Earnings from Morgan Stanley, International Business Machines (NYSE:IBM), Johnson & Johnson, Delta Air Lines Inc (NYSE:DAL) and Halliburton Company (NYSE:HAL) are expected on Tuesday
Futures suggest the:
S&P 500 will open 7 points higher at 2,026 with the
Dow Jones expected to open 48 points higher at 17,559 and the
NASDAQ Composite 20 points higher at 4,162.
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