As the US takes aim at Huawei, trade concerns returned to the market with vigour; investors are starting to question the progress made in the latest round of US – Sino talks which is hitting sentiment. The markets are fully aware that this latest move by the US could jeopardise the fragile relationship between the US and China. As a result, risk sentiment is falling, denting demand for riskier assets. China is unlikely to take this lying down; some form of retaliation is expected and that is making the market nervous.
FTSE tracks global stocks lower
The FTSE tracked global stocks lower on renewed concerns over US – Sino relations and weaker earnings from MJP Morgan. The UK index was faring worse than its European counterparts thanks to a stronger pound.
The pound extended gains versus the euro and the dollar, as Theresa May continues her cross-party talks. Jeremy Corbyn boycotted the talks demanding no deal Brexit to be taken off the table before he is open to discussion. Theresa May will must announce her Plan B on Monday. She has already delayed its discussion in Parliament until 29th January. Pound traders are aware of the size of the challenge that May faces and how quickly the clock is ticking. However, rightly or wrongly, this is not making traders as nervous as it would have just weeks earlier.
Morgan Stanley (NYSE:MS) disappoints
Also hitting on sentiment was weaker that forecast earnings from Morgan Stanley. Shares in the investment bank sunk 5% as it blamed tough market conditions for its quarterly loss. With investors unable to shake off fears of an economic slowdown, there is heightened sensitivity to weaker earnings data.
Netflix (NASDAQ:NFLX) reports at 9pm
US earning season will remain in focus with Netflix reporting after the closing bell. As the first of the Faangs to update the market, investors will be watching very closely. Faang results usually have a keen audience and this time round will be no different. In fact, we are expecting even more interest than usual, given the strong sell off in tech stocks at the end of last year.
Hopes are high that Q4 results will echo a strong Q3. Streaming revenue is expected to have increased by 36% whilst paid membership numbers are expected to have pushed through 130 million. Netflix’s share price has rallied well over 30% since its recent low on Christmas eve. Investors will want to see figures that support such a rally.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.