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Here Is Why Stock Futures Are Sensitive

Here Is Why Stock Futures Are Sensitive

US and European futures are trading lower as traders react to the IMF’s growth forecast and poor earnings results. Tech stocks especially streaming stocks, are likely to drag the markets lower, and investors will continue to pay close attention to US earnings as they set the trading tone among traders.

Sentiment 

The IMF reduced its global growth prediction for 2022 to 3.6 per cent from 4.4 per cent and warned of the potential of more aggressive central bank tightening to combat inflation. This year, the fund predicts that prices in advanced nations will rise by 5.7 per cent, while prices in emerging and developing economies will rise by 8.7 per cent. It forecasts Ukraine’s GDP to drop by 35% and Russia’s GDP to contract by 8.5 per cent. The battle threatens to undo much of the recent epidemic recovery.

Netflix and Streaming Stocks 

Streaming stocks will be under immense selling pressure after Netflix’s earnings report that showed that the company lost 200,000 subscribers in the first quarter, a number that isn’t easy to digest. Investors reacted harshly to Netflix’s earnings report, and its stock tanked nearly 26% in post-market trading hours, indicating a lower open today. There are several reasons behind Netflix’s subscribers’ report, which have made investors nervous. 

Firstly, we need to understand that we are in an environment where consumers have started to cut back on luxury items, and Netflix’s subscription is part of that segment. Consumers feel the inflation pain, and pretty much everyone is trying to cut back on their unnecessary expenses. 

Secondly, if you look at Netflix’s subscription price, it has been going only in one direction, upside down. Yes, it is true that the company is also facing a higher cost due to soaring inflation but passing that cost in terms of the higher subscription price isn’t the answer.

Netflix has been experimenting with various subscription models for some time, such as advertisements and others. And it believes now is a good time for the company to bring on that model as it is a win-win strategy for the company and its consumers. 

Thirdly, as the CEO mentioned, many of Netflix’s members are sharing passwords, and the company knew about this act all along, and now it wants to clamp down on such activities. Clamping down would help its revenue, but eliminating that would bite it back as competition is already challenging, and Netflix is a luxury item.

One of the possible ways to clamp down is sharing passwords could be to limit it to one household by tracking the IP address, and if someone is using Netflix anywhere else, they will need to have another account. 

Nonetheless, Netflix remains a great value and growth company, and many bargain hunters are likely to use the current sell-off as an opportunity to bag some bargains.

Bitcoin 

Bitcoin traders are trying their best to keep their heads above water. The BTC price is struggling to stay above the key support level of 40K. Traders know that bitcoin has to remain above this critical price level for the bulls to succeed.

On the fundament side, the fresh warning from the IMF about countries using crypto to avoid sanctions is in focus. Cryptocurrencies are being used to sell oil and gas by countries like Iran and Russia. There are also concerns that these countries are using oil and gas resources to power crypto mining which is another source of revenue and bypassing all sanctions. 

The warning by the IMF would undoubtedly bring more regulatory spotlight on crypto companies, crypto exchanges, and crypto mining.

Geopolitical Tensions 

Unfortunately, geopolitical tensions are moving in one direction and one direction only. The fact that President Biden would send more artillery to Ukraine doesn’t help the situation, nor does Russia extend its campaign in the Donbas region. Biden will send a new aid package to Ukraine, which is going to be similar to the previous one and that nearly $800 million. Additionally, the US and its allies are also expected to increase further sanctions on Russia in the coming days, likely to influence energy prices greatly. This key source is pushing inflation higher around the globe.