Netflix surges on 7.4m new subscribers, Dow jumps 213 points over solid earnings
Wall Street closed sharply higher, boosted by the technology and healthcare sectors, as markets shifted their attention away from missile strikes in Syria towards corporate earnings season.
Markets at 7:05am (AEST):
- ASX SPI 200 futures +0.1pc, ASX 200 (Monday's close) +0.2pc at 5,841
- AUD: 77.78 US cents, 54.25 British pence, 62.8 Euro cents, 83.3 Japanese yen, $NZ1.06
- US: Dow Jones +0.9pc at 24,573, S&P 500 +0.8pc at 2,678, Nasdaq +0.7pc at 7,156
- Europe: FTSE -0.9pc at 7,198, DAX -0.4pc at 12,391, Euro Stoxx 50 -0.2pc at 3,441
- Commodities: Brent crude -1.5pc at $US71.50/barrel, spot gold flat at $US1,345.54/ounce
Investors seem to have breathed a collective sigh of relief as geopolitical tensions appear not to have escalated since the weekend bombing of Syria by the US, UK and France.
The Dow Jones Industrial Average jumped by 213 points, or 0.9 per cent, to 24,573.
The S&P 500 and Nasdaq lifted by 0.8 and 0.7 per cent respectively.
Overnight, European stock markets fell, with London's FTSE dropping 0.9 per cent as investors awaited new US sanctions on Russia.
Netflix surges after hours
Netflix's shares leapt 5.8 per cent to $US307.78 in after-hours trade, after reporting that its massive spending on new programming attracted 7.4 million new customers during the March quarter.
It was a substantial turnaround given that the streaming company's share price dipped 1.2 per cent during Wall Street's business hours.
Netflix is spending up to $US8 billion ($10.3 billion) on global television shows and movies this year.
As it has expanded to some 190 countries, investors accepted negative free cash flow in exchange for the potential of outsized growth in future years.
The company's total market value is $US137.2 billion ($176.3 million), more than double a year earlier.
However, it faces growing competition as technology companies such as Apple and Amazon pour money into premium programming, international rivals jump into streaming and traditional media companies pursue digital customers.
Disney will stop supplying new movies to Netflix starting next year and will start its own streaming service for families.
Bank of America and auto sales surge
S&P companies are expected, on average, to report an 18.6 per cent jump in first-quarter profit, the biggest rise in seven years, according to Thomson Reuters figures.
Bank of America shares rose 0.4 per cent — after it reported a better-than-expected 34 per cent jump in first-quarter profit.
It was helped by increased earnings from loans and lower US corporate taxes.
Last week, major financial stocks BlackRock, JP Morgan and Citigroup reported earnings, which beat expectations.
Pharmaceutical company Merck saw its share price rise 2.5 per cent, after announcing its cancer-treatment drug Keytruda reduced the risk of death in a patient trial by 51 per cent, when combined with chemotherapy.
In addition, US retail sales rebounded after three straight months of declines, powered by purchases of automobiles and other big-ticket items.
Retail sales rose 0.6 per cent in March, boosted by a 2 per cent jump in auto sales.
No surprises from the RBA
Australian shares are set to push higher in a few hours, thanks to a jump in base metal prices and a strong night in US markets.
The Australian dollar has lifted to 77.8 US cents, but has fallen to 54.25 British pence and 62.8 Euro cents.
In local economic news, the Reserve Bank will release the minutes of its April board meeting, in which it maintained the official cash rate at its record low 1.5 per cent for the 19th straight month.
"We don't expect any surprises from the RBA Minutes," said NAB's senior foreign exchange strategist Rodrigo Catril.
"The key message should be that a gradual decline in the unemployment rate is expected, along with some pick up in wages and an eventual return of inflation to target.
"So the main inference is that monetary policy will also evolve gradually."