Netflix shares dive another 25% - Tesla earnings due

A strong finish on Wall Street is expected to lift European stocks on the open today as several major exchanges open for the first time after the Easter break.

• Netflix stock plunges 25% after losing 200k subscribers rather than gaining 2.5 million
• EURUSD trades back over 1.08 & CAC is rising ahead of the French election debate later today
• Tesla is set to report Q1 earnings after reporting 310,048 deliveries

European bourses saw a softer session yesterday after the IMF downwardly revised global economic growth to 3.6%, from 4.4%, highlighting the negative impact that rising energy and food prices were having on the prospects for the worldwide economy. Both more exposed to Russia, Germany and Italy saw their growth estimates reduced by 1.7% and 1.5%, respectively, to 2.1% and 2.3%. Meanwhile, the US is expected to suffer the least damage from the Russian war, with its growth outlook revised just 0.3% lower.

US stocks pushed higher despite treasury yields surging after the Chicago Fed President Charles Evans said that interest rates could rise beyond neutral levels. Even so, he expressed confidence in the ability of the US economy to absorb the necessary monetary policy tightening, sending stocks higher.


Netflix

While big tech performed well, the Nasdaq jumped 1.1%, Netflix tumbled over 20% in after-hours trading, marking a 40% drop in the share price so far this year after revealing a 200,000 loss of paid subscribers against a rise of 2.5 million forecasts, owing to the suspension in Russia and the squeeze on incomes prompts households to rein in spending on streaming services.


French election debate

In Europe, the DAX is looking to hold above 14000, and the FTSE is clinging to 7600. Attention is on Ukraine and a crucial election debate between French President Emmanuel Macron and far-right nationalist Marine Le Pen ahead of Sunday’s runoff in the Presidential elections.
The CAC is holding up better this week ahead of Sunday’s vote than it did ahead of the first-round vote, suggesting that investors are more relaxed about the final round despite closeness in the polls.

The EUR is trading towards its yearly low, although it has managed to rise above 1.08 on USD weakness and following a record high in German PPI inflation, which jumped to 30.9% YoY in March, up from 25.9% in February. Despite today’s rise, EUR/USD remains in a downtrend, although a move over 1.0840, the 50 SMA on the 4-hour chart could help the pair towards 1.09.


Tesla

Today’s economic calendar is relatively quiet, leaving the focus squarely on US earnings. Today Tesla takes the prime position, reporting after the close. We already know that Tesla achieved 310,048 deliveries in the first three months of a year, a record high, despite supply chain disruptions and temporary factory shutdowns in a challenging environment.

Wall Street is expecting EPS of $2.27 on revenue of $17.8 billion. One of the key points for Tesla, and more broadly across earning season, will be the ability to pass rising costs on to the customer. Tesla has been hiking prices, so far showing it is able to do so with minimal affect on demand. Broadly speaking, these companies are likely to outperform in earning season and are expected to perform well in a high inflation environment.