Will a stunning result from Netflix save Wall Street after a second day in the red on Tuesday?
Wall Street saw another session of uncertain, volatile dealings that knocked the market lower.
Another slump – more accurate though – in oil prices hit market confidence and the prices of commodities such as gold, silver, copper and iron ore all went south.
But after the closing bell, Netflix produced a record number of new subscribers, higher revenue and profits and hopes for another strong June quarter (See separate story).
So will this strong quarterly result from Netflix in which it added more than 15 million new subscribers – vastly more than its own or market forecasts – help steady the weakening Wall Street ship on Wednesday?
The ASX will start in the red with the overnight futures trading showing a loss of around 100 points at 6.30am – the index had been down 117 points an hour or so earlier but the Netflix result seems to have helped produce a steadying.
The Dow dropped 631.56 points, or 2.67%, to finish at 23,018.88, the S&P 500 lost 86.6 points, or 3.07%, to close at 2,736.56. The Nasdaq ended at 8,263.23, giving up 297.50 points, or 3.48%.
Oil futures fell sharply, reflecting a glut of crude and tight storage constraints.
While the May contract for West Texas Intermediate crude expired in positive territory after a history-making plunge into negative territory on Monday, the most active June contract slumped by $8.86, or 43.3%, to end at $US11.57 a barrel.
Brent June futures fell by $6.24, or 24.4%, to end at $US19.33.
The US dollar rose, dropping the Aussie currency under 63 US cents.
Netflix’s results actually should be seen as an indicator of the problems in the wider economies – people are being forced to stay at home, stream video, buy online and not allowed to get out, work or consumer.
That’s bad news for other stocks, like Coca Cola which on Tuesday warned this quarter will be bad. The company has already seen a 25% fall in sales volumes so far this month.
In contrast, the Mexican fast-food chain, Chipotle reported on Tuesday that it had seen an 81% jump in online sales in the March quarter.
Local investors won’t be all that encouraged by the Netflix results – the company, with Amazon are one-offs in that there are reasons peculiar to their business models to explain why they are two of the best-performed stocks so far in the madness of 2020 market trading.
The ASX 200 lost 131.7 points on Tuesday to end at 5221.3, a decline of 2.46%
All sectors finished in red with financials down 2%, health down 2.6%, and materials down 1.7%. The biggest fall though was 4.8% in infotech, which was dragged down by large falls in WiseTech and EML Payments. WiseTech fell 12.5% to $13.75.
