Live Markets: Netflix: The big entertainment short
21/07/2022 12:10
* STOXX 600 up 0.1%
* ECB meeting, Draghi in focus
* Italian stocks underperforming
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NETFLIX: THE BIG ENTERTAINMENT SHORT (1110 GMT)
Netflix NFLX.O , the largest short in the entertainment
sector, saw increased shorting activity heading into its
earnings as bearish investors bet the stock would fall after
disappointing results, S3 Partners said.
Short interest in Netflix rose 3.5% in the 30 days leading
up to its earnings. The company has $2.51 billion short interest
which is 12.43 million shares or 2.8% of its free float, the
analytics firm said.
Netflix shares ended 7.3% higher on Wednesday after the
streaming giant posted a smaller-than-expected quarterly
subscriber loss. urn:newsml:reuters.com:*:nL1N2Z02DH
Despite Wednesday's share gains, Netflix, which is down 64%
year-to-date, is the most profitable short in the entertainment
industry, S3 says.
Bearish investors are up $3.08 billion in mark-to-market
profits this year, nearly doubling on an average short interest
of $3.14 billion in 2022, S3 data showed.
"These recent losses are making NFLX more squeezable," said
Ihor Dusaniwsky, managing director of predictive analytics, S3
Partners.
"If NFLX's recent price strength continues we can expect the
resulting short squeeze to force some short sellers to trim
their positions and the resulting buy-to-covers help drive
NFLX's stock price even higher."
Netflix shares have rebounded 24% so far this month, looking
at its biggest monthly gain in 3-1/2 years.
(Medha Singh)
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ITALIAN POLITICAL TURMOIL IMPACT ON STOCKS (1034 GMT)
Italy's political turmoil and bond volatility may
be a complication for stocks too.
Italian stock markets, especially domestic focused
companies, were hoping that the European pandemic recovery fund
would support domestic activity. urn:newsml:reuters.com:*:nL8N2UB41N
But as Italy grapples with political instability the
disbursement could suffer delays, writes Matteo Ramenghi, Chief
Investment Officer UBS WM Italy.
"While elections would have taken place within a few months
in any event and the government will remain in place until a new
one is formed, markets may be less confident on Italy being able
to make full use of the Recovery Fund this year," he writes.
The uncertainty regarding the future government compositions
may lead investors to be more cautious when elections come
closer and potentially more radical parties grab the media
coverage, he adds.
(Joice Alves)
******
ITALIAN SHARES LEAD LOSSES IN EUROPE (0752 GMT)
Italy's blue chips slump nearly 2% as the country's
government crumbled, keeping broader European stocks under
pressure despite some relief over the resumption of Russian gas
flows.
The FTSE MIB stock index .FTMIB is down 1.8%,
underperforming the pan European STOXX 600 .STOXX index, down
0.2%.
The Italian banks index .FTITLMS3010 , highly sensitive to
the political turmoil in Italy, sinks as much as 5%.
In terms of single stocks, Sinch SINCH.ST , Seb SEBF.PA
and Saab SAABb.ST are the worst performers, sliding around 10%
after results. TOP/EQE
(Joice Alves)
*****
ECB'S TIME TO HIKE, ITALY'S TIME FOR MORE INSTABILITY (0727
GMT)
If the European Central Bank's inflation headache wasn't bad
enough, its first interest rate rise since 2011 will land on the
day the government of its third-largest member state, Italy,
looks set to collapse urn:newsml:reuters.com:*:nL1N2Z10E6.
Mario Draghi's time as prime minister is likely over after
his coalition partners refused to heed his call for unity.
Stocks have fallen and Italian borrowing costs are rising -- a
worry for an ECB desperate to contain market stress in its most
indebted members.
The euro is rising, however - helped by news Russian gas is
flowing again through the Nord Stream pipeline after a 10-day
maintenance shutdown urn:newsml:reuters.com:*:nL1N2Z2080.
Now investors are waiting for the bigger, if less dramatic,
event of the day.
With sources this week said the ECB was weighing up a 50
basis-point rate increase rather than the 25 earlier flagged, a
greater degree of uncertainty has crept into the meeting.
The other question is what detail the ECB might provide on a
planned tool to contain bond market stress. Italy's latest
turmoil makes that task all the more urgent urn:newsml:reuters.com:*:nL1N2Z20BK.
The ECB may look with some envy at the Bank of Japan which
earlier on Thursday maintained ultra-low interest rates and
signalled its resolve to remain an outlier in the
policy-tightening wave urn:newsml:reuters.com:*:nL1N2Z2005.
Key developments that should provide more direction to
markets on Thursday:
Central bank meetings in Turkey, South Africa
U.S. earnings: Blackstone, Dow Chemical Co, Freeport-McMoRan
Copper & Gold, AT&T, Philip Morris International, Travelers
Companies Inc, American Airlines, Twitter, Mattel
EU earnings: Ocado, SAP, Dassault
U.S. Initial Jobless Claims/Philly Fed business index
(Tommy Wilkes)
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FUTURES FLAT AHEAD OF ECB MEETING, DRAGHI AND GAS IN FOCUS
(0640 GMT)
European futures are flat as investors are cautious ahead of
an expected European Central Bank interest rate hike later in
the day, and following the collapse of Prime Minister Mario
Draghi's government in Italy.
But bringing some relief especially to the Dax .GDAXI ,
Russia resumed pumping gas through its biggest pipeline to
Germany on Thursday after a 10-day outage, the operator said,
easing Europe's supply concerns amid an economic tit-for-tat
with the Kremlin over its invasion in Ukraine. urn:newsml:reuters.com:*:nL1N2Z2080
Italy's bond yields soared in early trade and the premium
investors demand to hold its bonds over safer Germany climbed to
its highest in five weeks, after the government crumbled as
three of Draghi's main coalition partners snubbed a confidence
vote he had called to try to end divisions. urn:newsml:reuters.com:*:nL1N2Z10E6
In a data heavy morning, UK and euro zone flash PMI will
also be in focus, with a Reuters poll expecting them to have
fallen further in the month.
Data also showed that a surge in debt costs pushed up by
soaring inflation added to Britain's budget deficit last month.
urn:newsml:reuters.com:*:nL8N2Z21R0
There's also corporate earnings results for investors to
digest: Spain's Bankinter Q2 net profit fall 88% compared to
same period a year ago, while Electrolux profit misses forecast
as supply chain pain lingers. TOP/EQE
(Joice Alves)
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