Markets pull back on UK inflation shock, Glencore sweet talks Teck, Netflix disappoints

“Stubbornly high inflation soured the mood on Wednesday with the FTSE 100 dipping back after a strong run since late March. News that UK CPI remains in double-digits will only strengthen the argument for the Bank of England to keep pushing up interest rates. Bond yields moved higher, while property and utility stocks eased back,” says Russ Mould, Investment Director at AJ Bell.

“Miners were also in the red, giving up some of yesterday’s gains from better-than-expected Chinese GDP figures.

“Glencore indicated it would be happy to dig a bit deeper with its merger proposal for Teck if the target’s board were willing to engage in conversation. That is not a surprise as miners rarely back down once they have fixed their eye on a new target. Expect this drama to keep playing out – ultimately, it is all down to price and even the most stubborn will eventually cave in if enough carrots are dangled in front of their face.”

Netflix

“Offering the ability to have a cheaper subscription tier if users put up with advertising was meant to be Netflix’s golden ticket to reviving growth. So far, the results have not put a rocket underneath subscriber numbers, with the company missing market expectation for user growth.

“Its initial attempts to crack down on password sharing have also backfired, resulting in many subscription cancellations rather than new sign-ups for those who were freeloading. It means Netflix has to work harder to have the type of content that could lure in viewers and encourage more of them to open their wallets.

“The initial password sharing crackdown seems to have sent shockwaves across the company as it has delayed the rollout to other regions, including the US, so it can make tweaks and adjustments to how the process is executed.

“Interestingly, the share price initially plummeted in after-hours trading but has since clawed back all the lost territory.

“One of Netflix’s problems is a lack of consistent hits that become the ‘water cooler’ discussion point in the office, at home or in the pub.

“Wednesday was a smash hit in the final quarter of 2022 and The Night Agent was the standout show in terms of popularity in the first quarter of 2023. But the problem lies in the ability to binge these shows – you can clear them in a day or two, meaning the rest of the time is spent yearning for something new to watch.

“The choice may be vast on Netflix’s platform, but most people spend more time flicking through the selection, unsure what to watch, rather than actually watching something. If users’ appetite for something new cannot be sated, then they will naturally look at one of the other streaming platforms.

“Netflix should really make it harder to cancel a subscription if it wants to hold onto customers, otherwise it’s all too easy to be lured by the competition.”

These articles are for information purposes only and are not a personal recommendation or advice.