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Good morning. More moves have been made to prevent a no-deal Brexit, Netflix soured the mood and bond investors are in for a summer of pain. Here's what's moving markets.

Article originally published by Bloomberg. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Good morning. More moves have been made to prevent a no-deal Brexit, Netflix soured the mood and bond investors are in for a summer of pain. Here’s what’s moving markets.

Lords Acts

The U.K.’s House of Lords has backed an amendment designed to block the country’s next prime minister from pushing through a no-deal Brexit by suspending Parliament. The increasingly volatile pound, having had a miserable recent run amid warnings that a no-deal Brexit could result in it hitting parity with the dollar, rose on the news. This after the Brexit secretary, Steven Barclay, suggested markets were underpricing the risk of the U.K. leaving the EU with no deal and Boris Johnson, the frontrunner for PM, said any trade deal with the U.S. won’t happen quickly.

Netflix Stumbles

The European tech sector is going to be closely followed on Thursday. SAP SE, the German software giant, reported that growth in its cloud business is slowing and in the U.S., Netflix Inc. missed estimates. The streaming firm reported a drop in U.S. customers and much slower growth overseas, sending its shares down 12% and likely bruising the view on the so-called FAANG stocks that dominate tech stock trading. Note too that International Business Machines Corp. reversed earlier gains after staying tight-lipped on how its acquisition of Red Hat Inc. will boost its cloud business.

Bond Pain

This column recently urged readers to pay close attention to bond markets around the world. Hopefully that was heeded. The summer is likely to be a painful one for the asset class as inflation hedging surges. On the central bank front, the Bank of England appears to be losing faith in its own call for higher interest rates, and not just because of Brexit, while Europe appears to have got stuck in a cycle of negative rates and is struggling to escape. The rule of negative yields is also killing incentives for governments to get their houses in order as investors go searching for returns on the riskier end of the market.

EM Check Up

A quick check on emerging markets. South Korea’s central bank surprised with a rate cut, an indication of the growing trade risks it faces. South Africa’s central bank is due to make its interest rate decision and a cut could prove helpful for battered retail stocks in the country. Elsewhere, falling profit estimates for IT companies are bucking the trend, with other emerging markets stocks seeing outlooks recover. Watch politics in Russia too, where the Kremlin has proposed extending Parliament’s powers by changing the constitution, a move that could allow President Vladimir Putin to extend his reign.

Coming Up...

Stocks in Asia fell from a two-week high amid deepening concerns that this earnings season will prove a weak one and worries about a trade battle between Japan and South Korea. European futures are pointing to a firmly red open. The European earnings calendar gets ever more full. We’ve already had numbers from Swiss drugmaker Novartis AG, which raised its guidance, but still to come we have Denmark’s Danske Bank A/S, luxury goods maker Richemont and budget airline EasyJet Plc to provide insights into their respective sectors. U.K. retail sales are also on the way.


©2019 Bloomberg L.P. This article was written by Sam Unsted from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by Bloomberg. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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