China stimulus in sight?

Hang Seng

The Hang Seng jumped overnight on the news that Chinese authorities are considering a package of measures to stabilise a slumping stock market. According to Bloomberg News, Chinese policymakers are seeking to mobilise about 2 trillion yuan—that's about $278 billion—mainly from the offshore accounts of Chinese state-owned enterprises to buy shares onshore through the Hong Kong exchange link. They are also weighing other options and may announce some of them as soon as this week, still according to Bloomberg.

The Bank of Japan

As expected, the Bank of Japan maintained ultra-easy monetary settings. At the two-day meeting that concluded on Tuesday, the Bank of Japan (BOJ) left unchanged its short-term rate target at -0.1% and that for the 10-year bond yield around 0%. However, conditions for phasing out its massive stimulus seem to be falling into place. In its quarterly outlook report, the central bank said "Consumer inflation is likely to increase gradually towards the BOJ's target as the output gap turns positive and as medium- to long-term inflation expectations and wage growth eighten." In the quarterly report, the BOJ cut its core consumer inflation forecast for the fiscal year beginning in April to 2.4% from 2.8% projected in October. It slightly revised up its forecast for fiscal 2025 to 1.8% from 1.7%.

Associated British Foods

UK property developer Crest Nicholson posted an adjusted pretax profit of £41.1 million, to be compared with £137 million in FY 2022. Associated British Foodsreported a 2.1% rise in underlying sales at its Primark clothing business in the Christmas quarter, a slowdown from growth of 8% in the previous quarter. Premier Foods sales rose 14.4% in Q3. The group said in its trading statement that it is well on track to deliver on previously upgraded expectations for the full year.

Netflix

Over in the US, Netflix is scheduled to report earnings on Tuesday after the close of US markets. The street expects earnings of $2.20 per share on revenue of $8.71 billion. Netflix's performance in the third quarter of 2023 was remarkable. The company achieved an impressive 8% growth in revenue, with a net addition of 8.76 million paid memberships. For Q4, Netflix had previously said it anticipated the continuation of robust user growth momentum. The net addition of paid memberships is projected to be close to the previous quarter, potentially with another 8–9 million new subscribers. In November 2022, Netflix will introduce a cheaper ad-tier subscription. And more recently, it cracked down on password sharing. These two measures remain under investor scrutiny.

Also expected today: Procter & Gamble, Johnson & Johnson, General Electric, and Verizon Communications. All these stocks are session stocks on the IG platform.