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Disney’s stock spikes on FQ3 print

 

Thursday, August 11, 2022

The news shaping the markets today

Four Russian missiles hit a village near southern Ukraine’s city of Zaporizhzhia. The ongoing war sent the safe-haven US dollar index higher this morning.


Singapore’s economy expanded 4.4% year-over-year in the second quarter, compared to 3.8% growth in the first quarter. Despite this, the SGD/USD forex pair remained under pressure due to the strength of the US dollar.


New Zealand’s number of visitor arrivals jumped by 83.5% year-over-year to 94,651 in June, the highest level since March 2020. However, the NZD/USD pair declined in forex trading this morning.


Kuwait’s central bank raised its key discount rate by 25 bps to 2.75% at its latest meeting, lending support to the KWD/USD forex pair.


The US government budget deficit shrank to $211 billion in July, from $302 billion in the same month of the prior year. The news sent the Dow Jones index higher by more than 500 points on Wednesday.

 

What’s happening: Shares of Walt Disney Co gained in after-hours trading on Wednesday, following the release of better-than-expected results for the fiscal third quarter.

What happened: Walt Disney reported strong growth in overall operating income. However, the bottom line of one of its major segments declined in the quarter.

The Burbank, California-based company also made an important announcement regarding its Disney+ streaming platform.

How were the results: Disney reported growth in both sales and earnings for the fiscal third quarter.

  • Revenues grew 26% year-over-year to $21.5 billion, topping the consensus estimate of $20.5 billion.
  • Adjusted earnings came in at $1.09 per share, up 36.25% from the year-ago period and beating the Street expectations of $1 per share.

Why it matters: Disney recorded a rise in guest volume and spending at its parks during the latest quarter. Its cruise ships were also operational during the quarter.

Revenues from the Media and Entertainment segment rose 11% year-over-year to $14.1 billion, while revenue from the Parks, Experiences and Products came in at $7.4 billion, up 70% year-over-year.

Disney’s total operating income jumped 50% year over year to $3.57 billion. Operating income at the Parks segment surged to $2.19 billion, from $356 million in the year-ago quarter. However, the Media division recorded a 32% decline in operating income to $1.38 billion.

The company added 14.4 million subscribers for its Disney+ streaming service in the quarter, taking the total subscribers to 152.1 million. The average revenue per user for the streaming service rose 5% year-over-year to $4.35.

ESPN+ service ended the quarter with 22.8 million subscribers, representing 53% year-over-year growth, while Hulu’s subscribers both free and paid rose 8% year-over-year to 46.2 million. Its total number of subscribers, at 221.1 million, now stands slightly higher than the record 220.67 million figure recorded by rival Netflix.

The company announced plans to launch its ad-supported Disney+ streaming platform in the US on December 8, 2022. The service will be priced at $7.99 per user, while the price for its Disney+ services will also be increased by about 35% to $10.99 per user.

How shares responded: Disney’s shares jumped 6.9% to $120.13 in after-hours trading, following the release of quarterly results. The stock had climbed 4% during the regular trading session.

What to watch: Investors will monitor the covid-19 pandemic, as any spread of the subvariants could apply breaks to the sharp rebound in Disney’s overall business. Markets will also keep an eye on moves by Netflix.

The markets today

Gold will be in focus today ahead of the producer inflation data from the US

Context: Gold prices settled slightly higher on Wednesday, following the release of US consumer price data.

Details: Gold prices rose slightly amid a choppy trading session on Wednesday after an easing in US inflation-supported prospects of the US Federal Reserve following a less aggressive monetary tightening policy. Non-yielding gold generally performs well in a low-rate environment.

US Consumer Price Index came in unchanged for July, after increasing 1.3% in June, amid a sharp decline in gasoline prices. The annual inflation rate also fell to 8.5%, from 9.1% in June.

The decline in the US dollar also provided some support to gold prices. The US dollar index, which measures the greenback’s performance versus a basket of major rivals, declined around 1.1% to 105.20 on Wednesday. US Treasury yields also moved lower following the inflation data.

Gold for December delivery gained $1.40 to close at $1,813.70 an ounce on Wednesday.

In other metals, silver for September delivery added 26 cents to settle at $20.74 an ounce. September copper gained 6 cents to $3.65 a pound, while platinum added more than 1% to $946.1 per ounce and palladium settled higher at $2,245.90 per ounce.

What to watch: Traders await the release of data on producer prices and initial jobless claims from the US today. Producer prices for final demand in the US, which surged 1.1% month-over-month in June, are expected to increase by just 0.4% in July. Annual producer inflation is seen easing to 10.9% in July, from 11.3% in June.

Other Markets: European trading indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.25%, 1.23%, 0.52% and 0.89%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.0283 and 1.0289 Positive
USD/CHF – 0.9438 and 0.9446 Positive
Silver – 20.450 and 20.476 Positive
Platinum – 942.76 and 944.26 Negative
Nasdaq 100 – 13353.37 and 13391.17 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0292, -0.08%) Dow ($33,363, 0.31%) Brent ($97.25, -0.2%)
GBP/USD (1.2199, -0.16%) S&P500 ($4,222, 0.30%) WTI ($91.74, -0.2%)
USD/JPY (133.07, 0.14%) Nasdaq ($13,444, 0.39%) Gold ($1,801, -0.7%)

What else to watch today

Turkey’s current account and foreign exchange reserves, South Africa’s mining production, gold production and industrial production, Mexico’s industrial production, Germany’s current account, Brazil’s industry confidence indicator, US natural gas stocks change, Mexico’s central bank interest rate decision, China’s total vehicle sales, foreign direct investment, new yuan loans, outstanding loan growth, total social financing and money supply M2, as well as Argentina’s inflation rate.


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