S&P 500 flat, UK inflation holds above 10% for 7th straight month, ASX to fall

ASX 200 futures are trading 7 points lower, down -0.01% as of 8:20 am AEDT.

The S&P 500 was unchanged as the market awaits more earnings results, the VIX falls for a fifth straight sessions to levels not seen since November 2021, US earnings rise 6.1% in the first quarter and outpaced inflation, UK inflation unexpectedly remains above 10% in March and a closer look at Netflix's earnings rollercoaster.

Let's dive in.

S&P 500 SESSION CHART

The first quarter has been a resilient one for the major financial institutions stateside. Here are just some of the top numbers so far:

• Bank of America: Profits +15%, EPS +18%, Net interest income +25%
• JPMorgan: Profits +52%, Net interest income +49%, guiding for more NII upgrades
• Wells Fargo: Profits +30%, Net interest income +45%, resumes share buyback
• Citi: Net interest income +23%, EPS of $1.86/share handily beat analyst estimates

Then, there's Goldman Sachs and Morgan Stanley. The investment banks posted first quarter net income declines of 19% and 18.7% respectively, brought down by weak fixed income trading and sluggish dealmaking activity. It also didn't help that its one-time adventure into consumer banking is still being wound down.

So far, so good among the majors. But it's the regional banks that are of more interest this time and all eyes are on First Republic Bank which reports next Monday. Compatriots Western Alliance and Zions have both reported a bump in EPS but unsurprisingly, a fall in total deposits.

Netflix reported results after hours on Wednesday and to say its results caused a wild ride for its share price is a gross understatement. But this is far from the first time this has happened.

• It's fallen in each of its last four Q1 earnings, including a 35% drop last April
• In its 83 prior earnings since 2002, 23 have triggered declines of more than 8%
• Average one-day reaction to earnings is a gain or loss of 12.3%

Looking at more recent result:

• The stock plunged by as much as 12% after hours but recovered all its losses as investors chose to focus on its cash balance rather than the miss in revenues and new subscriber additions
• In the Q4 2022 result, net subscriber additions soared as they introduced a lower-cost, ad-supported tier to its offering. Even though the EPS forecast missed analyst estimates, the share price soared by nearly 7% immediately after the result
• In the Q4 2021 result, shares collapsed by more than 10% after the net subscriber additions forecast came in at less than half of analyst expectations and the then-EPS forecast fell short by more than 50 cents/share

The last four US sessions have been rather uneventful, with the S&P 500 creeping a little higher or lower. Markets are in limbo right now, looking for more clues about the potential recession later this year.

Travel: The 7.5% rally from United Airlines helped the US Global Jets ETF rise 1.6%. Also, China's domestic flight travel bookings for May Day holiday exceeded 2019 levels, outbound travel bookings hit a new record high, according to Fliggy. Does this see some positive flow for local travel names like Qantas, Flight Centre, Webjet and Corporate Travel?

Other: Overall, it was another uneventful session. A lot of commodity-related ETFs eased 1-2% overnight including Steel, Copper, Uranium and Gold.

Key Events

ASX corporate actions occurring today:

• Trading ex-div: Wingara (WNR) – $0.006, Plato Income Maximiser (PL8) – $0.006, Spheria Emerging Companies (SEC) – $0.022, Oz Minerals (OZL) – $1.75
• Dividends paid: Austal (ASB) – $0.04, Nine Entertainment (NEC) – $0.06, Lovisa (LOV) – $0.38, Rio Tinto (RIO) – $3.26, Imdex (IMD) – $0.015, Restaurant Brands (RBD) – $0.16
• Listing: None

Economic calendar (AEST):

• 9:50 am: Japan Balance of Trade
• 4:00 pm: Germany Producer Price Index

This Morning Wrap was first published for Market Index by Hans Lee and Kerry Sun.