Top 5 Things to Know in the Market on Friday, July 17th

By Geoffrey Smith 

Investing.com -- The U.S. shatters its record for daily new cases of Covid-19. Netflix (NASDAQ:NFLX) stock slumps after warning of a sharp slowdown in subscriber growth in the second half of the year. China's stock bubble is quickly deflating while the U.S. is dreaming up ever more ways to punish it. And the euro hits a four-month high as EU leaders meet to discuss their big recovery fund plan. Here's what you need to know in financial markets on Friday, July 17th. 

1. New record for virus cases

The U.S. shattered its record for the number of new infections of Covid-19, with 77,300 recorded on Thursday. That took the total number of infections above 3.5 million in the U.S.

Covid-19-related deaths rose to an estimated 924, their highest since early June.

Texas Governor Greg Abbott said, however, that “there is no shutdown coming.”

Further afield, the number of cases in Brazil passed 2 million, while India’s topped 1 million. Both figures are likely under-reported due to less-than-comprehensive testing in those countries.

2. The froth comes off Chinese stocks

The bubble in Chinese stocks could be over already. Chinese markets stabilized on Friday but the main indices all ended the week with losses of between 4% and 5%.

The move follows a change in signalling by state-owned media and banks this week that quickly reversed some of the more exuberant buying seen in previous weeks by retail investors.

The news comes against the backdrop of more negative briefing by U.S. officials with regard to China. The Wall Street Journal reported on Thursday that administration officials are discussing banning travel by China’s Communist Party members and their families to the U.S., while other reports this week have mooted a ban on short-form video service TikTok over data integrity concerns.

3. Stocks set to open higher; Michigan consumer sentiment due

U.S. stocks are set to open mostly higher to end the week on bargain-hunting after weak labor market data on Thursday knocked the main indices down by over half a percent.

By 6:30 AM ET (1030 GMT), the Dow futures contract was up 78 points or 0.3%, while the S&P 500 Futures contract was up 0.4% and the Nasdaq 100 futures contract was up 1.0%

A relatively light day for earnings is set to be dominated by asset manager Blackrock (NYSE:BLK),  which reported a 22% gain in per share earnings for the second quarter, somewhat better than expected.

The data calendar highlight is Michigan consumer sentiment at 10 AM ET (1400 GMT), along with June data for housing starts and building permits, both at 8:30 AM ET.

4. Euro hits four-month high as EU leaders meet

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European Union leaders are meeting in person for the first time since the pandemic erupted to discuss the bloc’s plans for a 750 billion-euro recovery fund that would mark the biggest step yet toward a centralized fiscal policy and explicit transfers from richer countries to poorer ones.

The Brussels summit is unlikely to reach a formal agreement on the European Commission’s plan, despite strong backing from Germany and France, traditionally the most influential members of the bloc.

Resistance to a proposal for up to 500 billion euros in fiscal transfers is being led by Dutch Prime Minister Mark Rutte, who said on his arrival at the summit that he sees the chance of a deal today at less than 50%.

The euro nonetheless advanced to its highest in over four months before retracing slightly to trade at $1.1413, up 0.3% on the day.

5. Netflix stock slumps after growth warning

Netflix (NASDAQ:NFLX) stock is set for a rocky ride after the company warned of a sharp slowdown in subscriber growth over the rest of the year.

The world’s biggest streaming company added another 10 million subscribers in the second quarter, living up to expectations that it would be one of the biggest beneficiaries of lockdowns across the globe. However, it expects only 2.5 million new users in the third quarter – half of what Wall Street had been hoping for.

At the same time, it also raised Ted Sarandos, the head of its Hollywood operations, to be co-chief executive alongside Reed Hastings.

Netflix stock was quoted down 7.5% in premarket trade, paring losses of over 15% at one point in after-hours trade on Thursday.