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Category: Stockmarket / Currency / Markets / Futures

Wall Street slips on slowing Facebook revenue growth, Fitbit fall

Friday, 4 Nov 2016 05:37:23 | Rebecca Hyam

Facebook warns revenue growth will fall and costs will rise as it aggressively expands. (Robert Galbraith: REUTERS)

Concerns about slowing revenue growth for Facebook and lingering uncertainty over next week's US presidential election saw the S&P 500 book its eighth straight session of losses overnight.

Markets at 7:30am (AEDT):

  • ASX SPI 200 futures -0.5pc to 5,167
  • AUD: 76.83 US cents, 61.62 British pence, 79.09 Japanese yen, 69.13 euro cents, $NZ1.0469
  • US: S&P 500 -0.44pc to 2,088, Dow Jones -0.16pc to 17,930, Nasdaq -0.92pc to 5,058
  • Europe: Euro Stoxx -0.22pc to 320.25, FTSE -0.8pc to 6,790, DAX -0.43pc to 10,325
  • Commodities: Gold +0.51pc to $US1,303.48/ounce, Brent crude oil -1.2pc to $US46.30/barrel, iron ore $US64.50/tonne

The declines represented the S&P 500's longest losing streak since the height of the 2008 global financial crisis.

Facebook's slide of 5.7 per cent came after the social media giant's chief financial officer, David Wehner, warned that advertising growth would "slow meaningfully", due to limits on ad load, or the number of ads Facebook can present to customers without alienating them.

He also said 2017 would be a year of aggressive investment, with a substantial increase in expenses.

Facebook was the biggest drag on the S&P 500 and Nasdaq.

In election news, two polls revealed Hillary Clinton was maintaining a narrow lead nationally, but investors were bracing for how financial markets might respond to a victory by Donald Trump next Tuesday.

Shares in Fitbit tanked by 34 per cent after the fitness device maker's revenue forecast for the Christmas shopping quarter came in well below estimates.

British shares fall amid Brexit court ruling and inflation warning

It was a weak finish in Europe, with a court ruling in London complicating the Brexit process.

The British High Court ruled that the Government would require parliamentary approval to trigger process of leaving the European Union.

The British Government argued it maintained the right to implement Article 50 and begin the Brexit process as planned, before the end of March.

Lord Chief Justice John Thomas read out the ruling saying, "the most fundamental rule of the UK's constitution is that Parliament is sovereign and can make and unmake any law it chooses."

The British Government said it would appeal against the decision and Britain's Supreme Court has set aside dates early next month to deal with the matter.

Elsewhere, the Bank of England kept interest rates on hold at the record low level of 0.25 per cent, but scrapped plans to make any further cuts in the near future.

The BoE warned households to expect a sharp rise in inflation next year, as the depreciation in the British pound drove import costs higher.

The central bank said inflation would increase from 1.3 per cent this year to 2.7 per cent in 2017 and 2018, with petrol prices and other imported goods expected to move higher.

That outlook was an increase on the BoE's last set of forecasts three months ago.

The bank's Monetary Policy Committee said it would be 2020 before inflation reached its 2 per cent target set by the government.

Writing in an economic note this morning, NAB senior economist David de Garis said rising inflation could present significant challenges for Britain.

"These higher inflation forecasts stem from the weaker pound but also an upward revision to growth from a better-than-expected base and sterling," he wrote.

"This is all very different from before and could yet challenge the BoE next year, given the big challenges ahead for the city and the broader economy after Article 50 is triggered and beyond."

The local share market is set to fall at the open, with the ASX SPI 200 down 0.5 per cent to 5,166.

At 7:30am (AEDT) the Australian dollar was worth 76.83 US cents, after gaining ground overnight.

West Texas crude oil had fallen to $US44.61 a barrel, the price of a barrel of Tapis was also lower at $US45.83 and spot gold had edged up to $US1,303.48 an ounce.

Today's agenda:

Australia:

  • RBA Statement on Monetary Policy - Q3 (11:30am AEDT)
  • Retail sales – September (11:30am AEDT)
  • Orica full-year result (8:30am AEDT)

US:

  • Trade balance - October (11:30pm AEDT)
  • Average hourly earnings - October (11:30pm AEDT)

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