Futures rise on Brexit deal; Netflix, Morgan Stanley earnings adds to cheer

[October 17, 2019]  By Shreyashi Sanyal

(Reuters) - Wall Street was set for a higher open on Thursday, after Britain struck a preliminary last-minute deal with the European Union helping to ease some geopolitical jitters, while upbeat earnings from Netflix and Morgan Stanley affirmed a strong start to the reporting season.

British Prime Minister Boris Johnson said "we have a great new Brexit deal," lifting the mood across global equities, while he is yet to receive approval for the agreement in a vote at a session of the British parliament on Saturday.

"Although, the agreement reached between the U.K. and EU needs to be approved by the British parliament, the headline news coupled with U.S. earnings should boost market sentiment," said Peter Cardillo, chief market economist at Spartan Capital Securities in a client note.

Netflix Inc <NFLX.O> shares jumped 8.7% in premarket trading, after the video streaming service provider added slightly more paying subscribers than Wall Street expected in the third quarter.

Morgan Stanley <MS.N> gained 4% after the big lender beat analysts' expectations for quarterly profit, buoyed mainly by a strong performance in its trading business.

This followed upbeat results earlier in the week from major U.S. lenders JPMorgan Chase & Co <JPM.N>, Citigroup Inc <C.N>, Bank of America <BAC.N> and healthcare giants Johnson & Johnson <JNJ.N> and UnitedHealth Group Inc <UNH.N>.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 12, 2019. REUTERS/Brendan McDermid

The mood was also lifted after the Chinese Commerce Ministry said it hoped to reach a phased agreement in a protracted trade dispute with the United States and cancel tariffs as soon as possible.

Rising uncertainties around the U.S.-China trade war, increasing geopolitical risks and weak domestic economic indicators have recently hit sentiment, with investors now focusing on third-quarter earnings for clarity on these factors impacting Corporate America.

Analysts are expecting S&P 500 third-quarter earnings to fall by 3%, which would mark the first year-on-year contraction since the earnings recession that ended in 2016.

However, of the 43 S&P 500 companies to have posted quarterly results so far, 86% have beaten expectations.

At 7:12 a.m. ET, Dow e-minis <1YMcv1> were up 73 points, or 0.27%. S&P 500 e-minis <EScv1> rose 8.25 points, or 0.28% and Nasdaq 100 e-minis <NQcv1> were up 26.5 points, or 0.33%.

Among other stocks, International Business Machines Corp <IBM.N> slipped 5% after it missed quarterly revenue estimates due to weakness in its global technology services unit.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Bernard Orr)

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