European stocks were poised to break a three-day winning streak, while U.S. stock exchanges fell sharply, following disappointing quarterly updates by technology groups that thrived during the pandemic.
The European stock index Stoxx 600 fell 0.3 percent at the opening of trading. Contracts betting on the direction of the tech Nasdaq 100 from Wall Street fell 1.8 percent. Japan’s Nikkei 225 fell 1.1 percent, and most other Asian markets closed due to the Lunar New Year.
Overnight, Facebook owner Meta lost nearly $ 200 billion in value, after reporting its first decline in daily active users, warning of increased competition from competitors such as ByteDance’s TikTok platform and citing macroeconomic problems such as supply chain disruptions.
Shares in the online payment group PayPal also fell by a quarter on Wednesday after that warned inflation and a weakening e-commerce environment would slow its growth rate this year. Meanwhile, music streaming platform Spotify has delivered a poor perspective for subscriber growth in the first quarter.
Investors are nervous about high-value technology companies that have dominated Wall Street’s major stock indexes for months, fearing a slowdown in growth as social restrictions on coronavirus cease, as well as upcoming U.S. interest rate hikes that reduce the attractiveness of more speculative and early-stage companies. . .
The Nasdaq 100 has fallen more than 7 percent so far this year, despite rising in the past four sessions as dealers focused on forecasted quarterly results of Apple, Microsoft and Google owners Alphabet.
“We knew e-commerce was in question when we started this press,” JPMorgan CEO Ron Adler said in a note to clients, citing Meta and Paypal’s results. “It simply came to our notice then [tech] complex.”
Government debt markets were stable on Thursday morning ahead of the monetary policy statements of the Bank of England and the European Central Bank.
Yields on the reference 10-year US Treasury bonds were stable at 1.77 per cent, the German equivalent Bund yield was stable at 0.04 per cent and the 10-year yield in the UK was trading at 1.26 per cent. Bond yields, which are accompanied by interest rates and inflation expectations, range from debt prices.
After the US Federal Reserve last month opened the door to a rapid growth rate cycle to cope with rising inflation, BoE is widely expected raise borrowing costs for the second time in two meetings.
Traders are intensely focused on whether the ECB, whose president Christine Lagarde insisted the bank would not raise its key interest rate above zero this year, would make a statement interpreted as dangerously pigeon.
“Our concern is the market that the ECB is challenging in its decision to say that it is too pigeonhole and behind the curve,” said Tatjana Greil Castro, co-head of public markets at credit investor Muzinich & Co.
Greil Castro said that in practice could lead to a sell-off of eurozone debt as investors bet the ECB will leave the monetary loose for too long and then embark on a rapid rise in rates that could destabilize weaker currency bloc economies.
Inflation hit the eurozone new record 5.1 percent in January. Yields on Italian ten-year bonds rose 0.03 percent on Thursday to 1.45 percent as the price of debt fell.