European stocks and US futures drop after upbeat tech sector earnings

European shares are poised to post a three-day winning streak, while US stock futures plummet, after disappointing quarterly updates from tech groups that have thrived during the pandemic.

Europe’s Stoxx 600 share index fell 0.3% in open trade. Contracts betting in the direction of Wall Street’s tech-heavy Nasdaq 100 fell 1.8 percent. Japan’s Nikkei 225 index fell 1.1%, while most other Asian markets were closed for the Lunar New Year holiday.

Overnight, Facebook owner Meta nearly 200 billion dollars less in its valueafter reporting its first drop in daily active users, warned of increased competition from rivals like ByteDance’s TikTok platform and cited macroeconomic issues like disruptions supply chain.

Shares in online payments group PayPal also fell by a quarter on Wednesday after it alert Inflation and a weakening e-commerce environment will slow its growth this year. Meanwhile, music streaming platform Spotify offers a weak prospects for subscriber growth in the first quarter.

Investors have been worried about the highly-rated tech companies that have dominated Wall Street’s main equity indexes for months, fearing slowing growth amid coronavirus social distancing restrictions termination, as well as impending US interest rate hikes reduce the attractiveness of speculative and early-stage businesses. .

The Nasdaq 100 is down more than 7% so far this year, despite gaining over the past four sessions as traders focus on beat quarterly results forecasts from Apple, Microsoft and Google owner Alphabet.

“We know that e-commerce has been challenged,” Ron Adler, head of trading at JPMorgan, said in a note to clients, referring to the Meta and Paypal results. “And that will weigh on the whole [tech] complicated.”

Government debt markets stabilized on Thursday morning ahead of monetary policy statements from the Bank of England and the European Central Bank.

Yields on the benchmark 10-year US Treasuries were unchanged at 1.77%, the German equivalent yield was steady at 0.04% and the UK 10-year gold-plated yield was delivered. translates at 1.26%. Bond yields, which track interest rate expectations and inflation, move inversely with debt prices.

After the US Federal Reserve last month open door with a cycle of rapid rate hikes to tackle rising inflation, the BoE widely expected to raise borrowing costs for the second time in two meetings.

Traders are highly focused on whether the ECB, whose president Christine Lagarde has insisted the bank will not raise its key deposit rate above zero this year, will issue a statement to be interpreted as dov dangerously.

“Our concern is that the market is challenging the ECB in their resolve, to say it is too dovish and behind the curve,” said Tatjana Greil Castro, co-head of investor public markets. credit Muzinich & Co., said.

This could, in fact, lead to a sell-off in eurozone debt as investors bet on the ECB leaving the currency loose for too long and then starting to raise interest rates, says Greil Castro. could quickly destabilize the weaker economies of the currency bloc.

Inflation in the euro area new record high 5.1% in January. Yields on Italy’s 10-year notes rose 0.03% on Thursday to 1.45% as the price of the debt eased.

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