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European stocks fall after mixed US tech earnings

European stocks fell on Friday, as traders increased bets on impending rate hikes by central banks in the region, while sentiment rapidly changed for big tech stocks. looks set to continue driving volatility in the US.

The Stoxx 600 in the region lost 0.7%, after closing 1.8% lower on Thursday, also marking its worst day on Wall Street. for almost a year.

Futures markets imply some respite for US tech stocks on Friday, after the sector suffered a sharp sell-off in the previous session, with Facebook-owned Meta shedding more than 230 billion dollars in stock market value in a single day of an unprecedented loss for a public company.

Contracts betting in the direction of the Nasdaq 100 gained 0.8%, after the tech-focused index fell 4.2% on Thursday. Amazon shares jumped 13% in pre-market trading in response to the e-commerce group price increase for its popular Prime subscription service. Snap, a social media group, is up 48% after falling 24% on Thursday.

Analysts warn that equity markets will remain volatile as global central banks respond to high inflation by implementing the extremely loose monetary policies they have implemented to isolate financial markets from the shocks of the coronavirus pandemic.

“You’ve been hit with a perfect storm of dramatic re-evaluations of the interest rate outlook from central banks,” said Nick Nelson, head of global and European equity strategy at UBS. , right in the earnings season with a big disparity between winners and losers. .

The US Federal Reserve last month signaled a rapid rate hike cycle this year. The higher ratio reduces the present value of the future profits of the firms in the investor’s model.

Markets have priced in about five U.S. rate hikes this year, a big shift from expectations by the end of 2021 that have knock the door high valuations of many tech groups benefiting from the coronavirus lockdown.

On Thursday, the Bank of England raised its inflation forecast to an April peak of 7.25%, quote Energy prices skyrocketed and bottlenecks in global supply chains were disrupted by the coronavirus shutdown.

Traders now also expect the European Central Bank to raise its key deposit rate close to zero at the end of the year. ECB offers negative interest rates in 2014 in an attempt to stimulate lending and spending. But euro zone inflation hit a record 5.1% in January.

Daily reversals in the stock market mood are common this year, while the overall trend is lower, with the FTSE All-World index down nearly 5% so far in 2022.

Jefferies strategist Christopher Wood warned that the “bear market argument” will prevail as long as the Fed maintains its “commitment to meaningful monetary tightening”.

“The latest US data offers no respite,” Wood said.

Official employment data late Friday is expected to show that US employers added 150,000 new roles in January, down from the previous month when the Omicron coronavirus variant spread. But median earnings, according to economists polled by Reuters, are forecast to grow 5.2% year-on-year.

The yield on the benchmark 10-year Treasury note, which underlies the worldwide cost of debt, was steady at 1.82% as the price of the benchmark debt instrument changed ahead of the payrolls report.

The dollar index, which measures the greenback against six major currencies, fell 0.1%.

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