(Bloomberg) — The rally in global stocks faltered Thursday following disappointing earnings from technology bellwethers and as traders await more clues on how quickly key central banks will tighten monetary policy.
U.S. equity futures dropped, with contracts on the technology-heavy Nasdaq 100 down some 2%, after Facebook parent Meta Platforms Inc. and streaming service Spotify Technology SA plunged in late trading on soggy forecasts.
Shares fell in Japan and Australia. South Korea reopened from a holiday and pushed higher. Hong Kong and China remain shut. U.S. shares closed up Wednesday, taking global stocks to their best four-day advance since 2020, but the tech fallout overshadowed that winning run.
A strong regional inflation print is buttressing the euro and adding pressure on the European Central Bank to reconsider its dovish stance. Policy decisions from the ECB and the Bank of England are due Thursday.
Treasury yields dipped and a dollar gauge snapped a three-day retreat. Oil eased from a seven-year high and gold was steady at around $1,807 an ounce.
The poorly received earnings reports from the U.S. tech giants are a challenge for dip buyers hoping that corporate performance will assuage worries about central bank interest-rate hikes. Markets have swung sharply and stocks are nursing losses this year as officials pare stimulus to curb inflation.
“Volatility is here to stay,” Anna Han, equity strategist at Wells Fargo Securities, said on Bloomberg Television. “Our outlook for 2022 was that we’d see more spikes in volatility. With that choppiness, with that unpredictability, investors are going to express that by compressing multiples.”
ADP data before Friday’s jobs report showed employment at U.S. firms shrank in January by the most since the early days of the pandemic. The omicron virus variant dealt a swift yet likely temporary labor-market blow.
Markets will probably trade off average hourly earnings in the jobs report, but if the unemployment rate “surprises us and ticks up some may see it as confirmation of fears that the U.S. economy is slowing,” Steven Englander, global head of G-10 FX research at Standard Chartered Bank, wrote in a note.
Meanwhile, the U.S. gave the green light to plans to move more troops to Europe and dispatch soldiers already stationed on the continent further east, seeking to send a stronger military message alongside diplomatic efforts with Russia over Ukraine. Western officials have warned of punishing economic sanctions if Russia invades Ukraine, which the Kremlin denies it plans to do.
For more market analysis, read our MLIV blog.
What to watch this week:
- Earnings are due from Amazon, Ford Motor
- Bank of England, European Central Bank rate decisions, Thursday
- Fed Board of Governors confirmation hearing, Thursday
- U.S. factory orders, initial jobless claims, durable goods, Thursday
- U.S. payrolls report for January, Friday
- Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.9% as of 12:20 p.m. in Tokyo. The S&P 500 rose 0.9%
- Nasdaq 100 futures declined 2.1%. The Nasdaq 100 rose 0.8%
- Japan’s Topix index shed 0.7%
- South Korea’s Kospi rose 2.2%
- Australia’s S&P/ASX 200 index lost 0.3%
- Euro Stoxx 50 futures declined 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was at $1.1302
- The Japanese yen was at 114.43 per dollar
- The offshore yuan was at 6.3626 per dollar
Bonds
- The yield on 10-year U.S. Treasuries declined one basis point to 1.76%
- Australia’s 10-year bond yield fell four basis points to 1.87%
Commodities
- West Texas Intermediate crude shed 0.4% to reach $87.91 a barrel
- Gold was at $1,806.76 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
