Global stocks took a breather on Thursday after recent sharp gains as investors processed the latest earnings news and looked forward to a meeting of the European Central Bank (ECB) and economic growth data from the US. Europe’s Stoxx 600 index slipped and the blue-chip Euro Stoxx 50 traded flat after soaring to a 23-year high. Chipmaker STMicroelectronics NV dropped as much as 6% after reporting softer customer orders and guiding for weak revenue ahead. Stockholm-based SEB reported lower-than-estimated income, while Finland’s Nokia Oyj forecast challenging market conditions. Earlier, South Korea’s SK Hynix Inc, the world’s no 2 maker of memory chips, dropped the most in three weeks after results, while carmaker Hyundai Motor Co also missed estimates.
The reports follow disappointment from Tesla Inc, which dropped 6% in extended trading after the electric vehicle maker missed earnings estimates and flagged slower growth this year. Contracts on the Nasdaq 100 index traded flat after the index gained for the fifth day in a row. Investors are also keen to gauge when central banks could embark on cutting interest rates, after policymakers pushed back against the possibility of swift and early easing. The ECB will keep rates on hold later in the day, but its statement and post-meeting news conference will be parsed for clues on the path forward.
Similarly, US data is expected to show the economy expanded at a 2% annualised rate in the fourth quarter. A slew of other figures are also due, including inventories, new home sales and weekly unemployment claims, which should offer a snapshot of the economy before the end-January Federal Reserve meeting. A key focal point for risk assets is the US Treasury markets where long-dated yields have been on the rise.
The 30-year yield eased about 2 basis points on Thursday, having climbed the previous day to its highest level this year. The rise came after a poor debt auction and on anticipation of
a heavy government borrowing schedule. Ten-year Treasury yields trade currently around 4.16%, approaching levels hit before the Fed’s dovish pivot unleashed a bond rally. Earlier in the day, Chinese and Hong Kong shares extended gains, trading off the People’s Bank of China’s plan to cut banks’ reserve requirement ratio next month. Doubts persist about the effectiveness of such monetary stimulus, with analysts pointing out that RRR cuts have not in the past boosted Chinese stocks. However, the pledge has offered some support to industrial metals prices, while oil advanced to trade near a one-month high. The Stoxx Europe 600 fell 0.2% in London. S&P 500 futures were little changed. Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average rose 0.2%. The MSCI Asia Pacific Index rose 0.2%. The MSCI Emerging Markets Index rose 0.5%