US futures, Europe stocks decline on earnings shock

Bloomberg

The rally in global stocks faltered following disappointing earnings from technology bellwethers and as traders await more clues on how quickly key central banks will tighten the monetary policy.
US equity futures dropped, with contracts on the technology-heavy Nasdaq 100 losing 1.8%, after Facebook parent Meta Platforms Inc and streaming service Spotify Technology SA plunged in late trading on soggy forecasts. Europe’s Stoxx 600 fell, with ING Groep NV leading losses after missing profit estimates. German, UK yields rise before central-bank decisions.
US 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 (ECB) to reconsider its dovish stance.
The poorly received earnings reports from the US tech giants are a challenge for dip buyers hoping that corporate performance will ease 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.”
If the near-23% after-hours tumble in Meta Platforms holds, it has the potential to erase about $200 billion in market value from the company — bigger than Netflix Inc.’s total value at current prices.
Oil eased from a seven-year high eased from a seven-year high as traders waited to see whether Opec+ can deliver on its latest promised increase in supply.
Meanwhile, ADP figures before Friday’s jobs report showed employment at US firms shrank in January by the most since the early days of the pandemic. The Omicron virus variant dealt a swift yet likely temporary blow to the labour market.
Markets will probably trade off average hourly earnings in the official jobs report, but if the unemployment rate “surprises us and ticks up some may see it as confirmation of fears that the US economy is slowing,” Steven Englander, global head of G-10 FX research at Standard Chartered Bank, wrote in a note.
Elsewhere, the US 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.
The Stoxx Europe 600 falls 0.2% as of 8:14 am London time and futures on the S&P 500 also drop 0.8%.
While Futures on the Nasdaq 100 drop 1.8%, futures on the Dow Jones Industrial Average were little changed and the MSCI Asia Pacific Index falls 0.3%. The MSCI Emerging Markets Index was little changed.
The Bloomberg Dollar Spot Index rises 0.2% and the euro was little changed at $1.1294.
While the Japanese yen falls 0.2% to 114.66 per dollar, the offshore yuan drops 0.2% to 6.3693 per dollar and the British pound also plunges 0.2% to $1.3556.
The yield on 10-year Treasuries was little changed at 1.78% and Germany’s 10-year yield was little changed at 0.05%. Britain’s 10-year yield advanced one basis point to 1.27%.