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European stocks and Wall Street futures slipped on Thursday after tech earnings disappointed, while investors prepared for key central banks meetings next week.
Europe’s region-wide Stoxx 600 lost 0.2 per cent, dragged lowed by declining technology stocks, while France’s Cac 40 gave up 0.1 per cent and Germany’s Dax slipped 0.2 per cent at the opening bell.
The moves echoed US futures markets, where contracts tracking the benchmark S&P 500 fell 0.2 per cent while those tracking the tech-focused Nasdaq 100 retreated 0.7 per cent ahead of the New York open.
Investor sentiment soured after the first tech heavyweights to report their second-quarter results failed to impress. Tesla’s profit margins slipped as a series of price cuts weighed on the carmaker’s earnings, while Netflix missed sales estimates and posted lower than expected guidance for the following quarter.
Large tech companies drove much of the rally on Wall Street since the start of the year, as investors rode the wave of artificial intelligence hype and hoped that the global march higher of interest rates would soon draw to a close.
Meanwhile, traders turned their attention back to economic data, with US weekly jobless claims and the eurozone’s consumer confidence indicator coming out later in the day, ahead of a series of central bank policy meetings next week.
Markets overwhelmingly expect the European Central Bank to lift its benchmark deposit rate by 0.25 percentage points to 3.75 per cent next Thursday, but are divided on whether rates will increase beyond that point following policymakers’ dovish remarks earlier in the week.
The US federal reserve is expected to raise the federal funds rate by the same amount, from the current target range between 5 per cent and 5.25 per cent. But lower than expected inflation data last week suggested the Fed’s tightening campaign could also be nearing its end.
“Central banks might finally be near the end of their current rate hiking cycle, particularly after some positive numbers on inflation over recent days,” said Henry Allen, macro strategist at Deutsche Bank.
The trend spilled over into the UK in the previous session, when official data showed inflation eased more than expected in June, bolstering bets that Bank of England policymakers would opt for a smaller rate increase at their August meeting.
London’s FTSE 100 index was the only riser in Europe on Thursday, gaining 0.2 per cent at the market open.
Equities were down in Asia, with China’s benchmark CSI 300 index slipping 0.7 per cent while Hong Kong’s Hang Seng lost 0.1 per cent.
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