Tech stocks extended their slide on Wednesday, with the Nasdaq down 2 per cent at the opening bell after disappointing results from Alphabet and Microsoft.
Google parent Alphabet reported a severe slowdown in its search ads business, sending its shares down as much as 7.6 per cent. Microsoft’s stock slid 7.8 per cent after it warned that revenue growth from cloud computing had fallen. Shares in Meta, which reports later on Wednesday, shed 4 per cent.
The tech-heavy Nasdaq 100 index has lost more than 30 per cent of its value this year as investor fears about the prospects for big tech companies have grown.
Wall Street’s broad S&P 500 index opened 0.5 per cent lower. Investors are scouring corporate results for signs that high inflation and slowing economic growth are hitting company profits.
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In government bond markets the yield on benchmark 10-year US Treasuries fell 0.043 percentage points to 4.06 per cent.
The dollar softened 0.5 per cent against a basket of six other currencies, and has now erased its gains since the start of the month.
Chris Turner, global head of markets at ING, attributed the dollar’s recent moves less to “any kind of de-rating” of the US economy and more to investors hunting for bargains in other countries. US consumer confidence deteriorated in October after two months of gains, according to a closely watched index released on Tuesday.
In Europe the regional Stoxx Europe 600 index slipped 0.4 per cent and Germany’s Dax traded flat. The moves came as Deutsche Bank, the country’s largest lender, reported its highest third-quarter pre-tax profit since before the financial crisis, thanks in part to rising interest rates.
The European Central Bank will meet on Thursday, and is widely expected to raise borrowing costs by 75 basis points for the second month in a row, to 1.5 per cent, to tame inflation that hit 10 per cent in the year to September.
The ECB warned on Tuesday that tighter monetary policy and falling consumer confidence had contributed to a big drop in demand for housing loans. However, demand for corporate loans rose over the same period as companies grappled with higher costs and falling demand.
Still, Gergely Majoros, a member of the investment committee at Carmignac, said falling prices for natural gas in Europe and hopes that the US Federal Reserve and ECB might begin raising rates at a slower pace in the fourth quarter and into the new year meant investors’ “short-term fears have abated quite a lot”.
London’s FTSE 100 index fell 0.5 per cent in afternoon trading, while yields on 10-year gilts lost 0.01 percentage points to 3.61 per cent, reflecting a rise in prices. The 30-year gilt yield rose 0.06 percentage point to 3.74 per cent, close to levels last seen before the “mini” budget announced by previous UK prime minister Liz Truss in late September.
Sterling added 0.9 per cent against the dollar to $1.157 and 0.25 per cent against the euro to €1.153. One euro bought 86.5p.
Shares in Asia recovered, with indices in Japan, Hong Kong and China rising on Wednesday. – Copyright The Financial Times Limited 2022
