World stock markets were down for a second running day on Friday as a nearly $1 trillion weekly wipeout in top tech stocks outpaced expectations of a Fed and ECB rate slowdown and news that the US economy is not yet in recession.
European stocks fell nearly 1 per cent on Thursday on weak forecasts from Amazon and Apple and more than 2 per cent in the tech sector and the prospect of renewed COVID restrictions at mining and oil firms in China.
In bond markets, borrowing costs also began rising again, although what analysts described as the ECB meeting on Thursday meant Germany’s 10-year Bund yields were the biggest weekly since October 1987. was set to decline.
Bank of Japan Governor Haruhiko Kuroda said that the yen was weakening again in foreign exchange markets, despite raising inflation forecasts that he did not “raise interest rates or pull out (from ultra-low interest rates) any time soon.” Didn’t plan to leave”.
A sharp drop in China meant that ex-Japan shares of the Asia-Pacific were down 1.9 per cent to close at 432 points from a 2-1/2-year low on Monday.
Nevertheless, Indian stocks edged higher for the second day in a row, but closed at the day’s high.
MSCI’s main world index, which tracks 47-countries, was down 0.5 per cent on the day, although it, like both European and US markets, was heading towards its third weekly rise in the past four.
Disappointing earnings are expected in the market in the recent past.
Amazon.com and Apple were the latest tech giants to face heavy punishment from investors for their numbers on Thursday and could wipe out nearly $1 trillion from the big US tech giants this week alone.
Facebook’s parent company Meta has brought its year-over-year decline to 70 percent, or more than $670 in value terms, with a 25 percent drop, while Apple’s disappointing forecast for the traditionally lucrative holiday season has spurred its year-over-year decline. After hours the shares had sent down 13 percent.
Jim Reid, a Deutsche Bank strategist, said, “If this holds up today it will drop to a market cap of $1 trillion. Last November we were at a high of $1.9 trillion, so to say the least. There has been a substantial drop.”
The BoJ’s widely expected move in Tokyo to keep its policy lax came after the European Central Bank raised interest rates by 75 bps the previous day, but said it was “substantial” in its bid to fight the rise in inflation. Progress had already been made.
Investors are now turning their attention to the Federal Reserve meeting next week. According to the CME’s FedWatch tool, a growth of 75 basis points is assured at the conclusion of the 1-2 policy meeting in November, but a smaller, 50 basis-point increase in December was expected to be 55 percent.
“I don’t think there will be any surprises here (in terms of rate hikes), but it will be more on the message that the Fed will deliver,” said Societe Generale’s Benjimara.
Less sharp comments from the ECB added to expectations that central banks may slow the pace of monetary tightening, especially after the Bank of Canada surprised the market on Wednesday by raising rates lower than expected.
The market has again started to trade a Fed pivot, but this is defined as hiking in small increments, not a “proper” pivot to cut from hikes, according to Citi strategists. According, given that an actual break is still some time away.
“No Powell Pivot, No Santa?” Citi’s emerging economy analysts asked, referring to the so-called “Santa rally” that markets often see at the end of the year.
In China, the stock market fell 2.25 per cent, with Hong Kong’s Hang Seng index down 3.6 per cent, having had a rough week. The bleak industrial profit figures and the rising outbreak of COVID-19 weighed on all sentiments.
The dollar index was up 0.3 per cent that day but was down for the second week in a row. The euro was again below par at $0.9944, while the BOJ’s trend pushed the yen down 0.8 percent to $147.43.
Oil for Brent crude also fell 1.3 percent to $95.7 a barrel. But they were also poised for a fourth weekly increase in the past five and many market veterans expect prices to hover around $100 a barrel in the coming months.