US tech stocks oscillated between gains and losses in choppy trading on Wednesday, following 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 9 per cent after the New York opening bell. Microsoft’s stock slid as much as 8.2 per cent after it warned that revenue growth from cloud computing had dropped. Both companies later retraced some of those falls to trade 6 per cent and 5 per cent lower.
The tech-heavy Nasdaq fell more than 2 per cent in early dealings on Wednesday before trimming its slide to trade 0.2 per cent lower on the day. The index has lost almost 30 per cent of its value this year on intensifying concerns about the prospects for technology companies against the backdrop of high inflation and rising interest rates.
Investors have been scrutinising corporate results for signs that rapid price growth and a challenging economic environment are hitting company profits.
Wall Street’s broad S&P 500 index reversed early falls to trade up 0.5 per cent.
In government bond markets, the yield on the benchmark 10-year US Treasury note fell 0.1 percentage point to 4 per cent as its price rose.
The dollar, meanwhile, softened 1 per cent against a basket of six peers, taking the US currency back to levels last seen in late September.
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 reversed earlier losses to close up 0.7 per cent. The moves came as Deutsche Bank, Germany’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 0.75 percentage 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 climbed 0.6 per cent in afternoon trading, while yields on 10-year gilts lost 0.05 percentage points to 3.58 per cent.
Sterling added 1.1 per cent against the dollar to $1.16.
Shares in Asia advanced after sharp declines for Chinese tech stocks in the previous session. Hong Kong’s Hang Seng closed 1 per cent higher and Japan’s Topix was up 0.6 per cent.
