Market Shows Volatility on Tech Earnings and Fed Decision

US equity futures experienced a decline as earnings reports from major tech companies failed to meet Wall Street’s high expectations. Additionally, investors braced themselves for the Federal Reserve’s first interest-rate decision of the year. Nasdaq 100 futures fell by 1.3%, while S&P 500 contracts retreated by 0.5%. Pre-market trading saw drops in Microsoft Corp., Alphabet Inc., and Advanced Micro Devices Inc., contributing to investor disappointment.

In premarket trading, Microsoft Corp., Alphabet Inc., and Advanced Micro Devices Inc. dropped after earnings reports from these tech giants fell short of expectations. On a positive note, Paramount Global saw a 21% surge in its stock after media mogul Byron Allen reportedly made a $14.3 billion offer for the media and entertainment company.

In Europe, Novo Nordisk A/S became the second European company to reach a market value of $500 billion, citing expectations of surging sales and profit due to its blockbuster obesity shot Wegovy. However, Hennes & Mauritz AB faced a 10% decline in shares after missing profit estimates, leading to the CEO’s resignation. The Stoxx 600 index in Europe managed a modest gain of 0.3%.

Investor attention later shifted to the Federal Reserve’s interest-rate decision, with expectations that rates will be maintained in the range of 5.25% to 5.5%. Speculation on a rate cut in March exists among traders, though most Fed officials suggest it’s premature to consider such a move. Federal Reserve Chair Jerome Powell is expected to hold a press conference following the rate decision.

In Europe, cooling price pressures in France fuelled optimism that the European Central Bank may consider rate adjustments as early as April. The 10-year yield on German debt dropped, and the euro slid. Meanwhile, the dollar strengthened against most of its G-10 peers, accompanied by a drop in Treasury yields.

In Asia, Japanese bond yields rose, and the yen strengthened as the Bank of Japan signalled a potential interest rate hike. Japanese stocks rose on optimism about the possible end of negative rates. Australian equities reached a record high following soft inflation data, leading to expectations of monetary policy easing.

Chinese and Hong Kong stocks extended losses after data revealed another month of contraction in China’s factory activity. Concerns grew as mainland shares approached wiping out gains driven by hopes of stronger support measures from authorities. Despite these regional fluctuations, oil headed for its first monthly gain since September, triggered by an escalation of attacks on ships in the Red Sea, raising fears of a broader conflict in the Middle East.

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