US equity futures faced a downturn as investors reacted to underwhelming earnings reports from major tech companies, setting the stage for the Federal Reserve’s first interest-rate decision of the year. Contracts on the Nasdaq 100 experienced a 1.2% decline, while those on the S&P 500 retreated by 0.5%. Notably, tech giants like Microsoft Corp., Alphabet Inc., and Advanced Micro Devices Inc. saw premarket declines after their updates failed to meet the heightened expectations surrounding tech megacaps and artificial intelligence (AI). Additionally, media mogul Byron Allen’s $14.3 billion offer for Paramount Global sent the company’s shares soaring by 21%.
The day also saw significant corporate developments in Europe. Novo Nordisk A/S, the second European company to reach a market value of $500 billion, projected strong sales and profit growth, primarily driven by its obesity shot Wegovy. Conversely, Hennes & Mauritz AB’s shares plunged by 10% as the retailer missed profit estimates, leading to the resignation of its chief executive officer. In the broader European market, the Stoxx 600 index saw marginal gains of 0.3%.
Attention turned to the Federal Reserve’s interest-rate decision, with expectations that rates would remain in the range of 5.25% to 5.5%, a 22-year high. Despite speculation of a rate cut in March, most Fed officials cautioned against premature assumptions, citing encouraging declines in inflation and continued strength in the labor market and economic growth.
In Europe, cooling price pressures in France fueled optimism about potential rate adjustments by the European Central Bank as early as April. German bond yields saw a drop of up to eight basis points, while the euro weakened against the dollar.
In Asia, Japanese bond yields rose as the Bank of Japan signaled its intention to raise interest rates for the first time since 2007. Japanese stocks rallied on the news, driven by optimism over potential improvements in lenders’ profitability.
Australian equities reached a record high following soft inflation data, which bolstered expectations of monetary policy easing. However, stocks in China and Hong Kong faced losses due to another month of contraction in China’s factory activity.
Overall, the market’s attention remained divided between corporate earnings, central bank decisions, and economic indicators, reflecting the ongoing uncertainties in global financial markets.
(1 USD = 147.6800 JPY)
