Drop in view of actions after facebook, central banks to follow

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to decline on Thursday at the opening after Facebook’s announcements and pending monetary decisions from the European Central Bank (ECB) and the Bank of England (BoE).

Futures contracts signal an opening down 0.27% for the Paris CAC 40, 0.49% for the Dax in Frankfurt, 0.17% for the FTSE in London and 0.51% for the Euro Stoxx 50.

On Wall Street, futures contracts indicate a session down in particular for the Nasdaq (-2.1%), which should be heavily penalized by the Meta Platforms group.

Facebook’s parent company plunged 20% out of session after publishing a quarterly revenue target below expectations and reporting for the first time a drop in the number of daily active users of its main social network, referring to Apple’s privacy changes and competition, including from TikTok.

This element is added to the caution of rigor before the monetary policy meeting of the BoE (at 12:00 GMT) and that of the ECB (at 12:45 GMT) which will be followed by the press conference of its president, Christine Lagarde.

The markets expect a 25 basis point rise in the BoE’s key rate. As far as the ECB is concerned, no policy change is expected but soaring consumer prices and recent strong employment data are leading some market participants to anticipate a change in tone from the Frankfurt institution, especially with regard to inflation.

“The likelihood of the ECB opening the door to policy normalization and Christine Lagarde telling us she can’t rule out a rate hike this year has clearly increased,” Chris Weston at Pepperstone said.

Also on the program for a busy session, a series of indicators is expected, including the final results of the purchasing manager surveys (PMI) on services activity in Europe.

A STREET WALL

The American session promises to be the opposite of that of Wednesday when the New York Stock Exchange ended in the green, carried by technology stocks, Alphabet in the lead.

The Dow Jones index gained 0.63% to 35,629.33 points, the S&P-500 gained 0.94% to 4,589.38 points and the Nasdaq Composite advanced 0.50% to 14,417.55 points.

Alphabet rose 7.5% after posting record profit for a fourth straight quarter, with ad sales beating Wall Street expectations.

Advanced Micro Devices jumped 5.1% after announcing a higher-than-expected annual revenue target on strong demand for its semiconductors. In its wake, Qualcomm (+6.2%), Nvidia (+2.4%) and Micron Technology (+3.8%) also recorded gains.

IN ASIA

In Tokyo, the Nikkei index lost 1.06% as investors moved away from technology stocks due to the sharp decline in Nasdaq futures and the decline in Sony and Panasonic.

The latter fell by 6.9% after the announcement of a fall (-44%) greater than expected in its operating profit in the third quarter, due to the increase in the costs of raw materials, shortages of components and the decline in sales of household appliances in the domestic market.

Consumer electronics group Sony fell 6.08% as concerns over its gaming business resurface amid semiconductor shortages and stiff competition.

Markets in China, and other countries in Asia, remain closed due to Lunar New Year festivities.

EXCHANGES/RATES

The dollar gains 0.16% against a basket of benchmark currencies, after three sessions of decline, and the euro retreats very modestly below $1.13 as traders opt for caution ahead of the ECB’s announcements .

On the bond market, the yield of ten-year Treasuries was stable at 1.7717%, as was that of the German Bund at the same maturity at 0.041%.

OIL

Oil prices fell on the back of the disappointing ADP US jobs report and some profit taking.The barrel of Brent lost 0.25% to 89.25 dollars and American light crude lost 0.35% to 87.95 dollars.