The quarterly results of Meta Platforms spoiled the mood of investors on Thursday and abruptly stopped the recent rally on Wall Street. The technology index Nasdaq Composite recorded the biggest loss since September 2020, losing about -3.7%. The S&P 500 experienced its worst day in almost a year.
Meta's shares plunged more than 26% on Thursday after the group dampened first-quarter growth expectations. The tech giant's stock market value has thus shrunk by more than USD 232 billion. Facebook's owner is suffering from Apple's new privacy rules, which make it harder to personalize ads, cutting into advertising revenue. More than USD 10 bn in revenue could be lost this year as a result, Meta estimates. In addition, CEO Mark Zuckerberg pointed to growing competition in the race for customers' attention and referred to the Chinese video service TikTok in this context.
Today, US stock markets should nevertheless open friendly as futures markets signal. The good quarterly results of Amazon provide support: the e-commerce giant almost doubled its profit in the past quarter. The shares rose more than 14% in after-hours trading. Snap also caused a stir. The Snapchat parent recorded the first profitable quarter since its IPO and the shares shot up almost 60%.
In addition, investors are eagerly awaiting the US labor market report for January, which will be published in the afternoon (CET). According to Reuters, analysts forecast an increase of 150’000 jobs in the private sector, after 199’000 new jobs were created in December. The unemployment rate is expected to remain at 3.9%.
ECB keeps rates unchanged
The European Central Bank is sticking to its loose monetary policy course for the time being. Thus, the central bankers decided on Thursday to leave the key interest rates at record lows and to continue the multi-billion bond purchase programs. But in contrast to December, the ECB no longer categorically rules out an interest rate hike this year. The reason for this shift are rising consumer prices in the euro area, which in January climbed faster than at any time since the introduction of the euro. Central bank chief Christine Lagarde said that the inflation trend was causing unanimous concern in the ECB's governing council. Until now, the ECB classified the high inflation as a temporary phenomenon. But, Lagarde said at the press conference, the situation has changed in the meantime and inflation risks are tilting upward. However, the ECB still rules out an interest rate hike in the near future and wants to stop bond purchases before considering an interest rate step.
The next meeting in March should provide more information when the ECB presents its updated economic outlook. If the inflation forecast is raised, this could pave the way for a faster reduction in bond purchases.
Bank of England raises key interest rates
The British central bank raised interest rates for the second time in a row on Thursday. The key interest rate is now at 0.5%, which corresponds to an interest rate step of 25 basis points. The first rate hike was decided by the BoE in December, ending the phase of record low interest rates.
|11:00||EZ||Retail sales (December)||+1.0%|
|14:30||US||Non-farm payrolls (January)||+199'000|
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Source: LGT Bank (Switzerland) Ltd.
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