Investors were surprised by a hawkish hint from the ECB’s Lagarde amid record inflation figures
Wall Street stocks tumbled overnight after a four-day rally after Meta Platforms reported disappointing quarterly results. The company’s shares plunged over 26% as its profit came in lower than expected in the fourth quarter. Furthermore, the Facebook parent revealed gloomy revenue guidance for the current quarter. As such, the Dow shed 1.45%. the S&P 500 lost 2.44%, and the tech-heavy Nasdaq fell 3.74%. Of note, the CBOE volatility index climbed from 2.5-week lows registered in the previous session.
Asian stock markets turned positive after mixed trading. Investors continue to express a positive tone but feel somehow uncomfortable after a second rate hike by the Bank of England and a hawkish hint from the ECB’s Lagarde amid record inflation figures. Still, following some hesitation, regional indexes finished in positive territory. Japan’s Nikkei 225 advanced 0.73%, the Hang Seng in Hong Kong rallied 3.18%, while Australia’s S&P/ASX 200 gained 0.60%. Kospi in South Korea gained nearly 1.5%.
In Europe, equity markets opened higher, with US stock index futures regaining ground, adding about 2% due to a jump in Amazon stocks after better-than-expected earnings. As such, the STOXX 600 index is heading to the first week of gains since the start of the year. Upbeat sentiment dominates the markets even as the ECB didn’t exclude raising rates this year at its policy meeting. Of note, now, Goldman Sachs expects ECB to start hiking rates in September, while money markets now price in a 50 bps rate move by the end of the year.
In currencies, the dollar extended the decline after a hawkish twist from the ECB, pushing the euro above the 1.1400 figure. EURUSD extended the ascent to the 1.1470 region on Friday, now targeting the 1.1500 figure. Later in the day, the US NFP employment report will set the tone for USD pairs ahead of the weekend. Should the figures come in better than expected, the greenback will stage widespread recovery, thus capping the bullish momentum surrounding the common currency. The immediate barrier for the euro arrives in the 1.1480 area that triggered a downside correction last month.