(Bloomberg) — U.S. stock futures fell after profits for tech giants fell short of high expectations on Wall Street and as investors braced for the first interest rate decision this year from the Federal Reserve.
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Contracts in the tech-heavy Nasdaq 100 index fell 0.8%, while contracts in the S&P 500 index fell 0.4%. Shares of Microsoft Corp and Alphabet Inc fell. and Advanced Micro Devices Inc. in late trading Tuesday after the tech giant's earnings left some investors disappointed. The recent decline in Samsung Electronics' profits has exacerbated the weak sentiment towards technology.
It's a big earnings day in Europe, too: Novo Nordisk A/S became the second European company to reach $500 billion in market value after it said sales and profits would rise again this year thanks to its blockbuster obesity drug Wegovy. Hennes & Mauritz AB shares fell 10% after the retailer missed earnings estimates and its CEO resigned. The European Stoxx 600 index rose.
Attention later turns to the Federal Reserve, with the Federal Open Market Committee poised to keep interest rates in a range of 5.25% to 5.5%, the highest level in 22 years first reached in July. The interest rate decision and accompanying statement will be released at 2pm in Washington, with Chairman Jerome Powell holding a press conference 30 minutes later.
Investors see there's about a 40% chance the central bank will cut interest rates for the first time in March, but most Fed officials have said it's too early to predict such a pivot. Powell would say he feels comfortable with recent declines in inflation while continuing to point to little urgency to lower inflation, pointing to a strong labor market and a solidly growing economy.
“The conclusion investors are drawing from the FOMC and Powell's medium-term guidance could lead to asset market volatility, even if the risk of an interest rate move at the January 31 FOMC meeting is very small,” said Steve Englander, Chairman G10 global foreign exchange group. He wrote research and macro strategy for North America at Standard Chartered in a note.
The dollar rose against all its G10 peers. Two-year and 10-year Treasury yields fell.
In Asia, Japanese bond yields rose as the summary of the Bank of Japan meeting indicated that it was close to raising interest rates for the first time since 2007, and one member even warned against missing the opportunity to move. Japanese stocks also rose, as signs that the Bank of Japan may move to end negative interest rates boosted optimism about lenders' profitability.
Australian shares closed at a record high after weak inflation data boosted bets on monetary policy easing. Yields on the local dollar and government bonds fell.
Stocks in China and Hong Kong extended losses after data showed another month of contraction in factory activity in China. Mainland stocks came close to erasing all the gains spurred by hopes that the authorities would take stronger support measures. The broader measure of Asian stocks was little changed.
Elsewhere, oil headed for its first monthly gain since September, as a surge in attacks on ships in the Red Sea diverted tanker traffic and raised concerns about a broader conflict in the Middle East.
Most prominent companies
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Novo Nordisk said sales and profits will rise again this year as it continues to roll out its leading obesity treatment product Wegovy around the world.
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Hennes & Mauritz, Europe's second-largest listed fashion retailer, has appointed Daniel Erver as CEO, replacing Helena Helmersson. This announcement comes at a time when the company announced fourth-quarter profits, which were lower than estimates.
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Novartis AG expects its profits to grow at a high-single-digit pace this year as the Swiss drugmaker focuses on drugs with greater growth potential.
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GSK Plc updated its long-term outlook, boosted by sales of the drugmaker's new RSV vaccine and the launch of other drugs.
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Samsung reported its fourth straight quarterly profit decline in the holiday quarter, after a long-awaited rebound in demand for chips and electronics left the world's largest memory maker with thin returns.
Main events this week:
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Boeing reports earnings amid US government safety investigation, Wednesday
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Fed interest rate decision and Fed Chairman Jerome Powell's press conference, Wednesday
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Quarterly redemption of US Treasury bonds, Wednesday
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China Caixin Manufacturing PMI, Thursday
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Eurozone S&P Global Manufacturing PMI, CPI, Unemployment, Thursday
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US Productivity, Construction Spending, ISM Manufacturing Index, Initial Jobless Claims, Thursday
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Apple, Amazon, Meta, Deutsche Bank and BNP Paribas earnings on Thursday
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Bank of England interest rate decision, Thursday
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US Employment Report, University of Michigan Consumer Confidence, Factory Orders, Friday
Some key movements in the markets:
Stores
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The Stoxx Europe 600 Index was up 0.1% as of 8:21 a.m. London time
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S&P 500 futures fell 0.3%
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Nasdaq 100 futures fell 0.7%
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Dow Jones Industrial Average futures were little changed
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MSCI Asia Pacific Stock Index rose 0.1%
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MSCI Emerging Markets Index fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%.
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The euro fell 0.3 percent to $1.0814
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There was little change in the Japanese yen at 147.60 to the dollar
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There was little change in the yuan in external transactions at 7.1867 to the dollar
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The British pound fell 0.2 percent to $1.2678
Digital currencies
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Bitcoin fell 1.4% to $42,936.54
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Ethereum fell 1.9% to $2,335.46
Bonds
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The yield on the 10-year Treasury note fell 2 basis points to 4.01%.
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The yield on 10-year German bonds fell seven basis points to 2.20%.
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The yield on British 10-year bonds fell four basis points to 3.86%.
Goods
This story was produced with assistance from Bloomberg Automation.
– With assistance from Tasya Sibahutar and Rob Verdonk.
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