European shares fall as investors await fresh US economic data

European stocks and Wall Street futures slid on Wednesday as investors assessed the latest batch of corporate results and awaited a key set of US gross domestic product data later in the week.

Regional stocks Europe 600 and Germany’s DAX fell 0.4 per cent, while London’s FTSE 100 was flat.

The contract tracking Wall Street’s blue-chip S&P 500 and the contract tracking the tech-heavy Nasdaq 100 fell 0.8 percent and 1.4 percent, respectively, ahead of the New York open.

Equity markets rallied after Microsoft said it expected revenue in the current quarter to be between $50.5bn and $51.5bn, which fell short of analysts’ expectations. The company’s shares fell 1 per cent in pre-market trading.

Tesla will report its fourth-quarter figures later Wednesday, in which analysts polled by Refinitiv expect earnings of $1.01 per share on revenue of $24.03 billion, up from $17.72 billion in revenue during the same period in 2021. But with earnings of 68 cents per share. Tesla shares have jumped a third so far in 2023 but have lost more than half in value over the past 12 months.

Tesla is far from the only company to enjoy a bounce in January. The slide in US inflation data, “coming prematurely, with signs of cooling in labor and wages”, raised hopes that the Federal Reserve will hold off on its interest rate hike earlier than previously expected, Charlie McElligott, the analyst said. Nomura.

He added that China’s reopening and Europe’s avoidance of a deep recession have resulted in a “high re-rating” of global growth at the same time. The Nasdaq Composite is down a third in 2022 but is up more than 9 percent this year.

Some doubt how long this year’s rally has left to go. “Earnings weather has been unremarkable so far and the past few sessions of strength suggest that investors are either anticipating that the weather will turn nice in short order or that the Fed will hike [0.25 percentage points] Next Wednesday, earnings weather won’t matter as there will be a wave of optimism and positivity at the end of the hiking cycle,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. “It’s a pretty spectacular play if you ask me. Is.”

The end of the European Central Bank’s rate-raising cycle looks more distant. “Markets have now priced in the ECB as the most active G10 central bank this year in tighter policy [1.4 percentage points] “Rate increases move up the price curve,” said Derek Halpeny, head of research at MUFG. “For the Fed, the amount of remaining tightening is approximately [0.6 percentage points],

US GDP data on Thursday will shed further light on the health of the world’s largest economy, with analysts expecting growth of 2.6 per cent in the three months to December, down from 3.2 per cent growth in the previous quarter.

A gauge of the dollar’s strength against a basket of six peers was flat on Wednesday. International oil benchmark Brent crude prices rose 0.1 per cent to $86.18 a barrel.