LIVE MARKETS It's official: European tech is in a bear market

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  • STOXX 600 down 1.4%
  • European tech enters a bear market
  • Wall Street futures mixed

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IT'S OFFICIAL: EUROPEAN TECH IS IN A BEAR MARKET (1020 GMT)

It's been a long time coming but here it is, the European tech index is down more than 20% from its November highs and has therefore officially entered a bear market.

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Of course that might come as little surprise to investors as sell-side analysts have been warning for months now that growth stocks are bound to take a hit during a Federal Reserve tightening cycle.

But it's worth noting that the damage to tech has probably been much milder than initially feared thanks to encouraging results from Microsoft and Apple.

Anyhow, here's the long slide of European tech since November:

tech

(Julien Ponthus)

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RISK-OFF MODE (0845 GMT)

European bourses are in the red, as the prospect of interest rates hikes in the U.S. and tensions between the Western and Russia over Ukraine dampened risk-sentiment.

The pan European STOXX 600 (.STOXX) index is down 0.8%, with auto shares (.SXAP) leading the losses down 1.7%, followed by the bank sector (.SX7P), down 1.6%.

Positive company results capped some losses, with shares in LVMH (LVMH.PA) rising after the world's largest luxury goods conglomerate reported an acceleration in its fourth quarter sales growth. read more

(Joice Alves)

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TRANSATLANTIC SPLIT (0825 GMT)

After U.S. Q4 GDP came in at an annualised 6.9%, the highest since 1983, could Europe go one better? Yes and no.

France just posted data showing the economy in 2021 expanded at the strongest rate in 52 years at 7%. Sweden too beat expectations at 6.4%. German growth meanwhile is expected at a more sedate 2.7%.

The wait is on.

In any case, not much relief for the euro, which is heading for its biggest weekly loss against the dollar since last June, and could tumble below $1.11 for the first time since mid-2020. The promise of an aggressive Fed rate rise campaign and a slew of buoyant economic data have boosted the dollar index almost 2% so far this week.

As usual, reasons for the U.S.-Europe split can be seen in "real" bond yields. After stripping out inflation effects, U.S. 10-year yields now stand at minus -0.5%, double end-2021 levels, while its German equivalent languishes around -1.8% .

While Wall Street ended with losses again on Thursday, Apple (AAPL.O) posted record holiday-quarter sales, having skirted the supply chain problems that have bedevilled rivals. Shares jumped 5% after-hours, but with the world's biggest company down almost $400 billion from peak value, will more buyers emerge?

Aside from the European growth, markets will await core U.S. PCE, the Fed's favoured inflation gauge, to see if price growth is peaking. Expectations though are for a pick-up to 4.8%, which would be the highest reading since 1983.

As for stock markets, futures are again pointing north after a bounce across Asia. Here at least Europe appears more resilient, having managed to end firmer on Thursday. The pan-European STOXX index is down 3.5% this year (-9% at the S&P 500) while Britain's FTSE is actually in the green.

Apple market cap

Key developments that should provide more direction to markets on Friday:

-Italy's UniCredit reports better-than-expected full-year revenues and profit read more

-Portuguese snap election points to rocky road ahead read more

-Euro zone consumer and business sentiment

-Emerging markets: Colombia expected to raise interest rates

-U.S. core PCE index Dec/University of Michigan inflation expectations

-U.S. earnings: Chevron, Caterpillar, Colgate Palmolive

-European earnings: Caixabank, Unicredit, H&M, Electrolux, Volvo, Telia, Svenska Celulosa

(Sujata Rao)

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STOXX 600 SET FOR WORST MONTH SINCE OCTOBER 2020 (0730 GMT)

European stocks are heading to their worst month since October 2020 after weeks marked by the prospects the Federal Reserve will raise interest rates and mounting geopolitical tensions in Ukraine.

Russia said it was clear the U.S. was not willing to address its main security concerns in their standoff over Ukraine, but both sides kept the door open to further dialogue. read more

While the Fed on Wednesday said it is likely to hike interest rates in March and reaffirmed plans to end its bond purchases that month in what U.S. central bank chief Jerome Powell pledged will be a sustained battle to tame inflation.

While traders also digest a new batch of earning reports, European futures are mixes. Euro STOXX 50 futures if flat, DAX futures are down 0.26%, while FTSE futures are up 0.1%.

(Joice Alves)

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