Economy

Tech melts, buck bounces by Stocksak


© Stocksak. FILE PHOTO Traders work on the New York Stock Exchange (NYSE), in New York City, U.S.A, October 17, 2022. REUTERS/Brendan McDermid

Mike Dolan gives a look at the future in the U.S. and global market.

The worst week in technology stocks has intensified with Amazon (NASDAQ:) becoming the latest mega-cap to plummet. This underlines recession fears and fuels speculation that central banks may be slowing down.

The shares of the world’s largest online retailer fell 15% on Thursday morning after Wall Street was disappointed by a forecast that the firm would slow down sales growth for the holiday period. This disappointing Wall Street, and a warning to consumers and businesses that there is less money available.

Apple (NASDAQ) was unable to escape the market trapdoor despite more soothing earnings. Amazon’s slide is the latest blow to a sector which has been hammered this past week by worrying updates about the impact of inflation, rate increases, and the looming recession.

Meta stock plunged nearly 25% on Thursday, and in China, Hong Kong’s tech stocks were decimated this week due to fears about Beijing’s new government.

All this raises questions about Elon Musk’s decision to buy Twitter at a high price. Musk took control of Twitter late Thursday night, firing top executives but not providing any clarity on how to achieve his lofty goals for the social media platform.

Exxon (NYSE): Big Oil earnings will be much stronger than Big Tech earnings later on Friday – but there are rumblings about windfall taxes around world that could limit market optimism.

Major futures and bourses were all down around 1%

The fear of an economic downturn from the corporate sector has only fuelled talk that the U.S. Federal Reserve will reduce its tightening campaign, following a fourth consecutive 75 basis point rate hike next week.

The dollar gained on Friday, as other central banks tried to match the Fed’s easier tilt. The focus is shifting to a U.S. inflation update later in the day, with surprising European growth and inflation numbers.

The Bank of Japan maintained its ultra-low interest rate and dovish guidance, cementing its position as an outlier among global central banking institutions tightening monetary policies.

The inflation news pushed Friday’s rise higher, but European bond markets were cautious about Thursday’s doubled European Central Bank interest rate to 1.5%. The implied ECB “terminal” rate for next year has been lowered to 2.75%, from 3%, due to mounting demand fears and falling energy prices.

The following are key developments that will provide direction for the U.S. market later on Friday:

* U.S. September PCE price index, personal income and consumption. Dallas Fed Trimmed Mean PCE Price Index For September, U.S. September Home Sales, University of Michigan October Mood.

* Italy auctions government bonds

* U.S. Corporate Earnings: Exxon, Chevron (NYSE:), Nextera Energy, Abbvie, Colgate Palmolive, WW Grainger (NYSE:), , DaVita (NYSE:), Charter Communications (NASDAQ:), Church & Dwight (NYSE:).

Graphic: Tech Wreck – https://fingfx.thomsonreuters.com/gfx/mkt/xmpjkgbxlvr/One.PNG

Graphic: Twitter rises after Musk’s purchase – https://graphics.reuters.com/TWITTER-MA/MUSK/gdpzqrknjvw/chart.png

Graphic: Fed alert – https://graphics.reuters.com/GLOBAL-RATES/klpygeqkdpg/Screenshot%202022-10-27%20at%2016.53.32.png

Graphic: Doves and Hawks – https://graphics.reuters.com/JAPAN-ECONOMY/BOJ/gkvlgrwdkpb/graphic.jpg

(By Mike Dolan, editing by Tomasz Janowski; mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)

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