Meta Platforms (Facebook) report interrupted the growth of stock indices

The US stock indices ended Wednesday's trading with growth, closing near session peaks. By the close of the trading session, the Dow Jones index (US30) gained 0.63%, the S&P 500 index (US500) added 0.94%, and the NASDAQ technology index (US100) increased by 0.5%. However, futures on indices fell sharply after the stock market closed, as stocks of companies such as Meta Platforms (Facebook), Spotify, Twitter, and Snapchat fell so that the major stock indices will open with a big gap down today. Investor sentiment has been mixed so far. On the one hand, they fear the upcoming tightening of the monetary policy by the US Federal Reserve System. On the other hand, they are confident in the recovery of the American economy amid strong reports of the majority of companies.

Meta shares fell 23% after Wednesday's close. Investors were disappointed by the company's report, which was below Wall Street analysts' expectations. The company cut fourth-quarter net income by 8% and gave a weak outlook for the current quarter. Spotify shares fell more than 10% on the report due to the company's weaker-than-expected subscriber forecast. Meanwhile, Alphabet (Google) shares increased by 7.5%. Google recorded stronger than market forecasts earnings and revenue growth in the fourth quarter of 2021 and announced its decision to do a 20-to-1 stock split. Advanced Micro Devices (AMD) shares rose 5.1%. The microchip maker reported record revenue in the fourth quarter of 2021, better than the market forecasts. Shell reported on Thursday a sharp rise in fourth-quarter earnings, above forecasts, driven mainly by higher oil and natural gas prices. Adjusted profits increased by 55% from the previous quarter.

Companies like Amazon, Snapchat, Pinterest, and Ford will report today.

European stock indices ended Wednesday's trading without a single trend. German DAX (DE30) decreased by 0.04%, French CAC 40 (FR40) gained 0.22%, Spanish IBEX 35 (ES35) lost 0.15%, British FTSE 100 (UK100) added 0.63%. Despite declining inflation in countries such as Spain and Germany, the Eurozone consumer price index rose unexpectedly in January. Inflation was 5.1% (previous 5.0%) in annual terms, more than double the ECB's target of 2%. Investors now expect the ECB to become more aggressive with its monetary policy, but analysts do not share this view and believe that the ECB will leave its policy unchanged. The next ECB meeting will be held today. The Bank of England will also hold its next monetary policy meeting today. Analysts expect the Bank of England to raise the interest rate again by 0.25% and discuss the gradual withdrawal of economic stimulus. In December, the Bank of England had forecast that inflation would peak in April at about 6%, but price growth this month jumped more than expected to 5.4%, the highest in nearly 30 years.

As expected, OPEC+ countries have not changed the fundamentals of their moderate production plan, despite pressure from major consumers to increase production. The US crude oil inventories fell by another 1 million barrels last week. Supply shortages and geopolitical tensions in Eastern Europe and the Middle East keep oil high. According to Yergin, sanctions imposed by the United States on Russia could push oil prices up to $100.

Stock indices in Japan and Australia are decreasing in trading Thursday, following the technology sector. Japan's Nikkei 225 (JP225) fell by 1.06%, and Australia's S&P/ASX 200 (AU200) lost 0.14%. Investor sentiment was negatively affected, in particular, by weak quarterly reports of Meta Platforms (Facebook).

Main market quotes:

S&P 500 (F) (US500) 4,589.38 +42.84 (+0.94%)

Dow Jones (US30) 35,629.33 +224.09 (+0.63%)

DAX (DE40) 15,613.77 −5.62 (−0.04%)

FTSE 100 (UK100) 7,583.00 +47.22 (+0.63%)

USD Index 96.00 0.00 (0.00%)

• - Japan Services PMI (m/m) at 02:30 (GMT+2);
• - Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• - UK Services PMI (m/m) at 11:30 (GMT+2);
• - Eurozone Producer Price Index (m/m) at 12:00 (GMT+2);
• - UK BoE Inflation Report (m/m) at 14:00 (GMT+2);
• - UK BoE Interest Rate Decision (m/m) at 14:00 (GMT+2);
• - UK BoE Monetary Policy Statement (m/m) at 14:00 (GMT+2);
• - Eurozone ECB Monetary Policy Statement (m/m) at 14:45 (GMT+2);
• - Eurozone ECB Interest Rate Decision (m/m) at 14:45 (GMT+2);
• - Eurozone ECB Press Conference (m/m) at 15:30 (GMT+2);
• - UK BoE Gov Bailey’s Speech at 16:15 (GMT+2);
• - US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• - US ISM Services PMI (m/m) at 17:00 (GMT+2);
• - US Natural Gas Storage (w/w) at 17:30 (GMT+2).

by JustMarkets, 2022.02.03

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.