Daily Dose, EU

Nasdaq Futures Fall as Expected AI Outcomes Are Not Met – Europe Market Wrap

US equity futures dipped as investors braced themselves for the Federal Reserve’s first interest-rate decision of the year, and after earnings from tech giants failed to live up to Wall Street’s high expectations.

Microsoft, Alphabet, and AMD saw premarket trading declines as their updates fell short of the market hype surrounding tech megacaps and artificial intelligence, which has contributed to the recent record-breaking rally in US stocks. Contracts on the Nasdaq 100 fell 1.2%, while those on the S&P 500 retreated 0.5%.

Later on, the focus shifts to the Federal Reserve, where Chair Powell will hold a press conference 30 minutes after the rate decision and accompanying statement are released. The Fed is expected to maintain rates in a range of 5.25% to 5.5%, a 22-year high that was first reached in July.

While most Fed officials have said it is too soon to speculate on such a pivot, traders see a roughly 40% chance that the central bank will lower rates for the first time in March. Powell may say that recent declines in inflation are encouraging, but given the labour market’s resilience and the economy’s growth, he may still show little urgency to ease.

Regarding monetary policy in Europe, data released on Wednesday indicated that price pressures were abating in France, which increased expectations that the European Central Bank might start reducing rates as early as April. The yield on German government debt fell by as much as eight basis points, and the euro declined. In the meantime, the dollar appreciated against most of its peers in the Group of Ten, and Treasury yields remained stable.