London’s stock market bucked the trend in reaching another record high on Thursday but Wall Street and eurozone equities tumbled as tech shares sank after Meta signalled an AI spending spree and data showed slower US economic growth.
The US growth figures surprised analysts who have been reassured by robust US labour and retail sales data, prompting a resumption of selling that has taken hold of the market in April.
US gross domestic product grew 1.6 percent in the first quarter, much slower than anticipated as consumer spending and exports decelerated.
“The GDP miss likely took investors off guard — particularly with how solid some of this year’s economic reports have been and with strength in the labour market,” said Bret Kenwell, US investment analyst at the eToro trading platform.
“It’s not necessarily a report to panic over, but it’s one to pay attention to,” Kenwell said.
The surprising slowdown could lead the US Federal Reserve, however, to cut interest rates sooner than expected, said Richard Flax, chief investment officer at Moneyfarm.
“Today’s data might just be the signal the Fed was looking for to start considering rate cuts as the economy appears to cool,” Flax said.
The tech-heavy Nasdaq shed two percent in morning deals, with shares in Meta, owner of Facebook and Instagram, plunging by almost 14 percent before paring its fall slightly.
Meta reported soaring quarterly profits on Wednesday but worried investors by announcing that it expects spending between $35 billion to $40 billion — more than previously forecast — due to investments in artificial intelligence.
Shares in Microsoft and Google owner Alphabet, which will publish earnings after markets close, were down more than four percent in morning trading.
The Dow and the S&P index both were off more than one percent midsession while Frankfurt and Paris likewise shed similar ground.
Stocks had mostly enjoyed broad gains earlier this week on optimism that earnings from some of the world’s biggest companies — particularly in the tech sector — would show that profits remained strong even amid stubbornly high inflation and elevated interest rates.
– London bucks trend –
London’s FTSE 100 index bucked the trend as it struck 8,102.14 points to briefly reach an all-time high for a third session running, ending in positive territory despite the declines elsewhere.
Shares in mining group Anglo American soared 16 percent after news of a $38.8 billion takeover bid by rival BHP.
“The FTSE 100 is having the time of its life as takeovers continue to power the market,” said Russ Mould, investment director at AJ Bell.
“BHP’s move on Anglo American has got investors excited at who else in the blue-chip UK stock index might be next for a bid.”
Well-received earnings sent share prices jumping for other British companies, including drugmaker AstraZeneca, lender Barclays and consumer goods firm Unilever.
Traders also kept an eye on Japan as the yen wallowed at a fresh three-decade low above 155 per dollar, a level many observers saw as likely to see authorities intervene in currency markets.
– Key figures around 1545 GMT –
New York – Dow: DOWN 1.6 percent at 37,876.44 points
New York – S&P 500: DOWN 1.2 percent at 5,011.46
New York – Nasdaq Composite: DOWN 1.6 percent at 15,455.43
London – FTSE 100: UP 0.5 percent at 8,078.86 (close)
Paris – CAC 40: DOWN 0.9 percent at 8,016.65 (close)
Frankfurt – DAX: DOWN 1.0 percent at 17,923.79 (close)
EURO STOXX 50: DOWN 1.1 percent at 4,939.71 (close)
Tokyo – Nikkei 225: DOWN 2.2 percent at 37,628.48 (close)
Hong Kong – Hang Seng Index: UP 0.5 percent at 17,284.54 (close)
Shanghai – Composite: UP 0.3 percent at 3,052.90 (close)
Euro/dollar: UP at $1.0718 from $1.0701
Pound/dollar: UP at $1.2492 from $1.2461
Euro/pound: DOWN at 85.79 pence from 85.85 pence
Dollar/yen: UP at 155.53 yen from 155.31 yen on Wednesday
Brent North Sea Crude: DOWN 0.5 percent at $87.59 per barrel
West Texas Intermediate: DOWN 0.7 percent at $82.26 per barrel
