Skittish investors haunted by tech sell-off

Feb 5 – A look at the day ahead in European and global markets from Stella Qiu:

Conviction was high that major U.S. tech ​firms would deliver another impressive quarter of strong sales and rosy outlooks ‌and so investors added to their exposures before this earnings season. That has proved to be a ‌costly mistake.

Google parent Alphabet released solid results after the bell, but it also shocked analysts by targeting capital expenditures of $175 billion to $185 billion this year, way above Wall Street’s estimates.

That only added to fears about exploding artificial intelligence investment. Given that valuations are ⁠already sky-high and signs that ‌some of our jobs – in data analytics or software – are already replaceable by AI, there seems to be only one way ‍to go: down.

Alphabet shares swung wildly after hours – down over 6% at one point – before settling 0.4% lower. One would expect the rising AI spending would benefit a chip maker like ​Nvidia.

Indeed, Nvidia shares were up 2% after the bell, but equipment providers ‌in Asia are deep in the red, with South Korea down 3.5% and Taiwan off 1%.

Wall Street futures attempted a recovery but quickly lost momentum as selling spread to precious metals, with silver sinking 14% and gold well below $5,000 per ounce.

European futures point to a lower open ahead of policy decisions from the European Central ⁠Bank and the Bank of England. Both are ​expected to hold rates steady.

The ECB will likely ​signal that no policy move is imminent, even if the euro’s recent surge against the dollar fuels concerns that inflation might undershoot its ‍target.

The BoE, on ⁠the other hand, is expected to leave its options open about when it will cut rates again as it waits to be sure that a ⁠weakening jobs market will push down on inflation pressures.

Key developments that could influence markets on Thursday:

ECB and ‌BoE policy meeting, January PMI data for euro zone, Germany and ‌France

(By Stella Qiu; Editing by Thomas Derpinghaus)