European stocks are falling and US futures are rising after Apple’s optimistic report


European stocks fell and Wall Street stocks rose at the end of a turbulent week for global markets as investors balanced the outlook for a rapid rise in US Federal Reserve interest rates with an upbeat quarterly update from Apple.

The Stoxx 600 regional stock index lost 0.4% in early trading after a volatile Wall Street session in which major US indexes initially rose before closing lower. Futures markets predict that the S&P 500 will rise when trading opens in New York, while contracts tracking focus on Nasdaq 100 technology added 0.6%.

Stock markets, especially Wall Street, changed this week after investors were confronted with a hawkish message from Federal Reserve Chairman Jay Powell at the end of a meeting of the US Federal Reserve on monetary policy on Wednesday.

But Wall Street’s mood was boosted overnight by record quarterly revenue and better-than-expected earnings from Apple. The iPhone maker also revealed a lighter blow than analysts had predicted due to problems in the coronavirus-related semiconductor supply chain that contributed to rising inflation in the United States and Europe. Apple shares jumped 5% in pre-market trading.

Chinese markets fell as Hong Kong’s Hang Seng index fell 1%. Tokyo’s Nikkei 225 closed 2.1% higher as Japanese exporters were boosted by the stronger dollar and weaker yen. South Korean technology Kospi rose 1.9 percent.

Powell on Wednesday refused to rule out raising interest rates from record lows in the pandemic era to stem rising inflation, prompting futures markets to appreciate about five interest rate hikes this year, starting in March.

“This cycle of rising interest rates must begin with inflation at levels not seen since the early 1980s, with the Fed seeking to regain confidence after constantly underestimating inflation over the past year,” the strategist said in a note. Deutsche Bank Jim Reed.

Higher interest rates increase corporate borrowing costs and reduce the present value of projected profits in investor models.

Money managers will focus on businesses “that can lead to strong profit growth in the short term,” said Maria Weitmane, a senior multi-asset strategist at State Street.

Tighter monetary policy has led to a leak from speculative technology stocks this month, which helped push the Nasdaq Composite by almost 18% below its all-time high in November.

“Last year, a very friendly policy lifted all the boats. “Now it’s about finding companies with strong short-term profits and the right business model, and high-capitalization technology remains a strong area,” Weitmane said.

US short-term bonds came under renewed pressure to sell on Friday as expectations of higher interest rates on cash and sustained inflation made fixed-income securities less attractive.

Yields on two-year government securities, which are moving back in price and following monetary policy expectations, rose 0.02 percentage points to 1.21%. The yield on five-year government bonds rose 0.03 percentage points to 1.69%, with both yields hovering around their highest levels since February 2020.

The dollar index, which measures the US currency against six others, was stable after climbing to its 18-month high on Thursday.

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