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GLOBAL MARKETS-Wall Street set to open lower; Fed and U.S. tech earnings in focus

Stock MarketsJan 27, 2021 12:42
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© Reuters.

* Graphic: Global asset performance
* Graphic: World FX rates
* Reuters Live Markets blog: LIVE/

(Updates prices and commentary)
By Elizabeth Howcroft
LONDON, Jan 27 (Reuters) - Europe's share indexes fell on
Wednesday and Wall Street futures were in the red as investors
turned more cautious about COVID-19 and stretched stock
valuations, with the U.S Federal Reserve meeting and tech
giants' earnings also in focus.
The MSCI world equity index, which tracks shares in 49
countries, was down 0.2% at 1104 GMT, having fallen around 1%
since it hit a new all-time high on Jan. 21 .MIWD00000PUS .
Following a weak Asian session in which shares were hurt by
profit-taking, European indexes also retreated, with the STOXX
600 down 0.8%. London's FTSE 100 was down 0.7% .FTSE while Germany's DAX
was down 1% .GDAXI .
The dollar rose against a basket of currencies and was last
at 90.359, up 0.2% on the day =USD . “There's been a bit of a shift of tone in markets in the
last few days," said Catherine Doyle, investment specialist at
Newton Investment Management.
"Markets are starting to worry about COVID again," she
added, highlighting in particular the Brazilian and South
African variants of the virus. "We're now going into a seasonally more difficult period, as
you come into February that's typically when you might see
markets pause if they started off the year very strongly," Doyle
"Within our portfolio we've put on some protection to
potentially cushion us in case there is some volatility."
Quarterly earnings from U.S. tech giants including Facebook (NASDAQ:FB)
and Apple, are due later in the session.
"With some financial assets currently trading at what many
are describing as bubble territory, there'll be heightened
attention on these releases to see whether these current
valuations are justified," Deutsche Bank strategist Jim Reid
said in a note to clients.
S&P 500 e-minis were down around 0.4% EScv1 , but Nasdaq
futures were up 0.2%, helped by strong Microsoft earnings the
previous session NQcv1 . Microsoft said its Azure cloud computing services grew by
50%. Heightened participation of retail investors in the stock
market has come into focus this week, as amateur traders on
Reddit's r/WallStreetBets stock trading discussion group piled
into GameStop GME.N , causing it to skyrocket while
professional shortsellers scrambled to cover losing bets.
To some stock market professionals, the recent moves look
symbolic of a stock market that may be overvalued at the end of
a year dominated by floods of fiscal and monetary stimulus to
ease the coronavirus crisis.
Newton Investment Management's Doyle said that people
"taking a punt on the market" is a sign that "risk appetite has
got carried away".
Also in focus is the U.S. Federal Reserve's policy meeting.
The Fed is not expected to make any policy changes but investors
will be listening for shifts in tone around the economic outlook
and any mention of slowing down - or "tapering" - the Fed's
asset purchases. The U.S. 10-year Treasury yield held close to the three-week
low it hit in the previous session, and was broadly flat on the
day at 1.0432% US10YT=RR .
The International Monetary Fund raised its forecast for
global economic growth in 2021, and said the
coronavirus-triggered downturn last year would be nearly one
percentage point less severe than expected. Global COVID-19 cases surpassed 100 million on Wednesday and
countries around the world are struggling with new variants of
the virus and delays in vaccine rollouts. The euro was down 0.3% at $1.21245, while euro zone
government bond yields edged up slightly.
Gold was down 0.4% XAU= . Bitcoin was down around 3%
Oil prices rose after industry data showed U.S. crude
stockpiles fell unexpectedly last week and China recorded its
lowest daily rise in COVID-19 cases in more than two weeks.
Emerging markets
Global asset performance
Fed Balance Sheet

GLOBAL MARKETS-Wall Street set to open lower; Fed and U.S. tech earnings in focus

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