European stocks fell on Friday after disappointing quarterly results from Apple and Amazon reignited questions about labour shortages, supply squeezes and, in turn, persistently high inflation.
The Stoxx Europe 600 share index ticked down 0.3 per cent in early dealings, even as fresh data showed France’s economic growth had topped expectations, expanding 3 per cent in the three months to September against consensus forecasts of 2.1 per cent. London’s premium FTSE 100 index also lost 0.4 per cent in morning trades.
The moves in Europe’s equity market came after Apple and Amazon both missed analysts’ expectations on Thursday. In an earnings report delivered after the closing bell, Apple posted revenues of $83.4bn for the fiscal quarter ending in September, up 29 per cent but slightly below consensus estimates as supply constraints hampered growth. The iPhone maker’s net profits beat forecasts.
Meanwhile, Amazon warned that labour challenges and rising costs would dampen earnings for the rest of the year, as it delivered third-quarter sales of $111bn, lower than the $112bn figure projected by analysts.
Futures tracking Wall Street’s blue-chip S&P 500 fell 0.5 per cent, while those following the tech-heavy Nasdaq 100 index slipped 0.8 per cent. Wall Street stocks closed at new record highs in the previous session, helped by a series of strong earnings reports from large companies including machinery group Caterpillar, widely perceived as an economic bellwether, along with positive numbers earlier in the week from Microsoft and Alphabet.
Government bond markets were choppy on Friday morning after significant volatility on Thursday afternoon in the wake of the European Central Bank’s meeting and fresh data showing that German inflation topped expectations in October, reaching 4.5 per cent.
Germany’s two-year Bund yield rose 0.04 percentage points to minus 0.6 per cent on Friday as investors bet the ECB will raise rates next year.
These moves came after the Reserve Bank of Australia chose not to defend its bond-yield target which is central to its quantitative easing programme — a decision that, in turn, pushed the yield on Australia’s April 2024 government bond to more than 0.7 per cent, well beyond the bank’s target of about 0.1 per cent. Bond yields move inversely to prices.
Interest rate decision announcements are due next Tuesday, Wednesday and Thursday respectively from the RBA, the US Federal Reserve and the Bank of England.
The UK’s 10-year gilt yield edged up 0.04 percentage points on Friday to 1.05 per cent. The yield on the US 10-year Treasury note was also up 0.03 percentage points to 1.59 per cent.
