Rates-sensitive technology stocks led declines in Europe’s Stoxx 600 index. Natwest Group Plc slumped after the British lender’s guidance disappointed some investors. Contracts for both the S&P 500 and Nasdaq 100 retreated after the underlying indexes sank more than one per cent on Thursday. DoorDash Inc. jumped in premarket trading as the food delivery company’s results showed resilient demand. Moderna Inc. fell following mixed results for a flu vaccine candidate.
The market has been “a little bit too sanguine” so far this year concerning any imminent Fed pivot, according to Helen Zhu, chief investment officer at Hong Kong-based Nan Fung Trinity. Interest rate expectations are also rising in Europe, with money markets bolstering ECB rate-hike bets after Schnabel’s remarks, pricing a 3.72 per cent peak in the deposit rate by the end of the third quarter and almost removing all wagers on cuts in 2023.
A BofA team led by Michael Hartnett is among those predicting a scenario known as “no landing” in the first half of the year, where economic growth will stay robust and central banks will likely remain hawkish for longer. That will probably be followed by a “hard landing” in the latter part of 2023, they wrote.