European stock markets may experience a stagnant or mild dip on Wednesday as investors respond to financial reports from leading tech companies while anticipating the Federal Reserve's upcoming monetary policy announcement.
Asian markets are experiencing a downturn, with Hong Kong's Hang Seng taking over a 1 percent dip following a warning by the International Monetary Fund indicating risks related to China's escalating real estate crisis. Concurrently, oil prices dropped in Asian markets due to data revealing that China's manufacturing sector shrank in January for the fourth consecutive month.
Conversely, the dollar is on the rise, although gold is on track for its first monthly decline as investors scale back on aggressive bets for swift and significant rate cuts in the U.S. Investors widely expect the Federal Reserve to hold interest rates steady, with indications of future rate cuts potentially revealed in an impending statement and press conference held by Chair Jerome Powell.
Previously anticipated rate cuts in March are now less likely, with a growing consensus suggesting a possible deferral to May by the Fed. Private-sector employment reports in the U.S., German inflation and labor market data, and retail sales reports might influence market sentiment throughout the day.
In terms of earnings, Microsoft surpassed market predictions for quarterly profit and revenue, though reported increased costs associated with new artificial intelligence features. Google's parent company, Alphabet, exceeded fourth-quarter expectations, but disclosed weaker-than-forecast holiday-season advertising sales.
Prominent tech firms such as Apple, Amazon, and Meta Platforms are set to release their quarterly results in the coming days. U.S. stocks closed mixed as investors adjusted to varied earnings from United Parcel Service and General Motors, and encouraging data on job openings and consumer confidence.
Primarily tech-focused, Nasdaq Composite fell slightly by 0.8 percent, and the S&P 500 closed marginally lower. On the other hand, Dow rose by 0.4 percent, setting a new record for closing high.
Following suit, European stocks saw a rise for the fifth consecutive session on Tuesday, as the eurozone economy managed to steer clear from a technical recession in the second half of 2023. The pan-European STOXX 600 saw a boost of 0.2 percent with German DAX slightly up by 0.2 percent, and France's CAC 40 saw a 0.5 percent increase. The U.K.'s FTSE 100 also experienced a gain of 0.4 percent.
