PHOTO
A specialist trader works with his son during a traditional bring-your-kids-to-work day on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2024. REUTERS/Brendan McDermid.
TOKYO/LONDON - Global shares rose as investors digested earnings from Microsoft and Meta in the wake of this week's rout in technology stocks, while the dollar was steady against most other currencies after the Federal Reserve left rates unchanged.
The exception was the yen, which strengthened across the board, as expectations mount for the Bank of Japan to keep raising interest rates while others cut theirs.
The U.S. central bank, meanwhile, held rates steady overnight as widely expected, with Fed Chair Jerome Powell saying there would be no rush to cut them again.
President Donald Trump's policies remain a risk for the Fed's policy outlook, and Saturday is likely to see new tariffs slapped on Canada, Mexico and possibly China.
"Powell was unwilling to be drawn on the potential economic impact and monetary policy response to tariffs, immigration and regulatory change, but clearly the tails of the risk distribution related to these factors are long and heavy," said Elliot Clark, head of international economics at Westpac.
"Powell made clear in the press conference though that, while strong, the economy is not overheated."
On Wall Street, after-the-bell earnings reports from members of the Magnificent Seven megacap tech stocks were a mixed bag.
Microsoft beat quarterly revenue estimates, while Tesla's fourth-quarter profit margin missed expectations. Meta forecast first-quarter revenue below market estimates. Apple reports results later Thursday.
Microsoft shares fell 3.7% in premarket trading, while those in Meta and Tesla rose 3.1% and 3.5%, respectively.
The results did little to further the debate on Chinese startup DeepSeek's potential threat to U.S. dominance in artificial intelligence, and the big spending behind it - questions that triggered a rout in global tech stocks on Monday.
"Microsoft, Tesla, and Meta are all making massive AI investments, but investors are now demanding real results," Jacob Falconcrone, Saxo chief investment strategist for Europe, said.
U.S. stock indexes ended slightly lower on Wednesday, and tech was the biggest drag on the S&P 500, as the benchmark slipped 0.5%.
Stock index futures pointed to a brighter start later on, up 0.5-0.8%.
In Europe, the STOXX 600 hit a new record high, rising 0.5%, in a heavy earnings day.
Some of the big names reporting results included lenders Deutsche Bank, BBVA and CaixaBank reported results, along with energy producer Shell and retailer H&M.
In the foreign exchange market, the dollar held steady against most other major currencies, with the euro down 0.1% at $1.0407 ahead of the European Central Bank's policy decision later on. Traders are banking on a quarter-point rate cut, and will be looking for an indication from ECB President Christine Lagarde that the market is correctly pricing in around three more rate cuts this year.
Sterling was flat at $1.2440.
The yen, however, strengthened about 0.5% to 154.44 per dollar with Bank of Japan Deputy Governor Ryozo Himino saying in a speech that the central bank will continue to raise interest rates if the economy and prices move in line with its forecasts.
Traders currently expect one more quarter-point increase this year, potentially as soon as July.
Oil prices fell, as traders remained nervous about this weekend's deadline of Feb 1, by which Trump has said he will impose tariffs on Canada and Mexico, the two largest suppliers of crude to the United States.
U.S. crude futures was down 0.3% at $72.38 a barrel, while Brent crude futures eased 0.34% to $76.32.
(Reporting by Kevin Buckland in Tokyo; Editing by Shri Navaratnam, Bernadette Baum and Hugh Lawson)