Investors Spooked by Weak Reporting Companies’ Guidances and New Geopolitical Escalations

U.S. equity futures slumped in today’s late premarket, as recent earnings reports from the likes of Microsoft (MSFT) fanned concerns about the health of corporate America and investors grew wary about new geopolitical escalations stemming from Germany’s decision to send own-produced tanks to the Ukrainian battlefield. At the time of writing, futures indicated Wall Street was in for a drubbing, with contracts for the Nasdaq Composite down around 1.6% and S&P 500 futures losing approximately 1%. A two-day Nasdaq rally ground to a halt Tuesday after Microsoft warned of decelerating revenue growth in its cloud-computing business and other key names such as 3M Co. (MMM) and chipmaker Texas Instruments (TXN) also disappointed investors. Shares in Microsoft and other tech firms such as Salesforce Inc., Tesla Inc. and Amazon.com fell between 1% and 2% in New York premarket trading.

Microsoft (MSFT) erased early post-earnings gains yesterday after it said revenue growth in its Azure cloud-computing business will decelerate and warned of a further slowdown in corporate software sales (read our daily analysis). Separately, customers reported difficulties across multiple regions in accessing Microsoft 365 services, which the company attributed to networking issues. Over in semiconductors, Texas Instruments posted its first sales decline since 2020 and its outlook doesn't suggest a quick bounce. Meanwhile, ASML forecast better-than-expected first-quarter sales due to strong demand for its advanced chip-making machines.

Meanwhile, Bitcoin (BTCUSD) fell below the $23,000 level earlier today, as an interim correction swept across cryptocurrency markets. Following a high of $23,048.18 on Tuesday, BTCUSD hit an intraday low of $22,406.08 earlier in today’s session. As a result of today’s drop in price, bitcoin fell to its weakest point since Sunday, breaking out of a floor at $22,500 in the process.

Earnings from major European companies today offered some reasons for optimism, even as investors remained concerned about the slowing global economy. The Pan-European STOXX 600 index is up more than 6% since the start of the year, trading down today, however, to the tune of 0.6%, hitting its highest since April last week after better-than-expected economic data.

Thus, Q4 earnings from ASML Holding NV (ASML.AS) exceeded expectations and the Dutch technology company, Europe's largest, forecast a rise of more than 25% in 2023 sales despite possible new curbs on exports to China. Shares in budget airline easyJet (EZJ.L) shot up more than 10% to their highest since June after the air carrier said it expects to beat market expectations this year based on the strength of bookings into summer. Meanwhile, Barclays (BARC.L) CEO C.S. Venkatakrishnan appointed former Credit Suisse (CSGN.S) dealmaker Cathal Deasy as co-head of investment banking with a view to grow the business and an eye for succession.

Asian equities held steady earlier today near 7-month highs. Many markets are closed for celebration of the Chinese Lunar New Year. Meanwhile, Thailand's central bank raised its key interest rate by 25 basis points for a fourth consecutive meeting, in an attempt to curb high inflation.