Meta slump and interest rate fears drag stocks lower

SAN ANSELMO, CALIFORNIA – FEBRUARY 03: In this photo illustration, the Meta logo is displayed on a computer screen on February 03, 2022 in San Anselmo, California. Shares for Facebook’s parent company Meta dropped over 25 percent on Thursday following a reports by Meta that revenue growth in the next quarter will be weaker-than-expected. Meta lost $230 billion from its market cap. (Photo Illustration by Justin Sullivan/Getty Images)

(AFP) — Stock markets slid Thursday, dragged down by a massive plunge in the shares of Facebook parent company Meta following disappointing earnings, as well as indications central banks may move more aggressively to raise interest rates.

Attention on Wall Street was firmly focused on Meta, which after the close of trading on Wednesday reported a gloomy mix of a sharper-than-expected drop in profit, a decrease in users and threats to its ad business.

Already jittery markets have punished pandemic-era darlings including Netflix for disappointing results, but many firms have seen their share prices bounce back as investors recovered lost ground.

But Meta shares fell by around 25 percent, erasing $200 billion off its value.

Craig Erlam at trading platform OANDA said the disappointing earnings from Meta and music streaming service Spotify, which reported a quarterly loss and projected lower profit margins in the coming earnings period, “brought investors back down to earth with a bang”.

The tech-heavy Nasdaq Composite finished down 3.7 percent, leading major US indices lower, and Spotify sank 16.8 percent after its lackluster forecast.

Amazon dove 7.8 percent at the close as traders grew jittery ahead of its earnings release, but its shares then surged more than 15 percent in after-hours trading when the results proved strong.

Meanwhile, trading in Europe was animated after the Bank of England raised interest rates for the second time in a row, while European Central Bank chief Christine Lagarde opened the door to interest rate hikes this year for the first time, as the eurozone comes under pressure from soaring prices.

Those moves lifted both the pound and the euro against the dollar, while also adding to pressure on equities.

“The central bank factor was in play today as another negative on top of the Facebook news,” said Briefing.com analyst Patrick O’Hare.

“What it has done has redirect peoples’ attention back to idea that policy tightening is going to be a headwind for the market for this year.”

US oil futures overtook $90 per barrel for the first time in seven years, bolstered by a weakening dollar and cold weather in the United States that has boosted energy demand, as well as lingering worries over Ukraine-Russia tensions.

The rise in oil prices also followed an announcement by the OPEC+ group of oil producers to undertake another modest increase in output.

– Key figures around 2200 GMT –

New York – Dow: DOWN 1.5 percent at 35,111.16 (close)

New York – S&P 500: DOWN 2.4 percent at 4,477.44 (close)

New York – Nasdaq: DOWN 3.7 percent at 13,878.82 (close)

London – FTSE 100: DOWN 0.7 percent at 7,528.84 (close)

Frankfurt – DAX: DOWN 1.6 percent at 15,368.47 (close)

Paris – CAC 40: DOWN 1.5 percent at 7,005.63 (close)

EURO STOXX 50: DOWN 1.9 percent at 4,141.02 (close)

Tokyo – Nikkei 225: DOWN 1.1 percent at 27,241.31 (close)

Hong Kong – Hang Seng Index: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Euro/dollar: UP at $1.1438 from $1.1305 late Wednesday

Pound/dollar: UP at $1.3601 from $1.3577

Euro/pound: UP at 84.06 pence from 83.26 pence

Dollar/yen: UP at 114.95 yen from 114.46 yen

Brent North Sea crude: UP 1.8 percent at $91.11 per barrel

West Texas Intermediate: UP 2.3 percent at $90.27 per barrel