The FTSE 100 was trading in negative territory on Thursday after the US released bumper GDP growth for the third quarter.
Although the FTSE 100 was down 0.3% at the time of writing, the index was off the worst levels of the day as markets digested a blowout 4.9% increase in US GDP in the third quarter.
Equity markets are expected to remain choppy for the rest of the session as investors weigh positive news for the US economy and what it means for the Federal Reserve and the trajectory for interest rates.
In the Eurozone, the European Central Bank voted to keep rates on hold on Thursday and said rates were expected to remain higher for longer.
The European session had started on the back foot following pessimistic US technology earnings overnight.
“The fall-out from a disappointing performance from Google-owner Alphabet’s cloud division continues as a wider tech sell-off feeds into the performance of European markets on Thursday,” said AJ Bell head of financial analysis Danni Hewson.
“When you consider the negative reaction to Meta Platforms’ warning of weaker ad spend, despite, like Alphabet, posting better-than-expected earnings, then hopes big US tech might continue to drag markets higher on its back are starting to look increasingly forlorn.
“It is notable that, thanks to their extremely strong run, beating earnings expectations is not, in itself, proving enough to support share prices. Investors are looking beyond the headlines to see just how healthy the outlook really is for these businesses.”
Earnings season is also in full swing in London, with Standard Chartered, WPP and Unilever reporting on Thursday. All three were firmly in the red at the time of writing.
Standard Chartered was the FTSE 100’s biggest faller, giving up 10%, in reaction to falling net interest margins and a sharp drop in profits. Their problems stemmed from China and provisions for bad debts related to Chinese property.
“Standard Chartered, the Asia-focused bank, is one of the biggest fallers on the index, dropping like a stone after its pre-tax profits fell 33% in the third quarter. Shareholders are clearly very disappointed by this sharp reversal of fortunes compared to the second quarter. Its exposure to China, where it’s expanded rapidly, is its weakest link, with the real estate sector buckling under a mountain of debt,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
WPP is struggling with slow advertising spending by large US technology companies and Unilever’s volumes fell in the most recent quarter.