European stocks stable as investors brace for week of tech earnings

European stocks were mixed on Monday and US equity futures rose as traders braced for a flurry of big tech earnings reports, delivered amid high inflation and signs of an impending tightening monetary policy.

The Stoxx Europe 600 regional stock index was stable at the start of trading, while the London FTSE 100 index rose 0.3%.

Futures markets meanwhile said the S&P 500 blue-chip U.S. equity index would stagnate in morning trading in New York, while the tech-focused Nasdaq 100 index would rise 0.2%.

Monday will bring new quarterly figures from social media giant Facebook, with figures expected later in the week from peers like Microsoft and Apple.

The expected earnings reports come after shares of social media platform Snap slipped more than a quarter last Friday in response to the company’s warning about shrinking ad revenue. Other tech leaders, including Facebook, also suffered losses in the wake of Snap’s report.

In Asian markets, the Hong Kong Hang Seng was roughly flat, as the improvement in healthcare and industrials stocks was tempered by a drop in real estate stocks after Beijing said this weekend that ‘it would expand testing for a property tax.

The Chinese real estate sector, long considered the engine of the country’s economic growth, has been hit in recent months by a crackdown on real estate speculation and a liquidity crisis at developer Evergrande.

In foreign currencies, the Turkish lira hit a record high against the US dollar on Monday, after hitting a new low last week when the central bank cut interest rates by 2 percentage points – a larger drop than what the markets had expected.

Exacerbating the currency’s decline, President Recep Tayyip Erdogan ordered 10 Western ambassadors to be declared persona non grata in Turkey over the weekend. The Turkish lira weakened 1.7% on Monday morning to settle at 9.75 TL against the greenback.

In government debt markets, yields on 10-year US Treasuries and the equivalent UK gilt were both broadly flat Monday at 1.66% and 1.16% respectively.

Central banks around the world are considering how to respond to inflationary pressures and signs of slowing economic growth. Huw Pill, the chief economist at the Bank of England, told the Financial Times last week that the UK’s headline inflation rate could exceed 5% next year.

US economic growth data is due Thursday and economists forecast GDP expansion of 3.2% on an annualized basis in the July-September quarter, compared to a 6.7% expansion in the second quarter.

Oil prices hit a new three-year high as supply problems persisted, following on from a growing energy crisis that fueled high natural gas prices across Europe. The benchmark Brent crude index exceeded $ 86 a barrel on Monday.

What else to watch out for in the markets today

Germany: Figures from last week showed business activity in the euro area growing at its slowest pace in six months, as companies grapple with supply chain issues and rising prices from energy. There will be another indication of how German companies are facing difficult conditions when the Ifo Institute releases its closely watched monthly Business Climate Index this morning.

british politics: Budget week kicks off in the UK. Chancellor Rishi Sunak will present both the regular budget and a review of government spending on Wednesday, so watch out for last-minute pleadings from Whitehall departments and lobby groups across the country as they call for additional funds.

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