news/GOOGL/2023.02.03/Tech giants call time on stocks rally, U.S. payrolls loom.txt

*China shares fall, Japan's Nikkei up 0.3%*Sentiment hurt by weak earnings from U.S. tech giants*Sterling, euro falter after BOE, ECB decisions*U.S. payrolls data coming upLONDON/SYDNEY, Feb 3 (Reuters) - A global stock rally,
powered by hopes of central banks ending aggressive rate rises,
ran into roadblocks on Friday following weak earnings from U.S.
tech giants and as key U.S. jobs data loomed.The MSCI World Stock Index slipped 0.2%, but
was still near its highest since last August following a sharp
rebound in recent weeks on hopes that central bank rate hikes
are nearing an end.Wall Street stock futures fell sharply, with contracts
on the tech-heavy Nasdaq 100 2% lower, on disappointing
earnings from Google, Apple and Amazon
. S&P 500 futures slid 0.9%.Investors are also watching the fallout from this week's
plunge in shares of India's Adani group, which continued to
nosedive on Friday with market losses amounting to $115 billion
in the wake of a U.S. short-seller's report.In Europe, the Stoxx 600 share benchmark fell 0.6%.
Germany's benchmark 10-year bond yield inched 2
basis points (bps) higher to 2.097%, having on Thursday dropped
by the most since 2011 as the price of the debt rallied.This week, the U.S. Federal Reserve, the European
Central bank (ECB) and Bank of England (BoE) all increased
benchmark borrowing costs and warned of more hikes to come.Markets initially shrugged off the hawkishness, however,
and clungto a statementby Fed chair Jay Powell on Wednesday that the United States
was in the early stages of "disinflation."The mood turned much more cautious on Thursday, however,
as U.S. tech sharestook a beating in U.S. after-hours trading.Apple projected another revenue decline in the start of the
year, Amazon warned that its operating profit could fall to zero
in the current quarter, and Google parent Alphabet missed
expectations in its fourth-quarter profit and revenue.The keenly watched U.S. non-farm payrolls report, due
out later on Friday, could now be crucial to supporting the
recent rally."If we are seeing an easing of net job creation that
would allow the Fed to just do one more rate hike of 25 basis
points and that would be the end of the cycle," said Willem
Sels, global chief investment officer at HSBC's private bank."We will see headwinds from further earnings downgrades,
but we have incorporated quite a lot [of this] already so I
think markets can hold here if we are indeed right on the Fed."U.S. job growth likely remained strong in January, with
economists polled by Reuters expecting185,000 new jobs were created last month.Hourly wages are predicted to have risen by 0.3% from
the month before, although the unemployment rate is also
forecast to have ticked up to 3.6% from 3.5%, which may give the
Fed comfort that wage inflation could decline.Alan Ruskin, macro strategist at Deutsche Bank, said that
given the current market price action ahead of the U.S. payrolls
data, a softer report would be regarded as endorsing all the
favourite trades of the year."Not least it would provide the most important evidence to
date to suggest that the market's rates pricing is more
appropriate than the Fed's own more hawkish signalling," Ruskin
said.Futures markets favour another 25 bp hike from the Fed in
March and imply that might be the end of its current tightening
cycle. They have also priced in two rate cuts by the end of this
year, a scenario Powell dismissed.In currency markets, the euro extended losses
to $1.0888, pulling further away from Thursday's 10-month top of
$1.1033.Sterling fell to $1.2185 on Friday, the lowest
in more than two weeks, after tumbling 1.2% the previous
session.That helped the U.S. dollar to recoup most of its
post-Fed losses, with the dollar index now standing at
101.94, away from its nine-month low of 100.80.Treasury yields held largely steady. Ten-year Treasury
yield were flat at 3.96%, while the two-year yield
, which rises with traders' expectations of higher Fed
fund rates, rose 2 bps to 4.106%.In the oil market, Brent crude futures reversed
earlier gains and slid 0.6% to $81.58 per barrel, while U.S.
West Texas Intermediate (WTI) crude was also down 0.6% at
$75.28.(Editing by Dhara Ranasinghe and Toby Chopra)