European stocks fell on Wednesday following a torrid session on Wall Street, where the tech-heavy Nasdaq Composite share index posted its biggest single-day decline since September 2020.

The regional Stoxx 600 share index lost almost 1 per cent cent in early dealings. Germany’s Dax was down 0.4 per cent and London’s FTSE 100 edged 0.5 per cent lower.

European technology shares fell 1 per cent, following a 3.95 per cent fall for the Nasdaq on Tuesday. The moves in Europe came after Google parent Alphabet reported a $1.5bn drop in quarterly profits following the closing bell, citing a slowdown in European advertising spending at its YouTube division, driven by Russia’s invasion of Ukraine.

Listed companies are reporting quarterly earnings against a backdrop of weak market sentiment, as the US Federal Reserve prepares to raise interest rates aggressively to tackle inflation, and lockdowns stemming from China’s zero Covid policies intensify investors’ worries about global economic growth.

“Concerns about growth, interest rates, component shortages, and investment prices are some of the heavy clouds that are currently hanging over the equity markets,” analysts at Nordic bank SEB said in a note to clients.

Ahead of this earnings season, with Apple and Amazon yet to report results, some investors had hoped the dominance of big tech groups would secure their finances and relatively high share valuations against the economic pressures of the war and the effects of surging inflation on household finances.

“This sector was priced for perfection and set up to fail,” said Julian Howard, lead investment director for multi-asset solutions at fund manager GAM. “Anything that is short of a really good [earnings] beat is going to be severely punished by the market.”

Outside of the tech sector, US industrial conglomerate General Electric on Tuesday lowered its earnings outlook because of supply chain disruptions stemming from China’s Covid-19 lockdowns.

In currencies, the euro weakened further against the dollar on Wednesday morning after touching a fresh five-year low late in the previous New York day.

In Asian equity markets, Taiwan’s tech-heavy Taiex share index fell 2.1 per cent. South Korea’s Kospi fell 1.1 per cent after Apple supplier LG Display reported its quarterly operating profit fell 93 per cent compared with the same time last year, on slowing consumer demand for laptops and smartphones.

China’s CSI 300 gained 2.9 per cent after earlier losses, boosted by figures showing growth in profits at China’s industrial companies quickened in March, at 12.2 per cent compared to the same period last year, despite impacts from the country’s strict measures to combat the spread of Covid-19.

Government debt markets mostly drifted, with the yield on the US 10-year Treasury note flat at 2.77 per cent after a bout of haven buying earlier in the week.

Oil prices rose, with Brent, the international benchmark, up 0.8 per cent to trade at almost $106 a barrel and US marker West Texas Intermediate gaining about 1 per cent to hit $102.65.

Early futures trading implied Wall Street indices would trace back some of their losses from the previous session. Contracts tracking the benchmark S&P 500 share index, which closed 2.8 per cent lower on Tuesday, added 0.5 per cent. Those wagering on the direction of the top 100 stocks on the Nasdaq rose 0.4 per cent.

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