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European stocks made cautious gains in late-morning trade on Friday, as the tech sell-off rippled across the continent, while investors prepared for key central banks to announce their latest policy decisions next week.
The pan-European Stoxx 600 index steadied after early-morning losses, as energy sector gains offset the continued fall in technology stocks, while France’s Cac 40 added 0.2 per cent.
Germany’s tech-heavy Dax index was the only faller in Europe, down 0.5 per cent.
Technology stocks led decliners, with the Stoxx 600 Technology index down 0.9 per cent after disappointing earnings results from industry heavyweights Tesla and Netflix triggered a sharp sell-off on Wall Street.
Wall Street’s tech-focused Nasdaq Composite, which had ridden the wave of artificial intelligence to advance 34 per cent since the start of the year, slid more than 2 per cent on Thursday, while the Fang+ index of big tech companies registered its worst day this year.
Futures contracts tracking the Nasdaq 100 pointed to the index opening 0.5 per cent higher on Friday, while those tracking the benchmark S&P 500 rose 0.3 per cent ahead of the New York open.
Meanwhile, European energy stocks softened the blow, rising 0.7 per cent as oil prices edged up on expectations that Chinese officials will next week announce more measures to support the world’s second-largest economy.
Brent crude, the international benchmark, rose 1.1 per cent to $80.54 a barrel, while US benchmark West Texas Intermediate added 1.2 per cent to $76.52 a barrel.
“The measures released till now have been underwhelming relative to expectations [ . . . ] we could see more stimulus measures over the coming weeks, which should provide short-term support to the market,” said Mohit Kumar, chief Europe financial economist at Jefferies, in relation to China.
Equities were mixed in Asia, with Hong Kong’s Hang Seng adding 0.9 per cent while China’s benchmark CSI lost 0.1 per cent.
Meanwhile, investors prepared for the US Federal Reserve to hold its policy meeting next week, with a majority expecting policymakers to raise the benchmark federal funds rate by 0.25 percentage points to a target range between 5.25 per cent and 5.5 per cent.
Lower than expected inflation data last week suggested the central bank’s historic tightening cycle could soon end.
“With inflation dynamics looking more encouraging, the general notion is that central banks are close to their cycle peaks in terms of tightening,” said Padhraic Garvey, Americas regional head of research at ING.
But traders debated the likelihood of rates moving higher beyond next week’s meeting after fresh data showed the number of people applying for US unemployment aid fell contrary to expectations, in a sign that the labour market remained resilient to rising borrowing costs.
The Bank of Japan and the European Central Bank also hold interest rate-setting meetings next week.
