LIVE MARKETS Fed minutes: European tech tracks Nasdaq lower – Reuters

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FED MINUTES: EUROPEAN TECH TRACKS NASDAQ LOWER (0821 GMT)
The European Tech index lost over 2% in the first minutes of trading, tracking the Nasdaq which plunged over 3% in its worst session since February, after the Fed minutes suggested U.S. interest rates may rise sooner rather than later.
As you can see below there's a sea of red among the constituents of the tech index:
Investors are typically reluctant to pay big equity premiums for growth stocks when bond yields rise quickly and that seems to be exactly the arbitrage that's taking place today.
By the same token, portfolio managers have already engaged a rotation towards assets which usually thrive in when interest rates go up.
Commodities, banks and insurers are among the stocks which are limiting their losses with the three sector down between 0.3% and 0.5%.
The broader market is under heavy selling pressure with the pan-European STOXX 600 down 1.2%.
That's quite a stark change of mood after three straight sessions of gains.
As for individual moves Dr. Martens plunged over 10% after Permira sold 65 million shares at 395 pence each. The stock had closed at 421 pence yesterday.
Among winners, France's Carrefour jumped close to 4% after a report that rival Auchan is considering another bid for its rival.
(Julien Ponthus)
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WHEN THE HAWKS SING (0736 GMT)
All it took was the minutes of a three-week old U.S. Federal Reserve policy meeting to change the mood music in global markets. The Fed's December meeting minutes showed officials had discussed shrinking the U.S. central bank’s overall asset holdings as well as raising interest rates sooner than expected to fight inflation. read more That sent global markets in a tailspin with investors heading for the exits.
The Dow, which had hit a record high earlier in the day, reversed course and ended down more than 1%. The selloff was broad-based as markets underwent one of the most violent rotation trades in recent times with investors dumping tech stocks and favouring consumer staples and industrials. The Nasdaq (.IXIC) plunged more than 3% on Wednesday in its biggest one-day percentage drop since February, signalling how much of the lofty valuations in technology stocks was premised on the view that interest rates would rise only gradually.
Bond yields shot higher with two-year yields , which track near-term rate expectations, rising nearly 3 bps to a 22-month high of 0.860%. Benchmark 10-year yields climbed 1.4 basis points above 1.71%, the highest level since April 2021.
In currencies, while the overall dollar index remained broadly unchanged from Wednesday's levels, the greenback gained ground versus the Aussie and the Canadian dollar while remaining broadly unchanged against the euro and the Japanese yen. Indeed, the dollar index is poised to break out of a nearly 8-year range which could have far reaching implications for its rivals.
The selloff in U.S, markets reverberated globally with Asian stock markets (.MIAPJ0000PUS) falling 1% while market gauges of volatility rose to a three-week high. Cryptocurrencies, the darling of the pandemic-scarred investor crowd, slumped with bitcoin falling more than 5% overnight.
Money markets are now pricing nearly an 80% probability of a U.S. interest rate by March and more than 80 basis points of cumulative rate increases in 2022, a breathtaking shift in expectations considering that only three months ago, investors were expecting the first U.S. rate hike in the summer of 2023.
Key developments that should provide more direction to markets on Thursday:
Macro corner: UK PMI, German CPI, Europe Nov Producer prices, U.S. Dec ISM
ECB's Schnabel gives speech in Frankfurt
Catering group Sodexo beats first-quarter revenue forecast as schools reopen read more
(Saikat Chatterjee)
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FED-INDUCED SELLING SPREE ABOUT TO HIT EUROPE (0701 GMT)
The selling spree which hit Wall Street following the release of the Fed minutes last night is about to wash on Europe's shores.
The risk-off mood has already spread outside of the U.S. with MSCI's index of Asia-Pacific shares outside Japan down about 1.3%.
Futures for European benchmarks are down between 1.3% and 1.8%.
Given the losses sustained on the Nasdaq, the European tech sector is expected to be under heavy pressure.
Investors interpreted minutes from the Fed's December meeting as being more hawkish than expected and fast-rising yields and growth stocks usually don't mix well.
(Julien Ponthus)
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(Joice Alves)
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