European shares followed Asia’s lower on Wednesday, as technology stocks fell after worse-than expected results from Apple and Twitter, while a weaker dollar before a US monetary policy decision kept oil close to 2016 highs.
Apple shares dropped nearly 7 per cent in after-hours US trade on Tuesday after the company reported a decline in iPhone sales and its first drop in revenue in more than a decade. Twitter lost more than 10 per cent after first-quarter revenue lagged expectations.
The pan-European FTSEurofirst 300 index fell 0.3 per cent in early trade. Austria’s AMS fell 2.4 per cent, though Dialog Semiconducter and ARM reversed early declines.
Japan’s Nikkei index closed 0.4 per cent lower and Taiwan shares fell 0.2 per cent as the shares of suppliers of parts for iPhones fell.
Banks helped support European shares. Several, including Barclays and Santander, reported lower first-quarter profits. However, Barclays shares rose nearly 4 per cent and Santander 2.85 per cent.
Asia-Pacific shares
Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan retreated 0.7 per cent.
Australian shares closed down 0.6 per cent. Banks fell there after weak inflation data revived prospects for a rate cut as early as next week.
On Tuesday, the S&P 500 index closed up 0.2 per cent, but the Apple and Twitter results dragged index futures lower.
Fed decision
The dollar fell 0.3 per cent against a basket of currencies as investors waited for a Federal Reserve decision on US rates at 1800 GMT. No change in rates is expected, but the Fed may signal its intention to tighten policy later this year.
Economists polled by Reuters expect two increases this year, although futures prices show traders do not expect rates to rise until late 2016, according to CME Group’s FedWatch.
“On a risk/reward basis there is more scope there for a hawkish surprise, because the market's been pricing itself for more dovishness for a very long time,” said Rabobank currency strategist Jane Foley.
BOJ policy decision
The euro rose 0.3 per cent to $1.1327 while the yen gained 0.1 per cent to 111.15 per dollar. The Bank of Japan will announce its policy decision on Thursday.
The Australian dollar was the big mover, falling 1.7 per cent to $0.7618.
Sterling held close to Tuesday’s 12-week high of $1.4640 hit on rising expectations Britons will vote in June to stay in the European Union.
The weaker dollar helped lift oil prices. Brent crude, the international benchmark, rose 61 cents to $46.35 a barrel, within a whisker of Tuesday’s 2016 high of $46.49.
Copper fell for a third consecutive day as the benefits of a weaker dollar were outweighed by worries over demand for China. The metal fell 0.9 per cent to $4,917, close to Tuesday's one-week low.
Gold edged up about 0.1 per cent to $1,245 an ounce.
In euro zone debt markets, German 10-year benchmark yields held steady at 0.29 per cent. Spanish equivalents edged up after a final round of talks on forming a Spanish government failed on Tuesday, meaning a new election will be held in June.
“The problem markets have not really digested is that polls point to a similar election outcome to what we saw in December,’’ said DZ Bank strategist Christian Lenk.