Nasdaq Plunges after FB Results; BoE and ECB Deliver Policy Results

Sentiment deteriorated yesterday, following weak earnings and a slight uptick in the US dollar.

Late Wednesday, the Metaverse company, known before as Facebook, reported disappointing earnings results, resulting in a massive 25% plunge in the company's stock price in the after-hour trading. Because Facebook is one of the biggest companies globally, the magnitude of the decline was enormous.

That alone dragged the Nasdaq 100 index nearly 300 points, or more than 2%, down on Thursday.

Later today, the Bank of England is expected to deliver another rate hike, following the surprising increase of 15 basis points in December.

On the other hand, the ECB will likely do nothing at today's meeting, and monetary policy will remain unchanged. However, the pressure is mounting on the central bank to start tightening monetary policy following yesterday's CPI data, which showed that inflation in the Eurozone rose to 5.1% in January, the highest ever for the region, despite expectations for a drop to 4.4%.

Nevertheless, the ECB is expected to repeat the same old “inflation is temporary” narrative, which has unfortunately not been the case in the US or the UK.

Finally, the US services ISM for January is due, seen falling from 62 to 59.5, although most of the subindices are expected to improve.

The FX market seems undecisive as the USD has dropped notably this week, correcting previous gains and switching the short-term outlook to neutral.