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AFP

Business

Global stocks mixed as Snap shares dive after earnings

SNAP New York Euro Facebook Meta

Shares of Facebook parent Meta Platforms plunged more than seven percent after weak Snap results sparked worries about digital advertising revenues . ©AFP

New York (AFP) - European stocks edged back into positive territory while Wall Street retreated Friday as Snap shares fell off a cliff after reporting bleak quarterly results.

Meanwhile, the euro came under pressure after a key survey suggested the single-currency area could be on the verge of recession due to slumping demand and rising costs.

A bigger-than-expected hike in interest rates by the European Central Bank failed to provide a lasting boost to the euro, as political turmoil in Italy also clouds the outlook.

Economic activity in the eurozone plummeted in July, the closely watched purchasing managers' index, or PMI, showed, with a big drop in manufacturing and consumers' post-lockdown spending sprees braked by high prices.

"The eurozone is teetering on the brink of recession," said Andrew Kenningham, economist at Capital Economics."The ECB will have to follow up on yesterday's historic rate hike with several more in the coming months even though this will worsen the downturn."

Nevertheless, Paris, Frankfurt and London all edged higher.

Back on Wall Street, a three-day streak of gains ended, cutting into the week's gains.

The broad-based S&P 500 ended at 3,961.63, down 0.9 percent for the day, but up 2.5 percent for the week.

"Even though results are not great, they have been good enough," said Angelo Kourkafas, investment strategist at Edward Jones.

"What has helped the markets rebound aside from good enough earnings is the declining inflation expectations."

But results by Snap, the owner of the Snapchat messaging app, landed like a bombshell, with quarterly losses nearly tripling to $422 million despite revenue increasing 13 percent under conditions "more challenging" than expected.

Its shares plummeted nearly 40 percent.

The results also weighed on Facebook parent Meta Platforms, which dropped 7.6 percent, and Google parent Alphabet, which shed 5.8 percent amid worries over internet advertising.

This week's rally in New York has fueled hopes that the market may be poised for a recovery after a bruising first half of 2022.

But Chris Beauchamp, chief market analyst at online trading platform IG, said that while this week's rebound in equities had lasted longer than previous ones, it was on borrowed time.

Investors "will be wary of pushing their luck too hard into next week, given the avalanche of earnings heading their way, plus a (US Federal Reserve interest rate) decision and the first reading on US second quarter GDP."