Global shares subdued after poor tech results

Both Tesla and Netflix reported steep post-earnings plunges earlier this week

The MSCI World index of global shares dipped 0.3% while Europe's Stoxx 600 was flat following disappointing tech results. 

Global shares were subdued on Friday following disappointing earnings in tech amid an ongoing slowdown in the sector.

The MSCI World index of global shares, which has risen more than 16% this year, dipped 0.3% while Europe's Stoxx 600 was flat and Germany's tech-heavy Dax .GDAXI slipped 0.3%.

Earlier this week, both Tesla and Netflix reported steep post-earnings plunges.

Tesla shares slid after profitability shrank in the second quarter, which is an indication the electric-vehicle maker’s margins are being squeezed. Shares in the company dropped over 9% on Thursday.

Netflix shares dropped over 8% after it missed sales estimates.

In addition, Taiwanese chipmaker TSMC warned of a drop in sales this year, leading to a share price drop of 3.3%. 

These announcements led a sub-index of European technology to lose 0.9%. The moves came after Wall Street's tech-heavy Nasdaq share index .IXIC fell 2% on Thursday, its biggest one-day loss since March.

Shares in German software maker SAP fell — also dragging down European technology shares — after it reported sales for its cloud computing unit which missed analyst estimates.

Investors took profits amid concerns about tech stock valuations, which have been supported by exuberance about the potential of artificial intelligence that has helped the Nasdaq gain about 40% year-to-date.

"The market got very overbought," said Patrick Spencer, vice-chair of equities at Baird. "If you haven't played this market, you've missed out."

A special rebalancing of the multi-trillion dollar Nasdaq 100 .NDX due at the close of trading on Friday, would also cause some "quirky price action" in tech mega-caps, Spencer said.

The overhaul of the index was designed to reduce its heavy weightings of tech giants like Microsoft and Apple. However, it may exacerbate moves in these stocks during the ongoing earnings season, Spencer added.

But he also predicted ever-optimistic tech investors would use sustained price weakness as a "chance to reload".

The markets are looking ahead to next week with the US Federal Reserve and the European Central Bank set to meet individually to decide on their monetary policy and whether further rate increases are needed. 

 Both the US Federal Reserve and the ECB are expected to raise interest rates by 0.25%.

The Fed's outlook will be watched closely as it tries to manage inflation while avoiding a potential recession caused by the rate hikes. 

 • Reuters