Dashed hopes of a more stimulus from the Bank of Japan sent the Nikkei crashing overnight and the sour feeling has spread into Europe. On Thursday all major equity benchmarks are falling and hitting the lowest in over a week.

Further monetary easing from central banks was part of what was being baked into the rally. Central banks aren’t looking quite as helpful as they were a day ago; the Fed have kept the door from shutting on a June rate hike and the Bank of Japan have shied away from offering negative rates on bank loans.

Poor quarterly results from Lloyds and Deutsche Bank have sent banking shares lower across Europe. Financials were the biggest drag on the FTSE 100 as Lloyds tumbled 4% after poorly-received earnings and Barclays fell over 1%, taking it lower since reporting its results yesterday.

Lloyds profits halved compared to the same period a year ago after it decided to buyback high yield bonds, though underlying profits did fall slightly to £2.1bn from £2.2bn. Given that net interest margin and income improved, capital reserves remained at a healthy 13% and there was no further provision for PPI claims, the drop in Lloyds shares looks like an overreaction.

US markets look set for a sharply lower open after a fairly neutral Federal Reserve meeting has proven not enough to counterbalance disappointment at the inaction from the Bank of Japan.

The tech-laden Nasdaq could get some reprieve from disappointment surrounding Apple Alphabet and Twitter quarterly results after Facebook easily topped earnings estimates.

It’s a sign of the times to see a story of record earnings at Facebook right next to a story of slumping ad revenues at a major UK newspaper. People spending a high proportion of their online hours on Facebook has seen advertisers flood to the site at the expense of other online outlets. This trend is even more evident on mobile where monthly active users increased and now contribute 82% of total ad revenue.

Facebook shares look set to open over 9% higher, taking them to new all-time highs. The gains perhaps could have been more were it not for a proposal to create a new class of C-shares which will further erode shareholder voting power, placing more power with founder Mark Zuckerberg.

Notable earnings before the US open: Altria, Bristol-Myers Squibb, MasterCard, AbbVie, Colgate-Palmolive, Ford

Notable earnings after the close: Amazon, Gilead Sciences, Amgen, Expedia, LinkedIn


USA pre-opening levels

S&P 500: 17 points lower at 2,078

Dow Jones: 149 points lower at 17,892

Nasdaq 100: 10 points lower at 4,406



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