Last night’s sell-off in the US tech sector has seen markets in Europe open lower this morning, giving up some of the gains from yesterday’s rebound.

The so-called 'FANG' stocks of Facebook, Amazon, Netflix and Google (Alphabet) saw some of their biggest falls in years, as concern about a crackdown on how these companies use personal data prompted a re-examination of how these companies are valued.

As one of the main sectors that has driven the bulk of stock market gains over the past two years, it remains much more susceptible to a major pullback, which if we see further losses, could act as a bit of a ball and chain for the rest of the equity space.

With the S&P 500 back at its long-term 200-day moving average, and a lot of attention around this key technical level, investors are likely to become ever more nervous of a much sharper sell-off if we drop below 2,580.

On the companies front retail is once again in the spotlight after DFS Furniture posted a 58% fall in first half profit, reinforcing the narrative around a difficult retail environment. The company did post an optimistic outlook, with the recent acquisition of Sofology helping add 4.3% to group revenue, in what continues to be a challenging environment for the sector.

Pharmaceuticals have maintained the tailwind from yesterday’s gains, along with other more defensive type sectors, with utilities also pushing higher. Shire Pharmaceuticals is leading the gainers helped by newspaper reports that it may be the subject of a bid from Japanese peer Takeda. G4S is also higher after being upgraded to hold by HSBC.

Later this morning we get the latest retail sales numbers from the CBI, which are expected to point to a modest slowdown to 7 from February’s reading of 8. We also have the final Q4 GDP numbers from the US, which are expected to show an improvement from 2.5% to 2.7%.

US markets currently look set to open slightly lower, though this could move around a bit between now and the official open.
 

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