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US futures fall as Meta, Microsoft ( MSFT ) slide after earnings

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BOJ holds rates as expected, yen a fraction firmer

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All eyes on Apple ( AAPL ) and Amazon ( AMZN ) earnings updates

(Updates prices at 1142 GMT)

By Amanda Cooper

LONDON, Oct 31 (Reuters) - Global shares fell on

Thursday, after Facebook owner Meta Platforms ( META ) and

Microsoft ( MSFT ) both warned of rising costs for artificial

intelligence, while evidence of strong U.S. economic growth

continued to underpin the dollar.

Big Tech's warnings stoked worries among investors that the

pay-off for heavy spending on AI may take longer than many had

hoped. And with Amazon ( AMZN ) and Apple ( AAPL ) due to report

later in the day, the mood was cautious.

In currencies, the dollar fell back from three-month highs

against the yen after the Bank of Japan kept interest rates on

hold as expected, but carried a hawkish tone, prompting some

analysts to raise the possibility of a December rate hike.

Investors were also treading warily ahead of U.S. non-farm

payrolls data on Friday, the presidential election next Tuesday

and a Federal Reserve policy decision on Thursday.

Data on Wednesday showed the U.S economy grew by an

annualised 2.8% in the third quarter, topping the 2% mark for

the eighth quarter out of the last nine, according Pepperstone

strategist Michael Brown.

S&P 500 futures eased 0.7%, while Nasdaq futures

fell nearly 1.0%, suggesting more losses on Wall Street

at the open. Shares in Microsoft ( MSFT ) and Meta, which have risen 15%

and 67%, respectively, so far this year, fell in premarket

trading by 3-4%.

"We've seen it time and time again. We have these set-backs

that have proved to be buying opportunities. The question now is

are we at such a level in the market where investors aren't

going to be rushing to buy up the stock and much more likely to

stand aside," Trade Nation market strategist David Morrison

said.

"There are so many excuses for not increasing your exposure

to the market right now and the tech earnings have put the

cherry on the top," he said.

AI posterchild Nvidia ( NVDA ) is the last of the so-called

"Magnificent 7" megacap tech companies to report earnings, in

about three weeks from now. Tesla reported last week,

with Alphabet following on Tuesday.

FRAGILE NERVES

In Europe, the STOXX 600 fell 0.85% to its lowest

in seven weeks in a heavy day for earnings, as a drop in shares

of French lender BNP Paribas after results and in tech

stocks like ASML and SAP offset a bounce in

energy and the wider banking sector.

In terms of macro risk events, the U.S. personal consumption

expenditures index, the Fed's preferred measure of inflation, is

due later on Thursday.

Meanwhile, in the final stretch of the U.S. presidential

election contest, opinion polls still put Republican Donald

Trump and Democrat Kamala Harris neck-and-neck, although

financial markets and some betting platforms have been leaning

towards a Trump victory.

The dollar index traded around 104, just below

Tuesday's near three-month highs. The U.S. currency fell by the

most against the yen, down 0.4% to 152.825, although

that was still not far from this week's high of 153.885.

The dollar is set for a rise of nearly 6.5% against the yen

in October with political uncertainty in Japan after the

coalition government lost its majority in parliamentary

elections at the weekend potentially hampering the BOJ's efforts

to normalise monetary policy.

"It supports our forecast for the BoJ to raise rates sooner

than current market expectations, although we have pushed back

the timing of our forecast for the next rate hike from December

to January in light of recent political instability in Japan,"

MUFG currency strategist Lee Hardman said.

"One final rate hike this year can't be completely ruled out

if the yen weakens sharply after the U.S. election," he said.

Japan's Nikkei share average closed down 0.5%. South

Korea's Kospi dropped 1.5%, shrugging off a late

recovery in Samsung shares after the consumer

electronics company said it was making headway in AI chip

supply.

Gold reached a fresh all-time high of $2,790.15 per

ounce, while oil prices were up 0.5% at $72.90 a barrel

after weekly data showed an unexpected drop in fuel inventories

that offered some reassurance about energy demand.

(Additional reporting by Kevin Buckland in Tokyo and Wayne Cole

in Sydney; Editing by Toby Chopra, Kirsten Donovan)