Global Stocks Retreat Ahead Of Fed, Tech Earnings

US and European stock markets pulled back on Tuesday ahead of a Federal Reserve policy meeting and earnings reports by top tech firms.

Analysts attributed the US retreat to profit taking after prices surged in recent days.

Meanwhile, Hong Kong led a sell-off across most Asian stock markets, extending the previous day's losses as traders were spooked by China's latest crackdown on a range of industries.

In US trading, the tech-rich Nasdaq finished with a 1.2 percent loss in a downbeat day felt across indices. Wall Street had hit records that last two sessions, with enthusiasm about strong corporate earnings offsetting worries about the Delta variant of Covid-19.

"Today is profit taking after a big run," said Briefing.com analyst Patrick O'Hare, adding that tech investors took note of Tesla's two percent decline despite reporting blowout profits after markets closed on Monday.

A similar dynamic may play out with Apple, Google-parent Alphabet and Microsoft, which all fell around one percent or more ahead of quarterly reports to be released later Tuesday.

Investors are turning their focus to the Federal Reserve's policy announcement set for Wednesday, and though the US central bank is expected to maintain easy money policies, it could offer clues on when it might change course on its bond-buying strategy.

O'Hare said investors are not worried about a major shift in Fed messaging, expecting the US central bank to maintain its strategy of "waiting and watching," even with the threat posed by the fast-spreading Delta variant of Covid-19.

In Europe, London stocks closed down 0.4 percent, Frankfurt 0.6 percent and Paris 0.7 percent, in part because of events in Asia.

Hong Kong sank more than four percent to match Monday's drop after Beijing instituted new regulations on China's tutorial sector -- which has clobbered private education firms -- along with other moves against tech firms and fresh rules for property and food delivery companies.

"The weakness seen in Europe today appears to be a by-product of wider fears that a policy misstep from Beijing could have wider consequences for the global economy," said Michael Hewson, chief market analyst at CMC Markets UK.

The moves have investors wondering where Beijing will strike next.

"China's regulatory uncertainty is not going away," said Rodrigo Catril at National Australia Bank.

"Indeed it looks to be broadening, with no clarity as to when and where it will end."

Tencent was also hit after it was told to relinquish exclusive music label rights owing to apparent antitrust breaches. Its shares fell by 10 percent, while Alibaba shed more than six percent. Food delivery firm Meituan lost more than 17 percent.