Equities markets were set to cap a volatile trading week on a gloomy note on both sides of the Atlantic after broadly upbeat earnings from America’s tech giants failed to impress investors.

A sell-off on Wall Street gathered pace an hour after the opening bell, sending the large-cap S&P 500 down 1.9 per cent and the tech-heavy Nasdaq Composite 2.3 per cent lower.

European stocks struggled for direction, paring back earlier falls by the afternoon. The region-wide Stoxx 600 index was down 0.2 per cent, while Frankfurt’s Xetra Dax slipped 0.6 per cent and London’s FTSE 100 fell 0.4 per cent.

MSCI’s broad gauge of stocks in developed and emerging markets around the world fell 1. 5 per cent on Friday, leaving it down 5.7 per cent this week — its heaviest sell-off since concerns about coronavirus gripped markets in March.

The selling comes against a backdrop of renewed virus-related lockdowns across much of Europe and the upcoming US presidential election that has sparked an uptick in stock volatility.

“The market turned decidedly cautious this week” with rising coronavirus infections calling into question “the path forward for the global economy”, said Candice Bangsund, vice-president and portfolio manager at Fiera Capital Corporation.

“Investors are likely to remain on edge in the near term,” she added.

The gloomy mood came even after Alphabet, Amazon, Apple and Facebook revealed results after the close of trade on Thursday that showed third-quarter sales had beaten analysts’ expectations.

The share prices of the quartet of large technology groups have soared this year, helping to fuel a nearly 25 per cent rally in the Nasdaq Composite despite pressure caused by the pandemic. But shares in Amazon, Apple and Facebook all slipped by at least 4 per cent on Friday.

This week’s fall in equities has been a “run-of-the-mill, short-term correction”, with investors taking profits from “winning positions” such as Big Tech stocks, said George Lagarias, chief economist at Mazars.

The fact that bond prices had not substantially climbed indicated that traders were not yet “fully de-risking portfolios” and the equity market might rebound swiftly after a temporary “risk-off episode”, he added.

The yield on the 10-year US Treasury was little changed on Friday, up 0.04 percentage points at 0.84 per cent.

Data that showed the eurozone economy rebounded in the three months to September failed to lift sentiment: Friday’s release indicated that output remained well below pre-pandemic levels, and analysts warned that the pace of the recovery was likely to be hit by renewed restrictions.

Christine Lagarde, president of the European Central Bank, said on Thursday that the risks to Europe’s economy were “clearly tilted to the downside”.

Expectations for volatility following next week’s presidential election represent yet another headwind confronting global investors. Wall Street’s Vix volatility index traded at 38 on Friday, close to double its long-term average.

“As election week approaches, markets are now focused on what could go wrong,” said Joyce Chang, global research chair at JPMorgan, in a note to the Wall Street bank’s clients. “Markets have been anticipating post-election reflation in the global economy into 2021, but there is room for disappointment if wild card scenarios materialise.”

Bastien Drut, a senior strategist at CPR Asset Management, said a contested outcome at the election would prolong uncertainty and be “very bad for the equity markets”.

“For volatility, the US election will be more important than the pandemic,” he said.