US equity futures gained as big-tech earnings helped support broader sentiment amid lingering concerns about the health of US regional banks as First Republic Bank extended a slide Wednesday.
(Bloomberg) — US equity futures gained as big-tech earnings helped support broader sentiment amid lingering concerns about the health of US regional banks as First Republic Bank extended a slide Wednesday.
The tech-heavy Nasdaq 100 rose 1.3% after Google parent Alphabet Inc. and Microsoft Corp. both beat first-quarter earnings expectations late on Tuesday. Alphabet gained 1.4%, while Microsoft rose 7.3%, even as the UK seperately vetoed a takeover of Activision Blizzard Inc. Meta Platforms Inc. is due to report after the bell.
Technology shares led gains within the S&P 500, up 0.3%, while further losses in First Republic, down another 23% Wednesday, weighed on the benchmark index. The bank’s advisors have reportedly lined up potential buyers of new stock as part of a rescue plan for the belaguered lender. Treasuries rose, sending the two-year yield to 3.92%. Meanwhile, PacWest Bancorp offered a glimmer of hope that First Republic doesn’t portend trouble for the broader sector. Its shares rose 13% amid signs of recovery in its deposit levels.
A run on deposits at First Republic has raised questions about the effect of the Federal Reserve’s aggressive rate hikes on US lenders and what the central bank can do to stop a bank crisis from spreading. Some market participants have speculated the tightening cycle may end sooner than expected, though inflation remains high. The Fed’s preferred measure of inflation, the so-called PCE deflator, is due Friday.
“Up to this point Fed officials have taken substantial comfort from indications that acute [bank] stress was contained and there was no immediate sudden stop to bank credit,” Krishna Guha, Evercore ISI’s head of central bank strategy, wrote. “That is a bit less firmly locked now, and we cannot rule out the possibility developments around First Republic could unfold in a manner that would lead the FOMC to skip [raising rates in] May while signalling a hike in June.”
In Europe, the regional stock benchmark declined 0.9% amid disappointing earnings. Software producer Dassault Systemes sank after missing revenue estimates. Dutch chip-tool maker ASM International slumped after offering a tepid outlook for the rest of the year. Roche Holding AG retreated even as its first-quarter sales exceeded expectations. Meanwhile, beats from Standard Chartered Plc and Sweden’s SEB AB failed to bolster sentiment.
“The markets are very much focused on some of the earnings story, but possibly overlooking the weight of economic deceleration that is playing through right now, particularly in the United States,” John Woods, Asia Pacific chief investment officer at Credit Suisse Group AG, said on Bloomberg Television. “I’m looking at a whole range of technical signals, which seem to be suggesting a risk-off environment.”
The yield on the 10-year Treasury note was steady. Oil fell and gold gained. Iron ore rose after a brief drop below $100 a ton for the first time since December. Bitcoin climbed.
Stocks
- The S&P 500 rose 0.3% as of 11:11 a.m. New York time
- The Nasdaq 100 rose 1.3%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 fell 0.9%
- The MSCI World index fell 1.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.7% to $1.1052
- The British pound rose 0.5% to $1.2477
- The Japanese yen rose 0.3% to 133.39 per dollar
Cryptocurrencies
- Bitcoin rose 6.3% to $29,734.56
- Ether rose 4.7% to $1,947.06
Bonds
- The yield on 10-year Treasuries was little changed at 3.40%
- Germany’s 10-year yield declined two basis points to 2.36%
- Britain’s 10-year yield was little changed at 3.69%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures rose 0.1% to $2,006.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika, Tassia Sipahutar and Sujata Rao.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.