US equity futures pared gains as First Republic Bank extended a slump amid lingering concerns about the health of US regional banks, even as a strong start to big-tech earnings helped support broader sentiment.
(Bloomberg) — US equity futures pared gains as First Republic Bank extended a slump amid lingering concerns about the health of US regional banks, even as a strong start to big-tech earnings helped support broader sentiment.
Contracts on the S&P 500 were about 0.2% higher after briefly dipping into the red. First Republic sank as much as 23% in premarket trading after Bloomberg reported the lender is exploring divesting as much as $100 billion of assets as part of a rescue plan. The stock plunged 49% on Tuesday. On the plus side, The Boeing Co. gained after results topped estimates.
Nasdaq 100 futures were up about 0.9%. Google parent Alphabet Inc. and Microsoft Corp. both beat first-quarter earnings expectations in results published after the market close. Microsoft rose about 8% in the premarket Wednesday, while Alphabet reversed an advance to move into the red. Meta Platforms Inc. is due to report after the bell today.
First Republic’s woes have raised questions about the effect of aggressive Federal Reserve rate hikes on economic growth broadly and US lenders in particular, and what the central bank will do to stop the crisis from spreading. Some market participants have speculated that the tightening cycle may have to end sooner than expected.
“The question is to what extent central banks and regulators can contain market sentiment and make clear to investors they need to keep a cool head, to give depositors confidence that there is no need to run to other banks,” said Tatjana Puhan, deputy chief investment officer at Tobam SAS. “So far the Fed has been very clear that they will continue to hike rates as long as needed to contain inflation.”
In Europe, the regional stock benchmark declined amid disappointing earnings. Software producer Dassault Systemes sank more than 8% after missing revenue estimates. Dutch chip-tool maker ASM International slumped more than 10% after offering a tepid outlook for the rest of the year. Roche Holding AG retreated even as its first-quarter sales exceeded expectations. 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.”
Treasury yields ticked higher after the benchmark 10-year yield fell nine basis points Tuesday and the policy-sensitive two-year yield dropped 13 basis points. A gauge of the dollar declined. Most bond yields in Europe rose, though Sweden bucked the trend with the 10-year yield falling about 2 basis points after a much-anticipated Riksbank rate increase.
Elsewhere in markets, oil dipped and gold was little changed. Iron ore rose after a brief drop below $100 a ton for the first time since December. Bitcoin climbed for a second day.
Stocks
- S&P 500 futures rose 0.2% as of 8:31 a.m. New York time
- Nasdaq 100 futures rose 0.9%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 fell 0.9%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.6% to $1.1044
- The British pound rose 0.5% to $1.2468
- The Japanese yen was little changed at 133.79 per dollar
Cryptocurrencies
- Bitcoin rose 6% to $29,665.3
- Ether rose 4.2% to $1,938.96
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.41%
- Germany’s 10-year yield was little changed at 2.39%
- Britain’s 10-year yield advanced three basis points to 3.72%
Commodities
- West Texas Intermediate crude fell 0.8% to $76.42 a barrel
- Gold futures rose 0.1% to $2,006.70 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.