US equity futures gained as strong earnings from tech majors Alphabet Inc. and Microsoft Corp. after the Wall Street close offered investors some reassurance amid continued concerns over the health of the economy.
(Bloomberg) — US equity futures gained as strong earnings from tech majors Alphabet Inc. and Microsoft Corp. after the Wall Street close offered investors some reassurance amid continued concerns over the health of the economy.
Contracts on the S&P 500 climbed about 0.3% after the index fell the most in a month Tuesday, driven in part by First Republic Bank’s 49% plunge. Nasdaq 100 futures were up more than 1%. Google parent Alphabet and Microsoft both rose in premarket trading after providing an auspicious start to the Big Tech earnings season. Worries over regional banks eased somewhat after PacWest Bancorp said deposits rebounded in April.
In Europe, stocks declined more than 1% amid disappointing earnings. Software producer Dassault Systemes sank more than 6% 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.”
Boeing Co. and Meta Platforms Inc. are among companies to report earnings later Wednesday.
Treasuries were little changed 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. Bonds in Europe gained, with Sweden’s 10-year yield falling about 7 basis points after a much-anticipated Riksbank rate increase.
First Republic Bank’s warning on deposit outflows had reignited concerns about the health of the regional banking system after weeks of calm. The bank is exploring an asset sale of up to $100 billion of long-dated mortgages and securities as part of a rescue plan, Bloomberg reported Tuesday. The turmoil has raised questions about the effect of the Federal Reserve’s aggressive tightening on the economy broadly and lenders in particular.
“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 Asia, South Korea after battery maker LG Energy Solution Ltd. posted first-quarter net income that beat analysts’ estimates and Apple Inc.-supplier SK Hynix Inc. forecast a rebound in the memory-chip sector later this year.
Oil edged higher, clawing back some of a drop on Tuesday. Gold was little changed.
Key events this week:
- Eurozone economic, consumer confidence, Thursday
- US initial jobless claims, GDP, Thursday
- Bank of Japan meets on interest rates, Friday
- Euro-area GDP, Friday
- US personal income, Friday
Earnings highlights:
- Wednesday: Boeing, Meta, Hilton
- Thursday: Amazon, American Airlines, Intel, Mastercard, Southwest Airlines, Hershey, Honeywell, Barclays
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 1% as of 9:06 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 1.1%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.4% to $1.1018
- The Japanese yen rose 0.2% to 133.45 per dollar
- The offshore yuan rose 0.1% to 6.9317 per dollar
- The British pound rose 0.4% to $1.2453
Cryptocurrencies
- Bitcoin rose 1.5% to $28,400.34
- Ether rose 0.2% to $1,863.87
Bonds
- The yield on 10-year Treasuries was little changed at 3.39%
- Germany’s 10-year yield declined seven basis points to 2.32%
- Britain’s 10-year yield declined four basis points to 3.66%
Commodities
- Brent crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika and Tassia Sipahutar.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.