(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.
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Contracts on the S&P 500 climbed about 0.4% 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, with Meta Platforms Inc. due to report after the bell today.
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.”
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.
Regional Banks Rally
Worries over US regional banks, sparked by $100 billion of outflows reported by First Republic, eased somewhat after PacWest Bancorp said its deposits rebounded in April, sending shares of the California-based lender up more than 20%. Other mid-sized banks including Western Alliance Bancorp also rallied.
First Republic rebounded about 5% after Bloomberg reported the lender is exploring an sale of up to $100 billion of long-dated mortgages and securities as part of a rescue plan. The fresh bout of banking 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.”
Elsewhere in markets, oil edged higher, clawing back some of a drop on Tuesday. Gold was little changed. Iron ore rose after a brief dip below $100 a ton for the first time since December. Bitcoin climbed for a second day.
Key events this week:
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Eurozone economic, consumer confidence, Thursday
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US initial jobless claims, GDP, Thursday
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Bank of Japan meets on interest rates, Friday
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Euro-area GDP, Friday
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US personal income, Friday
Earnings highlights:
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Wednesday: Boeing, Meta, Hilton
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Thursday: Amazon, American Airlines, Intel, Mastercard, Southwest Airlines, Hershey, Honeywell, Barclays
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.4% as of 6:10 a.m. New York time
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Nasdaq 100 futures rose 1.3%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 fell 0.7%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.7% to $1.1050
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The British pound rose 0.6% to $1.2480
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The Japanese yen rose 0.3% to 133.41 per dollar
Cryptocurrencies
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Bitcoin rose 3.1% to $28,845.64
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Ether rose 1.9% to $1,896.77
Bonds
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The yield on 10-year Treasuries was little changed at 3.41%
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Germany’s 10-year yield declined four basis points to 2.35%
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Britain’s 10-year yield was little changed at 3.69%
Commodities
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West Texas Intermediate crude rose 0.4% to $77.40 a barrel
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Gold futures rose 0.2% to $2,009.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika and Tassia Sipahutar.
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