US stocks rose on Wednesday as investors were reassured by strong earnings from two of America’s largest technology companies, offsetting further jitters in the banking industry.
Wall Street’s benchmark S&P 500 rose 0.4 per cent, with technology, consumer cyclicals and real estate among the best-performing sectors.
The tech-heavy Nasdaq Composite added 1.4 per cent, with Google owner Alphabet adding 0.5 per cent and Microsoft gaining 8 per cent following the groups’ first-quarter results. Social media company Meta is due to report results later in the day.
Regional bank First Republic shed 17 per cent, a day after halving in value as investors worried over the future of the bank. Its shares have fallen heavily this week after news that customers withdrew $100bn of deposits during March’s banking panic.
The group was planning cost cuts but the lender’s results confirmed its “zombie bank status” and underscored the extent of US regional banks’ “profitability crisis”, said Charlie McElligott, analyst at Nomura.
The early gains in New York were a relief from the heavy selling in many assets in the previous session. Tuesday was an “old-school risk-off” session, McElligott said, with Treasuries rallying sharply and equities and commodities, including gold, crude oil and copper, falling.
Investors on Wednesday were emboldened by a 3.2 per cent month-on-month rise in new orders for manufactured goods in March, far more than the 0.7 per cent increase expected by economists polled by Reuters.
US government bonds sold off slightly, with the yield on interest rate sensitive two-year Treasuries up 0.06 percentage points at 3.95 per cent. The US dollar index weakened 0.5 per cent against a basket of six other currencies.
European stocks sank following weaker than expected earnings from ASM International, the Dutch chip equipment manufacturer. The region-wide Stoxx 600 fell 0.8 per cent, with consumer cyclicals, healthcare and industrial stocks among the worst performers. France’s Cac index lost 0.9 per cent and London’s FTSE closed down 0.4 per cent.
ASMI fell 7.5 per cent in Amsterdam after it warned that demand had weakened in the first quarter and would stay depressed for the remainder of the year. Sales in the second half were expected to drop 10 per cent or more compared with the first six months of 2023, it added.
Meanwhile, the Swedish krona fell 0.7 per cent against the euro, hitting its lowest level in two weeks, after Stockholm’s Riksbank increased policy rates by half a percentage point to 3.5 per cent, as expected. The central bank noted it anticipated more rises in the future.
Asian stocks were mixed. China’s CSI index fell 0.1 per cent, continuing a sharp slide that began early last week, while Hong Kong’s Hang Seng index rose 0.7 per cent, partially reversing a more than 5 per cent decline over the same period.
