← Go back Apr 04, 2023
European stocks declined as investors parsed a flood of earnings reports from some of the region’s biggest companies. The Stoxx Europe 600 index dropped about 0.5%, with Swiss lender UBS Group AG weighing on banks after results that fell short of analysts’ expectations. Spain’s Banco Santander SA slid as concern over outflows offset a first-quarter earnings beat. US equity futures declined, with First Republic Bank plunging more than 20% in premarket trading after results that reignited concerns about prospects for its business after weeks of calm in the banking sector. In other earnings news: Contracts on the S&P 500 and the Nasdaq 100 traded about 0.5% lower. The S&P 500 closed just 0.1% higher on Monday and the tech-heavy Nasdaq 100 slipped 0.2%. That extended to seven the number of trading days when the two indexes have both moved less than 1%. Heavyweights including Microsoft Corp. and Alphabet Inc. will report results later Tuesday. “Market sentiment remained under pressure in early trading as investors kept limiting their exposure to risk,” said Pierre Veyret, an analyst at ActivTrades. “Investors are also keeping an eye on the corporate front and many are already pricing a negative impact from the current economic and monetary context on company earnings.” A Bloomberg gauge of the dollar erased an earlier decline and Treasuries extended gains after 10-year yields slid eight basis points Monday, the biggest one-day decline since March. Government bonds across Europe rallied, with the German 10-year yield falling as much as eight basis points. Markets are now pricing the peak for US interest rates in June, and then a decline to end the year below 4.5%. The small shifts in Fed projections underscore the lack of direction at the start of a busy week for economic data and corporate earnings. Data published Monday showed US manufacturing data was weaker than economists forecast, while uncertainty over the debt ceiling persisted. Later this week, US GDP data is forecast to reveal slower growth, and the so-called core PCE deflator, the Fed’s preferred inflation gauge, is expected to show price growth cooled. “The data justifies a 25 basis-point hike,” said Erick Muller, head of product and investment strategy at Muzinich & Co. in London. “But it’s going to be difficult for central banks to raise rates and then quickly within a few months to start reversing that.” The CBOE VIX index of equity volatility remained near the 17-month low reached last week, but JPMorgan Chase & Co. strategist Marko Kolanovic said that may spell trouble for stock investors as it gives a false sense of calm. Investors should stay defensive despite the current low volatility, according to Altaf Kassam, head of investment strategy & research EMEA at State Street Global Advisors. “Over the medium to long term, inverted yield curves, slowing consumer spending and tightening in credit standards will all take their toll,” he said on Bloomberg Television. Some better-than-expected Chinese data in recent days haven’t been enough to bolster investor sentiment in the equity market. “People question the accuracy of the macro data, as bottom-up corporate earnings and guidance remain soft,” Bank of America Corp. strategists including Winnie Wu wrote in a research note. “We expect the debate on the bull/bear case to continue, and market may only get more clarity by June/July.” Elsewhere, oil steadied and gold rose. Bitcoin slid for a third day. Key events this week: Earnings highlights: Some of the main moves in markets:
Read more: moneyweb
