S&P Futures Rise Above 4,100 Propelled By Tech Earnings, Rate Hike Doubts

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by Tyler Durden
Thursday, Apr 27, 2023 - 12:13 PM

US index futures gained on Thursday halting a two-day drop, led by the tech stocks, after Meta’s better-than-expected results helped mitigate investor concerns about the F(ailing)irst Republic Bank, economic outlook, inflation and monetary policy. S&P 500 futures traded just above 4,100, rising 0.7% as of 8:00 a.m. ET, while Nasdaq 100 futures rose 0.9%, extending Wednesday’s gains as the tech-heavy benchmark continues its outperformance of the broader market this year. According to JPM, "this week’s Equity performance highlights the divergence due to low market breadth" something we discussed yesterday. European stocks gained and were set to snap a three-day losing streak as Barclays, AstraZeneca and Unilever all rise after their respective updates. Asian markets were also green after a rebound in Chinese stocks. USD is weaker, longer-dated yields are higher, and commodities are mixed before US GDP and jobless claims to gauge the strength of the US economy. Yields on five-year notes dropped the most in a month on Tuesday, spurred by a wave of quant investors. The Federal Reserve’s preferred inflation gauge, the core PCE deflator, is due Friday.

In premarket trading, Meta jumped as much as 11%, helping fuel gains in Snap and Amazon, both of which report after the close. First Republic Bank rose 2.8% after tumbling 64% in the previous two sessions. Cryptocurrency-exposed stocks also rose in premarket as Bitcoin gained for a third consecutive day, inching toward the closely watched $30,000 mark. Here are all the notable pre-market movers:

  • EBay rose as much as 3.1% after the e-commerce company forecast better-than-expected net revenue for the second quarter. Analysts noted that the company’s focus categories, which include refurbished products and collectibles, outperformed the rest of the marketplace.
  • Eli Lilly & Co. shares are up 4% after the pharmaceutical company reported first-quarter revenue that beat expectations, with sales for its Mounjaro antidiabetic medication notably above the consensus estimate. It also raised its forecast.
  • Electronic Arts shares dip 0.5% after BMO Capital Markets downgrades the video- game company to market perform from outperform. Analysts led by Gerrick Johnson say the UK Competition and Markets Authority’s decision to block Microsoft’s acquisition of Activision could have wider implications for consolidation in the video-game industry, a key component to their buy-rated thesis for Electronic Arts.
  • Enovix falls 5.3% as analysts say the silicon-battery company is signaling a slower-than-expected ramp at its Fab-2 manufacturing facility.
  • Impinj shares are down ~25% in premarket trading on Thursday, after the maker of radio- frequency identification chips gave a second-quarter forecast that is weaker than expected.
  • Jefferies gains 9% after SMBC Group announced plans to raise its economic ownership in the US firm to up to 15% on an as converted and fully diluted basis.
  • Meta Platforms rose as much as ~12% on Thursday, after the Facebook parent forecast second-quarter revenue that beat expectations.
  • Mobileye fell as much as 18% on Thursday — poised for its worst session ever since its debut last year if those declines hold — after the software and hardware maker for cars cut its revenue guidance for the full year.
  • Seres Therapeutics shares surge, set for their biggest gain in six months, after the developer of biological drugs received FDA approval for its therapeutics Vowst to prevent the recurrence of C. difficile Infection (CDI) in adults.
  • Southwest Air shares are down ~4% after the company’s first-quarter results missed analysts’ estimates.
  • Vornado Realty shares dropped as much as 13% after the owner of offices delayed its dividend and authorized up to $200 million in buybacks, a move which surprised analysts and prompted a downgrade from Piper Sandler.
  • Wolfspeed shares drop as much as ~15% after the maker of semiconductors gave a revenue forecast for the fourth quarter that fell short of estimates. Analysts cut price targets amid the company’s challenges in ramping its Mohawk Valley manufacturing facility
  • Cryptocurrency-exposed stocks rise as Bitcoin climbs for a third consecutive session, again inching toward the closely watched $30,000 mark. Hut 8 Mining +7.4%, Marathon Digital +5.7%

Coming on the heels of strong earnings from Microsoft, Meta’s results buoyed sentiment as investors weigh risks from banking-sector turmoil and the likelihood of a US recession. GDP and jobless claims data later on Thursday, as well as the core PCE deflator due on Friday, could provide further clues about the Federal Reserve’s likely interest-rate path. “Tech seems to be acting as somewhat of a haven trade,” said Michael Hewson, chief analyst at CMC Markets in London.

The potential for a tightening of credit conditions linked to the banking turmoil may prompt the Fed to adjust the pace of its interest-rate increases, Evercore ISI’s head of central bank strategy Krishna Guha wrote in a note, citing issues at First Republic Bank. The US regional lender faces potential curbs on borrowing from the Fed.

“We cannot rule out the possibility developments around First Republic could unfold in a manner that would lead the FOMC to skip May, while signaling a hike in June,” Guha said.

Europe's Stoxx 600 is up 0.2% and looking to snap a three-day losing streak as Barclays, AstraZeneca and Unilever all rise after their respective updates. Sanofi’s profit topped stimates as the French drugmaker’s blockbuster therapy Dupixent gained market share. AstraZeneca’s profit also rose in the first quarter, helped by sales of its blockbuster oncology treatments. Deutsche Bank AG dropped after trading revenue disappointed.  Here are the biggest movers Thursday:

  • SimCorp shares jump 39% to match the DKK735 price offered by Deutsche Börse to acquire the Danish financial software maker.
  • Nel shares rally as much as 18%, most since July after posting 1Q results that Citi says are broadly supportive, noting that the Norwegian hydrogen equipment maker’s revenue beat consensus
  • GN Store Nord jumps as much as 11% after the Danish hearing-aid and audio-equipment maker reported a strong set of earnings, with Handelsbanken highlighting a strong product launch in 4Q
  • Unilever shares jump as much as 2% after the consumer-goods company reported underlying sales that beat estimates. Analysts said the results were good, highlighting better-than-expected volumes
  • HelloFresh rises as much as 9.1% as the meal-kit company’s profitability beats estimates. Analysts say the firm is relying on a recovery in 2H as the toughest comparison of the year has now passed
  • Barclays shares rise as much as 5.1% in early trading after the UK lender’s investment banking arm drove a first-quarter profit beat, which however was partially offset by a miss for costs
  • Schneider Electric rises as much as 1.7% after the French maker of electrical products posted strong 1Q sales, as well as FY targets that RBC says imply higher consensus estimates
  • STMicro shares fall by as much as 8.2% following second-quarter earnings. The strong results didn’t surprise after peer Infineon confirmed still-resilient demand for semiconductors earlier
  • Tenaris shares fall as much as 6% in Milan after it flagged a sequential decline in sales and profit margins throughout 2023 which eclipsed positives from record 1Q sales and an earnings beat
  • BASF shares slide as much as 4.6% after warning of a subdued demand outlook for its chemicals, though the firm reaffirmed its adjusted Ebit forecast for the year
  • Universal Music Group drops as much as 6.9% with analysts saying a first-quarter beat was driven by less- predictable physical music sales, rather than the more recurring streaming line
  • Deutsche Boerse shares fall as much as 7.5% as the German exchange operator announced the acquisition of Danish financial software firm SimCorp and reported an unimpressive 1Q beat

Pharmaceuticals are well-positioned to weather recession, according to Janet Mui, the head of market analysis at RBC Brewin Dolphin, who recommends shifting to defensives. “There has been some weakening in credit data which suggests it’s getting more difficult to get a loan,” Mui told Bloomberg TV. “This raises a chance of recession by the end of the year.”

Earlier in the session, Asian stocks rebounded as China markets extended gains, with investors digesting a slew of corporate earnings for clues on the recovery’s strength. The MSCI Asia Pacific Index erased losses to advance as much as 0.2%, set to snap a four-day losing streak. Ping An Insurance was among the biggest boosts after reporting a surge in its first-quarter profit as China’s rebound helped demand and investment returns. Financials hauled up mainland China and Hong Kong indexes in afternoon trading.   Markets in the region were mixed, with stocks also advancing in South Korea, Japan and Taiwan while indexes in Thailand and Singapore posted declines. Investors were focused on results including those from tech heavyweight Samsung Electronics, which reported worse-than-expected earnings but gave an upbeat outlook.

Investors also parsed earnings from Chinese lenders following the recent pullback in mainland equities that at one point wiped out $446 billion in market value in April. China Merchants Bank fell in Hong Kong after reporting a softer set of first-quarter results than analysts had expected. The recent rout may offer “a good opportunity for long-term investors” in reopening bets, according to Pruksa Iamthongthong, senior investment director of Asian equities at abrdn. “The market itself had moved very much ahead in terms of expectations so the pullback that we have seen in first quarter results is actually a good thing.

Japanese stocks closed slightly higher as investors continue to digest earnings from key corporates amid resurfaced concerns over US regional banks. The Topix rose 0.4% to close at 2,032.51, while the Nikkei advanced 0.1% to 28,457.68. Sony contributed the most to the Topix gain, rising 3.5% after UK regulators decided to block Microsoft’s purchase of Activision Blizzard. Out of 2,158 stocks in the Topix, 1,149 rose and 905 fell, while 104 were unchanged. “While Japanese stocks started the day lower on the back of weaker US market, earnings results from major tech companies were good,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities. The market is in a “wait-and-see mood” ahead of the BOJ meeting tomorrow, where the focus will be on inflation outlook, he said.

Australian stocks declined for a 5th straigh session, with the S&P/ASX 200 index falling 0.3% to close at 7,292.70. Banks and health shares contributed most to the benchmark’s decline. The drop comes after US shares fell for a second day as concern over American regional banks outweighed better-than-expected technology earnings. In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,918.22

Stocks in India surged for sixth consecutive session as investors remain optimistic of earnings recovery after initial disappointment from top technology names. The S&P BSE Sensex Index rose 0.6% to 60,649.38 in Mumbai, while the NSE Nifty 50 Index advanced by a similar measure. The gauges have risen more than 1% this week as earnings season rolls out. Software makers Wipro and Tech Mahindra will be reporting earnings for the March quarter later on Thursday. Hindustan Unilever disappointed with lower than expected profit on account of weaker margins as the FMCG major struggles to increase sales volumes. Infosys contributed the most to the Sensex’s gain, increasing 1.5%. Out of 30 stocks in the index, 23 rose and seven fell.

In FX, the Bloomberg Dollar Spot Index slipped 0.1% while the Treasury two-year yield fell one basis point to 3.94% ahead of key US jobless claims and GDP data. Risk-sensitive currencies including the New Zealand dollar and Scandinavian currencies outperformed other Group-of-10 peers amid improving risk appetite. “With the Federal Reserve nearing the end of its rate-hiking cycle, we continue to expect the global macro outlook to translate into an unwinding of previous USD overvaluation over the medium term,” Bank of American strategists wrote in a note

  • The Yen was little changed at 133.69 per dollar after former Bank of Japan Governor Masazumi Wakatabe said there is a possibility that the central bank will change the wording of its forward guidance without adjusting its easing bias at the end of its policy meeting Friday. “There’s thin trading ahead of the BOJ decision tomorrow, and likely some technical pullbacks on the dollar which allows currencies like the kiwi to gain,” said Mingze Wu, an FX trader at StoneX Group
  • EUR/USD little changed around 1.1047 after rising to 1.1095, highest for more than a year, on Wednesday. Recent rally was “testament to how markets seem to favour the euro among other currencies in instances when the dollar falls on the back of Fed dovish repricing and US banking concerns,” according to ING Bank strategist Francesco Pesole. A break above $1.1100 could trigger another substantial rally in the pair, he added
  • GBP/USD fell 0.2% to 1.2442 in quiet trade, holding close to its highest level in nearly two weeks. The pound could see a slow move higher given that a less downbeat view of the UK economy has boosted speculative flows into the currency, according to HSBC. “Encouraging activity data, higher rates from the BoE, and a market which is not stretched in terms of positioning should offer further upside,” its strategists wrote in a note
  • USD/CHF rose 0.3%
  • NZD/USD climbed 0.4% to 0.6142; AUD/USD rose 0.1% to 0.6608

In rates, Treasuries were mixed, slightly cheaper at long-end of the curve where 20- and 30-year yields are up ~1bp vs Wednesday’s close following similar shift in German curve. US 10-year yields around 3.45%, little changed on the day, outperforming bunds slightly in the sector. German 10-year yields are up 3bps. The Treasury auction cycle concludes with $35b 7-year note sale; 2- and 5-year auctions produced good demand metrics. WI 7-year yield at 3.475% is ~15bp richer than last month’s, which tailed by 1.1bp.

In commodities, Crude futures advance with WTI up 0.3% to trade near $74.50 after a Wednesday fall. Gold traded near the highest level in a week and Bitcoin resumed an advance. Hong Kong Securities and Futures Commission chief said will issue crypto exchange guidelines in May.

Focal points of US session include weekly jobless claims and 1Q GDP estimate, followed by 7-year note auction at 1pm New York time. Economic data includes initial jobless claims and 1Q GDP estimate (8:30am), March pending home sales (10am) and April Kansas City Fed manufacturing activity (11am). Fed slate remains blank with members in communication blackout period ahead of May 3 policy announcement. On the earnings side, today’s releases include Amazon, Mastercard, Eli Lilly, and Intel.

Market Snapshot

  • S&P 500 futures up 0.5% to 4,096.00
  • MXAP up 0.2% to 160.08
  • MXAPJ up 0.2% to 511.87
  • Nikkei up 0.1% to 28,457.68
  • Topix up 0.4% to 2,032.51
  • Hang Seng Index up 0.4% to 19,840.28
  • Shanghai Composite up 0.7% to 3,285.89
  • Sensex up 0.4% to 60,556.84
  • Australia S&P/ASX 200 down 0.3% to 7,292.75
  • Kospi up 0.4% to 2,495.81
  • STOXX Europe 600 up 0.2% to 463.95
  • German 10Y yield little changed at 2.43%
  • Euro up 0.1% to $1.1057
  • Brent Futures up 0.6% to $78.12/bbl
  • Gold spot up 0.5% to $1,999.36
  • U.S. Dollar Index down 0.11% to 101.36

Top Overnight News

  • China's industrial firms' profits shrank at a slightly slower pace in January-March but the decline remained in the double-digits as the economy struggled to fully recover despite the country's exit from its zero-COVID policy. In March alone, profits for the sector fell 19.2%, according to the data by the NBS which only occasionally discloses monthly figures. RTRS
  • Former BOJ Deputy Governor Masazumi Wakatabe said there is a possibility that the central bank will change the wording of its forward guidance without adjusting its easing bias at the end of its policy meeting Friday. BBG
  • Deutsche Bank and Barclays buoyed the market with solid results. The German firm posted its strongest top line since 2016, as a 35% jump in revenue at the corporate bank more than offset a 17% slide in fixed income trading. It laid out plans to cut about 800 senior back-office staff. DWS signaled recovery, with net inflows of €5.7 billion. Barclays beat as its trading helped offset a drop in dealmaking. Fixed income sales unexpectedly rose 9%, outweighing a slump in equities. BBG
  • Russian Deputy Prime Alexander Novak said on Thursday the OPEC+ group of leading oil producers saw no need for further output cuts despite lower-than-expected Chinese demand, but that the organization can always adjust policy if necessary. RTRS
  • Germany is in talks to limit the export of chemicals to China that are used to manufacture semiconductors, people familiar said. Such a step would limit German companies like Merck and BASF from selling some of their semiconductor chemicals to China. Merck's products or services are found in almost every single chip in the world, while BASF is a market leader in Europe and Asia. BBG
  • UniCredit will exercise the option to redeem an AT1 bond early in the first major test for such calls since the wipeout of $17.3 billion of Credit Suisse notes. It'll repay the €1.25 billion note at face value June 3. Its price jumped 1.8 cents to around 100.2 cents on the euro, based on data compiled by Bloomberg. There's been doubt over whether banks would follow convention and exercise AT1 calls as the cost of issuing replacement bonds jumped after the writedown. BBG
  • Opec accused the International Energy Agency on Thursday of stoking “volatility” in energy markets, in an intensifying war-of-words between oil producers and consumers. FT
  • Florida Gov. Ron DeSantis is poised to jump into the presidential fray as soon as mid-May, four GOP operatives familiar with the conversations told NBC News. NBC News
  • SMBC plans to triple its stake in Jefferies to as much as 15%. SMBC's $2.25 billion financing in 2021 and investments will, at current market prices, result in a financial commitment to Jefferies of about $3.4 billion. SMBC will be responsible for credit products and debt capital markets, while Jefferies will be responsible for M&A and equity capital markets in the expanded alliance. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with most of the major indices subdued amid the banking sector headwinds in the US and as participants digested a deluge of earnings releases and quarterly performance updates. ASX 200 declined with the index pressured in early trade by weakness in the mining-related industries after a recent decline in underlying commodity prices and with gold miners hit after lower output and sales by Newcrest Mining and Northern Star Resources. Nikkei 225 was cautious as headlines were dominated by earnings and as the BoJ began its 2-day meeting. KOSPI was indecisive after earnings from index heavyweight Samsung Electronics which topped the preliminary release but confirmed an over-95% drop in its operating profit. Hang Seng and Shanghai Comp were somewhat mixed during the session with the biggest movers in Hong Kong driven by earnings releases, while the mainland was mildly underpinned by support measures after China's State Council unveiled a plan to stabilise employment and will support financial institutions to offer loans to businesses for expanding and stabilising jobs.

Top Asian News

  • Chinese Vice Human Resources Minister said China's employment situation is under pressure and employment pressure of college graduates remains very large, while they will strive to achieve the job creation target this year, according to Reuters.
  • China's borrowing costs are seen to remain low in Q2 and banks are expected to lower interest rates for loans and deposits, according to China Securities Journal.
  • US President Biden said his desire to increase manufacturing jobs in America is not about China and his policy is designed to preserve US access to semiconductors, not to hurt China.

European bourses are relatively contained but with an underlying positive skew, Euro Stoxx 50 +0.3%, with broader macro developments light and focus largely on earnings. On this, sectors are somewhat mixed with Autos/Parts outperforming after Michelin, Continental and Hella updates; Personal Care, Drug & Grocery is firmer following Unilever while Media names lag given poorly received UMG and WPP metrics. Stateside, futures are in the green with the NQ +0.9% once again leading after Meta's Q1 report with numerous heavyweights due on today's docket including AMZN. Meta (META) - Q1 2023 (USD): EPS 2.20 (exp. 2.03), Revenue 28.65bln (exp. 27.65bln). AI recommendations have increased time spent on Instagram by 24%, and added they are no longer behind in AI infrastructure. +11% in pre-market trade.

Top European News

  • Deutsche Boerse to Buy SimCorp in $4.3 Billion Software Push
  • Advent Seeks New Investor for £4 Billion Repair Firm Rubix
  • The Hard Part for Xi Starts Now After Finally Calling Zelenskiy
  • SES Imagotag Shares Surge on New Contract With Walmart
  • Glencore Bolsters Aluminum Position in $1.1 Billion Deal


  • Greenback grinds higher ahead of US GDP and IJC, DXY on a firmer footing between 101.280-510 parameters after the 101.00 test yesterday.
  • Kiwi and Aussie outperform as NZD/USD probes 0.6150 and AUD/USD defends 0.6600 again.
  • Euro pivots 1.1050 amidst more decent option expiry interest, but capped ahead of the new 2023 high just shy of 1.1100.
  • Yen and Franc undermined by higher UST yields as USD/JPY eyes 134.00 beyond 50 DMA and USD/CHF hovers above 0.8900.
  • PBoC set USD/CNY mid-point at 6.9207 vs exp. 6.9197 (prev. 6.9237).

Fixed Income

  • EGBs bounce off deeper lows as BTPs breathe a sigh of relief after Italian auctions and Bunds take on board mostly weaker EZ sentiment indicators.
  • 10 year benchmarks just shy of 114.00 and above 134.50 respectively vs 134.19 and 113.57 at worst.
  • Gilts pare losses within 101.05-44 range amidst lengthy month-end duration.
  • T-note nearer 115-06+ overnight low vs 115-17+ high ahead of US GDP, IJC and 7 year supply.


  • WTI and Brent June futures consolidate following yesterday’s losses, with WTI on either side of USD 74.50/bbl and Brent oscillating around USD 78/bbl.
  • Spot gold sees modest gains and largely mirrors Dollar action, but the yellow metal remains underpinned by banking woes.
  • Base metals are mixed amid the overall cautious tone and a lack of catalysts in the European morning.
  • Russian Deputy PM Novak says OPEC+ sees no need for further output reductions despite lower than expected Chinese demand.
  • OPEC Secretary General says OPEC and OPEC+ are not targeting oil prices; IEA should be very careful about "further undermining" oil industry investments.
  • China is to increase energy and agriculture imports, according to China's MOFCOM.


  • Ukrainian President Zelensky said after the call with Chinese President Xi that there will be no peace at the expense of territorial compromises.
  • US President Biden said the US and South Korea are standing against economic leverage being used in coercive ways and said that North Korean actions are a blatant violation of sanctions, while they will continue to seek diplomacy with North Korea to bolster stability in the region and warned that a North Korean nuclear attack would result in the end of whatever regime took such an action. Furthermore, South Korean President Yoon said the US and South Korea have agreed on an unprecedented expansion and strengthening of deterrence policy on North Korea.
  • China's Defence Minister General Li Shangfu has landed in Delhi to attend the Shanghai Cooperation Organisation Defence Ministers' Meeting; a bilateral meeting is scheduled for today later in the evening, according to Print India.
  • Military object found in Poland was likely not fired from another nation, and probably belongs to the Polish army, via RMF citing "unofficial information".
  • Russian Kremlin says it would welcome a call between Chinese President Xi and Ukraine President Zelenskiy if it brought the end of conflict closer; still needs to achieve its aims in Ukraine. President Putin will hold a call with Turkish President Erdogan later today.

US Event Calendar

  • 08:30: 1Q GDP Annualized QoQ, est. 1.9%, prior 2.6%
  • 08:30: 1Q Personal Consumption, est. 4.0%, prior 1.0%
  • 08:30: 1Q GDP Price Index, est. 3.7%, prior 3.9%
  • 08:30: 1Q PCE Core QoQ, est. 4.7%, prior 4.4%
  • 08:30: April Initial Jobless Claims, est. 248,000, prior 245,000
  • 08:30: April Continuing Claims, est. 1.87m, prior 1.87m
  • 10:00: March Pending Home Sales YoY, est. -20.7%, prior -21.1%
  • 10:00: March Pending Home Sales (MoM), est. 0.8%, prior 0.8%
  • 11:00: April Kansas City Fed Manf. Activity, est. -2, prior 0

DB's Jim Reid concludes the overnight wrap

There’s been a bit of a tug-of-war in markets over the last 36 hours between the dominance of US tech pulling aggressively on one side against the still shaky foundations of US regional banks on the other. The tech side dominated for most of yesterday but risk dipped through the latter part of the US session with the S&P 500 closing down -0.42%, whilst yields on 10yr Treasuries were up +4.9bps to 3.449%. Meta's positive after the bell earnings have helped again overnight but the battle is set to continue. Amazon, Intel and Mastercard headline earnings today. Q1 US GDP and initial claims are the data highlights with the latter still low historically but edging up slowly since February and now flirting with 18-month highs. So certainly one to watch over the next few weeks. With Q1 US GDP, DB’s preview link here suggests +1.9% real growth (down 0.3pp from our last estimate) but with most of the gains down to the consumer but likely slowing as the quarter progressed.

Back to markets and First Republic (-29.88%) remained in the spotlight for a second-day running, and at one point intraday was even down as much as -41%. The latest moves took the share price down to an all-time low of $5.69, and at one point the bank’s market capitalisation fell beneath $1bn, down from an all-time high of $39.73bn. In terms of the latest developments, CNBC reported that advisers to First Republic were trying to persuade the big US banks to purchase bonds at above-market rates, similar to how the group of 11 larger firms agreed to deposit $30bn at First Republic at the height of the turmoil last month. According to the article, the rationale for those banks would be that the loss of a few billion would be less than the $30bn in FDIC fees if First Republic failed. The report also said that if they manage to persuade the larger banks of this plan, then they were confident others would help recapitalise the bank, with potential purchasers of new stock already lined up. Later in the session, there were additional reports that indicated that the FDIC was considering downgrading their rating of First Republic if they are not able to reach a private deal. The downgrade would limit the bank’s ability to fully utilise the Fed’s discount window and the emergency facility that the Fed started last month. This caused tremors throughout the market, causing a dip in risk sentiment more broadly as well.

When it comes to the question of any government intervention, CNBC reported that the US weren’t willing to intervene at this stage. However, there’s still concern among market participants that the turmoil we saw last month could flare back up again. At the lows yesterday, there were growing questions being asked about whether the Fed would even be able to pursue another hike if the turmoil flared up again, and futures lowered the chances of a May hike beneath 75%. By the close that was back up to just under 80%, but the moves speak to the fact that any financial turmoil could stop the Fed in its tracks.

With First Republic reverting to close nearer its lows for the day, the KBW Bank index (-1.03%) registered its 5th consecutive decline. That came alongside a broader drop among US equities, with the S&P 500 dropping -0.38%. 20 of the 24 GICS 2 industry groups were lower on the day with the exceptions being led by software (+4.17%) following the results from Microsoft (+7.24%). After the close, we then heard from Meta (+11.6% in after-market trading) who beat on revenues and profits while also seeing greater engagement and forecasting higher-than-expected profits this year. The day’s tech gains caused the NASDAQ (+0.47%) and the FANG+ (+1.97 %) to outperform. Back in Europe, there were bigger losses and the STOXX 600 fell -0.83%, but that reflected a catchup with the US selloff from the previous day.

With investors reacting to better-than-expected earnings from big tech on the one hand, alongside the ongoing banking issues on the other, sovereign bonds oscillated throughout the session. Eventually there was a steeping in yield curves as yields on 10yr Treasuries were up +4.9bps to 3.449%, while 2yr yield saw a -0.3bps decrease to 3.951%. Over in Europe, those on 10yr bunds (+1.3bps) and OATs (+1.5bps) saw a modest increase too.

When it comes to sovereign bond yields, investors are continuing to keep a close eye on debt ceiling developments as we move closer to the summer x-date. Notably, yesterday saw the 3m Treasury bill yield hit a post-2007 high of 5.108%. By contrast, the fact that 1m and 6m bill yields are still some way beneath their recent peaks speaks to the concern at the 3m horizon coinciding with the x-date and doubts around how and when investors will be paid. House Speaker McCarthy had made some small changes to his proposal in order to bring it to a vote overnight which passed with a 217-215 margin in the House but has no chance of getting through the Senate. President Biden told reporters ahead of that vote, that he was open to sitting down with McCarthy but “not on whether or not the debt limit gets extended.”

Overnight in Asia, stocks are mixed but with US equity futures being buoyed by Meta’s earnings. However Samsung’s disappointing results this morning are weighing on tech sectors of key bourses in the region, with the Nikkei (-0.27%) among the key laggards. The Hang Seng TECH index is down -0.84% so far. Elsewhere, the picture is more mixed amid a rally in the Shanghai composite (+0.20%) and an almost flat Hang Seng (+0.08%) and Kospi (+0.00%). By contrast, the S&P 500 (+0.22%) and Nasdaq 100 (+0.50%) futures are higher again.

On the data side yesterday, there weren’t a massive number of releases, although the preliminary reading of US durable goods orders for March surprised on the upside. That showed an increase of +3.2% (vs. +0.7% expected), and the ex-transportation reading was also up +0.3% (vs. -0.2% expected). That said, the reading for core capital goods orders surprised on the downside with a -0.4% decline (vs. -0.1% expected), and the previous month’s number was revised down six-tenths to show a larger -0.7% contraction.

To the day ahead now, and data releases from the US include the Q1 GDP number, the weekly initial jobless claims, and pending home sales for March. From central banks, we’ll hear from the ECB’s Panetta. And on the earnings side, today’s releases include Amazon, Mastercard, Eli Lilly, and Intel.