Marketmind: Cloud control - tech trumps banks
Send a link to a friend
[April 26, 2023] A
look at the day ahead in U.S. and global markets from Mike Dolan
Just as markets were getting all antsy again about regional U.S. banks,
Big Tech mega caps seem to have calmed the investment world with
cloud-covered earnings beats and giddy talk of the quantum leap in
artificial intelligence.
After Tuesday's bank stress echo seeded the worst day on Wall St in over
a month, Microsoft stock soared almost 10% ahead of Wednesday's open
following a first-quarter profit beat that was driven by demand for its
cloud computing, productivity software and AI products.
Alphabet also gained 1% as it too trumpeted gains in cloud services and
AI, alongside plans for a $70 billion buyback. With Meta results out
later, its stock was up 2% and Amazon raced ahead 4%.
Apple reports next week, with some eyes on its move into financial
services as it muscles in on high-yield savings accounts that pander to
jittery depositors.
Judged by another near 50% drop in First Republic's already battered
shares on Tuesday - amid reports of asset sales to fill the $100 billion
hole in deposits that it reported from the March blowup - that banking
instability smoulders.
![](http://archives.lincolndailynews.com/2023/Apr/26/images/ads/current/castlemanor_sda_FINANCIAL_2017.png)
But despite the fresh wobble across banking indices on Tuesday, it
wasn't all bad news in the sector.
PacWest Bancorp's shares jumped 15% in extended trading after the
regional lender said deposits have been building recently. And in
Europe, Standard Chartered shares bucked otherwise dour markets on a
forecast-beating 21% jump in first-quarter profits.
And while the blizzard of corporate earnings this week makes it hard to
see the wood for the trees, the aggregate readout on first quarter
S&P500 earnings shows almost 80% of firms beating forecasts so far and
the estimated annual profit contraction ebbing to 3.9% from more than 5%
earlier this month.
The relatively mixed picture was also reflected in the incoming macro
numbers - where a drop in April consumer confidence contrasted with
further signs of a rebound in housing.
Overall, the news saw S&P500 futures gain 0.5% before the bell -
recouping some of Tuesday's 1.5% drop and offsetting modest losses on
many Asian and European bourses.
Simmering nerves about the looming U.S. debt ceiling standoff persisted,
however, with Treasury Secretary Janet Yellen again warning of 'economic
catastrophe' if the debt cap is not lifted and U.S. sovereign credit
default swaps creeping higher.
to top of second column] |
![](../images/042623PIX/busine54.jpg)
Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., November 15,
2022. REUTERS/Brendan McDermid
![](http://archives.lincolndailynews.com/2023/Apr/26/images/ads/current/graue_lda_preowned_042423.jpg)
The U.S. House of Representatives could on Wednesday vote on a bill
to sharply cut spending for a decade in exchange for a short-term
hike in the debt ceiling, though it is unclear if it has enough
support in the Republican majority to pass.
The implications of Republicans being unable to agree a bill that
even gets through the House - as it will likely fail in a
Democrat-led Senate anyway - offers markets the prospect of the debt
ceiling being hit without any real negotiations, leaving it down to
a thin Republican majority in the house whether to force a crisis or
vote to lift the cap and fight another day.
U.S. Treasury markets continued to rally, with yields on 2-year
notes dropping below 4% Tuesday and testing 3.9% early today. With
the bank reverberations and debt ceiling uncertainty in the
background, near certainty on one more Federal Reserve interest rate
rise next month weakened at bit too - as futures cut the chances of
another quarter-point hike to 80%.
The dollar fell back across the board.
Events to watch out for on Wednesday:
* U.S. March durable goods orders, wholesale/retail inventories,
advance trade balance
* U.S. corp earnings: Meta, eBay, CME, Boeing, Thermo Fisher
Scientific, American Tower, Boston Scientific, Vale, SK Hynix, Hess,
Universal Music, Hilton, EQT, Roku, KLA, Pioneer Natural Resources,
Teradyne, Align, General Dynamics, Norfolk Southern, Otis Worldwide,
Dover, ADP, Allegion, MAsco, Humana etc
* European Central Bank Vice President Luis de Guindos speaks; Bank
of Canada releases policy minutes
* U.S. Treasury auctions 5-year note, 2-yr floating rate note
* South Korean President Yoon Suk Yeol meets U.S. President Joe
Biden in Washington
(By Mike Dolan, editing by XXXX mike.dolan@thomsonreuters.com.
Twitter: @reutersMikeD)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](http://archives.lincolndailynews.com/2023/Apr/26/images/ads/current/humanesociety_sda022411.png) |