European markets lower as banking sector jitters return

Ester Baiget, CEO at Novozymes, discusses earnings, and explains the impacts of current macroeconomic conditions on the business.

Europe’s Stoxx 600 index opened lower and extended losses in early trade, trading down 1% at 8:45 a.m. London time.

Tech stocks dropped 2.1%, industrials were down 2% and banks fell 1.5% as investor sentiment soured on U.S. recession fears and banking sector nerves.

France’s CAC 40 was down 1%, Germany’s DAX was down 0.85% and the U.K.’s FTSE 100 fell 0.5%.

Standard Chartered’s deposits have been stable in aggregate, though there has been movement within areas, the U.K.-listed bank said.

Its results showed first-quarter pretax profit up 21%, ahead of estimates, as higher interest rates boosted cash management income and retail product sales.

The bank has benefited from being “very, very broadly geographically based,” Andy Halford, the bank’s chief financial officer, told CNBC’s “Squawk Box Europe.”

On recent banking turmoil and whether it would impact net interest margins as lenders are pushed to pay more to attract deposits, Halford said in his experience deposits were in a “flight to safety” to legacy institutions they see as “trustworthy and reliable,” rather than looking for where they can get the highest returns. This would create only a limited impact on the rates it pays, he added.

But he said it was “debatable” whether interest rates would come down as much as markets are currently forecasting for next year.

Standard Chartered shares were up 0.7% at 8:30 a.m. in London, bucking the European banking sector’s 0.7% fall.

Artificial intelligence (A.I.) related stocks have been on a tear since the start of the year, partly due to a surge in interest in chatbots.

But, for investors who might have missed that run-up in such stocks, HSBC has identified four Chinese stocks that are set to benefit from the growing trend.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Shares of First Republic continue to fall in afternoon trading. They were last down 44% and trading under $9 per share before trading was halted for volatility.

The bank said in its earnings release on Monday that it is considering strategic moves to help restructure its balance sheet. CNBC’s David Faber reported earlier Tuesday that the next several days were key for the bank as it tries to reconcile a mismatch between its deposits and assets.

Shares of First Republic extended their losses to more than 27% on Tuesday morning as investors reacted to a larger-than-expected decline in deposits at the troubled regional bank.

The stock is now down more than 90% year to date.

The stock also set a new intraday low for the year at $11.20 per share. The previous low water mark was $11.52 per share on March 20, according to FactSet.

— Jesse Pound

Fast food chain McDonald’s rose nearly 1% in extended trading after the company reported first-quarter earnings that came in ahead of analysts’ expectations.

The company reported $2.63 in adjusted earnings per share, higher than the $2.33 consensus estimate of analysts polled by Refinitiv. Revenue came in at $5.9 billion, which is higher than the $5.59 billion anticipated.

McDonald’s also said U.S. traffic rose for the third quarter in a row, continuing to bring in customers despite rising menu prices.

— Alex Harring, Amelia Lucas

Markets have been volatile for much of 2022 and this year, thanks to inflation, U.S. Federal Reserve interest rate hikes and the banking crisis.

Tech stocks were in bear territory for much of last year, but have been a bright spot so far in 2023 despite the uncertainty.

Ben Rogoff, a portfolio manager at Polar Capital with 25 years of investing experience, has a strategy for mitigating risk when investing in growth stocks such as tech.

CNBC Pro subscribers can read more here.

— Weizhen Tan

European markets are heading for a negative open Wednesday.

The U.K.’s FTSE 100 index is expected to open 27 points lower at 7,864, Germany’s DAX 68 points lower at 15,807, France’s CAC down 43 points at 7,484 and Italy’s FTSE MIB 118 points lower at 26,927, according to data from IG.

Earnings are set to come from Roche, Standard Chartered, Deutsche Boerse, MAN Group, Danone and Dassault Systemes.

On the data front, Italy releases preliminary gross domestic product data for the first quarter, and German GfK consumer sentiment data for May is due, as are French consumer confidence figures for April.

— Holly Ellyatt