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US stocks rose on Monday as traders balanced their concerns over a potential recession and its implications for interest rates against a mixed bag of results from the latest US banks to report their earnings.
Wall Street’s benchmark S&P 500 rose 0.1 per cent shortly after the New York open. The tech-heavy Nasdaq Composite added 0.2 per cent.
The KBW bank index slipped 1.4 per cent as shares in State Street fell 15 per cent after quarterly profits missed expectations, with deposits down 5 per cent in the first three months of the year.
Charles Schwab — whose shares have fallen almost 40 per cent since the collapse of Silicon Valley Bank — suffered further declines after it said deposits fell 11 per cent in the first quarter as clients shifted into higher yielding accounts. Its shares were down 2 per cent in early trading, though analysts at UBS said the results were “not as ugly as feared”.
Upbeat first-quarter earnings from JPMorgan Chase, Citigroup and Wells Fargo on Friday underscored how the failure of SVB and two others in March had at the same time benefited the biggest lenders as customers sought safety at larger names.
Investors expect a further quarter percentage point rise when the US Federal Reserve meets early in May with inflation at 5 per cent — far above the central bank’s 2 per cent target. Christopher Waller, a hawkish Fed governor, on Friday said monetary policy needed “to be tightened further” to cool the economy.
The US dollar index rose 0.3 per cent against a basket of six other currencies, though it has slipped 1.8 per cent since the start of the year as traders have upped their bets that May’s expected interest rate rise will be the Fed’s last.
US government debt sold off slightly, with two-year Treasury yields up 0.05 percentage points to 4.15 per cent and the yield on 10-year debt up 0.04 percentage points to 3.56 per cent.
Across the Atlantic, Europe’s Stoxx 600 rose 0.1 per cent to its highest level since February 2022. Germany’s Dax fell 0.1 per cent and London’s FTSE 100 rose by the same amount.
Europe was the only major region to have had its full-year consensus earnings estimates upgraded since January, data from Morgan Stanley showed, and the bank said it did not “see this resilience breaking” as companies report their first-quarter earnings in the coming weeks.
However, the bank said it anticipated “downside risks for consensus [full-year] estimates later in the year given the prospect of slowing GDP growth, weaker margins and growing FX headwinds”.
Asian stocks rallied after prices for new homes in China rose 0.5 per cent in March, the fastest pace in 21 months, and ahead of the release of the country’s first-quarter gross domestic product numbers on Tuesday.
Hong Kong’s Hang Seng index surged 1.7 per cent while the CSI 300, China’s key benchmark of onshore-listed companies, rose 1.4 per cent.
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