Live Markets: Tech beats won't fuel sustainable rally - UBS CIO

SIMCORP A/S

27/04/2023 10:59

* 
      STOXX 600 up 0.2%
    

        * 
      Bank stocks rise on solid earnings
    

        * 
      SimCorp rallies on Deutsche Boerse offer
    

        * 
      Meta results lift Nasdaq futures 
    

  
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
    
    
    TECH BEATS WON'T FUEL SUSTAINABLE RALLY - UBS CIO (0958 GMT)
    A trifecta of big tech wins in the last two days has boosted
market morale, with positive results from Microsoft  MSFT.O ,
Alphabet  GOOGL.O , and most recently Meta  META.O  also giving
a big lift to their share prices.
        That has been welcome news for markets worried by
slowing growth and resurfacing jitters over U.S. regional banks,
but for Mark Haefele, UBS global wealth management CIO, the
scope for current earnings to fuel a sustainable rally looks
limited. 
  
    The first reason he gives is that valuations are high in
both absolute and relative terms. His team of UBS strategists
forecast a 5% earnings contraction in S&P 500 this year. 
    Additionally, they think recession fears are likely to cap
market sentiment, with recent data depicting an overall
weakening U.S. economy. 
    Another limit to any upside for stocks is expected to be the
lagged effects of Fed tightening, which UBS's Haefele expects to
start becoming more pronounced. 
    "So, we see better risk-reward in bonds than in broad US
equities in our global strategy, favoring high-quality fixed
income due to decent yield and the scope for capital gains in
the event of an economic slowdown," writes Haefele in a daily
note. 
    "We also see value in emerging market bonds and sustainable
bonds."
    
    (Lucy Raitano)
    *****
    
    
    
        EARNINGS HELP STOXX STEADY AS BANKS BOUNCE BACK (0851
GMT)
    European shares managed to shake off opening losses on
Thursday with a string of well-received earnings updates, a
bounce back in banking stocks and some fresh M&A action helping
the STOXX 600  .STOXX  move above parity by mid morning.
    The pan-European equity benchmark index was last up 0.2%. 
following two days of declines. Banks  .SX7P  rose 0.8% after
consensus-beating numbers from Barclays  BARC.L , Deutsche Bank
 DBKGn.DE  and BBVA  BBVA.MC  which led higher a broad bounce in
the sector.
    Top STOXX gainer was software firm SimCorp  SIM.CO , up 39%
after German exchange operator Deutsche Boerse  DB1Gn.DE  made a
3.9 billion euro takeover offer for Danish company. Deutsche
Boerse fell 6% in heavy trading volumes that made it the biggest
single-stock drag to the STOXX.
    Among top gainers were hydrogen solutions provider NEL
 NEL.OL , hearing aid maker GN Store  GN.CO  and outdoor
products maker Thule  THULE.ST  following results. STMicro
 STMMI.MI  was a big faller even as the chipmaker posted solid
results. One trader cited demand concerns.         
        
  
        (Danilo Masoni)
    *****
        
  
        
  
        EUROPE SEEN SOFTER ON ANOTHER BIG EARNINGS DAY (0625
GMT)
  
    European stocks were set to fall slightly on Thursday as
worries over a slowing U.S. economy and jitters over First
Republic Bank overshadowed a string of strong tech earnings. The
latest is Facebook owner Meta Platforms, which returned to
positive sales growth, pushing its shares sharply higher.
    In Europe it's another heavy day for earnings releases. In
the closely watched banking sector, Deutsche Bank  DBKGn.DE 
reported a better-than-expected 9% rise in Q1 profit as higher
interest rates offset a slump in investment bank revenues.
    Strong numbers also from BBVA  BBVA.MC , which said Q1 net
profit rose 39.4% thanks to a solid performance in its main
market in Mexico. Futures on euro zone banks  FESBM3  however
were last down 0.15%.
    The region-wide EuroSTOXX50  STXEc1  futures fell 0.2% and
so did FTSE 100  FFIc1  contracts. Derivatives on the Nasdaq
rose 0.8%, pointing to another strong session for U.S. tech.
    Elsewhere, Unilever  ULVR.L  smashed quarterly sales
forecasts as another big rise in prices triggered only a small
dip in volumes, while chipmaker STMicroelectronics  STM.DE 
reported better-than-expected first-quarter results.
    Among other top earnings releases were those from
AstraZeneca, BASF, WPP and Air Liquide, just to name a few.
    
    (Danilo Masoni)
    *****
     
          
          
  
    
    US RECESSION WORRIES WEIGH IN ASIA (0556 GMT)  
    Europe wakes up to more weakness in equities after stock
markets across Asia took cues from Wednesday's slump on Wall
Street.
    Fears that the US could slip into recession weighed broadly.
But perhaps reassuringly, financials fared relatively better in
markets including Hong Kong and Tokyo, suggesting little fear of
widening contagion from First Republic's woes.
    Technology shares in the region didn't benefit much from
Microsoft's earnings boost though, which had buoyed the Nasdaq.
The Hang Seng's tech sector, in particular, slumped more than
1%, with the mood soured by the U.S. Commerce Secretary's
warning that Chinese cloud computing companies may pose a
national security threat.
    Meanwhile, the United States continued to cozy up to
long-time regional allies South Korea and Japan. 
    The Yomiuri newspaper reported the trio are preparing to
hold a summit on May 21 on the sidelines of the Group of Seven
summit that Japan is hosting over that weekend.
    Overnight, a meeting in Washington between President Joe
Biden and South Korean leader Yoon Suk Yeol produced a pledge
from the United States to give its East Asian partner more
insight into its nuclear planning over any conflict with North
Korea.
    Away from geopolitics, the Bank of Japan began its first
policy meeting with new governor Kazuo Ueda at the helm. While
the consensus is for no change to ultra-easy stimulus settings
on Friday, no one is willing to rule out another surprise like
in December, when former governor Haruhiko Kuroda wrong-footed
investors with a doubling of the 10-year bond yield band.
    Thursday's economic data calendar from Europe is light fare
with just a handful of Eurozone sentiment indexes, consumer and
business sentiment readings for Italy, along with retail sales
and the jobless rate in Spain.
    The meatier indicator comes later, in the form of U.S.
advance GDP for the first quarter, with 2% annualised growth
expected.
    The U.S. reporting season also continues apace, with some of
the day's highlights to include Mastercard pre-open, Caterpillar
during the day and Amazon and Intel after the bell.
    Looming over everything though is the continued standoff in
the US over extending the debt ceiling, as the bill passed by
House Republicans overnight - including sweeping spending cuts -
has already been called DOA by top Senate Democrat Chuck
Schumer.

    Key developments that could influence markets on Thursday: 
    -U.S. advance GDP
    -U.S. earnings including 
    
    (Kevin Buckland)
    *****

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Japan's core inflation remains above BOJ target    https://tmsnrt.rs/41r6sng
eu open    https://tmsnrt.rs/3LyNSnC
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>