European shares and US futures weaker ahead of Big Tech earnings

Asian markets sold off on Monday on the expectation of tight US restrictions on investments in China, while European stocks were steady ahead of first-quarter results from the world’s biggest tech companies this week.

The region-wide Stoxx 600 added less than 0.1 per cent in early trading and London’s FTSE 100 fell by the same amount. The moves came as Credit Suisse announced it suffered SFr61.2bn ($68.6bn) of asset outflows in the first quarter. Shares in UBS, which agreed to take over Credit Suisse last month, rose 1.6 per cent.

Asian equities continued to slide, with Hong Kong’s Hang Seng index down 0.6 per cent and the Hang Seng Tech index down 0.2 per cent, although it had traded as much as 1.1. per cent lower earlier in the session.

Markets expect US president Joe Biden to sign an executive order at next months’ G7 summit that will tighten rules on investments by US companies in key parts of China’s economy — measures that could reduce China’s GDP output by “around 2 percentage points” over the next four years, according to Goldman Sachs.

China’s CSI 300 fell 1.2 per cent, dragged lower by basic materials, property and consumer non-cyclicals.

China’s first-quarter GDP figures last week beat consensus expectations, with consumer spending rising as the service sector reopened, yet the overall numbers were “not particularly supportive of an industrial recovery”, said Robert Carnell, ING Asia Pacific chief economist.

“Millions of Chinese heading out for hot pot is not going to have much of a positive impact on the shares of traded companies, especially in the manufacturing sector,” Carnell added. “There is also the rather perverse sense that a consensus-beating GDP means the chances of large dollops of fiscal or monetary stimulus are now very low.”

In the US, contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 both fell 0.2 per cent ahead of the New York open, with traders awaiting the latest earnings from Microsoft, Alphabet and Amazon this week.

Big Tech stocks have held up well even as US interest rates have continued to climb, propping up the wider market so far this year.

First Republic’s results after the New York close meanwhile are expected to shed light on how the bank fared after other lenders in March spent $30bn to stabilise its balance sheet during the banking crisis.

US government debt rallied on Monday, with the yield on interest rate-sensitive two-year Treasuries down 0.03 percentage points to 4.15 per cent and the yield on the benchmark 10-year note down by the same amount to 3.53 per cent. Yields move inversely to prices.

A measure of the dollar’s strength against a basket of six major currencies fell 0.2 per cent.

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