Wall Street higher even as US economy grows slower than expected

Steel manufacturing in the US: US Bureau of Economic Analysis figures showed the US economy grew at 1.1.% annual rate in the first quarter. Which was disappointing as economists were expecting 1.9% growth. Photo: Matt Rourke/AP (ASSOCIATED PRESS)

The FTSE 100 and European stocks were mixed this Thursday with concerns over the global banking sector still casting a shadow over investor sentiment.

The FTSE 100 (^FTSE) lost 0.10% to 7,846 points during afternoon trading, while the CAC 40 (^FCHI) in Paris bounced back and climbed 0.45% to 7,500 points. In Germany, the DAX (^GDAXI) gained 0.27% to 15,838.

FTSE 100

The UK's blue chip index struggled for momentum but the one larger move on the index was Barclays (BARC.L).

The bank's shares gained 4.69% after posting a pretax profit of £2.6bn for the first quarter as higher interest rates bolstered its income in the UK.

AstraZeneca (AZN.L) increased profits in the first quarter as the company hopes information on key trials this year will reinforce its position as a top producer of cancer therapies. Shares edged 0.19% lower.

Sainsbury's (SBRY.L) has reported full year pre-tax profit of £690m, down 5% year-on-year, but at the top end of the £630m to £690m range guided by the company in January. Shares were down by 1.53%

Read more: Interest rates: Barclays profits from consumers surge 47% as homeowners struggle to pay higher loans

Microsoft (MSFT) has strongly criticised the UK and the Competition and Markets Authority (CMA), after the regulator on Wednesday blocked the US tech company’s $69bn (£55bn) takeover of games maker Activision Blizzard (ATVI).

Brad Smith, a president at Microsoft, said in an interview on BBC radio’s Today programme: "We’re of course very disappointed about the CMA’s decision, but it’s more than that. Unfortunately I think it’s bad for Britain."

US and Asia

US stocks rose on Thursday morning despite the release of cooler-than-expected economic data as earnings results from Meta (META) built on a strong week of tech earnings.

The Dow Jones (^DJI) slipped 0.68% to close at 33,301 points. The S&P 500 (^GSPC) lost 0.38% to 4,055 points while the tech-heavy NASDAQ (^IXIC) rose 0.47% to 11,854.

The Bureau of Economic Analysis advance estimate of first quarter US gross domestic product (GDP) showed the US economy grew at 1.1.% annual rate in the first quarter. Economists surveyed by Bloomberg had expected 1.9% growth.

Microsoft rallied more than 7% after the software giant reported fiscal third-quarter earnings that surpassed estimates on Tuesday, indicating growing strength in its AI and cloud businesses.

Alphabet’s (GOOGL) first-quarter earnings showed a 2% rise in search revenues, far below the corresponding quarters from the last two years.

Meta (META) reported a first-quarter revenue of $28.10bn, beating expectations of $27.66bn and up 3% year-over-year. Shares were up 11% in after hours trading.

The Facebook and Instagram parent company, which has touted 2023 as its "Year of Efficiency" said in the release that it has "substantially completed" its 2022 layoffs, though it will continue to conduct layoffs this year.

“The common theme here is that tech is stronger than most people think,” Jefferies analyst Brent Thill told Yahoo Finance Live after Meta’s earnings release. “Yes, we’re fading, but things are a lot better than the bears have been expecting.”

Amazon (AMZN) and Intel (INTC) are expected to report earnings after the bell on Thursday.

Shares of regional bank First Republic (FRC) tumbled almost 30% as investors continued to be concerned over the bank's health. That stock move came after similar plunges in the previous trading session. On Monday, the bank said that deposits dropped 40% to $104.5bn in the first quarter.

Read more: Trending tickers: Meta | Unilever | AstraZeneca | Taylor Wimpey

Deutsche Bank noted: “There’s been a bit of a tug-of-war in markets over the last 36 hours between the dominance of US tech pulling aggressively on one side against the still shaky foundations of US regional banks on the other.”

“Meta's positive after the bell earnings have helped again overnight but the battle is set to continue,” the investment bank said.

Asia-Pacific markets were largely higher on Thursday as investors focus on the Bank of Japan’s first policy meeting led by new BOJ governor Kazuo Ueda.

Tokyo’s Nikkei 225 (^N225) gained 0.15% to 28,457 points, while the Hang Seng (^HSI) in Hong Kong rose 0.29% to 19,814. The Shanghai Composite (000001.SS) climbed 0.46% to 3,279 points.

Pound

The pound’s (GBPUSD=X) rally against the dollar has lost stem, with sterling trading at $1.2475. The sterling (GBPEUR=X) lost ground against the euro and is now trading at €1.1277.

Oil markets

Meanwhile, Brent crude (BZ=F) bounced back and was trading at around $77/barrel after a 4% plunge on Wednesday, when US recession fears gripped investors.

"Crude prices remain heavy following the plunge below the $80 level as too much demand destruction hit the US economic outlook," said Edward Moya, an analyst at OANDA.

Russia's deputy prime minister has said the Opec+ cartel of oil producers does not see the need for further oil output cuts despite lower-than-expected Chinese demand, though the organisation is always able to tweak its policy.

Watch: Business Lookahead: Behold the megacaps

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