The FTSE 100 and European stocks opened mostly higher on renewed global optimism after a series of strong corporate results this week.
The FTSE 100 (^FTSE) rose 0.20% to 7,844 points at the open, while the CAC 40 (^FCHI) in Paris was muted at 7,484 points. In Germany, the DAX (^GDAXI) climbed 0.52% to 15,882.
Amazon said sales had climbed by 9% in the first quarter to $127.4bn (£102.2bn), above the company’s own financial forecasts.
FTSE 100
The UK’s blue chip index was struggling to maintain opening gains as NatWest was dragging the FTSE 100 down.
NatWest (NWG.L) reported higher-than-expected profits of £1.3bn in the first three months of this year, and said it would be able to navigate a tough economic environment.
Nevertheless, the bank’s share price dropped by 5.29% in the first minutes of trading as it put aside £70m to cover an increasing number of defaults and the amount of deposits it held dropped by £11bn.
Other banking stocks fell with Lloyds (LLOY.L) slipping 2.06% and Barclays (BARC.L) down 0.43%.
Pearson (PSON.L) rose 2.53% after the education group said it was on track to meet its annual guidance, and also deliver £120m of cost efficiencies this year.
Prudential (PRU.L) was another share on the rise, up 4.04%, after it said sales had risen reflecting growth in China and Hong Kong as markets improved post-COVID.
Numis (NUM.L) surged 67.65% after Deutsche Bank (DBK.DE) said it would buy one of the City of London’s best-known boutique investment banks for about £410m.
Private bank rescue talks around First Republic
US officials view a private-sector deal to rescue First Republic (FRC) as preferable to the bank falling into Federal Deposit Insurance Corporation (FDIC) receivership, according to Reuters.
The FDIC, the Treasury Department and the Federal Reserve are among the government bodies that have started to orchestrate meetings in recent days about pulling together a lifeline for the regional lender.
JPMorgan (JPM), which has been acting as First Republic’s banker and is the largest US lender, is involved in the conversations, but other large institutions are also likely to participate in some way.
Read more: Sainsbury’s profits slump as it holds back price hikes
First Republic’s share price has dropped by 95% since it was caught up in the regional banking frenzy sparked by the collapse of Silicon Valley Bank.
First Republic said in a statement: “We are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients.”
US and Asia
Across the pond, S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red as trading began in Europe.
US stocks rallied on Thursday 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) rose 1.57% to close at 33,826 points. The S&P 500 (^GSPC) climbed 1.96% to 4,135 points and the tech-heavy NASDAQ (^IXIC) jumped 2.43% to 12142.
Meta shares closed the day up nearly 14% on the heels of the company’s better-than-expected first-quarter earnings report following Wednesday’s close. Meta topped analyst expectations for revenue and earnings per share while also guiding for second-quarter revenue in a range of $29.5bn to $32bn. Analysts had been expecting $29.48bn in second quarter revenue. The stock closed at its highest level in nearly 15 months.
Amazon (AMZN) said sales had climbed by 9% in the first quarter of the year to $127.4bn, above the company’s own financial forecasts.
It recorded a profit of $3.2bn, compared to a $3.8bn loss in the same period a year ago. It was the company’s strongest quarterly profit since 2021.
The Bureau of Economic Analysis advance estimate of first quarter US gross domestic product (GDP) showed the country’s economy grew at 1.1.% annual rate in the first quarter. Economists surveyed by Bloomberg had expected 1.9% growth.
Naeem Aslam, an analyst at Zaye Capital Markets, a trading consultancy, said: “Traders know that the US economy is experiencing a difficult time, and it is pretty much a given that the Fed is going to increase the interest rate. This means that earnings are going to be adversely influenced further in the coming quarter, and the US economy will face further slowdown.
Read more: Interest rates: Barclays income from consumers surge 47% as homeowners pay higher loans
“Nonetheless, it is amazing to see that the US stock indices are still performing relatively well. For instance, the Dow Jones industrial average logged its best percentage gain yesterday since January this year.
“This means that risk appetite among traders is still extremely strong, despite the fact that there is serious fear about the US banking crisis. This week, we have seen plenty of new information come to light as the US regional banks reported earnings and their deposits depleted further.”
Asia-Pacific markets largely rose on Friday after the Bank of Japan kept its monetary policy unchanged.
Tokyo’s Nikkei 225 (^N225) gained 1.40% to 28,856 points, while the Hang Seng (^HSI) in Hong Kong rose 0.85% to 20,008. The Shanghai Composite (000001.SS) climbed 1.13% to 3,323 points.
Sony (6758.T) posted annual profits thanks to a strong performance in its music and computer chips businesses, even as it predicted that profits would dip in the current year.
The Japanese tech company expects operating profit in the year to March 31 to fall 3.2% to 1.17tn yen ($8.65bn).
Pound
The pound’s (GBPUSD=X) rally against the dollar appears to have come to an end, with sterling trading lower at $1.2470.
Sterling (GBPEUR=X) was flat against the euro, trading at €1.1337.
Oil markets
Meanwhile, Brent crude (BZ=F) gained ground and was trading at around $78 per barrel despite mixed economic signals.
“Oil markets have completely faded the boost from the surprise OPEC+ cut earlier this month, and we think this primarily reflects deep pessimism about the macro outlook, with little evidence of incremental weakness in demand so far,” Barclays analysts said.
Watch: Amazon’s first quarter earnings call: What you need to know
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