European shares fall after weak ASMI earnings stir recession fears

European shares sank on Wednesday as weaker than anticipated earnings from ASM International, the Dutch chip tools producer, reawakened buyers fears of a coming financial slowdown.

Europe’s region-wide Stoxx 600 fell 0.9 per cent, with client cyclicals, healthcare and industrial shares among the many worst performers. France’s CAC index misplaced 1.1 per cent. London’s FTSE slipped 0.4 per cent.

The strikes got here as ASMI fell 11 per cent in Amsterdam after it warned demand had weakened within the first quarter and would keep depressed for the rest of the 12 months. Sales within the second half have been anticipated to drop 10 per cent or extra in contrast with the primary six months of 2023, it added.

The falls overshadowed sturdy company earnings from US know-how duo Microsoft and Google parent Alphabet, whose shares rose 7.5 per cent and 0.5 per cent in pre-market buying and selling within the US.

Contracts monitoring Wall Street’s benchmark S&P 500 and people monitoring the tech-heavy Nasdaq 100 rose 0.4 per cent and 0.7 per cent forward of the New York open.

Those strikes got here after the S&P 500 on Tuesday endured its worst day since late March as shares in First Republic fell 49 per cent following the California-based lender’s announcement that clients withdrew $100bn of deposits throughout March’s banking panic.

Tuesday was an “old-school risk-off” session, mentioned Charlie McElligott, a strategist at Nomura, with Treasuries rallying sharply, equities and commodities together with gold, crude oil and copper decrease, credit score wider and the greenback “ripping higher to the pain of anti-dollar trades everywhere”.

First Republic mentioned on Monday it will lower as a lot as 1 / 4 of its workforce within the subsequent two months to scale back prices, although some now anticipate First Republic should be bought in full or half.

The lender’s outcomes confirmed its “zombie bank status” and underscore the extent of US regional banks’ “profitability crisis”, McElligott added.

Meanwhile, the Swedish krona fell greater than 0.5 per cent towards the euro, hitting its lowest stage in two weeks, after Stockholm’s Riksbank elevated coverage charges by half a proportion level to three.5 per cent, as anticipated. The central financial institution famous it anticipated extra rises sooner or later.

US authorities bonds steadied, with the yield on rate of interest delicate two-year Treasuries up 0.05 proportion factors to three.9 per cent. Yields transfer inversely to costs. The US greenback index weakened 0.5 per cent towards a basket of six different currencies, consuming into a number of the buck’s positive factors within the earlier session.

Asian inventory have been combined. China’s CSI index fell 0.1 per cent, persevering with a pointy slide that started early final week, whereas Hong Kong’s Hang Seng index rose 0.7 per cent, partially reversing a greater than 5 per cent decline over the identical interval.