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Markets under pressure as bank fears return

Renewed jitters surrounding troubled US lender First Republic Bank were putting pressure on equity markets early in the week. The San Francisco-based company’s shares lost nearly half of their value in Tuesday trading after the bank said deposits fell by more than 100 billion dollars in the first quarter when releasing its quarterly earnings late on Monday. Investors are concerned about the banks ability to turn around its business or sell assets as well as any further implications for the financial sector.

Shane Strowmatt, LGT
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5 minutes

UBS shares also slid 2.17% on Tuesday after the bank released first-quarter net profit at roughly half of the level reached in the same period a year earlier. Switzerland’s largest bank said clients are becoming more risk-adverse amid recent market turmoil, which results in less activity and lower revenue for financial service providers. Also in Switzerland, foods company Nestlé’s shares ended the day up 0.75% after the company said sales growth rose 9.3% in the first quarter. The SMI, Switzerland’s blue-chip stock index, closed up 0.4%.

In macro news, foreign trade in Switzerland increased during the first quarter of the year with seasonally adjusted exports increasing 3.9% versus the previous quarter and imports up 1.1%. That resulted in a trade surplus of 8.3 billion francs.

In New York, equity markets were anxious not only due to the situation at First Republic but also because of a warning from logistics company UPS, which said Tuesday demand for online goods is falling, a signal the economy may be slowing. The Dow Jones Industrial dropped 1.02% to end the day at 33,530.83 points and the S&P 500 fell 1.58% to close at 4,071.63 points. On the Nasdaq, the major tech indices slid almost 2%. US tech giants Microsoft und Google parent company Alphabet released quarterly figures that beat expectations just after trading in New York ended. Google also enticed investors with a 70-billion-dollar share buyback while Microsoft said it will invest more into in its artificial intelligence business, a potential key driver of future revenue.

Stock markets in Asia were trading mixed on Wednesday with Japan’s Nikkei falling 0.7% and South Korea’s Kospi trading in just slightly positive territory. Hong Kong’s Hang Seng Index gained 0.6% and the Hang Seng Tech index rose 1.4%. In mainland China, the Shanghai Composite lost 0.3% and the Shenzhen Component was trading up 0.2%.

Corporate news in focus: Q1 figures from Roche, Danone, Puma, Boeing, Deutsche Boerse and Meta.

Economic data in focus: GfK consumer confidence Germany for May (08:00 CET), US durable goods orders for March (14:30), weekly EIA petroleum status report (16:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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