Tech results help Wall Street make turnaround

LONDON — Wall Street stocks bounced higher Wednesday thanks to blockbuster tech earnings, while fears of global recession this year weighed on other markets.

The main US indices fell sharply on Tuesday ahead of results by Google-parent Alphabet and Microsoft, but the first quarter performance of the tech giants topped expectations.

At the opening bell, the Dow added 0.2 per cent and the tech-heavy Nasdaq jumped 1 per cent.

Shares in Microsoft jumped 7.2 per cent, despite UK regulators blocking the firm's $69 billion takeover of US video game giant Activision Blizzard. Although Microsoft will appeal, the ruling could signal the deal is on the rocks as EU and US regulators have yet to sign off. 

Alphabet shares shed 1 per cent on profit-taking.

Briefing.com analyst Patrick O'Hare said "the overall body of earnings reporting work for the March quarter since yesterday's close has been quite good, yet the overall reaction has been quite subdued."

Chipotle, Texas Instruments, Visa and PacWest Bancorp were among the other firms reporting.

"Take Microsoft out of the equation and the equity futures for the major indices would look quite anemic," O'Hare added.

European markets were lower in afternoon trading, while Asian markets turned in a mixed performance, following Wall Street losses on Tuesday with lacklustre US consumer data raising concerns about economic outlook. 

"Realisation is dawning that more ominous clouds are gathering over the US economy, causing fresh nervousness for investors," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Those concerns were top of mind for traders after US-based First Republic Bank disclosed it lost more than $100 billion in deposits in the first quarter, intensifying concerns about its long-term prospects after the failures of other mid-sized banks.

Shares of First Republic plunged 49 per cent on Tuesday, pressuring other regional banks that have been seen as vulnerable. They fell nearly 20 per cent at the start of trading on Wednesday.

Also weighing on sentiment was the question of interest rates, with Sweden's Riksbank on Wednesday hiking its guiding rate by a half-point to 3.5 per cent as it tried to rein in double-digit inflation.

The US Federal Reserve (Fed) is also mulling further inflation-fighting hikes.

Oanda senior market analyst Edward Moya said the overall outlook suggested "the Fed can stay on their tightening course with the risks of a June hike still remaining on the table".

Despite the prospect of higher US interest rates, the dollar fell against rival currencies. Oil prices fell.