San Francisco Frontiers - Goldman earnings take shine off US stocks

The blockbuster 4.5 percent expansion reported by China, helped by above-forecast retail sales last month, revived optimism for a recovery in the world's second-biggest economy after its worst performance in decades last year.

The first-quarter figures are the first snapshot since 2019 of a Chinese economy unencumbered by Covid health restrictions that included city-wide lockdowns lasting months.

But below-forecast readings on Chinese industrial output and fixed-asset investment suggested weaknesses remained in the economy, and an uneven recovery.

"We expect to see higher GDP growth rate in upcoming quarters as a result of the low base from last year, and the annual growth target of five percent should be achievable," said Chaoping Zhu, a strategist at JP Morgan Asset Management.

"That said, some challenges still exist in the economy."

The Chinese economy remains beset by a series of problems including a debt-laden property sector, global inflation and the threat of recession elsewhere.

"It's not just the pandemic that the country is bouncing back from, confidence in the property market has been severely undermined and it will take time to recover," said Craig Erlam, senior analyst at the OANDA trading group.

- Focus on earnings -

Wall Street stocks turned lower, with sentiment dampened by Goldman Sachs posting lower revenues and profit.

But Bank of America reported higher profit than expected, thanks to a boost from higher interest rates.

"A tale of two very different banking giants has unfolded as Goldman Sachs was hit by a dent in dealmaking, while the good times rolled for Bank of America, which reaped big windfalls from higher interest rates," said Susannah Streeter, head of money and markets at Hargreaves Lansdown brokerage.

But the "underlying story betrays more trickier times ahead for both banks", she warned, with market volatility and pressure on interest rate margins expected to make it tough going for banks.

Goldman Sachs shares were down 2.0 percent in late morning trade.

Investors were also keeping an eye on the results of regional US banks after three collapsed last month as lenders face pressure from rising interest rates.

- Key figures around 1530 GMT -

New York - Dow: DOWN 0.3 percent at 33,894.60 points

London - FTSE 100: UP 0.4 percent at 7,909.44 (close)

Frankfurt - DAX: UP 0.6 percent at 15,882.67 (close)

Paris - CAC 40: UP 0.4 percent at 7,533.63 (close)

EURO STOXX 50: UP 0.6 percent at 4,393.95 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 28,658.83 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 20,650.51 (close)

Shanghai - Composite: UP 0.2 percent at 3,393.33 (close)

Euro/dollar: UP at $1.0964 from $1.0930 on Monday

Pound/dollar: UP at $1.2424 from $1.2376

Dollar/yen: DOWN at 134.00 yen from 134.46 yen

Euro/pound: DOWN at 88.25 pence from 88.29 pence

West Texas Intermediate: UP 0.5 percent at $81.19 per barrel

Brent North Sea: UP 0.3 percent at $85.03 per barrel

burs-rl/js

G.Collins--SFF