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European stocks sank at the open on Wednesday as weaker-than-expected earnings from ASM International, the Dutch chip tool manufacturer, reawakened investors fears of a coming economic slowdown.

Europe’s region-wide Stoxx 600 and France’s CAC index both fell more than 1.1 per cent in the first hour of trade.

ASMI dropped 11.8 per cent in Amsterdam after it warned demand had weakened in the first quarter and would stay depressed for the remainder of the year. Sales in the second half were expected to drop 10 per cent or more compared with the first six months of 2023, it added.

The falls overshadowed strong corporate earnings from US technology duo Microsoft and Google parent Alphabet, whose shares rose 8.4 per cent and 1.6 per cent in after-hours trading in the US.

Contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 rose 0.4 per cent and 1.2 per cent ahead of the New York open.

Those moves came 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 customers withdrew $100bn of deposits during March’s banking panic.

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

First Republic said on Monday it would cut as much a quarter of its workforce in the next two months in order to reduce costs, though some now expect First Republic will have to be sold in full or part.

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

US government bonds steadied, with the yield on interest rate sensitive two-year Treasuries up 0.01 percentage points to 3.91 per cent. Yields move inversely to prices. The US dollar index weakened 0.4 per cent against a basket of six other currencies, eating into some of greenback’s gains in the previous session.

Asian stock were mixed. China’s CSI index fell 0.1 per cent, continuing a sharp slide that began early last week, while Hong Kong’s Hang Seng index rose 0.9 per cent, partially reversing a more than 5 per cent decline over the same period.

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