Wednesday, January 15, 2020

JPMorgan & Citi trading revenues surge; US' tariffs to stay put until phase two

Tags
  • China
  • Dollar
  • Stocks
  • US earnings' season

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Market Recap: JPMorgan & Citi trading revenues surge; US’ tariffs to stay put until phase two

Stocks in the US ended Tuesday mixed thanks to a Bloomberg report revealing certain details of the phase one trade agreement between China and the US. Bloomberg reported on Tuesday that US tariffs on $360bn worth of Chinese goods will continue until after the November presidential elections in the US and a suspension of the tariffs will be contingent on China's compliance with the agreement. Wall Street fell after the release of the report, as investors price in the negative impact that continued tariffs will have on global demand. US Treasury Secretary Mnuchin later confirmed that tariffs would stay in place until there is a phase two agreement. The Bloomberg report also said that China would increase its purchases by approximately US$80bn on US manufactured goods, US$50bn on energy supplies and US35bn on services-related goods.

Indexes Change (%) Net Change Closing Price
Dow Jones 0.11% 32.62 28,939.67
S&P500 -0.15% -4.98 3,283.15
Nasdaq -0.24% -22.60 9,251.33
*Source: Bloomberg

JPMorgan and Citi both beat earnings estimates on Tuesday while Wells Fargo earnings report was plagued with litigation expenses. Revenue from JPMorgan's Fixed Income trading desk surged 86% compared to a year earlier, contributing to a 31% increase in its corporate and investment banking unit. But the bank faced pressure from lower interest rates, although still beating analysts’ estimates to end the quarter with a net income of US$2.57 per share. Citi's EPS for the quarter was US$2.15 per share, beating expectations for US$1.84 per share thanks to growth in its credit card business and increased trading revenue. JPMorgan rose 1.17% and Citi advanced 1.56% while Wells Fargo dipped 5.39%. In the tech space, Pinterest spiked up 9.63% after a report showed that its estimated user base in the US grew 7.4% to 82.4mn in 2019, surpassing Snapchat to become the third-biggest social media platform.

The dollar gained against most major currencies on Tuesday thanks to the possibility of the continued tariffs on Chinese goods and as inflation in the US continued to support the Fed's economic outlook. US inflation rose slightly below expectations for December to 0.2% MoM and 2.3% YoY. Core inflation remained flat as expected at 2.3%.

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Meanwhile safe havens continued to extend losses for the second session in a row. Gold fell while the Japanese yen weakened against the greenback. But US Treasuries rose, with benchmark 10-year yields declining 3bps to 1.81%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold -0.10% -1.49 1,546.39
Silver -0.87% -0.16 17.68
JPY -0.04% -0.04 109.99
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year -1 1.57%
10-Year -3 1.81%
30-Year -3 2.27%
*Source: Bloomberg

Asia stocks was mixed on Wednesday morning, with both the Nikkei and KOSPI looking poised for losses. But the ASX200 started the trading session flat and advanced later in the morning.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.35% -83.65 23,937.79 8:06:40 AM
KOSPI Index -0.35% -7.82 2,230.23 8:26:40 AM
ASX200 Index 0.32% 21.95 6,984.60 8:26:35 AM
Hang Seng Futures 0.56% 161.00 28,960.00 2:59:57 AM
*Source: Bloomberg

Next up, expect earnings reports from Goldman Sachs (8.30pm GMT +8), Blackrock (after US market close) and Bank of America (after US market close).

Economic releases for the day ahead (all timings in GMT +8):

  • UK Dec Retail Price Index (5.30pm)
  • UK Dec Inflation Rate (CPI) (5.30pm)
  • UK Dec PPI (5.30pm)
  • US Jan Empire Manufacturing (9.30pm)
  • US Dec PPI (9.30pm)