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JPMorgan shares rise amid upbeat earnings

 

Monday, January 16, 2023

The news shaping the markets today

Russian forces targeted a nine-story apartment building in the central Ukrainian city of Dnipro, with the death toll rising to 30. The RUB/USD forex pair traded lower this morning.


China’s average new home prices fell by 1.5% year-over-year in December, following a 1.6% decline in the prior month, sending the CNY/USD pair slightly higher in forex trading this morning.


Japan’s producer prices climbed 10.2% year-over-year in December, exceeding market estimates of a 9.5% increase. However, the JPY/USD forex pair continued to climb after the news.


India’s total passenger vehicles sales fell by 14.8% to 235,309 units in December, compared to a 5.1% decline in the prior month, exerting pressure on the INR/USD pair in forex trading this morning.


Australia’s building permits fell by 9% to 13,898 units in November, compared to a 5.6% decline in October. Despite this, the AUD/USD forex pair remained elevated.

 

What’s happening: Shares of JPMorgan Chase rose on Friday after the bank reported results for its fourth quarter.

What happened: America’s largest bank reported stronger-than-expected earnings for its latest quarter on Friday.

However, the bank set aside a huge sum in the expectation of a mild recession in the US.

How were the results: The New York-based bank reported a rise in both sales and earnings for the three months ended December 31.

  • Revenues grew 17% to $35.57 billion, exceeding the consensus estimates of $34.3 billion.
  • Profits rose to $11 billion, or $3.57 per share, from $10.4 billion, or $3.33 per share, in the year-ago period.
  • Excluding items, the bank earned $3.56 per share, beating Wall Street expectations of $3.07 per share.

Why it matters: JPMorgan and other major banks kicked off the earnings season for Corporate America on Friday.

JPMorgan’s investment banking division remained under pressure during the latest quarter, with revenues contracting by 57%.

Trading revenues grew amid volatility in the markets. Trading revenues from fixed-income markets rose 12% to $3.7 billion, while equity trading revenues came in relatively flat at $1.9 billion.

JPMorgan’s net interest income, excluding markets, rose sharply by 72% to $20 billion, as the Federal Reserve continued to tighten its monetary policy to bring down inflation.

Management guided to net interest income, excluding markets, of $74 billion for 2023, versus market expectations of $75.15 billion. The bank’s expenses are expected to reach around $81 billion this year, compared to $75.9 billion in 2022.

Leading banks have been keeping aside more funds to cover for bad loans, while also reducing jobs. According to recent reports, Goldman Sachs is also looking to lay off over 3,000 employees.

JPMorgan added $1.4 billion over the fourth quarter to cover bad loans and credit losses, in anticipation of a mild recession.

How shares responded: JPMorgan’s shares gained 2.5% to close at $143.01 on Friday, following the release of quarterly results. The stock has added around 27% over the past six months.

What to watch: Investors will keep an eye on earnings results from other leading banks in the US, which will offer more insight into the economy’s financial health. Goldman Sachs and Morgan Stanley are all set to report results on Tuesday.

The markets today

Bitcoin will be in focus after recording gains on Friday

Context: Bitcoin moved higher on Friday and continued its uptrend over the weekend.

Details: The crypto market extended gains on Friday after rising in the previous trading session, following the US CPI report, which showed a moderation in consumer prices for December.

Bitcoin and Ethereum moved higher, which resulted in the global crypto market valuation surging to its strongest mark since the collapse of FTX. The surge in crypto prices came after the US CPI data showed annual inflation rate in the country easing to 6.5% in December, from 7.1% in the previous month.

The largest cryptocurrency by market value breached the $19,800 level on Friday and surged past the major $20,000 level over the weekend. Bitcoin jumped around 16% last week, recording its best weekly performance since March.

The recent rally in crypto prices took the global crypto market cap past the $910 billion mark during the week, compared to $851 billion in the prior week. The market valuation also inched closer to the $1 trillion level over the weekend.

Major altcoins, including Solana and Dogecoin, also remained in the green on Friday.

What are expectations: Traders will keep an eye on the macroeconomic environment, which is expected to provide further direction to the crypto market today. The release of major economic reports from the US during the week will also remain in focus.

Other Markets: US trading indices closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.33%, 0.40% and 0.71%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 127.38 and 127.51 Negative
GBP/USD – 1.2266 and 1.2280 Negative
EUR/JPY – 138.36 and 138.50 Positive
Nikkei 225   – 25792.84 and 25823.84 Negative
Silver – 24.555 and 24.650 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0862, 0.27%) Dow ($34,466, 0.15%) Brent ($84.85, -0.5%)
GBP/USD (1.2271, 0.30%) S&P500 ($4,024, 0.14%) WTI ($79.48, -0.5%)
USD/JPY (127.31, -0.43%) Nasdaq ($11,624, 0.14%) Gold ($1,928, 0.3%)

What else to watch today

Japan’s machine tool orders, India’s wholesale price inflation rate and balance of trade, Germany’s wholesale prices, France’s government budget value, Turkey’s central government budget balance, Central bank of Brazil’s focus market readout, Canada’s manufacturing sales, China’s foreign direct investment, as well as Indonesia’s value of loans.


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