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What’s happening: Shares of JPMorgan Chase rose on Friday, after the company released its results for the third quarter.
What happened: The largest US lender reported better-than-expected revenues and earnings for the latest quarter on Friday.
Prospects of further interest rate cuts by the US Federal Reserve provided a boost to big banks in the quarter.
How were the results: The New York-based company reported single-digit growth in sales for the latest quarter.
Why it matters: Big banks kicked off earnings season on Friday, with JPMorgan and Wells Fargo reporting stronger-than-expected earnings for the third quarter.
Interest rate cuts by the Fed boosted equity markets in the third quarter, which resulted in firms taking more loans, boosting the revenues of big banks.
JPMorgan’s investment banking revenues surged 29% to $2.4 billion, while investment banking fees rose 31%. Equities drove trading revenues higher by 8% in the quarter.
Consumer & Community Banking revenues fell 3% year-over-year to $17.791 billion, while Commercial & Investment Banking revenues gained 8% to $17.015 billion.
Asset and Wealth Management revenues gained 9% year-over-year to $5.4 billion, while corporate revenues jumped 97% to $3.07 billion.
Net interest income rose 3% to $23.5 billion, while non-interest revenues climbed 11% year-over-year to $19.8 billion.
Banks are keeping more money aside to cover loans that consumers may not repay. JPMorgan’s provision for credit losses increased sharply by 125% year-over-year to $3.11 billion in the third quarter, which included $2.1 billion in net charge-offs and $1.0 billion in net reserve build.
Management raised their 2024 forecast for net interest income to $92.5 billion, from their earlier projection of $91 billion.
How shares responded: JPMorgan’s shares climbed 4.4% to close at $222.29 on Friday, following the release of quarterly results. The stock has gained around 29% year to date.
What to watch: Investors will continue monitoring the US Fed’s monetary policy, which could significantly impact the overall results of banks. Traders will also focus on overall inflation and economic growth in the US.
Context: The CAD/USD forex pair declined to a two-month low on Friday, as investors assessed the latest jobs data.
Details: Data released on Friday showed an increase in Canada’s employment by 46,700 in September, following a 22,100 gain in the previous month. The figure also topped market expectations of 27,000 job adds.
The country’s unemployment rate fell to 6.5% in September, versus the 34-month high level of 6.6% hit in the previous month. The reported unemployment rate was also better than market estimates of 6.7%.
The total value of building permits in Canada fell by 7% to $11.5 billion in August, after a 20.8% surge in July.
Traders are seeing around 50% chances that the Bank of Canada will cut rates by half-percentage point at its upcoming policy decision on October 23.
The CAD/USD forex pair declined by around 0.2% to 1.3764 on Friday, after falling to its lowest level since August 7 earlier during the session.
With this, the loonie recorded losses for the eighth consecutive session, its longest losing streak since July. For the week, the CAD/USD forex pair shed around 1.4%.
The S&P/TSX Composite Index gained 0.70% to close at 24,471.17 on Friday.
What to watch: With no major economic data scheduled for today, investors await the release of inflation data from Canada on Tuesday. The annual inflation rate, which eased for the third straight month to 2% in August, is expected to increase slightly to 2.1% in September.
The Bank of Canada’s interest rate decision on October 23 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 down by 0.97%, 0.61% and 0.15%, respectively.
Ukraine’s military forces claimed to have hit a fuel depot in the Luhansk region occupied by Russia. The news sent the RUB/USD pair lower in forex trading this morning.
Ireland’s BNP Paribas Real Estate Construction PMI fell to 49.0 in September, from 50 in August. This being the lowest since June exerted pressure on the EUR/USD forex pair.
Singapore’s monetary authority maintained its interest rate during its latest meeting, which sent the SGD/USD pair lower in forex trading this morning.
New Zealand’s BusinessNZ Performance of Services Index came in unchanged at 45.7 in September. However, the services sector remaining in the contraction zone exerted pressure on the NZD/USD forex pair.
China’s vehicle sales declined by 1.7% year-over-year to 2.809 million units in September, sending the CNY/USD pair lower in forex trading this morning.
India’s wholesale prices and inflation rate, Mexico’s consumer confidence, Russia’s balance of trade, Turkey’s total motor vehicles production and total vehicle sales, China’s new yuan loans, money supply M2, outstanding yuan loans and total social financing, as well as Brazil’s IBC-Br economic activity index and Central Bank of Brazil’s focus market readout.
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