Global markets were mixed overnight with Wall Street moving between small gains and losses as investors digest the latest round of quarterly corporate profit announcements.
On the corporate profit announcement front, strong earnings from blue-chips UnitedHealth and Johnson & Johnson supported the market, while Technology and Resource stocks retraced. Netflix shares initially touched new all-time highs before retracing as it announced it had added 5.3m subscribers over the quarter, with profit up to $130m compared to $52m a year earlier. Once again, the high level of the market makes the current earnings season as important as ever in terms of supporting company share price valuations.
Closer to home, the NZ market continued to grind higher yesterday, while the Australian rallied for the 8th trading session in a row. It looks as if the ASX may have finally broken out of the trading range which it was stuck in for 5-months.
Stock in Focus: JP Morgan (JPM:NYSE)
Banking heavyweight JP Morgan reported third quarter revenue of $26.2 billion, an increase of 2.7% on the 3rd quarter of 2016. Net Income was $6.7 billion or $1.76 per share, which beat market expectations by $0.11 and compares favourably to $1.60 in 2016.
The slight disappointment in the result was trading revenues which declined by 27% decline year on year. At the same time JPM reported that net interest revenue was up 10% to $13.1 billion driven by the net impact of rising rates. We have a positive view on JPM as it should benefit from rising interest rates and trends towards a cashless society.
We are currently BUY rated on JPM.
Members should lookout for our full update on JPM to be released in today’s weekly report.
Australia & New Zealand Market Movers
The Australian share market continued its recent rally (ASX 200 index +0.73%) as investors poured into miners and banks on Tuesday, extending a powerful upswing and pushing the benchmark index further above its recent tight trading range.
Minutes from the RBA’s latest meeting showed the central bank gave no indication it was in any hurry to lift rates, despite growing market expectations of tighter policy in 2018.
In stock news, ANZ announced it has sold its superannuation and financial planning businesses to IOOF for $975 million.
The New Zealand market was higher on Tuesday (NZX 50 index +0.26%) led by Restaurant Brands and A2 Milk while Xero and Scales Corp fell, with investors still uncertain about the make-up of the next government.
3 Things Markets Will be Watching this Week
1. Quarterly US corporate profit announcements, with the level of the market making the current earnings season as important as ever.
2. Australian employment data is published on Thursday.
3. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday.
Have a Great Day,
Team