Earnings Focus in Busy Week | JP Morgan

16 July 2018

Global markets were little changed on Friday as a busy day on US and European markets amounted to little in the way of market moves. The US S&P 500 market index hit a more than five-month high on the back of gains in industrial stocks and energy companies which offset a drop in financials.

US corporate earnings season is now officially under way, which means investors will likely be shifting their focus back to quarterly company profit announcements. Kicking off earnings announcements were major banks JPMorgan, Citigroup and Wells Fargo which failed to inspire investors. Still, most market watchers are betting on yet another strong quarter. Market consensus estimates are calling for a 21% year-over-year increase for the quarter, setting up a potential second-straight quarter of earnings growth higher than 20%. What will be particularly interesting is how much companies focus on trade tensions within their updates and outlook comments.

In terms of other events, this week also sees a meeting between Donald Trump and Vladimir Putin as well as US Federal Reserve chairman Jerome Powell's two days of testimony to US lawmakers. 

 

Stock in Focus: JP Morgan (JPM:NYSE)

JPMorgan shares were down slightly on Friday as the bank's profit beat estimates, although JP Morgan’s share price performed better than peers such as Citigroup.

 Looking at some of the detail, second-quarter profit hit a record level of $8.32 billion, exceeding estimates as JP Morgan posted stronger-than-expected trading results on the back of increased market volatility. Profit surged 18%, well ahead of analyst estimates for a 9.4% increase. This is now the 14th straight quarter that JP Morgan has topped analysts' earnings estimates. The company's revenue increase was less inspiring rising 6% to $28.4 billion.

We have held a positive view on JP Morgan as our top pick in the US Banking sector.  

We currently have a BUY rating on JP Morgan. 

Members should look out for a full update on JP Morgan to be released in our weekly report.

 

Australia & New Zealand Market Movers

The Australian share market was virtually flat on Friday (ASX 200 index +0.01%) as trade tensions between the US and China meant the ASX closed the week flat, following a commodity plunge in the middle of the week. Energy stocks remains under pressure after Libya announced it would be restoring its production, news which sent oil prices tumbling. On the flipside, stocks exposed to a weaker Aussie dollar gained over the week as the US dollar continued to strengthen versus the Aussie dollar.
 

The New Zealand market was higher on Friday (NZX 50 index +0.48%) with gains being led by Z Energy and Infratil. Tourism Holdings and Fisher & Paykel Healthcare shares retraced in a quiet day for the NZ market. In stock news, Chorus said it lifted its fibre connections 9.9% in the June quarter, putting the ultra-fast broadband lines on an equal footing with its ADSL copper connections.

 

3 Things Markets Will be Watching this Week

1.               US corporate earnings season means investors will be shifting their focus back to company profit announcements.

2.               Trade will remain in the headlines after the United States announced further tariffs on an extra $US200 billion worth of Chinese goods.

3.               Key economic news flow includes – Chinese economic data (GDP figures and retails sales) are published on Monday. Australian employment figures are released on Thursday

 

Have a Great Day,

Team

Global markets were little changed on Friday as a busy day on US and European markets amounted to little in the way of market moves. The US S&P 500 market index hit a more than five-month high on the back of gains in industrial stocks and energy companies

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