The week could have gone a lot worse for equities
Paris (AFP) - Stock markets on both sides of the Atlantic pushed higher on Friday after two major US banks reported earnings ahead of analysts’ expectations.
A surprise performance by JP Morgan and Wells Fargo boosted the mood of investors who were also happy to have emerged largely unscathed from a week full of potential pitfalls, especially on Brexit.
Wrongfooting financial sector watchers who had warned of a “not that great” earnings season for banks, JP Morgan reported higher first-quarter profits Friday, pointing to a still-solid US economy reflected in more lending and better profit margins on loans.
Wells Fargo also did better than the market consensus.
Shares in both banks gained and the DJIA index, of which JP Morgan is a member, was about 0.7 percent higher in the late New York morning.
Shares in Walt Disney, also listed on the Dow, surged after the company announced the launch of its video streaming service, posting a gain of over 10 percent for much of the morning.
“US stocks are moving higher, with financials getting a bump as Dow member JPMorgan Chase unofficially kicked off Q1 earnings season in positive fashion, while Dow component Walt Disney is rallying after unveiling a new streaming service,” said analysts at Charles Schwab.
European stock markets were also all stronger at the close, with many banking stocks getting a lift from their US counterparts.
Away from corporate performance, investors basked in relief that Britain and the European Union had kicked the Brexit can down the road for another six months, and that statements from both the European Central Bank and the US Federal Reserve, while cautious, contained little that was new or frightening.
- In the end, an ‘unremarkable’ week -
In contrast to what punters had predicted a week ago “it’s been an unremarkable week for global equity markets, despite an ECB rate meeting, an EU summit and Fed minutes,” said Michael Hewson at CMC Markets.
Supporting sentiment were eurozone industrial production data for February that analysts at Capital Economics “suggest that output in the sector performed a little better in the first quarter than at the end of last year,” although it was likely to be sluggish going forward as global economic growth weakens.
Analysts at Oxford Economics said the industrial output numbers “showed some encouraging signs”, especially because of “surprising gains” in France and Italy, setting the scene for a solid rebound in first quarter growth.
Earlier, Asian markets ended mixed.
Analysts in the region reported that with few fresh developments on the China-US trade talks, a rally that characterised the first three months of the year appeared to be running out of steam, while Donald Trump’s threats of tariffs against Europe jolted confidence.
Data Friday showed China’s imports falling more than expected in March, signalling ongoing fragility in the world’s number two economy, even as exports enjoyed a sharp rise.
Total imports sank 7.6 percent year-on-year last month while exports rose 14.2 percent, the data from China’s customs administration showed.
Economists polled by Bloomberg had expected a slight 0.2 percent rise in imports with exports projected to grow 6.5 percent.
In commodities, oil prices chalked up more gains in a six-month bull run that analysts said is their best streak since 2016.
The pound strengthened against the dollar as traders digested the lengthy delay in Brexit proceedings, but slipped a touch against the euro.
- Key figures around 1540 GMT -
London - FTSE 100: UP 0.3 percent at 7,437.06 points (close)
Frankfurt - DAX 30: UP 0.5 percent at 11,999.93 (close)
Paris - CAC 40: UP 0.3 percent at 5,502.70 (close)
EURO STOXX 50: UP 0.4 percent at 3,447.97
New York - Dow: UP 0.7 percent at 26,326.92
Tokyo - Nikkei 225: UP 0.7 percent at 21,870.56 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 29,771.14 (close)
Shanghai - Composite: FLAT at 3,188.63 (close)
Pound/dollar: UP at $1.3112 from $1.3058 at 2100 GMT
Euro/pound: UP at 86.33 pence from 86.20 pence
Euro/dollar: UP at $1.1319 from $1.1253
Dollar/yen: UP at 111.97 yen from 111.66 yen
Oil - West Texas Intermediate: UP 63 cents at $64.21 per barrel
Oil - Brent Crude: UP 65 cents at $71.48 per barrel