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US Corporate Earnings in Focus

Markets Prepare For Friday Double Dose With US Bank Earnings and Retail Reports

earnings


With the week wrapping up, investors will be focusing on US corporate quarterly results from the financial sector with major quarterly earnings reports due from JPMorgan, Citigroup, and beleaguered bank Wells Fargo alongside the latest report on US retail spending.

Earnings Lie Ahead


Investors are bracing for an action packed Friday, which will see a slew of big bank earnings plus an important retail sales figure. JPMorgan, Citigroup and Wells Fargo are set to report quarterly results ahead of the US opening bell, potentially setting the tone for the upcoming earnings season amid the ongoing low interest rate environment. Due to the fact that banks derive a significant portion of income from interest rates and lending, the fact that none have materialised year-to-date may harm the latest earnings results. Also in focus will be any comments from Wells Fargo on the departure of its CEO John Stumpf following the cross-selling account scandal. Additionally, September retail sales are forecast to show a 0.60% jump in sales last month. Other key economic data expected Friday includes Producer Price Index and business inventories.

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jpmdaily10142016

Chinese Inflation Comes in Hotter Than Expected


Beating expectations by a wide margin, Chinese inflation increased in September, with both consumer and producer prices coming in higher than anticipated in a surprising sign of economic resilience.  On an annualized basis, consumer prices rose 1.90% through September while producer prices edged up 0.10%, marking the first increase in almost five years. Economists polled by Reuters were expecting the CPI to rise 1.60% and the PPI to dip 0.30% year over year. Though the PPI had been improving for some time, this was first time since 2012 that the figure turned positive, indicating capacity consolidation has been making progress. This augurs well at least for the manufacturing sector, as higher prices will provide China's heavily indebted industrial companies with much needed revenue.  The AUDUSD pair soared immediately in the wake of the data, rallying to as high as 0.7603.

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eurusddaily10142016

WTI Manages to Hold Above $50


After significant fluctuations around the release of the latest EIA inventory reports, US crude oil prices managed to end the session above the $50.00 per barrel-mark.  Inventory figures showed that crude oil in storage rose by 4.900 million barrels last week, far exceeding estimates while fuel inventories dipped. The market turned bullish after data showed a greater than expected drawdown in gasoline stockpiles, which fell by 1.9 million barrels accompanied by 3.7 million barrel drop in distillate inventories due to increased demand.  Beyond the inventory data, traders will be focussing on Russia’s stance on the proposed output cut agreed by the Organization of the Petroleum Exporting Countries.  The oil cartel is scheduled to meet in late November to fine tune details of the deal to cut production. The target is to slash net output from the current 33.390 million barrels to less than 33.000 million barrels a day.

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cl-nov16daily10142016

European Markets Show Opening Strength


European equity markets opened higher on Friday after stronger than forecast Chinese inflation data helped ease nerves over the growth prospects of the world’s second largest economy.  All major bourses in the region were in the green, with the pan-European STOXX 600 up 0.40%. The opening strength follows a weak US close on Thursday after the ripple effect of disappointing Chinese trade figures. On the economic front, data from the European Automobile Manufacturers' Association showed new car sales in the European Union jumped 7.20% last month on the back of double-digit growth in Spain and Italy. Sales grew 9.40% in Germany and 2.50% percent in France, while the UK registered a more modest 1.60% gain.  Looking ahead, the trade surplus data due from the aggregate Euro Area is expected to dip significantly, potentially knocking some of the wind out of the latest equity rally.

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eurusddaily10142016

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