Citi and Goldman Sachs earnings, Empire State General Business Conditions
Currency markets were on the move, with the Australian dollar (AUD) hitting the highest level against its US counterpart since February and improvements were also seen in the euro and the pound, while the Japanese yen (JPY) strongly declined for the second day in a row. Analysts explained the weakness of the yen by pointing to the overall positive sentiment over the past days, possibly encouraging investors to search for riskier assets. The Turkish lira (TRY) was also underperforming with investors concerned about the state of the economy. A recent poll by Reuters indicated a 6.5 percent contraction of the industrial production, raising fears of a longer recession.
Relatively little movement was seen in precious metal commodities like gold, with reports indicating that the reducing risks from Brexit and a trade conflict between the US and China are also having an impact on this market. Geopolitical risks are however still a relevant factor for oil, with the uncertainty about sanctions against Venezuela and Iran, as well as a volatile political situation in multiple African countries, especially Libya potentially affecting the markets.
Most global stock indices closed higher on Friday, helped by a positive sentiment from the first quarterly earnings releases, like the better than expected numbers from JPMorgan Chase helping US stock indices edge closer to the record levels from last year. CEO of JPMorgan Jamie Dimon commented on the positive state of the economy with the words "There is no law that says it has to stop."
Relatively few fundamental data releases are scheduled for Monday, with the Swiss publishing the producer price index (PPI) for March and from the US the New York Empire State Manufacturing Index, as well as data on the foreign demand of long-term US securities expected.
The euro managed for the first time in April to breach the 1.13 threshold in the EUR/USD pair. Data from Europe was slightly better than expected with industrial production only declining by -0.3% y/y (expected -1.0%), whereas in the US the University of Michigan consumer sentiment level was reported lower at 96.9.
Besides the Empire State Manufacturing Index and the European industrial production figures, markets could also pay attention to speeches of the presidents of the Federal Reserve Banks of Chicago and Boston.
Most European stock indices traded higher on Friday, especially key indices from Italy and Sweden, while some downside was seen in Swiss and Polish indices. It is now almost a month since the two biggest private banks in Germany, Deutsche Bank and Commerzbank announced their merger talks. Results are still unclear as also significant resistance is forming against this move, which could potentially make tens of thousands of jobs obsolete. Earlier reports indicated that the Deutsche Bank would give further insight about the progress of these talks as it releases its quarterly numbers on April 26.
Just as in the US, the positive performance of bank stocks also helped push European indices higher. Even stocks of UniCredit, which stands accused of running a cartel trading euro-zone bonds between 2017-2012, finished with a significant upside. Analysts explained that positive Chinese export data, as well as a good start in the earnings season in the US could have helped overall market sentiment.
Some of the key economic data from Europe is expected on Wednesday, with the release of the monthly figures on trade balance and consumer price inflation.
Oil prices moved higher on Friday, allowing the WTI crude oil futures close now for the sixth week in a row higher.
The US Baker Hughes Oil Rig Count was almost unchanged at 2 more operating oil rigs, compared to the previous week, bringing the total to 833 oil rigs.
Multiple geopolitical factors might have affected the market and continue impacting them in the near future. The United States intensified its sanctions against Venezuela, now also targeting shipping companies, which allowed Venezuelan oil to flow to Cuba. Political unrest in Africa also adds to the uncertainty, with fighting again erupting in Libya, as forces aligned to Khalifa Haftar push further to take on the capital Tripoli. It remains to be seen how the sudden removal of long-term rulers in Algeria and Sudan will affect those regions. Sudan is also key for oil shipments from now independent Southern Sudan.
On Tuesday the American Petroleum Institute (API) will publish weekly crude oil inventories data, followed by statistics from the Energy Information Administration (EIA) on Wednesday.
Major US stock indices closed higher on Friday, pushing the S&P 500 (US 500) towards its third consecutive week with new year-to-date record close levels. After the slump in December, markets have been recovering almost continuously, with the US 500 now less than two percent below its all-time high in September 2018.
The banking sector (US Banks ETF +2.04%) clearly took a lead, after a highly positive first round of earnings were released. Shares of JPMorgan Chase (+4.47%) surged higher as the $2.65 earnings-per-share (EPS) was clearly above investors' expectations. The strong results were attributed to higher interest rates and improvements in the debt underwriting segment.
Shares of another major bank, Wells Fargo (-2.93%) moved lower, despite higher profits and lower expenses. The bank however had to report that total average deposits declined by three percent in the first quarter.
Another possible reason behind the positive performance of some bank stocks was the announcement of the Uber IPO, with Goldman Sachs (+2.17%) and Morgan Stanley (+4.04%) set to take a major role in the IPO valued at up to $100 million.
The earnings seasons starts as often especially with the quarterly numbers of some of the biggest banks on Wall Street. On Monday results from companies like Citigroup and Goldman Sachs are expected. Then on Tuesday even more companies like Bank of America, Netflix, IBM and Johnson & Johnson will publish results.
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