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World stocks push higher as US banks shine

Apr 12 2019 16:07

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 at the Wall Street open, which saw the DJIA index, of which JP Morgan is a member, rise by nearly one percent.

European stock markets were also all stronger at that time.

"US stocks are higher in early action, on continued trade optimism and with the markets eyeing the unofficial start to first quarter earnings season that saw Dow member JPMorgan Chase & Co and Wells Fargo top expectations," said analysts at Charles Schwab.

Shares in Walt Disney, also listed on the Dow, surged after the company announced the launch of its video streaming service.

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 on 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% year-on-year last month while exports rose 14.2%, the data from China's customs administration showed.

Economists polled by Bloomberg had expected a slight 0.2% rise in imports with exports projected to grow 6.5%.

The readings come after a run of positive releases from Beijing including forecast-beating factory activity and a jump in inflation.

"Recent improvements in China activity data... expectations of further feed-through from policy stimulus to the real economy and signs of some partial form of US-China trade truce have all given rise to a more bullish China sentiment," said Jasslyn Yeo, global market strategist at JP Morgan Asset Management.

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.

equities  |  markets  |  global markets


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