Tesla doubled it’s share price in the last seven months, while major indices reach record highs
Today started the earnings season on Wall Street and this factor alone brought the US30 (Dow Jones) back to 29000 points. JP Morgan (JPM.US) rose 2% after earnings that showed both EPS (Earnings per share) and revenues above expectations. The Bank surprised with a surge in sales&trading revenues.
Better earnings were also presented by Citigroup (C.US) while Wells Fargo (WFC.US) disappointed. The last one is not included in the Dow but it’s part of the S&P500, explaining relative weakness of US500 today. Tesla (TSLA.US) remains in the spotlight – at one point its price reached $546, 207% gain in just 7.5 months!
JP Morgan (JPM.US) has reported earnings for Q4 2019 ahead of the session start as one of the first major US banks to do so. Bank reported EPS of $2.57, almost 9% above market consensus. Revenue of $29.211 billion was 4,7% higher than market expected. The biggest surprise came from sales & trading revenue as it grew 86% YoY to $3.45 billion while market expected only $2.44 billion. JP Morgan managed to post better year-over-year figures in all major categories except net interest income, which dropped 1.3% YoY.
Citigroup (C.US) also reported results that were much better than the market expected. EPS came in at $1.90 against forecasted $1.84 while revenue of $18.378 was 2.9% higher than expected. Revenue from fixed income trading grew 49% YoY to $2.9 billion. Improvement in EPS also came aimd 10% reduction in average diluted shares outstanding.
Wells Fargo (WFC.US), the third major US lender that reported earnings today, stood in contrast to the two aforementioned lenders. Wells Fargo missed adjusted EPS estimate of $1.11 as its earnings stood at $0.93. Revenue of $19.9 billion was 5% lower than a year ago. Net interest margin in Q4 stood at 2.53% while net interest income dropped 11% YoY to $11.2 billion. However, net interest figures were both in-line with market expectations.
The macroeconomic data was just the background. China saw better trade report for December, albeit partly due to base effects. US inflation was in line with expectations at 2.3% (both headline and core) having no impact on the FX.
While the majors saw moderate moves, EURCHF slid to 1.0765, the lowest level since April 2017. Markets are seeing some yield recovery in Europe and that seems to among factors supporting CHF. Unusual strength was also seen on the Polish zloty – EURPLN broke a lower limit of a nearly 2-year old consolidation and dove to 4.19 before recovering to 4.22.
On the commodity market OIL recovered slightly from a multi-week lows while Gold and Silver moved lower amid a general risk-on approach. These moved were dwarfed by the crypto market where Bitcoin soared to 2-month highs (above $8500) and Bitcoincash leaped by 25%. It seems like some fresh capital has been entering the market since the start of the year.
Wednesday will see an official signing of the PhaseOne US-China deal. It’s obviously better than new tariffs been so much hyped that it’s hard to see how it could deliver another positive surprise. Let’s recall that existing tariffs will mostly remain in place and unless there’s some kind of road-map for tariff rollback, the deal might do little to revive global growth.