The JPMorgan Chase & Co. headquarters in New York, US, on Friday, July 7, 2023.
Michael Nagle| Bloomberg | Getty Images
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What you want to know right now
Markets misplaced momentum
Major U.S. indexes mostly slipped Friday, although the Dow Jones Industrial Average bucked the pattern to inch up barely. Asia-Pacific markets dipped Monday. Mainland China’s Shanghai Composite fell round 0.4%, and the yuan weakened marginally, because the People’s Bank of China left its short- and medium-term lending charges unchanged.
Booming earnings at JPMorgan
JPMorgan Chase’s third-quarter profit surged 35% from a 12 months in the past to hit $13.15 billion, whereas income popped 21% to $40.96 billion, surpassing expectations. Net curiosity earnings, at $22.9 billion, was 30% larger than the identical interval in 2022, beating estimates by round $600 million. Shares of the financial institution climbed 1.5% Friday. Still, CEO Jamie Dimon warned we’re dealing with “probably the most harmful time” in many years.
Hot oil
On Friday, costs of each U.S. West Texas Intermediate and Brent crude futures soared greater than 5.7% to $87.72 and $90.89 per barrel, respectively. That’s the best leap in a day for each crude futures since April 3. (Prices remained largely unchanged throughout Asia buying and selling hours Monday.) Meanwhile, U.S. oil production hit an all-time high final week, marking a comeback within the home business.
‘Path to a Palestinian state’
U.S. President Joe Biden said in a televised interview Sunday the Palestinian militant group Hamas should be neutralized — however there additionally “wants to be a path to a Palestinian state.” Separately, China’s Foreign Minister Wang Yi reportedly told his Saudi Arabia counterpart Faisal bin Farhan Al Saud that “Israel’s actions have gone past self-defense.”
[PRO] All eyes on banks
Keep your eye on banks posting results this week — the numbers will present clues to many points of the financial system, resembling customers’ power and whether or not company borrowing and dealmaking are returning. Wall Street banks like Goldman Sachs and Bank of America report earnings Tuesday, adopted by regional banks — and Morgan Stanley — on Wednesday.
The backside line
Going into this earnings season, analysts feared big banks’ earnings would not maintain up from the earlier quarters. Those fears did not materialize — for now.
Net curiosity earnings, specifically, was larger than anticipated. That’s the quantity banks pocket after they give depositors a low (or zero!) rate of interest on their financial savings, and cost debtors a excessive rate of interest, often pegged to the federal funds price.
Given the excessive yields on U.S. Treasury and cash market funds, analysts thought banks could be pressured to bathe depositors with larger rates of interest, lowering internet curiosity earnings. That did not occur. On the opposite, internet curiosity earnings rose from a 12 months in the past at JPMorgan and Wells Fargo, and beat expectations at Citigroup.
But JPMorgan CEO Jamie Dimon is not feeling complacent about that. Dimon acknowledged that his financial institution’s “over-earning” on internet curiosity earnings, a profit that may vanish finally.
For a preview of that, we do not have to look forward to the next quarters. We simply have to take a look at BlackRock’s third-quarter earnings. Clients pulled their cash from BlackRock’s lively unit and its index and ETF unit as a result of “for the primary time in almost 20 years, purchasers are incomes an actual return in money and may look forward to extra coverage and market certainty earlier than re-risking,” CEO Larry Fink stated.
Meanwhile, gold noticed its finest day of the 12 months on Friday. December futures contracts for the safe-haven metallic rose 3.11%, placing it 6.31% larger than its degree in the beginning of 2023. That’s one other signal dangerous belongings are dropping attractiveness.
Indeed, the S&P 500 retreated 0.5% and the Nasdaq Composite fell 1.23%. But the Dow Jones Industrial Average managed to eke out a 0.12% acquire. For the week, solely the Nasdaq closed decrease.
It is not simply buyers who’re feeling jittery. Outside monetary markets, shopper sentiment is slumping, as indicated by the University of Michigan’s survey. But that is probably not a shock, given the geopolitical shocks and human tragedy unfolding at present.
“The battle in Ukraine compounded by final week’s assaults on Israel might have far-reaching impacts on power and meals markets, international commerce, and geopolitical relationships,” Dimon stated. “This could be the most harmful time the world has seen in many years.”