The US stock market opened higher on Wednesday. Among the main indexes, the S&P 500 opened with a 1.4 percent, Nasdaq 1.7 percent and Dow Jones 1.4 percent gains.
At the top of the exchanges Nvidia’s the share was 1.5 percent and Tesla in an increase of 3.9 percent.
The big theme of the day was the results of the giant banks and the US economy’s December inflation figures.
Consumer prices in the United States rose by 2.9 percent in December, while the consensus forecast of economists had expected inflation to accelerate to 2.9 percent from November’s 2.7 percent. The US inflation figures were the week’s most anticipated macroeconomic figure.
Core inflation adjusted for volatile food and energy was 3.2 percent in December, while it had been forecast to remain at November’s level of 3.3 percent. The calming down of core inflation clearly pleased the market.
Last Friday’s strong labor market report for December from the United States had made the market nervous around the end of last week, when interest rate cut expectations for the central bank, the Fed, had to be clearly lowered as the labor market was still riding strong, despite the central bank’s tight monetary policy and the economic difficulties in Europe and China.
The inflation figures were clearly a relief to the market, as the stock market futures started to rise immediately after the statistics were published.
Earlier in the afternoon Finnish time, many of the largest banks in the United States had reported their figures for the end of the year. The big US banks typically start the local earnings season.
The results of giant banks
Those announcing the results were JP Morgan (-0,7 %), Wells Fargo (+5,2 %), Citigroup (+4,1 %), Goldman Sachs (+4.9%) and the asset management giant Blackrock (+4,7 %).
The net result of major bank JP Morgan jumped 50 percent and exceeded expectations. Turnover rose ten percent from the corresponding period of the previous year to 43.7 billion dollars, while the analyst consensus collected by Factset expected a turnover of 41.9 billion dollars.
CEO of JP Morgan Jamie Dimon stated that the US economy had been sustainable, but warned that large government spending would keep the risk of inflation up and geopolitical conditions were “the most dangerous and complex since World War II”.
Wells Fargo surprised investors with both a better-than-expected result and a positive outlook. Wells Fargo expects net interest income to be 1-3 percent better this year than last year. According to Bloomberg, analysts had predicted an average decrease of one percent as a guideline.
Investment bank Citigroup’s result exceeded analyst expectations. In the last quarter of the year, Citigroup made a net result of 2.9 billion dollars and earnings per share of 1.34 dollars. A year earlier, the result was 1.8 billion dollars in loss due to large write-downs. The analyst expectation collected by the LSEG data service was $1.22 earnings per share.
Investment bank Goldman Sachs’ profit doubled in the last quarter thanks to the company’s strong investment banking operations. Goldman’s earnings per share rose to $11.95 from $5.48 last year. The analyst expectation collected by LSEG data service was $8.22. Revenue rose 23 percent to $13.87 billion, beating expectations for $12.39.
Asset management giant Blackrock reported a strong end of the year, which went even better than analyst forecasts. The company has been a big winner in the asset management world for the past few decades, with index funds and ETFs seizing the market from traditional active funds. The assets managed by the company swelled to 11,600 billion dollars, or approximately 11,300 billion euros, at the end of the year.
The scale can be understood, for example, by the fact that the combined market value of all companies on the Helsinki Stock Exchange has hovered around EUR 250–300 billion in recent years, and the world’s most valuable companies Apple’sNvidia’s and Microsoft’s market values have hovered over 3,000 billion dollars per company.
Blackrock drew in $281 billion worth of new capital on a net basis in the last quarter, when Donald Trump’s the election for president in the United States electrified the market mood at the end of the year. In all of last year, Blackrock’s asset management net subscriptions were $641 billion.
Source: www.arvopaperi.fi
