Rally in bank stocks lifts US markets

US stock market advanced on Wednesday as investor confidence was boosted by better than expected JP Morgan earnings report while oil declined. Gains in financial stocks led the broad market index as the decline in JP Morgan’s profits, the first in five quarters, was less than expected. The Dow Jones Industrial Average closed 1.1% higher at 17908.28, recording the largest daily gain in almost a month. The S&P 500 rose 1% to 2082.42 led by financial stocks, up 2.2%. Market sentiment was buoyed as the smaller than expected decline in earnings of the biggest US bank suggested that US corporate earnings may turn out to be not so bad as feared. According to analysts’ estimates S&P 500 profits are expected to have declined 7.8% in the first quarter, with financial sector expected to incur losses due to heavy exposure to energy sector particularly. Shares of JP Morgan gained 4.2%, Citigroup rallied 5.6% and Morgan Stanley jumped 5.3%. The dollar strengthened as better than expected Chinese trade data relieved concerns about global slowdown. The live dollar index shows the ICE US Dollar index edged up 0.8% to 94.764. Investors shrugged off disappointing economic data: retail sales unexpectedly fell 0.3% in March. US wholesale prices also fell last month. Wells Fargo and Bank of America will report earnings today, and Citigroup will publish them on Friday. Today at 14:30 CET Initial Jobless Claims and Continuing Claims, as well as March inflation report will be released. The tentative outlook is positive. At 16:00 CET Federal Reserve Governor Jerome Powell will testify about the fixed income markets before the Senate Banking Committee.
European stocks closed higher on Wednesday as higher exports from China boosted market sentiment. The euro fell against the dollar, weighed particularly by weaker than expected industrial production in euro-zone: the index was 0.8% lower in February against an expected 0.6% decline. The Stoxx Europe 600 index rallied 2.5%. Shares of oil companies extended gains following the rally in oil on Tuesday: Tullow Oil jumped 11%, Total added 4%. Germany’s DAX 30 gained 2.7% to 10026.10, France’s CAC 40 index rallied 3.3%. Today at 11:00 CET March final consumer price index will be published in euro-zone. At 10:15 CET January Retail Purchasing Manager’s Index will be released in euro-zone. The tentative outlook is neutral. And at 13:00 CET Bank of England will release its Rate Decision. No changes in monetary policy are expected and the central bank is expected to leave the interest rate at 0.5%.
Asian stocks hit four month highs today. Nikkei rallied 3.2% as weaker yen lifted exporter shares: Panasonic jumped 4.17%,Toyota Motor and Honda Motor gained 3.25% and 1.93% respectively.
Oil futures are extending losses today as it appears the Organization of the Petroleum Exporting Countries and Russia will most likely not sign any binding agreement to freeze output at Qatar meeting on Sunday. June Brent oil fell 1.1% to $44.18 a barrel on London’s ICE Futures exchange on Wednesday. Goldman Sachs analysts estimate shale productivity gains will prevent steep declines in US crude oil output as oil prices fall, contributing to continued oversupply and further pressuring prices.
Gold is retreating today following a decline on Wednesday as equities and US dollar advanced. June gold fell 1% to $1,248.30 an ounce. Copper is gaining after May copper rose 1% to settle at $2.168 a pound on Wednesday following a report China copper imports hit record high in March, up 30% in first quarter.