By Lorcan Roche Kelly
A lot to watch
Earnings season kicks off with a bang this morning as we get reports from JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc., Wells Fargo & Co. and money manager BlackRock Inc., with all of them set to land before 8 a.m. One of the biggest obstacles facing the sector is falling interest rates which cut into loan revenues, so the focus may be on cost-cutting measures. Investment banking fees are also unlikely to come to the rescue, with lenders suffering from a drop in merger activity after the worst quarter for the sector in two years.
The White House has called for an immediate ceasefire in Syria, with President Trump announcing sanctions on Turkey in response to the military offensive launched last week. The lira did not react strongly to the announcement, which lawmakers on both sides of the aisle in Congress said did not do enough to punish the country. Perhaps more significant for Turkey’s economy is the announcement this morning by Volkswagen AG that it has postponed a decision on building a $1.4 billion auto factory there in response to the military action.
EU chief Brexit negotiator Michel Barnier said that a deal is still possible this week, but that talks remain tough with only a day left to agree a legal text in time for Thursday’s leaders summit in Brussels. The U.K. submitted new proposals to EU negotiators on Monday clarifying its plan for customs rules for Northern Ireland, and the pound rallied in early trading this morning on the optimistic tone from Barnier before reversing some of those gains. Data on the U.K. economy showed that the number of people in employment fell for the first time since 2017, with wage growth and vacancies both declining.
Overnight the MSCI Asia Pacific Index added 0.6%, while Japan’s Topix index closed 1.6% higher as it reopened following a long weekend and priced the “phase one” trade deal between the U.S. and China. In Europe, the Stoxx 600 Index was 0.4% higher at 5:45 a.m. Eastern Time, with German payments firm Wirecard AG plunging as much as 23% after a report from the Financial Times alleging questionable accounting practices at some company units. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 1.686% and gold was slightly higher.
As well as all the bank earnings today, we also get updates from Johnson & Johnson and United Airlines Holdings Inc. St. Louis Fed President James Bullard, Federal Reserve Bank of Atlanta President Raphael Bostic, Kansas City Fed President Esther George and San Francisco Fed President Mary Daly are today’s scheduled monetary policy speakers. The World Bank and International Monetary Fund meetings begin in Washington, with the IMF presenting its World Economic Outlook which is expected to revise growth forecasts lower.