US Banks Kick-Off Earnings Season, UK GDP Due

JP Morgan  => Rises 6% in 2022

Citigroup     => Rises 11% in 2022

FTSE           => Eases from post-pandemic high

JP Morgan Q4 earnings preview

Q4 earnings season will kick off today with banks under the spotlight. JP Morgan, the largest US bank by assets, has had a strong year for profits, which has mainly been due to the release of bad loan reserves. These are reserves that JPM built up in the pandemic on expectations of a bigger economic fallout. Meanwhile, revenue has generally been softer. Whilst investment banking and trading units have performed well, net interest income (NII), the difference between what a bank earns on its assets and what it pays to depositors, has been low. This could be about to change as expectations for interest rate hikes from the Fed build. NII is expected to be down on the year, but up from the previous quarter. Consensus estimates point to EPS of $2.97, down from $3.79 in Q4 2020, on revenue of $29.5 billion, up from $29.3 billion.

JP Morgan Chase daily market

What’s next for JP Morgan’s share price?

After trending lower across the final 2 months of 2021, the JP Morgan share price rebounded off a low of $151.85. The price has been extending gains from this nadir, re-taking its 50 & 200 sma, before running into resistance at 169.50 the late November high. Whilst the RSI is supportive of further upside, buyers will need to break above $169.50 in order to target $173 the all-time high. Meanwhile, disappointing figures could see the share price tumble back to wards 164.40 the 50 sma and 159 the 200 sma. A break below this level could negate the near-term uptrend and see sellers gain momentum towards $151.85.

Citigroup reports Q4 earnings preview

Citigroup is due to report Q4 earnings before the US opening bell. After underperforming in 2021, Citigroup’s share price has rallied over 12% so far this year. The rally comes amid growing expectations of a higher interest rate environment across the year, and potentially in anticipation of upbeat Q4 numbers. As a result, earnings need to impress in order for the share price to continue to push higher. Citibank is expected to report an increase in revenue to $16.8 billion, up from $16.5 billion in the same period last year. EPS is expected to decline to $1.37, down from $2.08. The last time that Citigroup missed revenue forecast was in 2014. EPS was last missed in 2015.

FTSE falls ahead of GDP data

The FTSE is heading for a softer start on Friday, following big losses on Wall Street overnight. The market mood soured after an unexpected rise in the number of Americans applying for unemployment benefits. As a result, traders sold out of riskier assets such as stocks. Today, the mood in the market is still fragile as UK GDP comes into focus. Analysts are expecting Britain’s economy to grow 0.4% in November, up from 0.1% in October. Strong than forecast GDP growth could lift market confidence and demand for UK stocks.

Support can be found at 7465 (December high) and 7400 (round number).           

Resistance can be seen at 7570 (2022 high) and 7600 (round number).


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