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Beyond the Numbers

Upbeat Earnings From Financial Giants May Generate Early Buying Interest
4/14/2021 8:54 AM

The major U.S. index futures are currently pointing to a modestly higher open on Wednesday, with stocks likely to extend the upward move seen in the previous session.

Early buying interest may be generated in reaction to better than expected earnings from several big-name financial companies.

Shares of Goldman Sachs (GS) are moving notably higher in pre-market trading after the financial giant reported first quarter results that beat analyst estimates on both the top and bottom lines.

Banking giant Wells Fargo (WFC) may also move to the upside after reporting better than expected first quarter results.

On the other hand, shares of JPMorgan Chase (JPM) are seeing some pre-market weakness even though the financial giant reported first quarter results that exceeded expectations.

The release of the quarterly results comes as earnings season gets underway, with Bank of America (BAC), Citigroup (C), and PepsiCo (PEP) among the companies due to report their results before the start of trading on Thursday.

U.S. stocks ended broadly higher on Tuesday, shrugging off some adverse news on the vaccine front amid expectations of strong quarterly earnings from big name companies. Data showing an uptick inflation weighed a bit, although it did not trigger any big selling in the market.

Technology stocks gained in strength and lifted the Nasdaq Composite Index up by over 1 percent. The S&P 500 set a new record closing high, while the Dow closed on a negative note.

The Dow ended down 68.13 points or 0.2 percent at 33,677.27. The S&P 500 advanced 13.60 points or 0.33 percent to 4,141.59, while the Nasdaq surged up 146.10 points or 1.1 percent to 13,996.10.

Data released by the Labor Department showed annual consumer price inflation in the U.S. jumped to 2.6 percent in March from 1.7 percent in February. Economists had expected inflation rate to come in at 2.7 percent.

Core consumer price inflation rose to 1.6 percent year-on-year in March following a 1.3 percent advance in the previous month.

The Consumer Price Index rose 0.6 percent in March over the previous month, the most since 2012, due largely to a rise in gasoline prices.

The U.S. Food and Drug Administration on Tuesday announced a temporarily halt on the usage of Johnson & Johnson's (JNJ) Covid-19 vaccine after six recipients developed a rare blood clotting disorder. Johnson & Johnson shares shed about 1.3 percent.

“Right now, these adverse events appear to be extremely rare,” the FDA said in a joint statement with the Centers for Disease Control and Prevention. “COVID-19 vaccine safety is a top priority for the federal government, and we take all reports of health problems following COVID-19 vaccination very seriously.”

Telsa (TSLA) rose more than 8 percent, extending recent gains. Apple (AAPL), Travelers Companies (TRV), Boeing (BA), Salesforce.com (CRM) and Microsoft (MSFT) also ended notably higher.

JP Morgan (JPM), Goldman Sachs (GS), Bank of America (BAC) and Wells Fargo (WFC) are scheduled to announce their quarterly earnings on Wednesday.

Commodity, Currency Markets

Crude oil futures are climbing $0.82 to $61 a barrel after rising $0.48 to $60.18 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,746.20, down $1.40 compared to the previous session’s close of $1,747.60. On Tuesday, gold advanced $14.90.

On the currency front, the U.S. dollar is trading at 108.94 yen compared to the 109.06 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1963 compared to yesterday’s $1.1948.

Asia

Asian stocks rose broadly on Wednesday after the International Monetary Fund offered a more upbeat view on Asia's economic outlook than six months ago and data showed a tamer than expected increase in U.S. underlying inflation.

Investors awaited cues from the U.S. earnings season, with JPMorgan Chase & Co. and Goldman Sachs Group Inc. among the companies reporting their results later in the day.

Chinese shares advanced as strong export data added to signs of a solidifying recovery in the world's second-largest economy. The benchmark Shanghai Composite Index ended up 20.25 points, or 0.6 percent, at 3,416.72, while Hong Kong's Hang Seng Index rallied 403.58 points, or 1.4 percent, to 28,900.83.

Japanese shares ended lower as daily Covid cases in Osaka breached the 1,000 mark and data showed core machine orders sank 7.1 percent in February on an annual basis, missing forecasts for an increase of 2.3 percent following the 1.5 percent gain in the previous month.

The Nikkei 225 Index dropped 130.62 points, or 0.4 percent, to 29,620.99, while the broader Topix closed 0.3 percent lower at 1,952.18.

Banks ended broadly lower, while tech shares surged, tracking gains among their U.S. peers overnight. Tokyo Electron rose 0.9 percent, Screen Holdings advanced 2.5 percent and Advantest added 1.3 percent.

Toshiba surged 5.8 percent after reports of its embattled Chief Executive Nobuaki Kurumatani stepping down amid declining trust in his leadership both at the company and among investors.

Australian markets gained ground after a survey showed consumer confidence in the country surged to an 11-year high in April. The benchmark S&P/ASX 200 Index rose 46.20 points, or 0.7 percent, to 7,023.10, while the broader All Ordinaries Index ended up 49.60 points, or 0.7 percent, at 7,280.60.

Gold miners Newcrest, Northern Star Resources and Evolution Mining surged 4-5 percent after gold prices rebounded on Tuesday from their lowest levels in more than a week.

Resolute Mining soared 14.9 percent after the Ghanaian government restored the Africa-focused gold miner's Bibiani Gold Mine lease. Tech stocks also gained ground, with Afterpay, Appen, Xero and Wisetech Global climbing 2-3 percent.

Seoul stocks rose for the third straight day after the release of better than expected jobs data. The benchmark Kospi rose 13.30 points, or 0.4 percent, to 3,182.38 on economic recovery hopes after data showed the country added 314,000 jobs last month, marking the first job additions in 13 months.

Home appliances giant LG Electronics jumped 2.5 percent and leading carmaker Hyundai Motor rose 1.1 percent, while chipmaker SK Hynix fell 1.8 percent.

Europe

European stocks are moving higher on Wednesday as inflation fears ease and investors cheer strong earnings updates from the likes of SAP and LVMH Moet Hennessey.

Benchmark U.S. Treasury yields extended their decline to hit a fresh three-week low after data showed U.S. inflation was not rising too fast as had been feared.

The U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.3 percent, although the German DAX Index has bucked the uptrend and dipped by 0.2 percent.

Commodity trader Glencore has shown a notable move to the upside after Goldman Sachs upgraded its rating on the company’s stock to Buy.

Drug maker AstraZeneca has also risen after China's health regulator approved Tagrisso, its lung cancer treatment, as adjuvant treatment for patients with early-stage lung cancer.

easyJet shares have also jumped. The low-cost airline expressed optimism that European travel markets will revive this summer.

LVMH Moet Hennessey shares have also surged. The luxury goods company reported consensus-beating first-quarter sales, driven by strong performances by its flagship brands.

Business software maker SAP has also spiked after raising its full-year guidance, citing a sharp rise in new cloud business.

Similarly, plastics group Covestro AG has rallied after raising its earnings and operating cash flow guidance for 2021.

On the other hand, Tesco has moved to the downside after the grocery chain reported a drop in full-year pretax profit.

Credit Suisse shares have also slipped. The Swiss banking giant has flagged around $2.3 billion in problematic loans in its Greensill Capital funds.

In economic news, Eurozone industrial output declined 1.0 percent month-on-month in February and fell 1.6 percent compared to February 2020, Eurostat said.

U.S. Economic Reports

Import prices in the U.S. showed another notable increase in the month of March, according to a report released by the Labor Department on Wednesday.

The report said import prices surged up by 1.2 percent in March after jumping by 1.3 percent in February. Economists had expected import prices to climb by 1.0 percent.

The Labor Department noted import prices spiked by 4.1 percent from December to March, reflecting the largest three-month increase since May of 2011.

The report also said export prices soared by 2.1 percent in March after shooting up by 1.6 percent in February. Export prices were expected to increase by 1.0 percent.

At 9:15 am ET, Dallas Federal Reserve President Robert Kaplan is due to participate in a moderated question-and-answer session before a virtual Woodlands (Texas) Chamber Economic Outlook Conference.

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended April 9th at 10:30 am ET.

Crude oil inventories are expected to decrease by 2.9 million barrels after falling by 3.5 million barrels in the previous week.

At 12 pm ET, Federal Reserve Chair Jerome Powell is due to a participate in virtual Economic Club of Washington interview.

The Federal Reserve is scheduled to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the 12 Fed districts, at 2 pm ET.

New York Federal Reserve President John Williams is due to speak in a moderated discussion webinar organized by the Rutgers Finance Society at 2:30 pm ET.

At 3:45 pm ET, Federal Reserve Vice Chair Richard Clarida is scheduled to speak on “The Federal Reserve’s New Framework and Outcome-Based Forward Guidance” before a virtual Shadow Open Market Committee meeting.

Atlanta Federal Reserve President Raphael Bostic is due to participate in a discussion on “Redesigning Cities to Tackle Systemic Racism” before a virtual Georgia Tech School of Architecture Redesigning Cities series at 4 pm ET.

At 6:05 pm ET, Dallas Fed President Robert Kaplan is scheduled to participate in a moderated conversation on national and global economic issues before a virtual Global Perspectives series

Stocks In Focus

Shares of Moderna (MRNA) are moving notably higher in pre-market trading after the biotechnology company said its Covid vaccine is more than 90 percent effective six months after the second dose.

Energy company Occidental Petroleum (OXY) is also likely to see initial strength after MKM Partners upgraded its rating on the company’s stock to Buy.

On the other hand, shares of Bed Bath & Beyond (BBBY) are seeing significant pre-market weakness after the retailer reported slightly weaker than expected fiscal fourth quarter sales.
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