Week Commencing 23rd October 2023

Earnings Season Underway


Major Indices

Index Performance
S&P 500 -2.53%
DOW Jones -1.8%
NASDAQ -2.61%
FTSE 100 -1.50%
DAX -0.75%
Nikkei 225 -0.86%
Shangai Composite +1.16%

World Sector Performance

Bank Earnings Season Run Down

JP Morgan Chase: profits grew 35% in 2023 Q3 as the bank continues to thrive off of high interest rates. Their loan losses are also at low levels, only writing off $0.47 per $100 loaned out (on an annual basis). Chief Executive Jamie Dimon will sell 1 million shares next year, reducing his stake for the first time. At current market price, this would be over $140mn. Dimon said that the conflicts in Ukraine and Israel make this the 'most dangerous time the world has seen in decades' and also said that 'central banks have been dead wrong' referring to their historical projections.
Goldman Sachs: results beat the estimates with earnings coming in at $5.47 a share, and revenue $11.82bn vs $11.19bn expected. Equities trading revenue grew 8% YoY whilst bond trading fell 6%. Profit fell 33% upon last year, mainly driven by Goldman Sachs pulling out of the consumer side of the business as well as selling their GreenSky business which had to be written off in this release.
Morgan Stanley: earnings fell 9% due to lower investment banking revenue, fees from advising corporate clients on M&A fell by over 30%. Morgan Stanley have also chosen Ted Pick to replace James Gorman as CEO.
Deutsche Bank: net revenues were up 6% YoY to EUR 22.2 billion
Bank of America: earnings and revenue beat Wall Street estimates. EPS $0.9 vs $0.82 expected and revenue $25.32bn vs $25.14bn expected. This was 10% increase in profits. Shares rose 2.33% the day of the release.

UK Unemployment

Unemployemnt rate remained low for the three months to August, as the labour market stays tight. The statistic was 4.2% which is on par with the three months leading to July. Whilst unemployment rate remained the same, the number of new jobs fell by 43,000 to below a million. This was the 15th consecutive period of contraction in the labour market.

UK employment (House of Commons Library)

US GDP

GDP growth beat expectations, rising by an annualised rate of 4.9% in the third quarter of the year. Goods and service spending grew 4.8% and 3.6% respectively.Goldman Sachs recently published an article on Artificial Intelligence, forecasting that it may begn to boost US GDP in 2027; see some interesting figures below...

ECB Interest Rates on Hold

The ECB has warned that the Eurozone economy 'remains weak' after leaving interest rates on hold at 4%. This puts an end to the 10 consecutive increases but was expected amongst analysts. Christine Lagarde said that it was 'totally premature' to even entertain any rate cuts, and that further hikes are a possibility. Other interesting comments included that the ECB are being 'very attentitive' to the Israel-Hamas situation, but the eurozone is a 'completely different economy today' compared to when energy prices surged in 2022.

Chinas 3rd Quarter GDP

in Q3, China's GDP accelerated at an annualised rate of 4.9%, higher than Q2 growth and beating expectations. This has been helped by stimulus measures such as lowering interest rates, increasing liquidity in the banking system and supporting real-estate markets. The central bank cut the one-year loan prime rate by 10bp to 3.45% in August to stimulate credit demand. GDP in 2023 has now accumulated to RMB 91.3 trillion. The production output of renewable energy products experienced particularly strong growth, with solar batteries up 63.2% YoY and EV charging piles up 34.2% YoY.

China GDP growth YoY (Trading View)

Other Headlines

Coming Up Next Week...