Banks beat to kick-off earnings season

Summary:

• JP Morgan, Wells Fargo and Citigroup report latest earnings

• All 3 banks rising in the pre-market after positive results

• US indices green as they look to recover recent declines

The 3rd quarter earnings season has begun in earnest today with 3 of the big banks all posting their latest trading results. JP Morgan, Wells Fargo and Citigroup all announced a solid set of figures and the shares have all climbed in the pre market. The results are shown below in the format of actual vs expected:

JP Morgan:

• EPS: $2.34 vs $2.24

• Revenue: $27.3B vs $27.5B

           Citigroup:

•      EPS: $1.73 vs $1.67

• Revenue: $18.39 vs $18.41

Wells Fargo:

• EPS: $1.13 vs $1.17

• Revenue: $21.9B vs $21.63B

Summarising the results, both JP Morgan and Citigroup delivered better than expected earnings numbers but the revenue was lower than forecast in both cases. It was the opposite for Well Fargo, who beat on the top line but missed on the bottom. JPMorgan attributed the beat on earnings to higher interest rates and a growth in loans which helped the bank offset weakness in bond trading revenue. CEO Jamie Dimon seemed pleased with the economic backdrop at present but he did have a note of caution in his comments.  “The U.S. and the global economy continue to show strength, despite increasing economic and geopolitical uncertainties, which at some point in the future may have negative effects on the economy,” Dimon said.

The banks have seen their share prices caught up in the larger market rout so far this week, but all 3 are called to open higher today with gains of between 1.4% for JP Morgan and 2.8% for Citigroup seen in the pre-market at the time of writing. Let’s now turn to the charts.

JP Morgan

JP Morgan shares fell below their 200 day SMA during yesterday’s session but are called to begin higher this afternoon. Recent lows of 107.39 could be seen as possible support but if the stock continues lower then a retest of the summer low around 102 may be on the cards. Source: xStation

Citigroup

Citigroup has also recently fallen below its 200 day SMA. The SMA itself is more negative here as it is pointing lower. Lows of 68.58 are possible support while longs will want to see price get back above the SMA around 71.70. Source: xStation

Wells Fargo

Wells Fargo is perhaps the weakest of all the charts and ended yesterday the furthest from recent highs. Thursday’s low of 51.25 is a level to look to on the downside, but a break below there would open up a possible retest of 49.25. The 200 day SMA is currently around 56.50 and it’s not until price gets above there that the longer term trend can be seen to have turned higher. Source: xStation