Good morning. Here’s what you need to know.
JPMorgan earnings. JPMorgan Chase reported earnings of $US1.28 per share for the quarter ended March 31, below the consensus $US1.46 estimate. Revenues were $US23.9 billion, below the $US24.48 billion consensus estimate. The bank cited industry-wide headwinds in the markets and mortgages businesses. Shares are down about 2% in pre-market trading.
Wells Fargo earnings. Wells Fargo also reports earnings this morning. Analysts predict the bank made $US0.97 per share in Q1, up from $US0.92 in the same quarter last year. Revenues are expected to come in at $US20.6 billion, down from $US21.3 billion a year ago. Shares are down slightly in pre-market trading following JPMorgan’s earnings announcement.
Markets sliding. Asian stock markets sold off overnight and European markets are down substantially following a nasty afternoon session in the U.S. on Thursday. S&P 500 futures have fallen deep into the red following JPMorgan’s lackluster earnings announcement. The U.S. dollar is down slightly against the Japanese yen and up slightly against the euro, and U.S. Treasury note futures have just gone positive on the day.
BoJ minutes. The release of the minutes from the Bank of Japan’s March meeting revealed an agreement that the Japanese economy was improving in line with expectations and that the recent sales tax hike would not derail consumer spending. “Clearly there is no sense from these minutes of any concern over the outlook for the economy that would indicate a need to change monetary policy,” says Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ. “The minutes did note the potential hit from the sales tax increase and that the impact needed to be monitored — but the message that ‘our monetary stance is working’ was very clear.”
Chinese inflation. China’s consumer price index rose 2.4% from a year earlier in March, up from 2.0% in February but right in line with expectations. “Inflation remains a food story in China,” says Marc Chandler, global head of currency strategy at Brown Brothers Harriman. “Non-food prices have risen 1.5% from a year ago, down from 1.6% in February. Food price growth accelerated to 4.1% in March from a 2.7% year-over-year pace in February.” Producer prices fell 2.3% from the previous year in March, slightly more than the expected 2.2% drop.
China auto sales. The outsized growth in auto sales China has enjoyed in recent years is slowing. Sales rose 7.9% in March from a year earlier, down from the 11% growth rate recorded in the January-February period. Minivan sales fell 23%.
German inflation. Germany’s consumer price index rose 1.0% from a year earlier in March, unchanged from February’s pace and in line with consensus estimates. While inflation held steady in Germany, it fell in many other euro zone member states last month, including France and Italy. Some believe these weak inflation readings will put more pressure on the European Central Bank to take policy action if they continue.
Rating changes. Standard & Poor’s maintained Finland’s sovereign credit rating at AAA, but revised the outlook to negative from stable. “The action puts more pressure on the already shaky government and will deliver a hit to Finnish bonds, very dependent on the highest ratings,” says Jan von Gerich, chief strategist for developed markets at Nordea. Elsewhere, Fitch maintained its BB+ rating on Portugal, but revised the outlook to positive, while Moody’s maintained its Baa3 rating on Turkey, but revised the outlook to negative.
Producer prices. U.S. producer price index data are released at 8:30 AM ET. Economists predict prices rose 1.1% year over year in March, up from 0.9% in February. Excluding food and energy, prices are expected to have risen 1.1% year over year, unchanged from February.
Consumer confidence. The University of Michigan releases the preliminary results of its April consumer confidence survey at 9:55 AM. Economists predict the report’s headline index ticked up to 81 from March’s 80 reading.
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