US banks start the earnings season next week

The US banks will start the earnings season during next week. For example Citigroup, Wells Fargo, JP Morgan, Goldman Sachs and Bank of America will be in the headlines. One of the big questions is the low interest rates and how the banks are coping with the margins.

It is also a question about the timing. How quickly the banks can swift the low rates to deposits? On the other hand mortgage loans are expected to have shown good trend for banks during the third quarter.

For investment bankers, the recent office-rentals company WeWork´s failed IPO listing might show some write offs in the balance sheet. The market valuation for the WeWork was expected to be around 47 billion dollars before the financial worries started.

The financial markets in general have faced the US China trade talks as an issue for market volatility. Now, when the first phase of the deal between the US and China, has been announced on Friday, the situation is expected to calm down a little when more information of the deal will be revealed.

The market speculation of the low interest rates policy in Europe, US and other Asian countries, is expected to continue while for example the US Central Bank Federal Reserve, Fed is expected to make one rate cut in October, according to Reuters.

The reason for low interest rates policy is the global growth concerns due to geopolitical differences, several trade talks and Brexit. In the UK, the Prime Minister Boris Johnson has said on Sunday that he believes the deal can be reached. On the other hand, the EU´s opinion is that the Brexit Plan is not good enough for the EU leaders Summit on the 17-18th October in Brussels.

 

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Trump to meet Chinese top negotiator Liu on Friday

The US president Donald Trump will meet the top trade negotiator from China  in Washington on Friday.  According to his Twitter, he will meet Mr Liu He in the White House.

According to Bloomberg, last week the US Administration approved licenses for some American companies to sell tech goods to Huawei Technologies. And China agreed to buy more US agricultural products.

The latest US China trade news have lifted the stock markets and Dow Jones index is now trading up 0,62 %, S&P 500 -index up 0,60% and Nasdaq index up 0,64%. In London, the stocks were also up 0,38 %.

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US stocks down – manufacturing data and trade tariffs

The US equity markets were clearly down in New York on Wednesday. The global growth concerns related to recent manufacturing and car sales data were the primary reasons. Dow Jones lost 1,86 % to 26078 points, the S&P 500 -index 1,79 % to 2887 points and the technology Nasdaq-index declined 1,56 % to 7785 points.

The US manufacturing data showed the global growth concern is having impact on the US economy. The US China trade talks have put pressures on the US manufacturing and for example the Ford Motor Company released its car sales figures, which were showing a decline in the third quarter.  Also the declining figures in German manufacturing is one part of the global concern.

Tesla (TSLA) also announced its third quarter deliveries, which were approximately 97,000 vehicles, according to the company release. According to Tesla the total deliveries were at record level, but according to Reuters the deliveries were down to Wall Street expectations and the share fell over 6 % after the bell. Last week the CEO Elon Musk was quoting that the company may reach a six-figures deliveries.

The US also announced a new trade tariffs to the EU related to the WTO Airbus decision. The new tariffs would include 7,5 billion dollars worth of goods. According to Bloomberg this would mean a new 10 % tariffs to aircraft goods and 25 % tariffs on farming and other industrial items. The new tariffs would be effective by October the 18th.

In the UK the FTSE -index also declined 3,23 % to 7122 points. The UK Prime Minister Boris Johnson delivered the new Brexit proposal to the EU. The country is aiming the EU leaders summit on the October 17th in order to seek the deal with the EU.

In Germany the DAX-index closed down 2,76  % to 11925 points and in France the CAC 40-index declined 3,12 % to 5422 points.

 

 

 

 

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Stocks mixed in New York – outlook unclear

The stocks ended mixed in New York after the Federal Reserve rate cut on Wednesday. The Dow Jones ended up 0,31% to 27147 points, but the tech-heavy Nasdaq lost 0,11% to 8177 points.

The messages from the Fed were clear – the central bank is ready to act more if needed. The Fed also mentioned that the central bank will keep the reserves supply sufficient over time. The Fed Chairman Jerome Powell said that the global economic outlook is still uncertain due to trade talks with China and the Brexit-situation.

The markets are still expecting another rate cut for this year. On Thursday, the Bank of England and the Bank of Japan will also have their own meetings.

The negative rates are common for government bonds in Europe. For example the German 10 year bond was trading -0,51 % and the 10 year Dutch bond was -0,37 %. Bank of America Merrill Lynch senior analyst said in Bloomberg that US bonds may start to outperform Russel small cap. Much remain to be seen related to October and for example to the new trade talks with US China level.

The large S&P 500 index ended up 0,03 % to 3006 points while the Nyse closed down -0,09 % to 13 119 points. The Brent oil was trading down – 1,39% to 63 dollars after the highs due to the oil attacks in Saudi Arabia last weekend.

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Trump to delay China tariffs by two weeks

The US President Donald Trump has said the US will delay some Chinese tariffs related to 250 billion dollars in the beginning of October 1st.

– At the request of the Vice Premier of China, Liu He, and due to the fact that the People´s Republic of China will be celebrating their 70th Anniversary on October 1st, we have agreed, as a gesture of good will, to move the increased tariffs on 250 billion dollars worth of goods (25% to 30%) from October 1st to October 15th, he tweeted.

The US and China have also earlier agreed that they will start the trade negotiations again in October.

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US-China trade talks continue – Asia shares up

The US and China governments have confirmed that the countries will continue the trade talks again in October. The parties will seek to form a favourable dialogue in order to proceed with the trade negotiations.

According to Wall Street Journal, Chinese Vice Premier Liu He, Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke by phone on Thursday morning Bejing time. Both countries are in the process of raising tariffs if there is no new agreement.

The news was well received by the financial markets and the Asian shares were trading up on Thursday. Nikkei-index was up 2,42 % to 21 148 points, the Hang Seng in Hong Kong up 0,24 % to 26 586 points and the CSI in Shanghai +1,17% to 3952 points.

The dollar was trading up 0,18% to 106,57 yens. The UK sterling was trading down 0,09% to 1,22 dollars after the Brexit votes on Wednesday in London. The UK Parliament decided to block the no-deal Brexit and to prevent the snap elections as well. The voting means that the UK can extend the trade talks with the EU at the end of January 2020.

 

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Trump: China is willing to make a deal

The US President Donald Trump said to media representatives that he believes China is willing to make a trade deal. He told media that if the trade war is to prolonged the US will benefit more from it. He was speaking in Morristown before boarding Air Force One on Thursday.

According to Wall Street Journal, President Trump has also asked White House advisers to analyse if the Danish owned Greenland would be for sale. The idea of buying the Danish governed island would be in the national security interest, while one of the US Air bases is located on the island.

The speculation of the idea has come into public while Mr Trump will be visiting Denmark during September. None of the parties have responded to a request for comment, the newspaper says.

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