Proactive Investors -
- FTSE 100 slips from early highs, up 9 points
- Miners lead risers as Chinese GDP tops forecasts
- Goldman Sachs (NYSE:NYSE:GS) shares fall in US pre-market on revenue miss
US markets seen higher
Wall Street is expected to open higher as investors digest a slew of earnings statements from large US corporates, with the quarterly reporting season so far showing that most of those that have reported already have beaten expectations.
Futures for the Dow Jones Industrial Average rose 0.1% in Tuesday pre-market trading while those for the broader S&P 500 index gained 0.4% and contracts for the Nasdaq-100 jumped 0.8%.
The main US benchmarks closed higher on Monday as results continued to come in. The DJIA closed 0.3% up at 33,987, the Nasdaq Composite added 0.3% to 12,158 and the S&P 500 also improved by 0.3% to 4,151.
Data from Bank of America (NYSE:BAC) suggests that earnings season is going well so far. Of the companies that reported during the first week, 90% beat EPS estimates, the highest such rate since 2012.
There was mixed fortunes for US banks today with Bank of America rising 1.9% in pre-market trading after its first quarter numbers beat expectations but a revenue miss at Goldman Sachs saw its shares fall back 3.3% ahead of the opening bell.
Goldman Sachs slips on revenue miss
Goldman Sachs numbers have also been released with the US investment bank reporting net revenue of US$12.22bn, 5% lower than the first quarter of 2022 but 15% higher than the fourth quarter of 2022.
The revenue number missed Street expectations of US$12.79bn and included a loss of around $470mln relating to partial sale of the Marcus loans portfolio. Shares fell 3.3% in pre-market trading in New York.
Diluted EPS was US$8.79 for the first quarter of 2023 compared with US$10.76 for the first quarter of 2022 and US$3.32 for the fourth quarter of 2022.
Net revenues in Global Banking & Markets were US$8.44bn for the quarter, 16% lower than a strong first quarter of 2022 and 30% higher than the fourth quarter of 2022.
Investment banking fees were US$1.58bn, 26% lower than the first quarter of 2022, primarily due to significantly lower net revenues in Advisory.
The bade debt picture improved with a net benefit of US$171 million in the quarter compared with provisions of US$561mln for the first quarter of 2022 and US$972mln for the fourth quarter of 2022.
Global Banking & Markets generated quarterly net revenues of US$8.44bn, driven by strong performances in Fixed Income, Currency and Commodities and Equities, including record quarterly net revenues in Equities financing.
Bank of America rises after results top forecasts
A busy day of results across the pond and the numbers are already rolling in.
Bank of America reported first quarter a 15% increase in net income to US$8.2bn or US$0.94 per diluted share, compared to $7.1 billion, or $0.80 per diluted share a year prior. Revenue rose 13% to US$26.3bn.
The figures for revenue and EPS beat Street expectations of US$25.32bn and US$0.81 respectively and sent shares 2.6% higher in pre-market trading.
Bank debt provisions edged up to US$931mln from US$901mln and the bank’s Tier 1 ratio improved to 11.4%, up 14 percentage points on the previous quarter.
Net income in its Consumer Banking division totalled US$3.1bn and Global Wealth and Investment Management US$917mln. In Global Banking net income reached US$2.6bn, its second best quarter ever while in Global Markets net income was US$1.7bn.
Chair and CEO Brian Moynihan said: “Every business segment performed well as we grew client relationships and accounts organically and at a strong pace.”
He highlighted a “seventh straight quarter of operating leverage,” a further strengthened balance sheet and maintained strong liquidity despite an economy with modestly slower GDP growth.
Goldman Sachs and Netflix (NASDAQ:NFLX) are among those reporting numbers today.
BAT faces Italian probe
Italy's competition authority is investigating British American Tobacco PLC's Italian division and e-commerce company Amazon.com Inc (NASDAQ:AMZN) for alleged misleading advertising of a heated tobacco product.
The watchdog said publicity for BAT's Glo Hyper X2 device omitted information or provided "misleading information about the health risks of the use of the product, and the prohibition on its use by minors".
Heated tobacco products, or HTPs, use a high heat to decompose tobacco, via a process called pyrolysis, which does not set it on fire or burn it, therefore avoiding creating smoke.
The Glo Hyper X2 was launched last July, pitched as a "reduced-risk product" for adult smokers who want to give up cigarettes.
The Italian watchdog noted that tobacco contains nicotine, "a substance which has the capacity to cause addiction and which, in high concentrations, is harmful to health".
But it said promotional materials for the Glo Hyper X2 do not properly explain "that its use involves the emission of nicotine – in some messages, it is even explicitly stated that consumption is 'without nicotine'."
Shares in BAT fell 0.5% to 2,832p.
Coinbase would look at London listing
Crypto exchange Coinbase (NASDAQ:COIN) might well have listed in London rather than New York if it began the process toward a stock market float now, its co-founder and chief executive has said.
Brian Armstrong said he felt Britain is "leaning into" crypto following comments from the Prime Minister and the City minister Andrew Griffith.
By contrast he said the regulatory approach in the US had left him considering moving Coinbase's headquarters out of the country.
Armstrong told BBC Radio 4: "We started in the US so it was natural for us to list there but, honestly, given that recently the UK has been quite positive on crypto so in a different world, going back, we may have considered it."
"I do think the US risks falling a little bit behind here if some of the regulators don't engage further with the industry and create that clear regulatory environment."
Armstrong said "anything is on the table," when asked by former chancellor George Osborne at a fintech conference in London today whether the company would consider moving to Britain.