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Published: Apr 17, 2023
Updated: Apr 17, 2023

Global Market Insights: Mixed Earnings Results for US Banks, Inflation Concerns and Retail Sales Dip

US markets closed on a negative note on Friday despite some of the top banks beating earnings expectations in their first-quarter reports. However, the S&P500 and Nasdaq indexes still posted positive weekly gains for four out of the last five weeks. The markets were weighed down by expectations of one more rate hike in May, with the probability of a 25 bps rate hike jumping to 98%.

Inflation Concerns Linger

The inflation outlook remains a concern for the market as Fed governor Waller commented that not much progress has been made on inflation, and higher rates are needed. In contrast, US finance minister Yellen suggested that tightening lending requirements could substitute for Fed rate hikes.

Mixed Earnings Results

JP Morgan's shares surged 7% after beating Q1 earnings estimates, with a 20-25% increase in net interest income (NII), which is now guided almost 10% higher for 2023. Similarly, Citibank also beat expectations for earnings, NII, and NIM, reaffirming its outlook for FY23.

Retail Sales Dip

US retail sales declined 1% MoM in March, steeper than the estimated 0.4%. The decrease was attributed to the rise in Covid-19 cases and inflation concerns, leading to reduced consumer spending.

Consumer Sentiment Rises

In contrast, US consumer sentiment inched higher in April to 63.5, beating market expectations. Despite concerns around inflation and the possibility of higher rates, consumers seem to be optimistic about the future.

Investors looking for positive news in coming weeks

Mixed earnings results, inflation concerns, and lower-than-expected retail sales have impacted the US markets. However, consumer sentiment remains optimistic, indicating that investors are looking for positive news in the coming weeks