Mint Market Watch - 18 Oct 22
182 US Companies report results this week. Rio Tinto lowers full year guidance for Copper & Iron Ore. Charles Schwab reports record EPS. BoA beats earnings on rising net income.
182 US Companies are reporting results this week. The earnings season goes into full gear this week.
Banks gain from rising rates tailwinds. Rio lowers guidance for Copper (190k-220k tons) & Iron Ore (320M tons). Japan’s industrial production increased 3.4% MoM. China economic data delayed.
Inflation in Italy rises to 9.4% YoY from 9.1% YoY. New Zealand inflation comes in above expectations for Q3 at 7.2% YoY. RBA minutes notes inflation too high & more rate rises were in store.
BoA net income falls 9% beats expectations due to 24% rise in net interest income. BNY Mellon also beats earnings due to higher interest rates.
Charles Schwab reports record EPS as net income jumps 32%.
Japan’s industrial production increased 3.4% MoM in September (2.7% E).
Top Economic Events to watch:
UK CPI
UK GDP
EU CPI
China GDP
China Industrial Production
US Fed Beige Book
Canada CPI
US Initial Jobless Claims
US Existing Home Sales
Japan CPI
Top Quarterly Results to look out for:
Bank of America (Monday)
J&J (Tuesday)
American Express (Friday)
Tesla (Wednesday)
P&G (Wednesday)
Nestle (Wednesday)
Netflix (Tuesday)
Rio Tinto (Monday)
RIL (Friday)
BNY Mellon (Monday)
Japan industrial production rises 3.4% in September
Japan’s industrial production increased 3.4% MoM in September (2.7% E) after a 0.8% increase in August. On a YoY basis, September Industrial Production rose 5.8%. (Nasdaq)
Inflation in Italy reaches 9.4% up from 9.1% in August
Italy’s EU-harmonized CPI for September rose 1.6% MoM (1.7% E) marking a 9.4% YoY increase (9.5% E). This is higher than August’s reading of 9.1% YoY.
The main domestic price index (NIC) rose 0.3% MoM or 8.9% annually. Meanwhile, core inflation, which excludes food and energy, reached 5.3% YoY up from 4.9% YoY in August. (Nasdaq)
New Zealand inflation higher than expectations at 7.2%
New Zealand CPI showed 7.2% YoY increase in Q3 (6.6% E). Inflation slowed slightly from 7.3% in Q2 but remain just below the 30-year high. CPI rose 2.2% QoQ (1.6% E) following a 1.7% increase in Q2. The main drivers of inflation were rising prices for construction, local government taxes and rentals for housing.
Statistics New Zealand added that annual non-tradable inflation - products made in New Zealand for domestic consumption - rose 6.6%, the highest since it began tracking that data in June 2002.
This higher-than-expected inflation reading boosts the chances that RBNZ will become more hawkish going forward. ASB Bank’s OCR forecast now expects a 75-bps rate hike in November and 2 more subsequent 50 bps rate hikes in 2023. The RBNZ has hiked interest rates by 325 bps since last October. (Reuters)
RBA meeting minutes point to further hikes but members see need for slow adjustment in order to assess the uncertain environment
Minutes from the RBA’s monetary policy meeting from October 4th were released. At the meeting, the RBA decided to hike interest rates by 25bps, lower than the expected 50bps. The minutes showed that the RBA noted that rates had already risen by 250 bps since May and much of that was yet to feed through to mortgage payments. They also noted the tight labor market.
Members noted that, in an uncertain environment, there was an argument to slow the adjustment of policy for a time to assess the effects of the significant increase in interest rates to date and the evolving economic outlook," the minutes showed.
Still, the minutes noted that inflation was still too high and further interest rate increases were in store. (fxstreet)
China economic data delayed
China delayed the release of economic indicators scheduled for yesterday. The highly unusual delay comes amid the week-long congress of the ruling Communist Party, a twice-a-decade event that is an especially sensitive time in China.
"The delayed economic data release is not because of bad economic recovery but the ongoing congress, as authorities want media and the public to concentrate on the key messages delivered by the big event," said Bruce Pang, chief economist at Jones Lang Lasalle in Hong Kong. (Reuters)
Rio Tinto lowers refined-copper production guidance for full year
Rio Tinto downgraded its refined copper guidance for 2022. They also stated that they expect Australian iron-ore shipments to be on the lower end of previous guidance.
Rio Tinto said annual iron ore shipments will be closer to 320M tons from the previous guidance of 320-334M tons. They stated that outlook was dependent on whether it could scale up operations at Gudai-Darri and Robe Valley. Iron ore production in Q3 was 1% higher YoY at 84.3M tons and 7% higher QoQ. Meanwhile, shipments of iron ore were at 82.9M tons, 1% lower YoY and 4% higher QoQ. This was despite two unplanned rail outages.
Their Aluminum production was at 0.8M tons, 2% lower YoY and 4% higher QoQ.
Copper production was 19% higher YoY and 50% higher QoQ with significant progress into higher grades. However, refined copper production guidance was reduced to 190k-220k tons from 230k-290k tons. The lowered guidance shows further downside risk associated with Kennecott’s smelter and refinery performance until rebuilding which is planned for Q2 2023. (Marketwatch)
Bank of America profit above expectations on higher net interest income
Bank of America reported EPS of 0.81 (0.78 E) on revenue of $24.5B ($23.56B E), up 8% YoY. However, net income declined 9% to $6.58B. Net interest income increased 24% YoY to $13.8 billion as the bank benefited from higher interest rates.
Average loan balances rose 12% to $1 trillion, led by “strong” commercial loan growth as well as higher credit card balances. However, the bank’s net charge-offs, which is money it does not expect to collect from outstanding loans, increased 12% to $520 million.
Client balances in BoA’s global wealth and investment management unit fell 12% to $3.2 trillion as rocky financial markets took their toll. Total investment banking fees decreased by 46% to $1.2 billion. However, market volatility stoked the bank’s markets unit, which booked a 13% increase in trading revenue to $4.1 billion. Within that, fixed income trading revenue rose 27% to $2.6 billion, while equities trading dropped 4% to $1.5 billion.
BoA’s customers also stepped up spending on credit cards with credit and debit card spending up 9% to $218B.
BoA reported a net reserve build of $378 million. (Marketwatch)
BNY Mellon beats earnings as they benefit from higher interest rates
BNY Mellon reported EPS of 1.21 (1.11 E) on revenue of $4.28B ($4.2B E), up 6% YoY. Net income fell 62% to $319M or 0.39 per share. A significant portion of costs were goodwill impairment charges and litigation costs totaling $45M. Return on Equity excluding notable items was 22%.
The bank performed better than expected due to higher interest rates and continued strength in client volumes and balances in Securities Services unit and Market and Wealth Services Business.
BNY Mellon shares rose 5% following the announcement of results. (Marketwatch)
Charles Schwab reports record EPS as net income jumps 32%
Charles Schwab reported adjusted EPS of 1.1 (1.05 E) on revenue of $5.5B ($5.42B E), up 20% YoY. The brokerage firm said its third-quarter net income jumped 32% YoY to $2.02 billion, to a record of 0.99 per share.
Brokerage accounts rose 4% to 34 million, while record third-quarter retail inflows totaled $115 billion at an annualized growth rate of 7%. (Marketwatch)
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