US earnings season kicks off in earnest on Friday as four of Wall Street’s big banks report, with weaker third-quarter profits expected.
Even though US interest rates have risen from just above zero at the start of the year to 3.25%, which would normally spell good news for lenders, this is also slowing the economy and leading to volatile markets that are putting the mockers on the formerly buoyant dealmaking cycle.
A JPMorgan director told investors last month they expected investment banking fees to fall between 45% to 50% in the third quarter.
Analysts expect net income at Citigroup Inc (NYSE:C) to plunge 32%, with earnings at Morgan Stanley seen tumbling 28% and profits at JPMorgan Chase & Co (NYSE:JPM) dropping 24%, while net income at Wells Fargo & Co is predicted to slide 17%, according to Refinitiv data.
Fund managers Ashmore Group (LSE:ASHM) PLC and Jupiter Fund Management PLC (LSE:JUP) are both down to provide trading statements on Friday, fresh from recent industry announcements about significant fund outflows in recent months.
Little improvement is expected in the underlying trends that Ashmore reported in its last update, said Peel Hunt, with outflows likely to continue.
Elsewhere in the FTSE 100, paper and cardboard maker Mondi PLC (LSE:MNDI) will also be providing a quarterly update.
Back in August it revealed “materially higher” wood costs as Europeans look for new fuel sources amid a dearth of Russian gas, which it was able to overcome thanks to strong selling prices and cost control measures.
On the outlook, chief executive Andrew King said: "Pricing remains strong going into the second half, although we do anticipate continued inflationary pressures on our cost base and ongoing supply chain challenges."
Significant announcements on Friday
Trading announcements: Ashmore Group PLC, Jupiter Fund Management PLC, Loungers PLC (AIM:LGRS), Mondi PLC
AGMs: Ashmore Group PLC, Loungers PLC, TwentyFour Income Fund Ltd (LSE:TFIF)
Economic updates: Import and Export Price Indices (US), Retail Sales (US), Business Inventories (US), University of Michigan Confidence (Prelim) (US)
US earnings: Citigroup Inc, JPMorgan Chase & Co, Morgan Stanley, Wells Fargo & Co