JPMorgan Profit Jumps on Reserve Release
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JPMorgan Chase & Co.'s third-quarter profit rose 24%, the bank said Wednesday. The bank posted a profit of $11.69 billion, or $3.74 per share, up from $9.44 billion, or $2.92 per share, a year ago. That beat the $3 per share that analysts had expected, according to FactSet. The bank freed up $2.1 billion it had set aside for soured consumer and corporate loans during the worst days of the coronavirus crisis. Excluding the boost from the release and a tax benefit, the bank's profit was $9.6 billion in the third quarter. Revenue rose 1% to $29.65 billion, falling just short of the $29.79 billion analysts had forecast. JPMorgan entered the quarter with high expectations. In July, the bank said it expected people to ramp up spending throughout the summer as the coronavirus pandemic receded. More recently, soaring oil prices and global supply-chain disruptions have sent the markets oscillating. The highly contagious Delta variant has delayed office reopenings. Revenue in the consumer bank fell 3% from a year ago. In the corporate and investment bank, revenue rose 7%. Even though JPMorgan ‘s earnings per share came in above Wall Street’s projections, the bank’s shares fell $4.36, or 2.6%, to $161.
After a cautious week so far, the Swiss stock market ended midweek trading with a slight gain. The SMI rose 0.5 per cent to 11,815 points. Among the 20 SMI stocks, there were 12 price gainers and 8 price losers. 28 (previously: 24.12) million shares were traded. Lonza had a very good run. With a performance of 2.9 per cent, the shares of the pharmaceutical supplier were among the top performing shares in the SMI. Deutsche Bank rated the new company forecast for the period 2021 to 2024 as attractive. While luxury stock Richemont (+3.0%) reacted positively to the good business figures presented by its French competitor LVMH the previous evening, Swatch shares (-0.1%) lost out. The share of index heavyweight Nestle advanced 0.6 per cent. The food company is reorganising its business geographically and in terms of personnel in order to be able to operate in a more market-oriented way. Meanwhile, shares of the other two heavyweights Roche (-0.5%) and Novartis (-0.1%) failed to score. Analysts at Morgan Stanley expect Roche to raise the company's forecast range for 2021. However, this is largely included in consensus expectations. Financials were weak. Credit Suisse and UBS were down 1.7 and 0.6 per cent respectively. Insurance stocks were also not in demand. Zurich Insurance fell by 0.6 per cent and Swiss Re lost 0.7 per cent.
European markets mostly rose after upbeat export data boosted Chinese stocks, though inflation fears remain. The Stoxx Europe 600 index closed up 0.7% at 460.4 points. In Paris, the CAC 40 and the SBF 120 gained 0.8% and 0.7%, respectively. In Frankfurt, the DAX 40 rose 0.7%, boosted by a strong rise in SAP, while the FTSE 100 in London rose 0.2%. Spie (+8.5%) withdrew from the bidding process for the acquisition of Equans, the multi-technical services business of energy group Engie (-0.2%). LVMH (+3.2%) reported slightly higher-than-expected third-quarter sales on Tuesday, driven by strong demand in Asia and the US and the lifting of health restrictions in Europe. The German software company SAP (+3.9% in Frankfurt) raised its targets for the 2021 financial year, anticipating accelerated growth in revenues from its cloud services. Good quarterly results and an increase in SAP's outlook supported the technology stocks in the SBF 120 index. Sopra Steria jumped 5% and Atos gained 2.8%, while Capgemini and Dassault Systèmes gained 4% and 3.5%, respectively. Man Group jumped 6.4% after the listed hedge fund reported a strong performance in the third quarter and said it expected the momentum to carry into the next quarter.
The S&P 500 added 13.15 points, or 0.3%, to 4363.80. The Dow Jones Industrial Average edged down 0.53 points, or less than 0.1%, to 34377.81. The tech-heavy Nasdaq Composite gained 105.71 points, or 0.7%, to 14571.64. Traders seemed to shrug off a hotter-than-expected inflation reading and confirmation of the Federal Reserve’s plans to begin reducing its bond-buying stimulus program. Fresh economic data Wednesday kept inflation concerns in focus. Consumer-price data showed U.S. inflation accelerated slightly in September, rising a seasonally adjusted 0.4% from the previous month and at a 5.4% annual rate as labor shortages and supply-chain snarls kept prices high. Third-quarter earnings season kicked off this week, and investors are parsing results for signs that supply-chain bottlenecks and higher costs for raw materials are eroding profits. Several household-name companies reported earnings Wednesday. BlackRock shares rose $31.62, or 3.8%, to $867.81 after the money-management company reported revenue and profit that beat analysts’ expectations. Delta Air Lines shares dropped $2.51, or 5.8%, to $41.03 after the company posted a quarterly profit but said it faced pressure from rising fuel prices. Apple (-0.4%) may lower its iPhone 13 production targets for 2021 due to the current microprocessor shortage, Bloomberg reported Tuesday. Qualcomm (+1.7%) announced Tuesday evening that its board of directors had authorised a new $10 billion share buyback programme. The chipmaker said it could buy back another $900 million of shares under the current programme, announced in 2018.
Japanese stocks were higher, led by gains in electronics stocks, thanks partly to continuing hopes for fiscal stimulus and economic reopening. The Nikkei Stock Average was up 1.2%. South Korea's Kospi was 1.1% higher, led by gains in chemical, steel and retail stocks. Markets in Hong Kong are closed Thursday for a holiday. Chinese stocks were mixed in early trade, with losses led by coal producers and the utilities sector and airline stocks gaining. The Shanghai Composite Index gained 0.2%.
The yield on the benchmark 10-year U.S. Treasury note finished the trading session at 1.549%, down from 1.579% at Tuesday’s close. The yield on the German Bund with the same maturity was -0.123%, down from -0.082% on Tuesday evening.
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