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The Trader: Stocks rally, inflation sticks, earnings on tap

Stock markets update as we enter US earnings season.
The Trader: Stocks rally, inflation sticks, earnings on tap
  • JPMorgan release decent figures
  • Fed minutes suggest tapering is on the cards
  • Gold approaches $1,800

Taking stock... Stock markets rose in early trade as investors parsed the latest signs of inflation and the central bank reaction function, whilst earnings season has got underway across the pond with some decent numbers from JPMorgan. Wall Street rose mildly, snapping a three-day losing streak. VIXX is off sharply, which maybe reflects increasing comfort that the market has stabilised, if not able to make new highs just yet. 

Earnings season... Earnings season gives investors a chance to ignore some of the noise and market narratives and get into actual numbers. Only this time we expect the corporate reporting season to underline the inflation narrative – the question is whether it’s just inflation or stagflation. Probably we get a bit of both – watch for sandbagging. JPMorgan numbers were positive, but as ever the stock fell despite beating on the top and bottom line. Profits were boosted by better-than-expected loan losses. Trading revenues were robust, asset and wealth management strong, loan growth improving and likely to pick up in 2022. Delta Air Lines also posted numbers that topped expectations including a first quarterly profit ex-state aid since the pandemic. But higher fuel costs and other expenses will hit the fourth quarter profit – shares fell over 5 per cent. Today sees Citigroup, Bank of America, Morgan Stanley and Wells Fargo report.

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