Stocks Rise on Strong Bank Earnings
By Jon Sindreu and Joanne Chiu
Global stocks rose Friday on the back of stronger-than-expected earnings by major U.S. banks, amid signs that a trade spat among the world's top economies is easing.
The Dow Jones Industrial Average added 96 points, or 0.4%, to 24579 shortly after the opening bell. The S&P 500 gained 0.4%, and the Nasdaq Composite rose 0.4%.
The Stoxx Europe 600 climbed 0.4%, with the export-heavy German DAX up 0.7%, after Japan's Nikkei Stock Average closed up 0.6%.
Investors' focus is shifting to the first-quarter earnings season. Analysts believe this is likely to give stock markets a bump, since expectations about the strength of the global economy and corporate profitability remain very robust.
Shares of Citigroup added 0.5%, but JPMorgan slipped 0.4% and Wells Fargo fell 1.6%, even as first-quarter earnings for all three lenders came in stronger than analysts were expecting. JPMorgan's profits hit a new all-time high after a 35% quarterly increase. Its earnings were boosted by a stronger economy, higher interest rates and savings from the new tax bill, the banks said.
The KBW Bank Index of U.S. banks had already risen 2.2% Thursday, after asset-management giant BlackRock reported profit that exceeded expectations.
"We are quite constructive over the next few years on equity markets generally," said Dale Winner, a fund manager at Wells Fargo Asset Management, a firm with $500 billion under supervision. "The pace of growth might be slowing slightly but we have a world that is in synchronized growth right now and that's very unusual."
The week has been broadly positive for equities, despite growing concerns about a possible U.S. military intervention in Syria. News that President Donald Trump has asked his top economic advisers to study re-entering the Trans-Pacific Partnership negotiations -- from which he withdrew early in his presidency -- has boosted investor sentiment.
"There's a good probability that the [trade] barriers are not going to be put in place," said Chris Hiorns, a fund manager at EdenTree Investment Management, who has used recent selloffs to buy shares in companies he likes. "We see this more as an opportunity than a threat."
Brent futures, the global oil benchmark, added 0.3% at $72.22 a barrel after hitting their highest since late 2014 this week on concerns that military conflict in the Middle East would disrupt supply. The International Energy Agency said that commercial oil inventories for advanced nations were at their lowest since April 2015 -- a sign that demand is increasing -- but warned that trade disputes could dent the world's appetite for crude.
The U.S. dollar and 10-year Treasurys were mostly unchanged Friday. The pound rose 0.3% against the euro to its highest level since mid-2017.
In Europe, stocks in L'Oréal SA rose 0.8% after the French cosmetics company reported better-than-expected sales growth for the first quarter, even though foreign revenues were dented by the strength of the euro. Meanwhile, Germany's Volkswagen AG gained 0.6% after replacing chief executive Matthias Mueller and announcing structural changes to improve its economies of scale.
By contrast, the FTSE 100 was flat on the day after accountancy software developer Sage Group released disappointing earnings and cut its revenue forecasts for the year and aircraft-engine maker Rolls-Royce Holdings PLC announced higher inspections costs for some of its products, driving shares in the companies down 11% and 0.9%, respectively.
Chinese equities gave up some of their early gains Friday when investors were caught off guard by official data that showed China's trade balance swung to a deficit of $5 billion in March from a $34 billion surplus in February. Standard Chartered economist Shuang Ding attributed the deficit to one-off seasonal factors.
The Hong Kong Monetary Authority was forced to buy Hong Kong dollars for the second time this week to defend the peg against the U.S. dollar.