Bank profits rise, shares slip, and markets wait on prices

Wall Street's banks open the season

The reporting season for America's big banks began on Tuesday, and the headline numbers were good. The Wall Street Journal reported that profit jumped at both JPMorgan and Goldman Sachs as the large lenders kicked off earnings. Euronews described the sector's results as strong.

Share prices did not follow. US stocks ticked down on the day, according to the Journal, which put it plainly: bank earnings did not excite. A second Journal piece ran under the headline that bank earnings look strong but markets shrug. The paper's live coverage of the session told the same story, with stocks slipping despite solid Wall Street results. Good numbers, in other words, were not enough to lift the wider market, and the banks themselves offered no lead.

Two reasons for the reserve surfaced in the coverage. The Journal argued that rising interest rates threaten to spoil the party for the big banks. Euronews wrote that economic risks cloud the sector's outlook, even as earnings come in strong. Neither concern relates to the period just reported. Both relate to the quarters ahead, and to the direction of rates, which is where Tuesday's other markets were looking.

Bank of America, meanwhile, has been fined $1.2 billion over money laundering failures, Euronews reported early on Wednesday.

Yields, inflation and a warning from the IMF

Bond markets spent Tuesday waiting. Treasury and eurozone yields declined as markets looked ahead to US inflation data, the Journal reported. CNBC set out what is expected: the latest consumer price index, for September, is forecast to show price increases accelerating.

The waiting extended overnight into Asia. Gold held steady ahead of the figures. The Singapore dollar was steady too, supported by a stronger-than-expected GDP print, as Asian currencies consolidated before the US release.

The longer view was less settled. The International Monetary Fund warned that bond yields could see a 'disorderly' spike as debt and inflation risks worsen, CNBC reported. Not every buyer appears deterred by the level of yields. The South China Morning Post wrote that Hong Kong investors are warming to US Treasury bonds, with yields at a 20-year high. The same high yields that worry the Fund are, for those investors, the draw.

Two stories tied prices and risk to the weather. CNBC reported that a so-called 'Godzilla El Niño' is wreaking havoc with the Philippine central bank's inflation forecasts. In the United States, the Journal wrote that municipal bond investors face elevated risks from the rising costs of natural disasters.

Costs at home, an AI wobble abroad

In Britain the inflation story sat closer to the kitchen table. Grocery price inflation rose again, according to both the Guardian and Sky News. Sky pointed to energy costs weighing on shoppers; the Guardian described shoppers seeking out deals. The BBC reported that heating oil users face a choice between fuel and food this winter.

The IMF's view of the UK was mixed. Sky News reported that the Fund expects the economy to grow more than expected, but that households face a sharper rise in inflation.

Policy and retail news filled the rest of the domestic page. Jonathan Reynolds said the UK will not put tariffs on Chinese vehicles, the Guardian reported. The chief executive of B&Q and Screwfix told City A.M. that Healey must cut business rates. The owner of Poundstretcher withdrew its rescue bid for rival Poundland, Sky News reported. City A.M.'s morning blog expected the FTSE 100 to gain on Wednesday, with oil rising as Saudi Arabia and the Houthis trade strikes.

Further afield, the Journal reported that the failure of Australia's largest IPO in decades has sent tremors through the AI trade. The same boom delivered a record profit at Samsung, This is Money wrote, on surging demand for memory chips. In Hong Kong, a watchdog froze US$590 million of assets over alleged IPO fraud schemes.