Bears abandon ship after bank earnings

The week is ending on a positive note, with the FTSE 100 50 points higher as the session draws to a close, while US markets bounce back after good bank earnings says Chris Beauchamp, chief market analyst at IG.

Bears abandon ship after bank earnings

Thoughts of a bigger selloff have been banished this afternoon as a trio of US bank earnings beat expectations, restoring optimism regarding US equity markets and giving investors the chance to step back into the market.

After Alcoa’s disappointing figures earlier in the week, investors had begun to fear that this season’s figures might not paint the improving trend that had been suggested by analysts. Today’s numbers from Wells Fargo, JP Morgan and Citigroup have banished those fears, with US markets moving higher as a result. Admittedly it is Friday, so we’ll need to see these gains hold in the new week, but for now the fears of an October correction appear to have been banished.

Tesco is the big winner of the day in London, having emerged triumphant from its ‘David vs Goliath’ duel with Unilever. Perhaps investors feel more confident about backing Dave Lewis, knowing that he is evidently prepared to face down even his old employer.

It will be a busy time for markets in the coming week; US earnings season steps up a gear, as companies from across the stock market report numbers, while UK trading statements come thick and fast.

This week has demonstrated the resilience of bullish sentiments – as we have noted before, practically any dip in stock markets in the fourth quarter is a buying opportunity, and so long as upcoming figures are free of big unpleasant surprises, we could see this bounce stretch into the next few sessions.


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