Tue, May 18, 2021 @ 10:14 GMT
Home Contributors Fundamental Analysis Robust Earnings Fail To Drive Equities Higher

Robust Earnings Fail To Drive Equities Higher

The US earnings season kicked off yesterday with the largest US banks proving once again they can top analysts’ expectations by wide margins. Growth in investment banking, capital markets, and paring back loan loss reserves were major factors contributing to the bottom lines of JP Morgan, Goldman Sachs, and Wells Fargo. Citigroup and Bank of America will also announce results today and it will be interesting to see if the positives surprises continue.

Despite the strong kickoff in earnings this season, the wider markets were not overly excited. The one percent drop in technology and consumer cyclical sectors overshadowed the rally in energy and financial stocks. Coinbase’s direct listing on the Nasdaq exchange actually made the biggest headlines yesterday, with the company valued at $86 billion at the end of a volatile session having reached a market cap of $112 billion earlier in the day.

While there’s lot of excitement in equities, traders are also keeping an eye on the fixed income markets. US Treasuries are showing that investors are becoming more convinced by the Federal Reserve’s message that inflation spikes are only transitory and won’t lead to a tightening of policy anytime soon. US 10-year Treasury yields dropped to a low of 1.61% yesterday, dragging the dollar close to a one-month low. The drop in yields also explains the recent outperformance of growth stocks relative to value.

Traders will be closely watching today’s US retail sales data for March and weekly jobless claims. An upside surprise in retails sales won’t necessarily translate into a higher dollar. Tuesday’s CPI data release topped market forecasts and increased at the largest annual pace in almost three years, but still, the dollar ticked lower. For the greenback to resume this year’s uptrend, it requires strong positive surprises on the economic front that convince investors again of increasing inflationary pressures.


The FXTM brand provides international brokerage services and gives access to the global currency markets, offering trading in forex, precious metals, Share CFDs, ETF CFDs and CFDs on Commodity Futures. Trading is available via the MT4 and MT5 platforms with spreads starting from just 1.3 on Standard trading accounts and from 0.1 on ECN trading accounts. Bespoke trading support and services are provided based on each client's needs and ambitions - from novices, to experienced traders and institutional investors. ForexTime Limited is regulated by the Cyprus Securities and Exchange Commission (CySEC), with license number 185/12, licensed by South Africa's FSB with FSP number 46614, and registered with the UK FCA under reference number 600475. FT Global Limited is regulated by the International Financial Services Commission (IFSC) with license numbers IFSC/60/345/TS and IFSC/60/345/APM.

Featured Analysis

Learn Forex Trading