A positive spike in the value of Facebook’s stock brought the Nasdaq to a record breaking high on Friday. This coupled with the S&P 500 seeing a rise in value as major banks kicked off a strong fourth quarter earning session which seems to validate the Wall St. Rally we have seen in recent weeks. Wall St. has been experiencing growth since the election of President-elect Donald Trump, and if policy continues to suggest increased infrastructure spending, tax reductions and bank deregulation, the market’s strong push upward may continue. Currently stocks are trading at price to earning values that are above their historical average. Further gains will rely on S7P 500 companies delivering strong reports in the weeks ahead.
Bank of America, JPMorgan’ and Wells Fargo all posted quarterly profits well above speculators’ expectations. Public comments from the major banks all seemed optimistic in contrast to what some would believe a Trump Presidency portends for the global financial system. Wells Fargo saw the greatest increase in value ending 1.36 percent higher with J.P Morgan behind it at .53 percent. The S&P Financial sector has jumped 17 percent since Trump’s election and may continue to increase.
In an interview with Reuters, Mike Baele, the managing director with the Private Client Reserve of U.S Bank in Portland Oregon said that “Earnings are key going forward, and we're off to a decent start.”
While the market has maintained a surge overall, some commercial stops dropped marginally causing The Dow to go down as U.S retail sales for December,especially Wal Mart’s were less than expected by speculators during the holiday season.
The Nasdaq Composite IXIC increased by .48 percent closing at a record high of 5,574.12. Facebook’s 1.36 percent jump came as Raymond James upgraded the stock. According to the Thomson Reuters Datastream the S&P 500 is trading at 17 times the expected earning when compared to a ten year average. Bank stock will likely continue to stay strong as long as earning reports and faith in Trump’s campaign promises remain with investors.
In India, SGX Nifty traded 17 points or .20 percent up at 8,444 indicating a positive start for the NSE Nifty Index. Asian markets, Hang Seng and Nikkei, traded higher by .34 percent .37 percent respectively, and, while the Shangai index had a slight drop and was trading at .30 percent down at 3,1090.93. Mumbai based Reliance Industrial infrastructure saw an increase of .56%.
In London, European shares rose Monday leading to an increase by bank’s stocks with Britain’s Blue Chip Index acting as major surge driver and finishing at an all time high extending its record streak to fourteen days.
French media company Technicolor was not so lucky this week and fell 19.7 percent in their worst ever one day loss. The European banking index did well however and was the top sectoral gainer up by 2 percent with the help of strong earnings and large lenders in the U.S. Prospects of higher interest rates in the U.S economy also bolstered the index. Markus Huber a trader at City of London Markets said that "With the (U.S. Federal Reserve) having raised rates last month and is expected to undertake additional hikes in 2017, banks are gaining on popularity again between investors, especially as many funds are still underweight this sector."
The European auto index rose .8 percent but came off earlier highs pending reports that the French government was investigating Renault over suspected emissions cheating. UBI Banca surged 9.6 percent after HSBC forecast to generate a profit of 1.2 billion Euros by 2020. International markets had a good week this week with future projections looking primarily positive.
As we get closer to inauguration day, world markets seem far from unstable. If the markets are to be trusted it is highly likely that the beginning, at least, of a Trump presidency, has yet to rattle the financial engines of the world. All of this comes at a week that sees the closing of the Obama administration and its policies, raised concerns about Russia’s involvement in the United States, and speculation on financial policies of a Trump administration. Meanwhile investors continue to remain optimistic that the world is still by and large open for business, and that is a very encouraging thing.
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