Here are five things you need to know this morning:
In the driver seat: Markets are being driven by two factors this morning. First, oil. The price of crude is surging more than three per cent right now after the U.S. and U.K. launched about 70 airstrikes in Yemen early this morning in retaliation against Houthi attacks on commercial vessels in the Red Sea. Those Red Sea attacks have disrupted global supply chains as freight carriers re-route away from the trade route. It’s affecting the oil producing regions, but it’s also an inflationary pressure all investors must consider. Speaking of which, we just got a read of producer prices in the U.S. that came in cooler than expected. The second driver is earnings. The reaction to U.S. bank earnings is mixed (more on that below). Meanwhile, the most influential stock on the Dow Jones Industrial Average, United Health, is under big pressure after medical costs surged. It’s taking down the health insurance group this morning.
That Jamie Dimon: JP Morgan is the clear winner out of the big four U.S. banks that reported earnings this morning. Shares are poised to open at a record high, if pre-market gains hold. Net interest income – the difference between what it pays in deposits and makes on loans – hit a record for the seventh consecutive quarter. JP Morgan is forecasting that 2024 will be even better on that measure. There were some blemishes. Investment banking growth wasn’t as much as hoped, provisions for credit losses higher than expected and expenses jumped nearly 30 per cent. Still, the results are better than what we’ve seen from peers. Bank of America saw revenue decline in almost every segment, profit was worse than expected, bond trading profit fell and the bank’s net interest income fell five per cent. Wells Fargo is also under pressure even as earnings beat expectations. Costs were higher than expected. Citi is an interesting case. CEO Jane Fraser called the results “very disappointing.” Sales and quarterly loss were worse than expected. But the stock has been all over the place this morning. Fraser is committing to turn things around with even more job cuts, planning to let at least 20,000 people go over the “medium turn.” All the banks saw their results muddled by replenishments they had to make to the FDIC’s main fund after last year’s bank failures.
How soon can you start?: Gildan Activewear is moving up the start date of its new CEO by a month. The company says Vince Tyra will begin his new job next Monday. Gildan says the move will allow Tyra to engage early with key stakeholders and bring needed stability and leadership to the company. It defies the call by several top shareholders to reinstate co-founding CEO Glenn Chamandy. Clearly the board is not bowing to the pressure from Browning West, Turtlecreek and Jarislowsky Fraser.
That’s show business, baby: We will watch shares of Corus Entertainment this morning after the media company reported better-than-expected profit, even as revenue fell more than expected. Part of the beat was because they didn’t have to pay for as much content due to the Hollywood strikes. Hardly cause for comfort. The company is still struggling with a major advertising slump. Ad revenue dropped 16 per cent and Corus is forecasting for TV ad revenues to decline in the next quarter as well.
All aglow: The world’s largest uranium producer, Kazatomprom, announcing it will be cutting its 2024 production due to chemical shortages and construction delays. This news is sending shares of rival Cameco higher this morning as uranium prices surged. Uranium stocks are likely to radiate on the TSX this morning and continue their already white-hot momentum. Cameco is poised to start the day at a record high. We will watch shares of Denison Mines and NexGen as well.