Andrea Innocenti The global financial landscape is marked by two parallel dynamics: in Europe, banking stocks are fueling renewed market momentum, while in the United States, major financial institutions are preparing to publish their third-quarter results, providing insights into the health of the American economy.
Banks are driving the Milan Stock Exchange
The Stoxx Europe 600 index gained 0,6% on the day, thanks to a rebound in the banking sector , which had fallen 8% in the previous two weeks. Performance on the Milan Stock Exchange was particularly strong: Campari rose 2,99%, Avio 2,75%, and Nexi 2,47%. Banks also posted significant gains: BPER +2,18%, Mediobanca +1,3%, Intesa Sanpaolo +1,11%, Banco BPM +0,88%, and UniCredit +0,16%.
Other sectors under pressure
Meanwhile, telecommunications and technology stocks experienced slight profit-taking, with TIM down 1,2% and Poste Italiane posting a moderate recovery (+1%). The group increased its stake in TIM to 86,95%, making the risk/reward ratio attractive again, according to Kepler analysis.
The quarterly reports of the main American banks
In the United States, earnings week began with the Big Four: JPMorgan Chase, Goldman Sachs, Wells Fargo , and Citigroup . Analysts expect JPMorgan to report earnings per share between $5,8 and $5,9 and revenue around $51 billion, with a particular focus on net interest income following recent upward revisions to annual forecasts.
Focus on Goldman, Wells and Citi
Goldman Sachs is expected to report revenues of around $17 billion and EPS of $13, with observers focused on the sustainability of its strong trading trend and its mergers and acquisitions pipeline. Wells Fargo, on the other hand, is at the center of the debate over its net interest margin. Estimates call for EPS of $1,85 and revenues of $22,3 billion, with analysts monitoring the performance of its credit in a higher interest rate environment.
Citigroup, finally, is targeting revenues of $24 billion and EPS of $2,7, seeking to demonstrate the fruits of its reorganization and asset quality, while the bank emphasizes the growth of its international operations.
Market risks and stability scenarios
Rising Treasury yields have pushed the KBW Bank Index down 13% from its August peak, fueling fears of a potential slowdown in mergers and acquisitions and investment banking activity. However, analysts, citing reduced portfolio duration and more prudent risk management, rule out a return to the banking crisis in 2023.
The future directions of the Big Six banks will be crucial: their ability to maintain investment banking fees and manage the cost of funding in the coming months will define their growth path in a rising interest rate environment.