US markets look set for a positive open heading into the weekend after yesterday’s sharp declines as sentiment stabilises at the end of a fairly turbulent week, as concerns about high valuations and a slowing economic outlook weigh on investors as earnings season gets into full swing
Early trading is likely to be dominated
by this morning’s story that US tobacco giants Reynolds American and Lorillard are in the final stages of agreeing a $56bn merger,
with a final decision hoped to be reached by the middle of next week, if all goes well, which is by no means certain.
Earnings seasons for the banking sector also begins today
with the latest numbers from mortgage giant Wells Fargo
who releases their latest Q2 earnings. Despite some recent weakness stemming from a general bearish attitude towards financials, the bank has seen an astonishing 17 straight quarters of rising profits.
This is particularly noteworthy when you compare it to the performance of some of its peers, JP Morgan, Bank of America and Citigroup who have all been stung with huge fines by regulators
Despite this, the bank is expected to report a drop in revenue from $21.38 billion last year to around $20.83 bn.
Investors will be looking at today’s statement to see how it is going to deal with the two key issues the firm will face moving forwards- a slowdown in mortgage refinancing from possible higher interest rates, and how to maximise revenues in commercial real estate and consumer credit.
The Dow Jones is expected to open 40 points higher at 16,955
The S&P500 is expected to open 3.5 points higher at 1,968.2
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