- Wall Street opens flat as tech stocks consolidate gains
- State Street shares dip on weak guidance
- Regions Financial caps off banking earnings with a miss. Credit quality holds firm
- US industrial production boosted by high energy demand
- Gold price dip keeps FTSE just shy of record levels
- Brent crude finds a floor above $64
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Wall Street’s off to a cautiously optimistic start on Friday, with the tech-focused Nasdaq showing the strongest gains. That builds off yesterday’s session, where a bullish update from Taiwan Semiconductor Manufacturing Company helped to quell fears of an AI bubble forming.
Q4 earnings season for the US banks is drawing to a close. State Street, whose biggest business activity is Investment Servicing, came in with fourth-quarter earnings of $2.97 per share, comfortably beating market expectations, but the shares were down at the open with concerns being raised around profitability. The Group’s trying to move with the times, recently taking a stake in an Indian online investment platform and also unveiling a new Digital Asset Platform to take advantage of growth in blockchain-based transactions and assets. However, it’s likely to take some time before either venture makes a significant contribution to the bottom line.
Regional Financial’s fourth-quarter report came in short of estimates, with the shares opening down over 3%. However, it wasn’t all bad news with lower interest rates feeding through to higher demand for loans which translated to growth in net interest income of 4.1%. Markets were however hoping for a more optimistic guide for net interest in 2026 with the company setting a growth range of 2.5-4.0%. Perhaps the bigger takeaway for the wider market was the improvement in credit quality, with non-performing loans down 8%. Concerns have been circulating around stress in US regional banks following write-downs last year, but fourth-quarter earnings haven’t revealed any black holes.
US industrial production growth of 0.4% in December has come in well ahead of the 0.1% consensus of analyst forecasts. This was flattered somewhat by a boost in utilities output. That could be a sign of electricity generators and natural gas producers responding to demand for energy from the AI boom. Manufacturing was more muted but still positive at 0.2%. Add in yesterday’s better than expected jobs data, and there’s little sign of slack in the US economy.
That and the receding expectation for imminent rate cuts has seen the dollar strengthen of late. With the prospect of American intervention in Iran seemingly retreating, gold prices have pulled back a touch as safe-haven demand takes a breather. Copper is also unwinding some of its recent gains and most of the mining sector, a key driver of the FTSE 100’s year-to-date performance, is down today. The index was down around 0.15% from yesterday’s record close as it headed towards the weekend break.
Brent Crude has halted its slide at around $64 per barrel after Donald Trump appeared to pull back from the brink of military intervention in Iran. However, Washington’s true intentions can be difficult to read. The potential for disruption to Iranian production and key supply corridors is likely to keep market nerves on edge until more certainty emerges.”
