Global markets focus on US earnings season

In the US, major banks including JPMorgan, BofA, Citigroup and Wells Fargo will announce their balance sheets. Following the consumer inflation data released in the US, which increased faster than expected, Wall Street indexes finished the day flat, while global stock markets are mixed this morning. US indexes are down in futures as of 07:58 GMT. In Asia, Japanese stocks continue to diverge positively due to the weak yen. While Japan's Nikkei 225 increased by over 1 percent, the stock market in China, where the Consumer Price Index recorded its longest decline in more than 10 years with an annual -0.3 percent in December, is slightly down. Meanwhile, according to a Bloomberg survey, the People's Bank of China is expected to reduce the one-year benchmark interest rate, called the medium-term lending facility, by 10 basis points to 2.4 percent. This would be the first interest rate cut since the surprise 15 basis point cut last August. After the US and UK attacked the Houthis, Brent crude oil prices rose 2.5 percent at one point, but later gave back some of their gains. The Bloomberg Dollar Index is slightly negative. The balance sheets of major banks in the US will be monitored JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. are set to announce their balance sheets for the final quarter of 2023 today. The balance sheets will also be critical for US bank stocks, which rose 23 percent to post their best quarterly performance since 2021. Bank stocks, which have been under pressure for much of 2023, had risen since late October on expectations that the Fed would end its rate hike cycle without sending the US economy into recession. However, the focus from now on will be on the timing of the policy easing, and investors will try to interpret what this means for banks, from the health of their loan portfolios to the outlook for deposit rates. Goldman Sachs Group Inc. “Banks are certainly not as cheap as they used to be, but I also don’t think people believe their valuations are overblown,” said Richard Ramsden, an analyst at the Bank of England. Financials from Goldman Sachs and Morgan Stanley will also be on the radar Tuesday. The big banks are widely expected to report weak fourth-quarter results due to rising funding costs. Meanwhile, Cleveland Fed President Loretta Mester has predicted that March is likely too early to start cutting rates. Richmond Fed President Thomas Barkin said he needed more evidence to see progress toward the 2% target after the latest inflation data.