NY Open: A big beat for big banks

Wall Street is dancing to the Gold Diggers of 1933 film song “we’re in the money.” Maybe not everyone, but certainly the bankers at Goldman Sachs and Morgan Stanley are boogying in the boardrooms.

Goldman Sachs Group (GS: NYSE) surprised analysts when earnings per share rose to $6.28 rather than the $5.38 forecast for Q3. The stock rose 1.38% as of 14:00 GMT. Morgan Stanley’s share price soared 3.27% (as of 14:00 GMT) when it announced earnings per share were $1.17, handily beating the $1.01 that was estimated.

The three major US equity indices are up over 1.0% led by the Nasdaq with a gain of 1.20%. The investment bank earnings and the easing of Saudi Arabia/US tensions supported the prices

Wall Street’s rally has improved the FX market risk tone as evidenced by the weaker Japanese yen and Swiss franc, while the rest of the G-10 majors record gains.

The US data underscored the health of the US economy. Capacity utilisation and Industrial Production for September came in as expected. Hurricane Florence may have reduced gains. JOLTS Job openings increased, and the NAHB Housing Market Index rose to 68 from 67 in September.

NZDUSD and GBPUSD rallied the most since the open. Kiwi is still benefiting from the stronger than expected CPI reading reported at the start of the Asia session. Sterling continues to bask in the glow of this morning’s employment report showing average earnings rising. Traders appear to be ignoring Brexit developments or more accurately, the lack of Brexit developments. The Irish border issue is the sticking point, and hopes of a final summit in November are fading.  GBPUSD is in an uptrend above 1.3130. This morning’s break above 1.3200-10 targets 1.3280.