Strong earnings from BoA and Goldman are driving risk appetite

US stocks are off to good start as Bank of America and Goldman Sachs posted strong earning reports.  Bank of America delivered strong results with beats on both the top and bottom line, painting a better picture on the economy than what we saw from JP Morgan and Citigroup earlier in the week.  The BoA release also noted, “we see a healthy consumer and business climate driving a solid economy.”  Goldman Sachs also posted similar results to BoA.  Overall risk appetite is up on the strong results from banks and airlines.   The high-beta currencies have recovered some of their losses against the dollar following the strong move in equities.

The upward trend in stocks appears to be back despite the longest shutdown in US history, which now enters day 26.  There are no signs for talks to resume, but it will be interesting to see if the shutdown last beyond, January 29th , the day President Trump is expected to deliver his State of the Union address.  No President in history has given the address during a shutdown.

In M&A news, the board of directors of Fiserv and First Data approved a definitive merger between the two companies.  The $22 billion combination shows a continuing trend in the consolidation in the payment industry.  Last year, we saw Vantiv complete the acquisition of Worldpay.

Price action shows the resumption of the bullish rebound on the Dow Jones Industrial Average has price targeting the 50-day SMA, which trades at 24,352.  If we see continued upside, initial resistance may come from the 24,800 level.  To the downside, 23,330 remains key support.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya